Oxford Industries(OXM) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The company reported a significant turnaround in Q1 2021, with net earnings of $28.5 million compared to a net loss of $66.8 million in Q1 2020, driven by a 66% increase in net sales as operations recovered from the COVID-19 pandemic Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | May 1, 2021 | May 2, 2020 | | :--- | :--- | :--- | | Total Current Assets | $308,739 | $423,692 | | Property and equipment, net | $157,553 | $188,568 | | Total Assets | $900,982 | $1,097,470 | | Total Current Liabilities | $225,090 | $153,127 | | Long-term debt | $0 | $207,618 | | Total Liabilities | $473,081 | $658,775 | | Total Shareholders' Equity | $427,901 | $438,695 | Condensed Consolidated Statement of Operations Highlights (in thousands, except per share data) | Account | Q1 Fiscal 2021 | Q1 Fiscal 2020 | | :--- | :--- | :--- | | Net sales | $265,762 | $160,343 | | Gross profit | $166,585 | $94,074 | | Operating income (loss) | $34,893 | $(85,489) | | Net earnings (loss) | $28,468 | $(66,784) | | Diluted earnings (loss) per share | $1.70 | $(4.02) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Activity | Q1 Fiscal 2021 | Q1 Fiscal 2020 | | :--- | :--- | :--- | | Cash provided by (used in) operating activities | $41,005 | $(45,849) | | Cash used in investing activities | $(5,425) | $(8,591) | | Cash (used in) provided by financing activities | $(9,662) | $183,908 | | Net change in cash and cash equivalents | $25,918 | $129,468 | Notes to Condensed Consolidated Financial Statements The financial statements are prepared under GAAP for interim reporting, detailing the significant impact of the COVID-19 pandemic, the ongoing exit from the Lanier Apparel business, and a favorable effective tax rate in Q1 2021 - The COVID-19 pandemic led to temporary closures of all retail and restaurant locations for about half of Q1 2020, though e-commerce saw strong growth, and while most locations have reopened, they continue to face reduced traffic and capacity limitations[22][23] - The company is exiting its Lanier Apparel business, with the process expected to be completed in the second half of Fiscal 2021, and an additional $1 million in charges, primarily for severance and employee retention, were recognized in Q1 2021[47] - The effective income tax rate for Q1 2021 was 17.8%, compared to a 22.5% benefit in Q1 2020, favorably impacted by a $2 million reduction in uncertain tax positions and other items[39] Operating Income (Loss) by Segment (in thousands) | Operating Group | Q1 Fiscal 2021 | Q1 Fiscal 2020 | | :--- | :--- | :--- | | Tommy Bahama | $20,660 | $(23,362) | | Lilly Pulitzer | $19,945 | $4,146 | | Southern Tide | $3,253 | $(63,366) | | Lanier Apparel | $855 | $(2,637) | | Corporate and Other | $(9,820) | $(270) | | Consolidated | $34,893 | $(85,489) | Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the strong Q1 2021 performance, with net sales up 65.7% to $265.8 million and diluted EPS of $1.70, to the recovery from the COVID-19 pandemic, resulting in improved gross margin and a strong liquidity position with $92 million in cash and no debt Key Operating Results (in thousands, except per share data) | Metric | Q1 Fiscal 2021 | Q1 Fiscal 2020 | | :--- | :--- | :--- | | Net sales | $265,762 | $160,343 | | Operating income (loss) | $34,893 | $(85,489) | | Net earnings (loss) | $28,468 | $(66,784) | | Net earnings (loss) per diluted share | $1.70 | $(4.02) | - The improved Q1 2021 results were primarily due to the absence of the $60 million impairment charge seen in Q1 2020, higher sales and gross margin in all operating groups, and a favorable effective tax rate[69] - As of May 1, 2021, the company had $92 million in cash and cash equivalents with no borrowings outstanding and $322 million of unused availability under its U.S. Revolving Credit Agreement[119] Results of Operations Q1 2021 net sales surged 65.7% to $265.8 million, driven by recovery from pandemic-related closures, leading to a 400 basis point expansion in gross margin to 62.7% and a swing to a $34.9 million operating profit from an $85.5 million loss Consolidated Results of Operations (in thousands) | Line Item | Fiscal 2021 | % of Sales | Fiscal 2020 | % of Sales | $ Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Net sales | $265,762 | 100.0% | $160,343 | 100.0% | $105,419 | | Gross profit | $166,585 | 62.7% | $94,074 | 58.7% | $72,511 | | SG&A | $137,125 | 51.6% | $123,001 | 76.7% | $14,124 | | Operating income (loss) | $34,893 | 13.1% | $(85,489) | (53.3)% | $120,382 | Net Sales by Operating Group (in thousands) | Operating Group | Q1 Fiscal 2021 | Q1 