Raises revenue and earnings guidance for fiscal year 2024

Wolverine World Wide, Inc. (NYSE: WWW) today reported financial results for the third quarter ended September 28, 2024.

“In the third quarter, we delivered better-than-expected revenue and earnings – led by Merrell and Saucony outpacing our forecast – as we continue to make progress on our plan to turnaround and transform the Company for the future,” said Chris Hufnagel, President and Chief Executive Officer of Wolverine Worldwide. “We drove another quarter of record gross margin and more than doubled earnings versus last year. Today, we’re moving forward with a stronger platform for growth – a rationalized portfolio of authentic brands positioned in attractive categories, a much healthier balance sheet with our restructuring and stabilization efforts largely behind us, and finally, a talented, aligned, and motivated team driving the business each day.”

FINANCIAL HIGHLIGHTS

Financial results for 2024, and comparable results from 2023, in each case, for our ongoing business exclude the impact of Keds, which was sold in February 2023, the U.S. Wolverine Leathers business, which was sold in August 2023, the non-U.S. Wolverine Leathers business, which was sold in December 2023, and the Sperry business, which was sold in January 2024. Tables have been provided in the back of this release showing the impact of these adjustments on financial results for 2024 and 2023.

THIRD-QUARTER 2024 FINANCIAL HIGHLIGHTS

Gross margin improved significantly due to lower supply chain costs and lower sales of end-of-life inventory.

Inventory at the end of the quarter was $285.5 million and was down $278.3 million or approximately 49.4% compared to the prior year and down $88.1 million from the prior year end.

Net Debt at the end of the quarter was $563 million, down $373 million compared to the prior year and down $179 million from the prior year end.

FULL-YEAR 2024 OUTLOOK

For Fiscal year 2024, the Company currently expects:

• Revenue from its ongoing business to be approximately $1.730 to $1.745 billion. This range compares to the previous outlook of approximately $1.71 to $1.73 billion and represents a decline of approximately 13.1% to 12.4% and a constant currency decline of approximately 13.3% to 12.6% compared to 2023.
• Gross margin of approximately 44.5%, up 460 basis points compared to 2023, which remains unchanged from the previous outlook.
• Operating margin to be approximately 5.8% and adjusted operating margin to be approximately 7.2%, up 330 basis points compared to 2023. This compares to the previous operating margin outlook of approximately 6.0% and adjusted operating margin of approximately 7.4%.
• The effective tax rate to be approximately 16.5%, compared to the previous outlook of 18.5%
• Diluted earnings per share in the range of $0.56 to $0.66 and adjusted diluted earnings per share in the range of $0.80 to $0.90. This compares to the previous outlook for diluted earnings per share in the range of $0.53 to $0.63 and adjusted diluted EPS between $0.75 and $0.85. These full-year EPS expectations continue to include an approximate $0.10 negative impact from foreign currency exchange rate fluctuations.
• Diluted weighted average shares of approximately 80 million, unchanged from previous guidance.
• Inventory to decline by approximately $85 million at year end compared to the prior year end. This compares to the previous outlook of a decline of at least $75 million.
• Net Debt at year end to be approximately $545 million, a reduction of $195 million from the prior year end, compared to a previous outlook of $565 million.

Hufnagel concluded, “While pleased with the continued progress and early proof points to our strategies, we remain intently focused on driving the business forward to realize the full potential of our brands and delivering better returns to our shareholders.”

NON-GAAP FINANCIAL MEASURES

Measures referred to in this release as “adjusted” financial results and the financial results of the "ongoing business" are non-GAAP measures. Adjusted financial results exclude environmental and other related costs net of recoveries, non-cash impairment of long-lived assets, reorganization costs, gain on the sale of businesses, trademarks and long-lived assets, Sperry® store closure costs, and costs associated with divestitures. The financial results of the ongoing business exclude financial results from the Keds business, Sperry business and Wolverine Leathers business prior to the respective dates of sale of such businesses. Revenue adjusted for divestitures and business model changes exclude financial results from the Keds business, Sperry business and Wolverine Leathers business prior to the respective dates of sale of such businesses and are adjusted to include the impact of business model changes in 2023 (the transition of Hush Puppies North America to a licensing model, Hush Puppies IP sale, and conversion of the China joint ventures to the distributor model) and business model changes in 2024 (the transition of Merrell and Saucony Kids to a licensing model). The Company also presents constant currency information, which is a non-GAAP measure that excludes the impact of fluctuations in foreign currency exchange rates. The Company calculates constant currency basis by converting the current-period local currency financial results using the prior period exchange rates and comparing these adjusted amounts to the Company's current period reported results. The Company believes providing each of these non- GAAP measures provides valuable supplemental information regarding its results of operations, consistent with how the Company evaluates performance.

The Company has provided a reconciliation of each of the above non-GAAP financial measures to the most directly comparable GAAP financial measure. The Company believes these non-GAAP measures provide useful information to both management and investors because they increase the comparability of current period results to prior period results by adjusting for certain items that may not be indicative of core operating results and enable better identification of trends in our business. The adjusted financial results are used by management to, and allow investors to, evaluate the operating performance of the Company on a comparable basis. Management does not, nor should investors, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

EARNINGS CALL INFORMATION

The Company will host a conference call today at 8:30 a.m. ET to discuss these results and current business trends. The conference call will be broadcast live and accessible under the “Investor Relations” tab at www.wolverineworldwide.com. A replay of the conference call will be available on the Company’s website for a period of approximately 30 days.

