Wolverine Worldwide reported financial results for both the fourth quarter and full year ended December 28, 2013. Full-year results include a full 52-week contribution from the Company's October 2012 acquisition of the Sperry Top-Sider, Saucony, Stride Rite, and Keds brands (the "PLG Acquisition").
On July 11, 2013, the Company's Board of Directors declared a two-for-one stock split, which was paid in the form of a stock dividend on November 1, 2013. All references to the Company's share and per share data are presented on a split-adjusted basis.
Additionally, references to adjusted financial results exclude transaction and integration expenses related to the PLG Acquisition, restructuring charges related to the Company's manufacturing operations, non-cash retail store impairment charges, and expenses related to the October 2013 debt refinancing, where applicable.
Highlights from the year and fourth quarter 2013 include:
Consolidated full-year revenue increased to a record $2.69 billion, representing growth of 5.6% versus prior year pro forma revenue of $2.55 billion and growth of 64.0% versus prior year reported revenue of $1.64 billion. All three of the Company's branded operating groups contributed to the 2013 record revenue results, with the most significant contributions to revenue growth coming from the Sperry Top-Sider, Saucony, Keds, and Merrell brands.
Consolidated fourth quarter revenue was a record $740.8 million, growth of 0.6% vs. prior year pro forma revenue of $736.4 million and growth of 13.6% versus prior year reported revenue of $652.2 million.
Adjusted full-year gross margin increased 120 basis points to 39.8%. The strong gross margin improvement was driven by a mix shift towards higher margin consumer-direct channels, select price increases taken at the beginning of the year, efficiency gains in our owned manufacturing operations and lower LIFO expense. These were partially offset by higher product costs and unfavorable variances on FX forward contracts. Reported gross margin was 39.6%.
Adjusted full-year earnings increased 25.4% to a record $1.43 per fully diluted share. Reported earnings for the full year were $0.99 per fully diluted share.
In the fourth quarter, adjusted fully diluted earnings were $0.22 per share. As noted during the Company's previous earnings call, fourth quarter earnings were negatively impacted by incremental pension and incentive compensation expense and a higher tax rate and share count. Reported earnings in the fourth quarter were $(0.02) per fully diluted share.
Operating free cash flow for the full fiscal year was a record $157.6 million. TheCompany ended the year with cash of $214.2 million and net debt of $935.8 million, with the latter down $142.8 million from the prior year end.
"Fiscal 2013 was a year of many milestones for the Company, highlighted by record earnings per share and our fourth consecutive year of record revenue," said Blake W. Krueger, Chairman and Chief Executive Officer. "We integrated the newly acquired brands into our business and successfully executed numerous global growth initiatives across our brand portfolio while also expanding and strengthening our direct-to-consumer platform.
Even as a sluggish retail environment and very cold weather in the U.S. tempered growth for our Sperry Top-Sider and Stride Rite brands during the fourth quarter, many of our other brands, including Merrell, delivered excellent results. For the year, nearly every geographic region grew nicely, with the only exception being the EMEA region that still delivered results consistent with our expectations.
In addition, we were particularly pleased with the accelerated momentum in the Latin America and Asia Pacific regions during the back half of 2013, important regions for future growth across our portfolio and, particularly, for our newly acquired brands.
"As we begin fiscal 2014, we are pleased with the tremendous progress we have made over the past few years to position the Company for continued success around the world. Our fanatical focus on product creation and innovation is delivering exciting products to our global consumers, and we continue to tell compelling marketing stories each season – all while our talented and motivated teams deliver revenue growth and increased profitability across the portfolio. We remain steadfastly focused on achieving impressive returns for our shareholders in any macroeconomic environment."
Don Grimes, Senior Vice President and Chief Financial Officer, commented, "The Company delivered exceptional financial results in fiscal 2013, and we couldn't be more pleased with our strong cash flow generation and debt retirement since the close of the PLG Acquisition in October 2012. Our focus remains on growing our wonderful collection of lifestyle brands and driving continued excellent cash flow."
