Wolverine World Wide Inc (WWW) Q3 2021 Earnings Call Transcript

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Wolverine World Wide Inc (WWW 3.91%)
Q3 2021 Earnings Call
Nov 10, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to the Wolverine World Wide, Inc.'s Third Quarter Fiscal 2021 Results Call. [Operator Instructions]

I would now like to turn the conference over to Alex Wiseman, Vice President. Please go ahead.

Alex Wiseman -- Vice President of Finance-eCommerce

Good morning, and welcome to our third quarter 2021 conference call. On the call today are Blake Krueger, our Chairman and Chief Executive Officer; Brendan Hoffman, our President; and Mike Stornant, our Senior Vice President and Chief Financial Officer.

Earlier this morning, we announced our financial results for the third quarter 2021. The press 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 release sent to you directly, please call Allison Malkin at 203-682-8225.

This morning's press release and comments made during today's earnings call include non-GAAP disclosures, which adjust, for example, for the impacts of environmental and other related costs, net of cost recoveries, costs related to the COVID-19 pandemic, including airfreight costs, severance expenses and other related costs and foreign exchange rate changes. References to underlying performance reflect the exclusion of the recently acquired Sweaty Betty brand. These disclosures were reconciled in attached tables within the body of the release.

I'd also like to remind you that statements describing the company's expectations, plans, predictions and projections such as those regarding the company's outlook for fiscal year 2021 and 2022, growth opportunities and trends expected to affect the company's future performance made during today's conference call are forward-looking statements under U.S. securities laws. As a result, we must caution you that there are a number of factors that could cause actual results to differ materially from those described in the forward-looking statements. These important risk factors are identified in the company's SEC filings and in our press releases.

With that being said, I'd now like to turn the call over to Blake Krueger.

Blake W. Krueger -- Chairman & Chief Executive Officer

Thanks, Alex. Good morning, everyone, and thanks for joining us. I hope everyone on the call is safe and well.

Consumer demand for our market-leading brands and product offerings continues to surge and exceeded our expectations in Q3. Our strategic focus on a deeper connection with consumers, digital and DTC capabilities and product and design innovation is paying dividends. While the supply chain challenges that have been well documented across many industries has limited our ability to fully service this growing demand in the short-term, I have never been so enthusiastic about our future and our outlook for 2022.

Earlier today, we reported over 29% revenue growth versus 2020 and 11% over 2019. Third quarter revenue was approximately $637 million. Earnings leverage driven by gross margin increases was very good. We estimate that factory closures and logistics delays impacted Q3 by at least $60 million. The Wolverine Michigan Group's revenue was up 13% year-over-year and the Wolverine Boston Group's revenue was up over 33%. Both groups delivered growth over 2019. Adjusted earnings per share for the company were $0.62 in line with our expectation despite the shortfall in revenue driven by macro supply chain issues. We believe the company is well positioned to deliver accelerated future growth with a number of fundamental elements supporting our enthusiasm.

Our brand portfolio strategy and international distribution base continue to reduce risk and provide a meaningful strategic benefit in the current environment as the company is not dependent on any single product category, geographic region, consumer group or distribution channel. While consumer lifestyle choices have increased demand for performance product, the underlying trends in this category are long-term in nature and are expected to persist. Consumers are increasingly focused on health and wellness with running, hiking the outdoors and exercise in general, serving as the primary activation to this mindset.

Participation in running in the U.S. has increased every year over the last five years. And a significant majority of new runners today they plan to continue running in the future. Participation in all outdoor activities, including hiking, walking and boating has also increased with over 20 million new hikers in the U.S. alone since 2015. This past spring and summer, National Park shattered attendance records and new boat purchases and water activities in general reached a 13-year high. Consumers' renewed affinity for the outdoors is expected to continue into the future, especially as consumers begin to travel again.

The work category has also showed strong growth supported by healthy macro industry conditions and work wear fashion tailwinds. Warehousing jobs have more than doubled since 2005 and construction companies are expected to hire hundreds of thousands of additional workers over the coming months. Looking ahead, the passage of a major infrastructure plan in the U.S. will further boost momentum in this category.

Across all brands and product categories, we have placed our consumers at the heart of our global strategy, and that has changed how we bring product to market and operate the business. This strategic focus led to our recent acquisition of Sweaty Betty, a trend right women's active wear brand that adds a very meaningful DTC business to our portfolio with over 80% of revenue generated through DTC channels. Including Sweaty Betty, DTC e-commerce revenue more than doubled in Q3 relative to 2019 and our DTC stores are up over 35% versus that year.

Our owned online business and the online business of our wholesale customers now account for over 30% of global revenue. Together with the DTC businesses operated by our distributor partners around the world, nearly 40% of our global revenue and a larger percentage of our payers is now generated through consumer direct channel, enabling enhanced brand shopping experiences, a wealth of consumer insights and data and a more efficient business model.

We continue to capitalize on the fundamental consumer trends that are playing out in the market. In addition to our strong DTC business, these trends are reflected by continued strength in retail sell-through and a historically high order backlog that now extends into Q3 of 2022. We remain bullish on our outlook in light of these trends and the composition of our brand portfolio, which over indexes in trending performance and lifestyle categories. We expect strong long-term consumer demand, especially for Saucony, Merrell, Sweaty Betty, our work brands and Sperry, which will launch a line of products in the active sport category next spring.

For our call today, Brendan Hoffman will provide some additional insight on key brand performance during the quarter. Mike Stornant will review our Q3 financial performance and updated outlook in more detail. And I'll conclude with some final remarks.

With this, I'll now hand it over to Brendan. Brendan?

Brendan L. Hoffman -- President

Thanks, Blake. In the third quarter, we acquired sweaty Betty, a powerhouse brand that operates in the global addressable active wear market of over $200 billion. The brand delivers on our key strategic priorities by delivering a powerful line of industry-leading products, expanding our direct-to-consumer presence and growing our business internationally. We plan to leverage these strengths by deploying Sweaty Betty's best practices and apparel expertise across our portfolio. The business grew over 50% in the third quarter, ahead of our expectations. Less than three months after welcoming Sweaty Betty to the Wolverine family, we are even more excited about the growth potential, product collaborations and operational synergies in front of us.