ABOUT WOLVERINE WORLDWIDE

Founded in 1883, Wolverine World Wide, Inc. (NYSE:WWW) is one of the world’s leading marketers and licensors of branded casual, active lifestyle, work, outdoor sport, athletic, children's and uniform footwear and apparel. The Company's diverse portfolio of highly recognized brands includes Merrell®, Saucony®, Sweaty Betty®, Hush Puppies®, Wolverine®, Chaco®, Bates®, HYTEST®, and Stride Rite®. Wolverine Worldwide is also the global footwear licensee of the popular brands Cat® and Harley-Davidson®. Based in Rockford, Michigan, for more than 140 years, the Company's products are carried by leading retailers in the U.S. and globally in approximately 170 countries and territories. For additional information, please visit our website, www.wolverineworldwide.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements, including statements regarding the Company’s turnaround and transformation; the Company's outlook for 2024 including, among others: reported, adjusted and constant currency revenue; reported and adjusted gross margin; reported and adjusted operating margin; reported and adjusted net earnings; effective tax rate; reported and adjusted diluted earnings per share; diluted weighted average shares; net debt and year-end inventory; as well as statements regarding the Company's focus on realizing the full potential of its brands and delivering greater value to shareholders. In addition, words such as “estimates,” “anticipates,” “believes,” “forecasts,” “step,” “plans,” “predicts,” “focused,” “projects,” “outlook,” “is likely,” “expects,” “intends,” “should,” “will,” “confident,” variations of such words, and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions (“Risk Factors”) that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. Risk Factors include, among others: changes in general economic conditions, employment rates, business conditions, interest rates, tax policies, inflationary pressures and other factors affecting consumer spending in the markets and regions in which the Company’s products are sold; the inability for any reason to effectively compete in global footwear, apparel and consumer-direct markets; the inability to maintain positive brand images and anticipate, understand and respond to changing footwear and apparel trends and consumer preferences; the inability to effectively manage inventory levels; changes in duties, tariffs, quotas or applicable assessments in countries of import and export; foreign currency exchange rate fluctuations; currency restrictions; supply chain or other capacity constraints, production disruptions, including reduction in operating hours, labor shortages, and facility closures resulting in production delays at the Company’s manufacturers, quality issues, price increases or other risks associated with foreign sourcing; the cost, including the effect of inflationary pressures, and availability of raw materials, inventories, services and labor for contract manufacturers; labor disruptions; changes in relationships with, including the loss of, significant wholesale customers; risks related to the significant investment in, and performance of, the Company’s consumer-direct operations; risks related to expansion into new markets and complementary product categories; the impact of seasonality and unpredictable weather conditions; the impact of changes in general economic conditions and/or the credit markets on the Company’s manufacturers, distributors, suppliers, joint venture partners and wholesale customers; changes in the Company’s effective tax rates; failure of licensees or distributors to meet planned annual sales goals or to make timely payments to the Company; the risks of doing business in developing countries, and politically or economically volatile areas; the ability to secure and protect owned intellectual property or use licensed intellectual property; the impact of regulation, regulatory and legal proceedings and legal compliance risks, including compliance with federal, state and local laws and regulations relating to the protection of the environment, environmental remediation and other related costs, and litigation or other legal proceedings relating to the protection of the environment or environmental effects on human health; risks of breach of the Company’s databases or other systems, or those of its vendors, which contain certain personal information, payment card data or proprietary information, due to cyberattack or other similar events; problems affecting the Company’s supply chain and distribution system, including service disruptions at shipping and receiving ports; strategic actions, including new initiatives and ventures, acquisitions and dispositions, and the Company’s success in integrating acquired businesses, and implementing new initiatives and ventures; risks relating to stockholder activism; the potential effects of outbreaks of COVID-19 or future health crises on the Company’s business, operations, financial results and liquidity; the risk of impairment to goodwill and other intangibles; the success of the Company’s restructuring and realignment initiatives undertaken from time to time; changes in future pension funding requirements and pension expenses; and additional factors discussed in the Company’s reports filed with the Securities and Exchange Commission and exhibits thereto. The foregoing Risk Factors, as well as other existing Risk Factors and new Risk Factors that emerge from time to time, may cause actual results to differ materially from those contained in any forward-looking statements. Given these or other risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Furthermore, the Company undertakes no obligation to update, amend, or clarify forward-looking statements.

The following tables contain information regarding the non-GAAP financial measures used by the Company in the presentation of its financial results:

WOLVERINE WORLD WIDE, INC.

Q3 2024 RECONCILIATION TABLES

DIVESTITURE

FINANCIAL SUMMARY

(Unaudited)

(In millions, except per share amounts)

In order to provide visibility regarding the financial impact of completed divestitures, the Company has provided additional information within the supplemental table below. The items included in the tables represent amounts that are reflected in the reported fiscal 2024 and 2023 results that are related to businesses the Company has sold. The Company believes providing the following information is helpful to better understand the impact of the divestitures on the Company's ongoing business.

For purposes of providing additional information regarding year-over-year revenue comparisons, the below table adjusts 2023 revenue for divestitures and business model changes.

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