The Michaels Companies, Inc. (NASDAQ:MIK) Q3 2017 Earnings Conference Call - Final Transcript
Nov 30, 2017 • 09:00 am ET
Good morning. My name is Rachel, and I will be your conference operator for today. At this time, we'd like to welcome everyone to The Michaels Companies Third Quarter Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded. Thank you.
And now I'd like to turn the call over to your host, Kiley Rawlins, VP of IR and Communications. Ms. Rawlins, you may begin the conference.
Thank you, Rachel. Good morning, everyone, and thank you for joining us today. Earlier this morning, we released our third quarter financial results. A copy of the press release is available in the IR section of our website at www.michaels.com.
(Forward-Looking Cautionary Statements)
In today's earnings release, we have presented non-GAAP financial measures such as adjusted operating income, adjusted net income and adjusted diluted earnings per share. Adjusted operating income, adjusted net income and adjusted diluted earnings per share for comparable period in 2016 have been presented to reflect our view of ongoing operations by adjusting for last year's non-recurring, inventory-related purchase accounting adjustments and non-recurring integration costs and benefits associated with the February 2016 acquisition of Lamrite West as well as losses on early extinguishment of debt and refinancing costs, less related tax adjustments. A reconciliation of these measures to the corresponding GAAP measures can be found in today's earnings release.
Our call today will begin with highlights from Chuck Rubin, Chairman and CEO; and then Denise Paulonis, our CFO, will review our financial results and outlook in more detail. Following our prepared remarks, we will open the call for questions. As a remainder we'd appreciate it if participants could limit themselfs to one question and one follow-up.
I'll now turn the call over to Chuck. Chuck?
Thank you, Kiley. Good morning, everyone, and happy holidays. This morning, I'll review some highlights of our Q3 performance and then give an update on our plans for the fourth quarter.
Starting with the third quarter, this morning, we reported sales and operating income that were within our guidance for the quarter when we adjust for the disruptions from Hurricanes Harvey and Irma, and diluted earnings per share that was slightly above our initial guidance. We estimate the hurricanes negatively impact net sales by about $10 million and diluted EPS by about $0.01.
For the quarter, comparable store sales increased 1% or 0.5% on a constant currency basis, inclusive of sales lost due to the hurricanes. We estimate the hurricanes impacted more than 100 stores and resulted in more than 400 lost store days, impacting overall comps in the quarter by an estimated 80 basis points. Excluding the estimated impact of the hurricanes, comparable store sales increased 1.8% or 1.3% on a constant currency basis.
In addition to the impact on sales, Hurricane Irma also caused disruption in our Jacksonville, Florida distribution center, both in receiving shipments into the facility as well as in shipping inventory out to stores. Our teams reacted quickly and worked hard to get back on track. Thankfully, our team