Saucony delivered a very strong performance in Q3 with more than 40% growth over 2020 and 60% versus 2019 despite some supply chain challenges. saucony.com was up more than 50% and nearly tripled 2019. The brand has seen global success with all regions contributing significant growth. Outside of the U.S. market, technical running and lifestyle performance in Europe was especially strong, up 30% versus 2020. Our Saucony Originals lifestyle business continues to perform well, especially internationally.

Our performance in Europe continues to accelerate, while the Asia Pacific region is a big opportunity for us moving forward with the brand delivering over 60% growth in Q3. Saucony stores and the online business are performing well in China as the brand's joint venture there continues to gain momentum. Saucony continues to deliver a consistent flow of powerhouse performance product and trend-right lifestyle product. This has translated to consistent robust growth for the brand over the last several quarters, and we expect this to continue into 2022.

The road running category leads the way, including the recent launches of the new Ride 14, the brand's biggest franchise shoe and Triumph 19. The innovative Endorphin collection continues to generate heat in the marketplace and delivered substantial revenue for the brand, thanks to recent franchise updates, including the Pro 2, Speed 2 and Shift 2. Saucony's trail running business also grew by more than 40% in the quarter.

Let me shift to Merrell. The brand continues to experience record demand and great momentum in all global channels. During Q3, Merrell was impacted by factory closures in Vietnam, which resulted in missed revenue opportunities of at least $25 million. Despite these challenges, Merrell still delivered mid-single-digit growth in the quarter versus 2020. Merrell's DTC business grew mid-single-digits in the quarter with merrell.com building on its nearly doubling of the business last year.

Merrell stores also continued to outperform our expectations, a promising indicator of the strength of the brand and the consumers return to shopping in stores. Merrell holds the number one U.S. market share position in the hike category and is the category leader in many key markets across the globe. While Merrell continues to successfully optimize its well established and market-leading core product franchises, fresh innovative product offerings are driving brand's heat and new consumer interest.

The Moab Speed and Moab Flight collections are energizing the performance category. These styles represent the brand vision for fast, lightweight footwear for the trail and light hiking and also build on the heritage and success of the world's number one hiker, The Moab. This momentum is further fueled by the uptick in organic media placements that bridge both performance and lifestyle. For example, Annie Leibovitz used the Moab Speed in the September issue of Vogue for a major photo shoot and style with the Louis Vuitton jacket and skirt. Additionally, Merrell was featured on The Today Show during Q3, showcasing the Moab Speed, which aligns well to the brand's Step Further campaign, encouraging increased commitment to the outdoors. Both collections have exceeded our expectations, and we are excited about the potential for new performance collections in 2022.

Merrell's Lifestyle business performed better than the brand's overall growth in Q3. We are seeing positive results from our strategic focus on further elevating Merrell as a lifestyle brand. Recent brand health research indicates that consumers are incorporating Merrell into their own identity at an increasingly higher degree. These trends are manifesting in the strong performance we are seeing in lifestyle product, including the Hydro Moc and the newly launched Cloud all-day casual sneaker collection made with eco-friendly materials.

As we mentioned on our Q2 call, Merrell introduced its 1TRL capsule collection on merrell.com, which focuses on younger, fashion-forward consumers demanding authentic outdoor influenced style. Looking ahead, Merrell possesses a substantial growth opportunity globally, particularly in EMEA, which has seen increasing momentum for several quarters, and in Asia Pacific where the China JV is just beginning to gain momentum. Outdoor and performance trends are strong around the world, and Merrell is capitalizing on its heritage and brand positioning.

In Q3, our work business accounted for nearly 20% of total revenue and the category continued to deliver strong growth with Wolverine, the leader in the U.S. work boot category, up over 16%, Cat Footwear, up nearly 40% and with strong contributions from our smaller brands. As Blake indicated, we expect continued strong growth in the work category as we pivot toward 2022. Based on the performance of Merrell, Saucony, Sweaty Betty, Wolverine and our other work brands, our performance business developed growth of nearly 30% over 2019 during the third quarter.

The Sperry brand continued its steady recovery in Q3 with over 40% growth. The brand's DTC business was up 25% driven by ongoing e-commerce growth and very good Sperry stores performance. All product categories delivered strong double-digit increases in the quarter. The overall boat market showed strong growth, particularly in men's, and Sperry gained significant market share growth in this key category. From a fashion standpoint, there are clear indications that we are at the forefront of a boat shoe trend with very encouraging demand from key retailers for the first half of 2022. I hope you all saw 007 James Bond wearing a pair of our iconic boat shoes in No Time To Die.

In the coming months, Sperry plans to build on the energy created by recent collaborations with Rowing Blazers and Netflix Outer Banks and product capsules with John Legend and Rebecca Minkoff. The brand is also well positioned for the current seasonal women's boot business with strong demand and healthy inventory levels. Sperry will also leverage the easy on-off trend during Q4 with the new Moc Sider and the Cozy Float collections. In Spring '22, the brand will launch its new Sperry Sport collection through a path into macro consumer trends with more trend-right performance-based product for the water.

Looking forward, our product lines are robust across the brand portfolio and order demand continues to strengthen. We have been flexible and responded quickly to navigate the ongoing macro supply chain challenges to service the increased demand we are seeing in nearly every brand. We believe strong product coupled with more precise merchandising and consumer focus as well as healthier inventory positions will drive growth over the next year.

Our DTC channels remain a top priority and a source of opportunity for the business. We have pivoted to a more dynamic e-commerce operating model to enable faster implementation of technical enhancements and new commercial capabilities, which will also help us extend improved online functionality to our global online wholesale customers. In addition to our global DTC e-commerce business, we are seeing meaningful wholesale growth with our online retail customers.

As global economies have reopened, we have seen consumers shift a portion of their spending back to brick and mortar stores. About 50% of our footwear is now sold online in the important U.S. market. This bodes well for the current brand operating model that we are executing, including a more continuous product flow and best-in-class digital marketing content to benefit all channels. We continue to look closely at our store fleet and suspect there may be favorable and profitable opportunities for us to explore as we expand our footprint in key markets starting in 2022.

I'm now going to hand it off to Mike to review the third quarter financial results and our increased 2021 outlook in more detail. Mike?

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

Thanks, Brandon. Let me start by reviewing the company's strong third quarter financial performance, and then I'll cover our revised outlook for 2021.

