Movado Group Earnings 2020-07-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

mov-10q_20200731.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended July 31, 2020


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-16497

MOVADO GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

New York		13-2595932
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

650 From Road, Ste. 375 Paramus, New Jersey		07652-3556
(Address of Principal Executive Offices)		(Zip Code)

(201) 267-8000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

MOV

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for that past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,’’ “accelerated filer,’’ “smaller reporting company,’’ and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s Common Stock and Class A Common Stock as of August 21, 2020 were 16,572,681 and 6,608,548, respectively.

MOVADO GROUP, INC.

Index to Quarterly Report on Form 10-Q

July 31, 2020

			Page
Part I	Financial Information (Unaudited)
	Item 1.	Consolidated Balance Sheets at July 31, 2020, January 31, 2020 and July 31, 2019	3
		Consolidated Statements of Operations for the three and six months ended July 31, 2020 and July 31, 2019	4
		Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended July 31, 2020 and July 31, 2019	5
		Consolidated Statements of Cash Flows for the six months ended July 31, 2020 and July 31, 2019	6
		Notes to Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
	Item 4.	Controls and Procedures	39
Part II	Other Information
	Item 1.	Legal Proceedings	40
	Item 1A.	Risk Factors	40
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
	Item 6.	Exhibits	42
Signature			43

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

MOVADO GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

	July 31,			January 31,			July 31,
	2020			2020			2019
ASSETS
Current assets:
Cash and cash equivalents	$	170,195		$	185,872		$	134,890
Trade receivables, net		60,128			78,388			93,699
Inventories		173,374			171,406			200,953
Other current assets		29,856			28,888			32,113
Total current assets		433,553			464,554			461,655
Property, plant and equipment, net		25,888			29,238			28,248
Operating lease right-of-use assets		82,169			89,523			91,119
Deferred and non-current income taxes		59,747			25,403			24,621
Goodwill		—			136,366			131,936
Other intangibles, net		18,071			42,359			43,995
Other non-current assets		60,261			59,865			59,057
Total assets	$	679,689		$	847,308		$	840,631
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	29,929		$	35,488		$	50,281
Accrued liabilities		45,509			44,210			43,874
Accrued payroll and benefits		12,431			6,302			7,333
Current operating lease liabilities		14,766			15,083			14,609
Income taxes payable		6,774			8,217			10,800
Total current liabilities		109,409			109,300			126,897
Loans payable to bank		48,341			51,910			50,300
Deferred and non-current income taxes payable		20,743			25,419			26,593
Non-current operating lease liabilities		75,376			81,877			82,972
Other non-current liabilities		48,124			48,393			50,025
Total liabilities		301,993			316,899			336,787
Commitments and contingencies (Note 12)
Redeemable noncontrolling interest		3,037			3,165			3,540
Equity:
Preferred Stock, $0.01 par value, 5,000,000 shares authorized; no shares issued		—			—			—
Common Stock, $0.01 par value, 100,000,000 shares authorized; 28,063,179, 27,859,328 and 27,853,680 shares issued and outstanding, respectively		281			279			279
Class A Common Stock, $0.01 par value, 30,000,000 shares authorized; 6,608,548, 6,603,645 and 6,587,956 shares issued and outstanding, respectively		65			65			65
Capital in excess of par value		211,628			208,473			205,117
Retained earnings		298,871			455,479			443,414
Accumulated other comprehensive income		86,109			85,050			74,206
Treasury Stock, 11,490,610, 11,443,308 and 11,442,021 shares, respectively, at cost		(223,283	)		(222,809	)		(222,777	)
Total Movado Group, Inc. shareholders' equity		373,671			526,537			500,304
Noncontrolling interest		988			707			—
Total equity		374,659			527,244			500,304
Total liabilities, redeemable noncontrolling interest and equity	$	679,689		$	847,308		$	840,631

See Notes to Consolidated Financial Statements

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended July 31,						Six Months Ended July 31,
	2020			2019			2020			2019
Net sales	$	88,538		$	157,816		$	158,204		$	304,365
Cost of sales		43,182			72,477			80,955			140,153
Gross profit		45,356			85,339			77,249			164,212
Selling, general and administrative		54,272			76,563			112,409			150,462
Impairment of goodwill and intangible assets (Note 7)		—			—			155,919			—
Total operating expenses		54,272			76,563			268,328			150,462
Operating (loss)/income		(8,916	)		8,776			(191,079	)		13,750
Non-operating income/(expense):
Gain on sale of a non-operating asset		1,317			—			1,317			—
Change in contingent consideration (Note 11)		—			13,627			—			13,627
Interest expense		(590	)		(225	)		(861	)		(449	)
Interest income		8			24			23			45
(Loss)/income before income taxes		(8,181	)		22,202			(190,600	)		26,973
(Benefit)/provision for income taxes (Note 13)		(1,559	)		4,741			(33,889	)		5,588
Net (loss)/income		(6,622	)		17,461			(156,711	)		21,385
Less: Net loss attributable to noncontrolling interests		(7	)		(44	)		(103	)		(45	)
Net (loss)/income attributable to Movado Group, Inc.	$	(6,615	)	$	17,505		$	(156,608	)	$	21,430

