Business Context and Reporting Period
This Form 8-K, filed on February 14, 2019, by The Estée Lauder Companies Inc., serves as a correction to a previous filing dated February 5, 2019. The document addresses the Company's financial results for the fiscal quarter ended December 31, 2018, and specifically corrects the full-year fiscal 2019 guidance for reported diluted net earnings per share.
Key Financial Metrics and Guidance
The filing provides updated full-year fiscal 2019 forecasts (year ending June 30, 2019) on a reported basis:
- Net Sales Growth: 5% - 6% (Reported); 8% - 9% (Constant Currency).
- Diluted EPS Growth: 52% - 56% (Reported); 59% - 63% (Constant Currency).
- Reported Diluted EPS: Corrected range of $4.47 - $4.59 (previously stated as $4.55 - $4.67).
- Non-GAAP Diluted EPS: $4.92 - $5.00 (unchanged).
- Constant Currency Diluted EPS: $5.15 - $5.23.
The filing does not provide specific values for total revenue, profit, cash flow, margins, debt, or liquidity for the current period, as it focuses solely on the correction of the earnings per share guidance.
Material Changes and Corrections
The primary material change is the downward revision of the reported diluted EPS guidance by $0.08 per share. This adjustment reflects:
- Impacts of goodwill and other intangible asset impairments.
- Changes in contingent consideration.
- Finalization of provisional charges related to the U.S. Tax Cuts and Jobs Act (TCJA), totaling $0.07 and $0.01 respectively, which occurred in the first half of the fiscal year.
The non-GAAP diluted net earnings per share range remains unchanged at $4.92 - $5.00.
Management Commentary and Unusual Items
Management clarified that the correction is necessary to accurately reflect the impact of specific charges and tax finalizations. The reconciliation between GAAP and non-GAAP metrics highlights the following adjustments included in the forecast:
- Restructuring and other charges: $0.33 - $0.37 per share.
- Intangible Asset Impairments/Contingent Consideration: $0.07 per share.
- TCJA Impacts: $0.01 per share.
- Impact of ASC 606 adoption: $0.01 per share.
- Foreign currency impact on EPS: $0.22 per share.
Investor Verification Checklist
- Verify the corrected reported diluted EPS range of $4.47 - $4.59 against the previously issued $4.55 - $4.67 range.
- Confirm the specific components of the $0.08 downward adjustment, particularly the finalization of TCJA charges.
- Review the unchanged Non-GAAP EPS guidance of $4.92 - $5.00 to understand the magnitude of non-recurring charges.
- Assess the impact of foreign currency fluctuations, which represent a $0.22 per share headwind to reported earnings.
- Check subsequent filings for actual Q3 and full-year results to compare against the 5%-6% net sales growth forecast.