Third quarter revenue of approximately $637 million represents growth of over 29% compared to the prior year and includes $39 million from the recently acquired Sweaty Betty business. On a pro forma basis, Sweaty Betty grew over 50% versus 2020. Based on increased consumer demand experienced across the portfolio during the quarter, the company was on track to deliver just under $700 million in third quarter revenue. But as Blake mentioned, the unprecedented factory closures and other well documented supply chain disruption impeded our ability to service this strong demand. Despite these headwinds, Saucony and Sperry each delivered over 40% growth. Merrell was impacted most heavily by the factory closures in Southern Vietnam, yet still delivered mid-single-digit growth. Our work business also continued to drive meaningful growth at over 20%.

Adjusted gross margin improved 330 basis points versus the prior year to 44.6% due to the higher average selling prices, favorable product mix and the addition of Sweaty Betty for nearly two months of the quarter. Merrell, Saucony and Sperry all well exceeded gross margin expectations in the quarter, a testament to their strong position in the marketplace and robust pipeline of relevant trend-right product. Sweaty Betty's premium positioning, distinctive product offering and strong consumer trends are yielding robust gross margins which are accretive to our underlying business in Q3.

Total air freight costs were approximately $10 million in the quarter, of which $7 million was excluded from our adjusted results. Including the full air freight impact, our adjusted gross margin would have been 43.5% still 220 basis points higher than last year. We continue to use air freight where appropriate to mitigate exceptional supply chain delays caused specifically by COVID.

Adjusted selling, general and administrative expenses of approximately $208 million were $56 million more than last year, primarily due to increased revenue, the addition of Sweaty Betty and increased marketing investments. Adjusted operating margin was 12% for Q3, an improvement of 140 basis points over last year and ahead of our expectations. This very strong leverage on the company's revenue growth resulted from gross margin expansion and a balanced operating expense management.

Adjusted diluted earnings per share were $0.62 compared to $0.35 in the prior year, growth of 77% or 3.5 times our revenue growth in the quarter. Reported diluted earnings per share were breakeven and include a number of non-recurring or exceptional items comprised of approximately $34 million of cost related to bond retirements executed in the quarter to significantly improve the company's capital structure and future liquidity, including future savings of nearly $10 million in annual interest expense. Approximately $10 million of cost directly related to the acquisition of Sweaty Betty. Approximately $17 million of costs related to our legacy environmental matters. Including ongoing defense costs and an estimate of potential future settlement costs for a portion of the outstanding litigation. And finally, approximately $7 million of air freight considered to be well above normalized levels based on historical experience.

During the quarter, the company and 3M entered into a non-binding term sheet outlining proposed settlement terms on certain individual lawsuits filed against the company related to our legacy environmental issue. While the proposed settlement remains subject to finalizing terms and contingencies that allow any of the parties to opt out of the proposed settlement, we believe this is another important step toward potential resolution of these matters.

Let me now shift to the balance sheet. Total inventory grew approximately 26% versus 2020, including 16 percentage points of growth from Sweaty Betty. Underlying inventory was up approximately 10% compared to last year and still down compared to 2019. Our inventory position has improved over the last two quarters, especially for Saucony, Sperry and our work brands, but is still not in line with the higher demand. Merrell continues to manage through the recovery from closed Vietnam factories which has put more pressure on inventory levels. Based on current visibility, inventory levels will continue to improve as we benefit from supply chain diversification, the addition of several new factories and incremental capacity for 2022, higher production orders placed in mid-2021 and other actions we have taken to counterbalance macro supply chain headwinds.

Since August 1, we acquired Sweaty Betty for approximately $410 million. The purchase was financed through a combination of existing cash and borrowing under the company's revolver. We also executed some important refinancing activities to support future growth and optimize our capital structure, most notably, a bond refinancing and a new credit facility that gives us added liquidity and flexibility to invest in growth. As a result of these recent actions, we've added a powerhouse growth brand to the portfolio and our balance sheet remains extremely healthy with total liquidity of approximately $800 million.

I will now provide an update on our outlook for the rest of 2021. First let me focus on the strength of demand signals across the portfolio that support a very optimistic outlook for growth over the next several quarters. Our order book remains at historically high levels and provides very clear demand visibility for our global wholesale and distributor businesses well into 2022. Retail sell through continues to be very strong. Despite shipment delays and supply chain disruption, our order cancellations have been limited as retailers remain committed to our industry-leading brands and product offerings.

The positive momentum of our performance and work footwear brands continues, and now Sperry is beginning to show signs of a healthy recovery. Sweaty Betty is now the fourth largest brand in our portfolio and is driving outpaced growth. Trends in our DTC business remains strong with year-to-date underlying e-commerce revenue up nearly double 2019 and year-to-date underlying store revenue up mid-teens.

Finally, demand in our APAC and Latin America regions is recovering nicely as we transition to spring 2022, and we see near-term strength across many international markets. All of these indicators give us great confidence for the future. The strength of new product offerings and improved go to market tactics across the portfolio will allow us to continue to fuel growth despite the macro supply chain headwinds that we believe will persist well into 2022.

In the short-term, the impact of factory closures and a volatile logistics environment is having an unplanned negative impact on revenue for the last four months of 2021. As a result, we are adjusting our fiscal 2021 outlook. We now expect fiscal 2021 revenue of approximately $2.4 billion, growth of nearly 35% compared to the prior year and approximately 28% growth on an underlying basis. Despite the shorter term supply chain impact, we still expect to deliver up to 25% growth in the fourth quarter.

We expect strong gross margin performance to continue in Q4, thanks to low levels of excess inventory, lower promotional activity in the market and continued expansion of our D2C businesses. There will be ongoing cost pressure related to higher freight and logistics costs throughout the fourth quarter, and we will continue to invest behind our future growth opportunities, including brand enhancing marketing and key talent. We now expect full year adjusted diluted earnings per share in the range of $2.05 to $2.10 and Q4 adjusted diluted earnings per share of $0.38 to $0.43, representing 100% growth over 2020 at the high end of that range. Full year reported diluted earnings per share are now expected in the range of $1.16 to $1.21.

