Columbia Sportswear Company · NASDAQ:COLM
Columbia Sportswear — Q3 2023 Earnings Presentation
20 slides from Columbia Sportswear's earnings presentation, Oct 26, 2023
Slide 1: CFO Commentary and Financial Review Third Quarter 2023
& Columbia S Sportswear Company. | - a CFO Commentary and Financial Review Third Quarter 2023 October 26, 2023
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation does not constitute an offer or invitation for the sale or purchase of securities and has been prepared solely for informational purposes. This presentation contains forward-looking statements within the meaning of the federal securities laws regarding Co
Slide 3: Definitions and abbreviations
DTC DTC.com DTC B&M y/y U.S. LAAP EMEA SG&A EPS Bps direct-to-consumer DTC e-commerce DTC brick & mortar year-over-year United States Latin America and Asia Pacific Europe, Middle East and Africa selling, general & administrative earnings per share basis points “+” or “up” “-” or “down” LSD% MSD% HS
Slide 4: We connect active people with their passions
W E C O N N E C T A C T I V E P E O P L E W I T H T H E I R P A S S I O N S 4
Slide 5: Capital allocation approach
Dependent upon our financial position, market conditions and our strategic priorities, our capital allocation approach includes:
Slide 6: Q3'23 Financial Results Compared to Q3'22
Q3'23 FINANCIAL RESULTS COMPARED TO Q3'22 a $986M a +3% Net Sales Gross Margin Operating Margin Diluted EPS Q3°23 Highlights: * The increase in net sales primarily reflects strength in international-direct markets including Europe-Direct, Canada, and China. In the U.S., the marketplace remains chall
Slide 7: Q3'23 vs Q3'22 summary financial table
• • • (dollars in millions, except per share amounts) Q3'23 Q3'22 Change Net Sales $985.7 $955.0 +3% Gross margin 48.7% 48.0% +70 bps SG&A percent of net sales 35.7% 33.4% +230 bps Operating income $134.6 $145.3 -7% Operating margin 13.7% 15.2% -150 bps Net income $103.5 $111.8 -7% Diluted EPS $1.70
Slide 8: Q3'23 Net Sales and Growth vs. Q3'22
Q3'23 NET SALES AND GROWTH VS. Q3'22 CANADA +33% (+38% c.c.) EMEA -16% (-21% c.c.) $106M U.S. $129M +5% (+5% c.c.) $635M LAAP 0% (+4% c.c.) $116M Commentary below on primary drivers reflects constant currency performance. us. : up MSD%, primarily reflecting earlier shipment of Fall ‘23 orders compar
Slide 9: Net Sales Overview
T SALES OVERVIEW Q3'23 NET SALES AND GROWTH VS. Q3'22 CATEGORY PERFORMANCE BRAND PERFORMANCE CHANNEL PERFORMANCE APPAREL, ACCESSORIES & EQUIPMENT: t +1% (41% cc.) $732M FOOTWEAR: t +11% (411% cc.) $254M Columbia &. t +4% (+4% c.c.) t +9% (+8% c.c.) $804M $122M MOUNTAIN bs HARD prAna. WEAR "3 y -18%
Slide 10: Gross margin tailwinds and headwinds
Primary Gross Margin Tailwinds • Other: includes the benefit of lower inbound freight costs • Channel & Region Sales Mix: lower proportion of distributor sales, which generally carry lower gross margins Primary Gross Margin Headwinds • Channel Profitability: lower wholesale margins reflecting action
Slide 11: SG&A increased 10% to $351.6 million
SG&A increased 10% to $351.6 million | Primary SG&A Expense Increases + Omni-Channel: including higher DTC B&M expenses related to new and temporary stores Demand Creation: represents 5.8% of sales vs. 5.4% in Q3'22 Supply Chain: higher warehousing and fulfillment expenses, including increased 3PL c
Slide 12: Balance Sheet Overview
BALANCE SHEET OVERVIEW Balance Sheet as of September 30, 2023 Cash, Cash Equivalents, and Short-term Investments Inventory Cash, cash equivalents and short-term investments totaled $214.8M, compared to $160.2M as of September 30, 2022. Inventories -16% y/y to $885.2M driven by a reduction in current
Slide 13: Capital Overview
CAPITAL OVERVIEW Q3'23 YTD Net Cash Flow Provided by Operations Net cash flow provided by operating activities was $22.2M, compared to net cash flow used in operating activities of $328.1M for the same period in 2022. Lower purchases of inventory was the predominant driver of improvement in operatin
Slide 14: Financial Outlook
ANCIAL OUTLOOK | The Company's 2023 Financial Outlook and the underlying assumptions are forward-looking in nature, and the forward-looking statements reflect our expectations as of October 26, 2023 and are subject to significant risks and business uncertainties, including those factors described un
Slide 15: Financial Outlook Assumptions
ANCIAL OUTLOOK ASSUMPTIONS Anticipated net sales growth primarily reflects: + Net sales growth is expected to be led by SOREL and Columbia, both up LSD%, partially offset by declines in prAna and Mountain Hardwear. + All four geographic segments are anticipated to grow in 2023 with international sal
Slide 16: Foreign currency, cash flow and Q4 outlook
+ Foreign currency translation is expected to reduce net sales growth by approximately 60 bps. + Foreign currency is expected to have an approximately $0.07 negative impact on diluted earnings per share, due primarily to Foreign currency unfavorable foreign currency transactional effects from hedgin
Slide 17: Appendix
Slide 18: Constant-currency net sales non-GAAP note
(1) Constant-currency net sales is a non-GAAP financial measure. See “References to Non-GAAP Financial Information” above for further information.
Slide 19: First Nine Months Free Cash Flow Reconciliation
FIRST NINE MONTHS FREE CASH FLOW RECONCILIATION COLUMBIA SPORTSWEAR COMPANY Reconciliation of GAAP to Non-GAAP Financial Measures Net cash used in operating activities to free cash flow (Unaudited) Nine Months Ended September 30, (in miions) 2023 2022 Net cash provided by (used in) operating activit
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