Wolverine World Wide, Inc.

Greetings and welcome to the Wolverine World Wide Third Quarter Fiscal 2020 Results Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Brett Parent, Vice President of Strategies and Investor Relations. Thank you, sir. You may begin.

Good morning, and welcome to our third quarter 2020 conference call. On the call today are Blake Krieger, our Chairman and Chief Executive Officer, Brendan Hoffman, our President, and Mike Stornett, our Senior Vice President and Chief Financial Officer. Earlier this morning, we announced our financial results for the third quarter 2020. The release is available on many news sites and can be viewed on our corporate website at wolverineworldwide.com. If you would prefer to have a copy of the news release sent to you directly, please call Francesca Salandro at 646-677-1814. This morning's press release and comments made during today's earnings call include non-GAAP disclosures. These disclosures were reconciled in attached tables within the body of the release. During our call, we are providing non-GAAP financial results, for example, which adjust for the impacts of environmental and other related costs Net of Costs Recoveries, costs related to the COVID-19 pandemic, including severance, credit loss expenses, certain inventory reserves and other related costs, and foreign exchange rate changes. I'd also like to remind you that predictions and projections made during today's conference call regarding Wolverine World Wide and its operations are forward-looking statements under U.S. securities laws. As a result, We must caution you that, as with any prediction or projection, there are a number of factors that could cause actual results to differ materially. These important risk factors are identified in the company's SEC filings and in our press releases. With that being said, I'd like to turn the call over to Blake Krieger.

Thanks, Brett. Good morning, everyone, and thanks for joining us. I hope everyone is safe and well. Earlier this morning, we reported third quarter revenue of approximately $493 million, adjusted earnings per share of 35 cents, and operating cash flow of over $96 million, all significantly exceeding our expectations entering the quarter. The company continues to successfully execute our digital and DTC-first strategy and the game plan we put in place at the outset of the pandemic earlier this year. While the environment remains uncertain and challenging, it has enabled us to dramatically advance our global growth agenda, which is focused on, one, accelerating our digital DTC offense by engaging consumers with pinnacle brand experiences, product newness, and compelling storytelling. Two, driving innovation in all aspects of our business model, especially our product creation engines. And three, Accelerating growth in global markets by enhancing the positioning of our brands to capitalize on current trends and product categories consumers are craving. Upfront, I'd like to recognize our dedicated global team. Thanks to them, we now enter the next phase of the pandemic from a position of strength, with deep financial resources and the operational ability to service our consumers and retail customers. Over the last eight months, The team is operated to improve liquidity, control discretionary spend, manage inventories, and generate substantial cash flow, all with an overriding focus on protecting our employees and customers. I am truly grateful for their efforts. For several years, we have been investing to strengthen our digital and DTC capabilities, and this has allowed us to accelerate and optimize the global online channel. These investments dovetail perfectly with the once-in-a-generation change in consumer behavior that we are witnessing. Our owned e-commerce business nearly doubled in Q2 and continued its robust growth in Q3, up over 56%. In addition, the online channel of our customers has now also become our largest U.S. wholesale channel. Together, our owned e-commerce business and the online business of our wholesale partners accounted for over 40% of our revenue in the U.S. during the quarter. We expect our global online business will be the largest source of growth in 2021. From a brand perspective, we have become increasingly optimistic about the momentum in our brand portfolio as this unusual year has unfolded. Our brands are well positioned in high demand categories and Distribution Channels. And forward demand signals are healthy, both at wholesale and in our direct-to-consumer business. We have doubled down on new product and innovation during the pandemic, and we're seeing consumers respond favorably to newness and our fresh product offerings. As a company, we are clear on our strategic investment priorities to fuel future growth. Our strong brands sit at the center of the most relevant product categories trending with today's consumers, active in athletics, including running, outdoor, at home, and work and work lifestyle. Saucony continues to sprint ahead, driving strong growth in Q3. This momentum is fueled by Saucony's original fashion product, as well as its award-winning product innovation in the running category. and many more. We also have several work brands that are trending, including Wolverine, which remains the number one work brand in the U.S. market. To briefly discuss I'd like to introduce Brendan Hoffman, our new president. Brendan brings a strong consumer focus and a wealth of experience in merchandising, digital marketing, and e-commerce, having served as the CEO on the retail, e-commerce, and brand side. His background and experience will help us accelerate our transition to a DTC-first and digital organization.