We have good line of sight to the start of 2022 and have great enthusiasm for continued brand momentum as we pivot into the New Year. While certain known supply chain headwinds will continue to be in play, we still expect to deliver mid-teens underlying growth and mid-20s overall growth in the first quarter of 2022. Our confidence in delivering double-digit underlying growth next year remains very high, and we believe Sweaty Betty adds significantly to the growth profile of the company.

With that, I will hand it back over to Blake for some closing remarks. Blake?

Blake W. Krueger -- Chairman & Chief Executive Officer

Thanks, Mike. Our healthy growth and strong financial performance in Q3 are a testament to the company's strategic focus and accelerated brand investments. Over the last several years, we've consistently invested behind digital and DTC capabilities, technology, talent and the e-commerce as well as product innovation and design. In Q3, we made an important acquisition of Sweaty Betty, which will be an important catalyst for growth across our performance brands.

Our product pipeline is robust, consumer demand is surging and brand heat and ongoing trends favor our brand. We are confident as we plan for double-digit growth in 2022. The advantageous position we find ourselves in today is a credit to our team's expertise and relentless work, especially over the last couple of years. Global marketplace continues to be dynamic and fast changing and our people and company are excelling in this environment. I'd like to close by thanking our team members around the world for their tremendous efforts in making this a pivotal year for the company.

With that, I'll now turn the call back over to the operator. Operator?

Questions and Answers:

Operator

[Operator Instructions] First question is from Erinn Murphy with Piper Sandler. Please go ahead.

Erinn E. Murphy -- Piper Sandler Companies -- Analyst

Great. Thank you. Good morning. I have a couple of questions. I wanted to start first with the order book for 2022. It sounds like you have good visibility through the third quarter now of next year, could you talk a little bit more about that? And then with the facilities in Vietnam now ramping up after kind of a long period of downtime, is that impacting your ability to produce spring 2022?

Blake W. Krueger -- Chairman & Chief Executive Officer

Yeah. I'll take the first question with respect to the order book. Our order book really has been very strong for a year now, and most recently over the last couple of months, it's been accelerating. We have good visibility across the brand portfolio. The increases frankly are at historically high numbers that I've never seen in my career, all of which is very helpful as we try to mitigate some of the supply chain headwinds we're all facing. So the order book is building. Certainly, Q1, Q2, well in. We're still getting some more orders in Q3, and we'll be getting some Q4 future orders in the near future.

With respect to Vietnam, a number of the factories in the South were closed over the last two and a half, three months. Their reopening, reopening is probably going to be a bit of a ramp up here as we look ahead. I would say on supply chain, in general, we've been very proactive for a year. We've been focused on additional capacity, cost, taking cost out of the supply chain, but also speed. So we're going to continue -- the macro supply chain issues are going to continue to impact us and the whole industry and many industries well into 2022.

We feel very good about what we can control and the proactive actions we've taken. Certainly, in the short-term and mid-term we've added substantial new capacity with our existing factory base and sister factories as well as a couple of dozen of new factories have been added to our mix. Supply chain is going to continue to be a bit of a slow poke here compared to historical timelines. But again in that regard, we've taken a number of actions; air freight, the use of fast boats, shipping directly bypassing the distribution centers. So we feel very good about where we stand today and the actions we've taken to control what we can control.

Erinn E. Murphy -- Piper Sandler Companies -- Analyst

Great. Thank you. I just had a follow-up for Mike, if possible. On the third quarter gross margin, you talked about it being better if you excluded the air freight. But I guess, even if I do that and then back out the benefit that Sweaty Betty had, the $39 million to sales and $26 million to gross profit, gross margins would have been in the mid-30% range, like 35%, 36% versus last year. So I'm just trying to understand a little bit more about what is going on under the hood with the gross margin? Is that input cost? Is it something else that we're not thinking -- that I'm not thinking through? Thanks so much.

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

Yeah, sure. I think the Sweaty Betty benefit in the quarter was about 140 basis points on margin, just the mix benefit there because of their strength in D2C, Erinn. So I think even after that, we still are above last year's gross margin performance. So overall, our ability to kind of maintain a healthy gross margin going on the wholesale side has been very good, very strong, obviously scarce inventory helps in that regard, our e-commerce and store performance overall. The gross margins have held up to our expectations very well. We are not over promotional right now in the marketplace. As a result, we're getting good flow through.

And then on the input cost side, we've been able to manage that really well as it relates to product costs, etc. So I think overall, the health of the gross margin line is quite strong. We're certainly getting the benefit of the mix as we grow our D2C business and add Sweaty Betty into that overall. But I still see a continuing expansion in gross margin as we move forward as that mix continues to get richer.

Erinn E. Murphy -- Piper Sandler Companies -- Analyst

Thank you, all.

Operator

[Operator Instructions] The next question is from Jim Duffy with Stifel. Please go ahead.

Jim Duffy -- Stifel Nicolaus -- Analyst

Thanks. Good morning. I hope you guys are all doing well?

Blake W. Krueger -- Chairman & Chief Executive Officer

Good morning.

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

Thank you.

Jim Duffy -- Stifel Nicolaus -- Analyst

Can I ask you to speak more about the supply chain mechanics and how they play forward from here into 2022? Can you give more detail on brand-specific impacts? I know you flagged Merrell, are there other brands that are impacted? I'm curious how that impacts your international distributor business? And then looking out to 2022, is it going to impact revenue timing between Q1 and Q2? If you could help us think through that some more that would be great? Thank you.

Blake W. Krueger -- Chairman & Chief Executive Officer

Yeah. I would say, obviously, for the factory closures that happened in Southern Vietnam, of all of our brands, Merrell was the most impacted. There will be such still some continuing impact on Merrell's growth. They have an extremely strong order book obviously into Q1 and maybe potentially Q2 of next year. We have several other brands that had some capacity there, not to the extent of Merrell, Saucony would be one of those brands, but Saucony was also able to increase their inventory levels going into some of the most severe Vietnam shut down. So obviously, we haven't provided complete guidance for next year, but despite all of these supply chain headwinds, logistics headwinds, we still expect very, very strong growth in the first half of the year, mid-teens on an organic basis and probably over -- well over 20% when it comes to including Sweaty Betty.

Brendan L. Hoffman -- President

And I think just to add on to what Blake said, I think the tools we now have in our toolbox going forward, whether it be as Blake said, just shipping directly to retailers, diversifying our sourcing base are going to serve us very well as we get to the other side of this and continue to grow as a company.

