On June 27, The Timberland Company (NYSE:TBL) released first-quarter earnings for the period ended March 30.

  • Boots and kids' footwear couldn't hold their own this quarter, causing sales to fall 3.9% to $336.3 million. Fortunately, SmartWool and Timberland PRO picked up some of the slack.
  • See those big drops in margins? That's because the company's income statement deleveraged as sales declined.
  • For the second quarter, management anticipates a net loss in the range of $18 million to $20 million, excluding restructuring costs.

(Figures in millions, except per-share data.)

Income Statement Highlights

Q1 2007

Q1 2006

Change

Sales

$336.3

$349.8

(3.9%)

Net Profit

$9.3

$26.1

(64.5%)

EPS

$0.15

$0.40

(62.5%)

Diluted Shares

62.0

65.0

(4.6%)

Get back to basics with the income statement.

Margin Checkup

Q1 2007

Q1 2006

Change*

Gross Margin

48.0%

49.7%

(1.7)

Operating Margin

4.1%

11.5%

(7.4)

Net Margin

2.8%

7.5%

(4.7)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

Change

Cash + ST Invest.

$119.7

$125.3

(4.5%)

Accounts Rec.

$199.7

$192.1

4.0%

Inventory

$183.5

$174.9

4.9%

Liabilities

Q1 2007

Q1 2006

Change

Accounts Payable

$77.4

$70.0

10.6%

The balance sheet reflects the company's health.

Cash Flow Highlights

Q1 2007

Q1 2006

Change

Cash From Ops.

($56.1)

($59.7)

N/A

Capital Expenditures

$5.2

$5.5

(5.6%)

Free Cash Flow

($61.3)

($65.3)

N/A

Free cash flow is a Fool's best friend.

Related Foolishness:

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