Fiscal 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Tommy Bahama | $156,698 | $86,984 | $69,714 | 80.1% | | Lilly Pulitzer | $73,576 | $49,149 | $24,427 | 49.7% | | Southern Tide | $15,466 | $8,301 | $7,165 | 86.3% | | Lanier Apparel | $12,019 | $10,725 | $1,294 | 12.1% | | Consolidated | $265,762 | $160,343 | $105,419 | 65.7% | Financial Condition, Liquidity and Capital Resources The company's financial condition strengthened significantly, ending Q1 2021 with $92 million in cash and no debt, compared to $182 million in cash and $208 million in debt a year prior, supported by $41.0 million in operating cash flow and $322 million in available credit Key Liquidity Measures (in thousands) | Metric | May 1, 2021 | May 2, 2020 | | :--- | :--- | :--- | | Working capital | $83,649 | $270,565 | | Working capital ratio | 1.37 | 2.77 | | Debt to total capital ratio | 0% | 32% | - The decrease in debt since May 2, 2020 was due to the repayment of all outstanding borrowings using cash on hand and cash flow from operations, as the company had previously borrowed funds as a precautionary measure during the COVID-19 pandemic[123] - Cash from operating activities was $41.0 million in Q1 2021, a significant improvement from a $45.8 million use of cash in Q1 2020, primarily driven by the swing from a net loss to net earnings[134] - Anticipated capital expenditures for Fiscal 2021 are expected to be approximately $35 million[148] Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes in its exposure to market risks, including interest rate, foreign currency, commodity, and inflation risks, during the first quarter of Fiscal 2021 - There have not been any material changes in the company's exposure to interest rate, foreign currency, commodity, and inflation risks during the First Quarter of Fiscal 2021[156] Controls and Procedures Based on an evaluation conducted by management, including the principal executive officer and principal financial officer, the company concluded that its disclosure controls and procedures were effective as of the end of the first quarter of Fiscal 2021, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, evaluated disclosure controls and procedures and concluded they were effective as of the end of the reporting period (May 1, 2021)[157] - There were no changes in internal control over financial reporting during the first quarter of Fiscal 2021 that materially affected, or are reasonably likely to materially affect, internal controls[159] PART II. OTHER INFORMATION Legal Proceedings The company is involved in various legal and regulatory actions in the ordinary course of business but is not currently a party to any proceedings expected to have a material impact on its financial position, results of operations, or cash flows - The company is not currently a party to any litigation or regulatory action that it believes could reasonably be expected to have a material impact on its financial position, results of operations or cash flows[160] Risk Factors The company states that its business is subject to numerous risks and directs investors to the detailed discussion of these risks in its Fiscal 2020 Form 10-K, with no new or materially changed risk factors presented in this quarterly report - Investors are advised to consider the risk factors discussed in the Fiscal 2020 Form 10-K, as they could materially affect the business, financial condition, or operating results[161] Unregistered Sales of Equity Securities and Use of Proceeds The company did not make any unregistered sales of equity securities during Q1 2021, but repurchased 33,787 shares at an average price of $88.30 per share from employees to cover tax liabilities related to stock award vesting, with $32 million remaining available under the public stock repurchase program - During Q1 Fiscal 2021, the company did not make any unregistered sales of equity securities[163] Share Repurchases in Q1 Fiscal 2021 | Fiscal Month | Total Number of Shares Purchased | Average Price Paid per Share (in USD) | | :--- | :--- | :--- | | February | - | $ - | | March | 33,787 | $88.30 | | April | - | $ - | | Total | 33,787 | $88.30 | - As of May 1, 2021, $32 million remained available for future repurchases under the company's stock repurchase authorization[163] Defaults Upon Senior Securities None reported - None[164] Mine Safety Disclosures None reported - None[164] Other Information None reported - None[164] Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act, and XBRL data files - Exhibits filed with this report include Section 302 and 906 certifications by the Principal Executive Officer and Principal Financial Officer[164]