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

Jim, the only other point that you asked about on the international side too, it's a good question because obviously it can impact the timing of deliveries to our distributors a little bit, that's certainly hampering us in Q4. But obviously, we have a little more flexibility there as it relates to getting goods into the market on time even if we don't hit the quarter end deadline. So some of the Merrell headwinds that Blake referred to are certainly impacting our international business, but we don't see that creating any specific risk there. It's just more of a timing shift.

Jim Duffy -- Stifel Nicolaus -- Analyst

Got it. Thanks. And then a follow-up, just wanted to talk about the order backlog a little bit. You guys are not alone in expressing strength and confidence and visibility into next year. I'm curious, how solid these orders are? Because it feels like retailers are ordering from everybody and then they will see who can deliver just given the backdrop. Can you just speak about how you feel about orders and your confidence in how solid those are and presumptions for cancellation rates so forth?

Brendan L. Hoffman -- President

I think very solid. I mean, we're talking to the retailers all the time, we'll get to see them in a few weeks at Fannie. But they're hunkering for goods and they're hunkering for the right goods. And as we've talked about, our brands are playing in the right space and also some of the competitors have made some decisions to exit some of the retailers, which has also provided shelf space for us. So I think we feel extremely confident that the orders we have will be followed through on.

Blake W. Krueger -- Chairman & Chief Executive Officer

I would say, Jim, so far this year, we've seen very minimal order cancellations. So that certainly gives us some additional confidence.

Jim Duffy -- Stifel Nicolaus -- Analyst

Okay. Thank you, guys.

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

Thanks, Jim.

Operator

The next question comes from Jay Sole with UBS. Please go ahead.

Jay Sole -- UBS -- Analyst

Great. Thank you so much. Maybe Mike, I just want to ask you about the air freight. I think at this year and for the year to date it's like $22 million in sort of unusual air freight expenses. As you think about next year, presumably the company won't need to use air freight the same way, but do you see other cost inflation whether it's an ocean shipping rates or container rates or whatever that would impact margins? So if we think about that $22 million, how much really goes away next year? In other words, like what's the offset from rising costs in other areas to get the product to where you need it to go?

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

Yeah. I think again as we finalize our outlook for next year, we'll have more specific insights on where we see higher input costs or higher inflationary pressure on the business. So I won't be incredibly specific about it, but I will say that we expect to continue to use air freight as a way to mitigate some of the other delays we're seeing. And we're lucky enough to have ocean contracts that take us into May of next year at very low rates relative to the spot rate market today, but we're going to plan for increases there.

The team on the sourcing side, on the global operations side of the business has done a tremendous job with our factories to manage product cost increases for next year. And so we have some visibility to that. But overall, obviously, we're expecting an already communicated price increases across our own businesses here in North America and in our European owned businesses as well. And so we would expect to manage our margin and enhance our margin outlook for next year based on the pricing powers that our brands have right now. We have we feel a very reasonable price increases that we need to pass along, but really not a lot of resistance on those.

Jay Sole -- UBS -- Analyst

Okay. Got it. Maybe if I can ask one more about Sweaty Betty. I think it was mentioned that Sweaty Betty is going to help give expertise or you're going to apply the Sweaty Betty expertise across the entire portfolio, presumably help grow the apparel business for Merrell and maybe some of the other brands. Can you just talk about how the Sweaty Betty acquisition maybe creates new opportunities to do apparel in the other brands and what kind of revenue opportunity you see there? And then just on the Sweaty Betty guidance for this year, I think it was $100 million for revenue impact to this year, has that changed at all? Just based on the commentary in the press release, I wasn't sure if it seems like it had been shifted a little bit. Thank you.

Brendan L. Hoffman -- President

Well, I'll start with the first. I mean, we are -- having spent more time now with the Sweaty Betty team, and Blake and I were offsite with them with some of our board members last week. We are even more enthusiastic about the capabilities they're going to be able to bring to us in many areas, and apparel is certainly a top priority. Julia and her team has spent time with our brands to start to think about how we can utilize their expertise, which goes across the gamut of supply chain design production to really bring product to market in Merrell and Saucony and some of our other brands in a way we haven't been able to do before. We certainly have on our website apparel and these brands, but I think they think of it in more of a collection that will enhance the footwear that obviously is our strength. So very excited about what that can be. Now it won't really come to fruition until 2023 at this point, but the planning and the work and the effort going into it has already started.

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

Yeah. On the outlook side, Jay, we're really encouraged by Sweaty Betty's performance this year. We're expecting slightly better results this year than we originally anticipated. So no declines there at all. And if anything, we expect it to be slightly better.

Jay Sole -- UBS -- Analyst

Terrific. Thank you so much.

Operator

The next question comes from Laurent Vasilescu from Exane BNP Paribas. Please go ahead.

Laurent Vasilescu -- Exane BNP Paribas -- Analyst

Good morning, and thank you very much for taking my questions. I wanted to ask about the $60 million, Mike. Is that lost revenues or is that really a shift into 1Q? I think you talked about in the prior calls, there was a $40 million shift between the first quarters, but I'd love to get some additional color on that.

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

Well, I guess, the way we really measure that, Laurent, is that we know from Vietnam in particular. Obviously, on the logistics side, it tends to be timing-related, right?. So as Blake mentioned, we haven't seen a lot of cancellations in the business and our retail customers and also our distributors around the world have been fairly patient with some of these logistics delays.

To the extent Vietnam production can be replaced, then it will be a timing issue. To the extent it can't, then maybe there is some revenue in there that we're not going to be able to kind of push forward into future quarters. But the guidance that we gave for the first quarter, which was very strong and very -- Blake just reiterated, a high level of confidence in that number, really doesn't rely any major shift of revenue coming out of Q4 into Q1.

It's based on the order book we have today, the knowledge of supply chain capabilities and timing that we see today. So again, that shift concept really is something that we're focused on. We're looking at the reality of each month's production capabilities and the demand that we're seeing month-by-month. And as a result, we're still seeing really strong growth in the first half of next year despite those issues.