Basic (loss)/income per share:
Weighted basic average shares outstanding		23,240			23,138			23,191			23,127
Net (loss)/income per share attributable to Movado Group, Inc.	$	(0.28	)	$	0.76		$	(6.75	)	$	0.93

Diluted (loss)/income per share:
Weighted diluted average shares outstanding		23,240			23,292			23,191			23,370
Net (loss)/income per share attributable to Movado Group, Inc.	$	(0.28	)	$	0.75		$	(6.75	)	$	0.92

See Notes to Consolidated Financial Statements

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

	Three Months Ended July 31,						Six Months Ended July 31,
	2020			2019			2020			2019
Net (loss)/income	$	(6,622	)	$	17,461		$	(156,711	)	$	21,385
Other comprehensive income/(loss):
Net unrealized gain/(loss) on investments, net of tax provision/(benefit) of $2, $2, $(11) and $3, respectively		6			7			(32	)		8
Amortization of prior service cost, net of tax provision of $4, $3, $8 and $7, respectively		15			13			28			26
Foreign currency translation adjustments		9,014			(2,151	)		1,063			(6,335	)
Total other comprehensive income/(loss), net of taxes		9,035			(2,131	)		1,059			(6,301	)
Less:
Comprehensive income/(loss) attributable to noncontrolling interests:
Net loss		(7	)		(44	)		(103	)		(45	)
Foreign currency translation adjustments		320			(52	)		256			(136	)
Total comprehensive income/(loss) attributable to noncontrolling interests	$	313		$	(96	)	$	153		$	(181	)
Total comprehensive income/(loss) attributable to Movado Group, Inc.

Price	24.03	EPS	2
Shares	23	P/E	10
MCap	560	P/FCF	-13
Net Debt	-117	EBIT	68
TEV	444	TEV/EBIT	7
TTM 2019-10-31, in MM, except price, ratios

10-Q	2020-07-31	Filed 2020-08-27
10-Q	2020-04-30	Filed 2020-06-09
10-K	2020-01-31	Filed 2020-03-26
10-Q	2019-10-31	Filed 2019-11-26
10-Q	2019-07-31	Filed 2019-08-28
10-Q	2019-04-30	Filed 2019-05-30
10-K	2019-01-31	Filed 2019-03-28
10-Q	2018-10-31	Filed 2018-12-04
10-Q	2018-07-31	Filed 2018-08-29
10-Q	2018-04-30	Filed 2018-05-30
10-K	2018-01-31	Filed 2018-03-29
10-Q	2017-10-31	Filed 2017-11-21
10-Q	2017-07-31	Filed 2017-08-29
10-Q	2017-04-30	Filed 2017-05-25
10-K	2017-01-31	Filed 2017-03-20
10-Q	2016-10-31	Filed 2016-11-22
10-Q	2016-07-31	Filed 2016-08-25
10-Q	2016-04-30	Filed 2016-05-26
10-K	2016-01-31	Filed 2016-03-31
10-Q	2015-10-31	Filed 2015-11-24
10-Q	2015-07-31	Filed 2015-08-27
10-Q	2015-04-30	Filed 2015-05-27
10-K	2015-01-31	Filed 2015-03-31
10-Q	2014-10-31	Filed 2014-11-25
10-Q	2014-07-31	Filed 2014-08-26
10-Q	2014-04-30	Filed 2014-05-22
10-K	2014-01-31	Filed 2014-03-28
10-Q	2013-10-31	Filed 2013-11-26
10-Q	2013-07-31	Filed 2013-08-27
10-Q	2013-04-30	Filed 2013-05-29
10-K	2013-01-31	Filed 2013-03-26
10-Q	2012-10-31	Filed 2012-11-28
10-Q	2012-07-31	Filed 2012-08-28
10-Q	2012-04-30	Filed 2012-05-31
10-K	2012-01-31	Filed 2012-03-30
10-Q	2011-10-31	Filed 2011-12-01
10-Q	2011-07-31	Filed 2011-09-01
10-Q	2011-04-30	Filed 2011-06-02
10-K	2011-01-31	Filed 2011-04-07
10-Q	2010-10-31	Filed 2010-12-02
10-Q	2010-07-31	Filed 2010-09-02
10-Q	2010-04-30	Filed 2010-05-27
10-K	2010-01-31	Filed 2010-04-01

8-K	2020-08-27	Earnings, Exhibits
8-K	2020-08-20	Enter Agreement
8-K	2020-06-29	Exit Costs
8-K	2020-06-25	Shareholder Vote
8-K	2020-06-09
8-K	2020-06-09
8-K	2020-04-02
8-K	2020-03-26
8-K	2020-03-20
8-K	2020-01-06
8-K	2019-11-26
8-K	2019-08-28
8-K	2019-06-20
8-K	2019-05-30
8-K	2019-03-28
8-K	2018-12-04
8-K	2018-10-12
8-K	2018-10-09
8-K	2018-10-01
8-K	2018-08-29
8-K	2018-08-23
8-K	2018-08-15
8-K	2018-06-21
8-K	2018-05-30
8-K	2018-03-29

EX-31.1	mov-ex311_8.htm
EX-31.2	mov-ex312_9.htm
EX-32.1	mov-ex321_6.htm
EX-32.2	mov-ex322_10.htm

MOV 10Q Quarterly Report

Movado Group Earnings 2020-07-31