Laurent Vasilescu -- Exane BNP Paribas -- Analyst

That's great to hear that for next year it's really strong double-digit not driven by any shift into 1Q. I wanted to follow-up and Vietnam. In the press release you say we're encouraged to see factories reopen, but there are some recent closures. I'd love to get some context. What are you seeing -- obviously we can see that COVID is picking back up in Vietnam, but I'd just love to hear what you're seeing, what percentage or is it in the South as well as the North? Any further color on that would be very helpful for the audience.

Blake W. Krueger -- Chairman & Chief Executive Officer

Yeah. I mean, what we're seeing right now still seems to be concentrated in the southern -- in the south and southern factories. The north, while not untouched, was -- and we've got several factories up in the north, largely got through the latest variant very well. Obviously, it's hard to predict how governments and countries are going to react to the COVID situation. We've seen a wide variety of responses.

I think there was some original fear that when the factories reopen that it was going to be very difficult to get workers back in place and ramp up. And certainly, there is going to be some ramp up challenges, but I think from our perspective right now, things are going better than anyone really anticipated with respect to getting workers back in, getting the factories back up to production levels and little bit better right now than anticipated. Right now, we're not anticipating any slide back into closures for the Southern Vietnam factories. But again, it's hard to predict, but we're not anticipating that right now.

Laurent Vasilescu -- Exane BNP Paribas -- Analyst

That's great to hear, Blake. Thank you. And then lastly, just as a follow-up. Mike, maybe you can give us some more color, if we assume on Jay's question, there is $60 million of Sweaty Betty in the fourth quarter. It looks like you're implying the underlying business to be down high-single-digits. Is that the right way to think about it? Am I doing the right math? And if that's the case, how do we think about the puts and takes across the key brands?

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

I think what we're seeing -- I guess, the math that I'm looking at here still nice double-digit -- almost double-digit growth in our underlying business in Q4. Some of our larger brands, and Blake mentioned, the impact Merrell's taking on the Vietnam closures and the ramp-up there. But fundamentally, we're still seeing great growth in Saucony, Sperry and our work brands. Sweaty Betty should be incremental to that. So about 10% growth on an underlying basis for the fourth quarter.

Laurent Vasilescu -- Exane BNP Paribas -- Analyst

Wonderful. Thank you very much, Mike, for all that color.

Operator

The next question comes from Jonathan Komp from Baird. Please go ahead.

Jonathan Komp -- Baird -- Analyst

Yeah, hi. Thank you. Can I just follow-up on the fourth quarter, I want Mike to follow-up and understand. I know for the underlying business, the last couple of years you saw a revenue hit a high point in the fourth quarter and this year you're implying sequentially lower dollars, especially when you take out Sweaty Betty. So can I just maybe understand the fourth quarter assumption a little better? And then I know previously you thought 12% operating margin was potentially achievable on a non-GAAP basis. And can you maybe just clarify the delta versus what you expect now?

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

Yeah. I think as we've been cycling through the year, Jon -- I'll take the last question first. I mean, we've been investing a lot in our brands. The potential growth that we've seen as it's kind of crystallized every quarter and accelerated now, we've invested in our brands and in our e-comm capabilities and other parts of the business. So the investment thesis stays pretty constant. And we have one quarter here in Q4 where we're taking a more meaningful hit on some of these delayed shipments.

So you're going to see a little bit of deleverage against what we've normally delevered in the first three quarters on the earning side. But I think fundamentally, it's really a slowdown for Merrell in Q4 as it relates to the supply chain. So the lower revenue flow through for sure has an impact on Q4 EPS and earnings. And then some of the incremental investments that we've made that we're going to continue to move forward with are still embedded in our Q4 outlook as well. So the business -- the mix of the business is a little bit different now with sweaty Betty included as a D2C business, right, higher gross margins, but also a higher SG&A profile for that business.

Our underlying or organic D2C business is also growing and continuing to take a bigger share of the mix. And so the P&L kind of shifts around a little bit there. But I think overall, we're continuing to feel very confident, especially with price increases that we're planning for going into next year. We remain really confident in the margin profile of the business, the operating margin delivery. And unfortunately, in Q4, we're going to have a little bit of a bumpy road. But fundamentally, with all the actions that we're taking and the outlook that we have for next year, we remain really confident, not just on the growth side of the equation, but on the leverage side as well.

Jonathan Komp -- Baird -- Analyst

Okay. So it sounds like we shouldn't be sort of permanently anchoring lower from that 12% operating margin or maybe it's a way to tell, but just wanted to clarify?

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

No, I don't think that Q4 is an indicator of that at all. I think you're right to think that next year with the growth that we've kind of foreshadowed here and the health of the business overall, we will be comfortable at that level.

Jonathan Komp -- Baird -- Analyst

Okay. And then just one broader question if I could on Saucony given the two year strength they're seeing there and just the broader early enhancements to that brand, the last couple of years. Is there any more detail you can share, sort of the size of that brand, the opportunity just how to frame up sort of the multi-year profile of the growth that you see as well as just even more details on sort of the mix and size of the brand today would be helpful?

Blake W. Krueger -- Chairman & Chief Executive Officer

Yeah. I mean, we're not sure which of our brands is going to be our first $1 billion brand, Merrell or Saucony. So it's -- for us it's obviously a good race to be involved in. Saucony has tremendous tailwinds right now. A lot of them due to the management team and their product offerings. And some of them, the result of what we've all lived through for the last 20 months. So we're very bullish on the Saucony opportunity.

Our joint venture in China is going extremely well. There is an apparel opportunity, especially with Sweaty Betty sitting there for Saucony. And you have to remember that we also have a Saucony Originals business, which is more of a lifestyle business based on current and some older styles, but done in lifestyle materials colors and uppers that is growing. It's a tremendous success in Italy, one of the world's top three fashion markets. And so there is a great opportunity for Saucony there.

So the Endorphin collection, which is now approaching two years old, is significant success for the brand. The brand continues to increase the number of participants on virtually every marathon or race that's run either in China or here in the United States. So we're very bullish on the brand today. And obviously, it's growing at a highly accelerated pace.

Jonathan Komp -- Baird -- Analyst

Is it possible just to say this year with the growth again, what size we might be tracking toward the finish the year in revenue?

Blake W. Krueger -- Chairman & Chief Executive Officer

I think Saucony -- I don't want to quote an exact number, but I mean Saucony is going to be up an extremely strong double-digits this year.

Jonathan Komp -- Baird -- Analyst

Okay, understood. Thanks again.

Blake W. Krueger -- Chairman & Chief Executive Officer

Thanks.

Operator

The next question comes from Sam Poser from William's Trading. Please go ahead.

Sam Poser -- William's Trading -- Analyst

Good morning. I have three questions, one just housekeeping. Are you guys putting out a investor presentation this morning?

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

Yes. That will go on later this afternoon, Sam.

Sam Poser -- William's Trading -- Analyst

Okay, thanks. All right. So here we go. So I want to follow-up on Laurent's question. It says -- I'm just going to read it. We are encouraged here to see factories reopened, but recent closures will impact our ability to fully service incrementally strong demand we're seeing in the fourth quarter and adjust to the outlook accordingly. The question is, are you seeing more closings now or is the closings -- the recent closings that you're speaking of, the closings that happened in the past and that the factories are now reopening?

Brendan L. Hoffman -- President

Yeah. Those closings would be the -- what happened in the past, Sam, that basically started in July -- the end of July, but continues through August and September and maybe a few into early October. Those factories are now reopened and they're ramping up.

Sam Poser -- William's Trading -- Analyst

Okay, thanks. And now regarding the air freight costs and how you report it. One, what is your air freight cost assumption in the adjusted margin and the implied adjusted margin in the fourth quarter? And then why do you continue to take this as a non-GAAP charge when you're the only company out there doing that? And if you're to take that as a non-GAAP charge, why not take the $60 million in lost revenue as revenue against the non-GAAP gross margin? I mean, it's like, it didn't come, it's all -- I understand it's there, I don't understand why you take it out of the gross margin?

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

We would expect about the same level of air freight in Q4 as we had in Q3, which is about $10 million, give or take. And so a similar approach, similar treatment. We started the year with this approach, Sam, based on the fact that we obviously didn't anticipate the severity or the length of disruption that we were seeing from these supply chain issues and felt like excluding these incremental and exceptional air freight costs would be more relevant to our historical treatment as well as what the future would look like. Obviously, things have changed and we're not going to change our treatment this year and how we handle that. But it's been well documented.

I think it's clear in terms of how we're treating it and what the impact is. And so we'll finish the year with the same treatment in Q4. And as we cycle into next year, we're in a position to price for those increases not just for air freight, but for some of the other costs that we talked about earlier. And so we'll reflect that. And we'll treat trade and other costs that are now elevated on an extended period of time as more normalized and we won't have a non-GAAP adjustment going forward.

Sam Poser -- William's Trading -- Analyst

So then we need to add back -- I mean, I assume there's going to be air freight in the first quarter just given how everything...

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

Yeah. Our guidance when we provide it -- when we provide the guidance next year, we'll reflect all of that stuff. And you will see how we've been able to manage that [Speech Overlap]

Sam Poser -- William's Trading -- Analyst

You're providing non-GAAP guidance that's going to prove to be put back in next year, I mean, especially in the first quarter because you're going to probably have an incremental air freight over the $4 million you had in Q1?

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

I think our adjusted guidance is going to be apples-to-apples and we'll have -- again, we'll have the opportunity to price in these increases that we didn't have a chance to do this year. So do you have another question?

Sam Poser -- William's Trading -- Analyst

No. Thank you very much. Good luck with the holiday season.

Operator

The next question comes from Dana Telsey from Telsey Advisory Group. Please go ahead.

Dana Telsey -- Telsey Advisory Group -- Analyst

Good morning, everyone. As we're going through this time period, we hear of price increases that companies are taking on a product. Are you taking price increases? And how does it vary by division? And then I have a follow-up on the $500 million, I believe guide earlier in the year on e-commerce. Is that still on track or how are you seeing that unfold for the year? Then just one quick follow-up after that. Thank you.

Brendan L. Hoffman -- President

Yeah. I mean, I'll start with the e-commerce. If you include Sweaty Betty, we will exceed the $500 million, but obviously, that wasn't in our initial outlook. So no, we'll fall short of that. I mean, I think it's been pretty well documented out there how the shifts back into stores. I think for us, the biggest headwind was just the inventory, just not having the quantity of inventory to hit those numbers. And of course, the way it shifted completely played havoc with the marketing calendar.

So really proud of the work the team has done. The numbers we have are still almost double what they were two years ago. So we are -- have clearly shifted to become an e-commerce DTC-focused business. We've added great talent and Matt Blonder as our Head of Digital, and he's brought in talent to support him. We've become much better at managing the funnel as we find new customers and expose them to the brands. And I think we're starting to understand what to do with the data we now collect as a DTC-focused company.

So I think there are a lot of positives that even though we'll fall short of that number most likely have set us up to for the path we want to be on in the future. I think as we look at it by brand, it is very reflective of where the inventory levels are challenged. So that further reinforces, in our minds, that it's largely an inventory-based headwind.

I think on the pricing, we -- as Mike and Blake have said, we have had visibility now for quite a few months into what the supply chain challenges we're going to be into '22 and the cost increases that are well documented across all industries and inflation. And so we were -- have been able to price accordingly for 2022, beginning in spring. We did it very strategically by brand, by style, where we think from as merchants, the product allows us to have some elasticity there.

I will tell you in going to market with our retailers, there has been zero pushback. I think there's actually enthusiasm for the opportunity to get some increased gross margin based on the retails. And of course, Dana, as you and I have talked about the reduction in promotions out there has further enhanced the gross margin profile going forward. So we feel we're in a good position there. I'll be curious to see how the competition also prices the goods. I mean, we've gotten a little bit of visibility, but we think we'll be well positioned to still provide the value that our footwear has always offered, but yet doing it with some increased strategic retail pricing.

Dana Telsey -- Telsey Advisory Group -- Analyst

Got it. And then, Brendan, you had mentioned that Sperry is going to be launching active wear next year. Tell us a little bit about the offering. If you learn anything from Sweaty Betty to inform you for Sperry or how do you see that collection?

Brendan L. Hoffman -- President

Not active wear apparel, footwear around the water. We're really excited. This is something Blake really pushed about a year ago with the new team coming in, they just jumped on it. And so we just have really authentic cool product to wear around the water, activities on the water, boating, surfing, wind surfing, that also translates into great lifestyle footwear. So really excited not only with how it looks and how it's priced, but just how quickly the team was able to accomplish this as we try to shorten our lead time. So anxious for you guys to see that if you're able to come to market later this month for the shoe show.

Dana Telsey -- Telsey Advisory Group -- Analyst

Thank you.

Operator

The next question comes from Steve Marotta from CL King & Associates. Please go ahead.

Steve Marotta -- CL King & Associates -- Analyst

Good morning, Blake, Brendan, Mike and Brett. I wanted to just ask one question. Can you draw distinctions between the ability to deliver timely domestically versus internationally? And you can, of course, exclude Vietnam in the analysis. What I'm trying to get at is, how acute -- how much more acute are port and trucking issues here domestically than they are internationally? And how do you see that working out in, say, the first half of next year? Thanks.

Blake W. Krueger -- Chairman & Chief Executive Officer

Yeah. I mean, it's a very good question. Certainly, here in the United States when you look at Long Beach and even up to Vancouver and some of the other ports, we have unusually high congestion here in the U.S. It's not just the ports, it's the rail yards. It's some shortages in trucks and more accurately in truckers, and we see that continuing throughout most of 2022 right now. We think it's going to take a little bit of time to unclog, that has been built into our forecast and the estimates that we have talked about. We're seeing less congestion in that regard internationally. And so for our international business, it's more of a pure capacity issue and a timing issue when they can get stuff. And there seems to be -- obviously, every country is different, but there seems to be less of a supply chain congestion issue in most of our key international markets.

Steve Marotta -- CL King & Associates -- Analyst

And I'm assuming that analysis is also baked into future guidance. In other words, so many of your pairs are sold internationally and the ease at which those pairs are being delivered on a comparative basis to the U.S. is also built into your forecast?

Blake W. Krueger -- Chairman & Chief Executive Officer

That's correct. I mean, obviously, we're focused on serving all of our customers, consumers and distributors as best we can in this unusual environment, but that is correct.

Steve Marotta -- CL King & Associates -- Analyst

Super helpful. Thank you.

Operator

The next question is from Susan Anderson from B. Riley. Please go ahead.

Susan Anderson -- B. Riley Securities -- Analyst

Hi, good morning. Thanks for taking my question. I wanted to ask about Asia. It sounds like China is going well for you. Maybe if you could talk about the performance there and then also throughout Asia? I think some others have mentioned that China was softening, but it doesn't sound like that's the case for you guys?

Blake W. Krueger -- Chairman & Chief Executive Officer

Yeah. I would say when we look at just Greater China, Saucony is having a lot of success there right now. We're very happy with the progress of that brand in Greater China. APAC for us is a major growth opportunity as we look forward. We've got some great businesses in many countries around Asia. But when you step back and look at our company, I would say, we're underpenetrated at the moment in APAC. And so internally here, we view it as one of our top growth opportunities really across the portfolio, but especially for Saucony, Merrell and several of our other brands.

Susan Anderson -- B. Riley Securities -- Analyst

Great. And then just wanted to follow-up on the Sperry performance. It sounds like you're confident that we're heading into a boat shoe trend. Maybe if you could talk about what you're seeing that's driving that confidence? And I'm curious, which products are selling well? Is it the duck boots or the casual sneaker or the boat shoe or is it really just kind of all of the above in that brand?

Brendan L. Hoffman -- President

Yeah. Well, I think specific to boat shoes, I mean, we're seeing it on the reports with our classic AO and the market share we're taking. We're seeing it just as you shop the market, you're seeing people merchandise them front and forward. When I was in London a few months ago, I mean, there were windows of just boat shoes for other brands. So I think it's clear there is a boat shoe trend going. And I think Sperry, we know Sperry is at the forefront of taking advantage of that. I mentioned that seeing in the James Bond movie also doesn't hurt. I think the other franchises we have, like the boots, we're in better inventory position there. And as we've seen the cold weather start to hit, we've seen a real pickup there as well.

So part of Blake and my enthusiasm on Sperry is not just that the trends are breaking our way, but the way the product has evolved, which is just coming to market now. So we have the benefit of having showcased it to our retailers in advance of the end consumer and you guys seeing it, but that's starting to come to market now. And then as I said, for those of you that are able to come to a shoe show at the end of the month, we can give you a preview of what's coming in 2022, and it's just really exciting.

Blake W. Krueger -- Chairman & Chief Executive Officer

I would say just a little more color. We're seeing a positive reaction to the new product, but very encouragingly, we're seeing a strong response to the core boat shoe product that we've carried for many years. Obviously, some new materials and colors, but strong reaction there. The boat shoe category in total grew, was a growth driver in the United States in the most recent quarter and I think Sperry took about 650 basis points of market share in Q3 in the category.

Susan Anderson -- B. Riley Securities -- Analyst

Great. That sounds really positive. Thanks so much. Good luck with holiday.

Blake W. Krueger -- Chairman & Chief Executive Officer

Thank you.

Brendan L. Hoffman -- President

Thank you.

Operator

This concludes the question and answer session. I would like to turn the conference back over to Alex Wiseman for any closing remarks.

Alex Wiseman -- Vice President of Finance-eCommerce

On behalf of Wolverine World Wide, I'd like to thank you for joining us today. As a reminder, our conference call replay is available on our website at wolverineworldwide.com. The replay will be available until December 10, 2021. Thank you, and have a good day.

Operator

[Operator Closing Remarks]

Duration: 70 minutes

Call participants:

Alex Wiseman -- Vice President of Finance-eCommerce

Blake W. Krueger -- Chairman & Chief Executive Officer

Brendan L. Hoffman -- President

Michael D. Stornant -- Senior Vice President, Chief Financial Officer, and Treasurer

Erinn E. Murphy -- Piper Sandler Companies -- Analyst

Jim Duffy -- Stifel Nicolaus -- Analyst

Jay Sole -- UBS -- Analyst

Laurent Vasilescu -- Exane BNP Paribas -- Analyst

Jonathan Komp -- Baird -- Analyst

Sam Poser -- William's Trading -- Analyst

Dana Telsey -- Telsey Advisory Group -- Analyst

Steve Marotta -- CL King & Associates -- Analyst

Susan Anderson -- B. Riley Securities -- Analyst

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