- First Quarter Reported Revenues up
7% on Growth Across All Regions; Constant-Currency up 11%
- Reported Net Income of $147 Million
Compared to Net Loss in Prior Year; Adjusted Net Income up
81%
- Adjusted EBIT up 14% on Higher
Revenues and Margin Expansion; Constant-Currency up 21%
Levi Strauss & Co. (NYSE: LEVI) today announced
financial results for the first quarter ended February 24,
2019, and affirmed annual guidance.
"We delivered our sixth consecutive quarter of double-digit
constant-currency revenue growth," said Chip Bergh, president and
chief executive officer of Levi Strauss & Co. "Growth was
broad-based across all three regions and all channels,
demonstrating that our strategies are working and our investments
are paying off."
Highlights include:
Three Months Ended % Increase ($ millions) February
24, 2019 February 25, 2018 As Reported Net revenues $ 1,435
$ 1,344 7 % Net income (loss) attributable to Levi Strauss &
Co. $ 147 $ (19 ) * Adjusted net income $ 151 $ 83 81 % Adjusted
EBIT $ 206 $ 180 14 %
_____________
* Not meaningful
First quarter net revenues grew 7 percent on a reported basis
and 11 percent on a constant-currency basis, excluding $48 million
in unfavorable currency translation effects. Reported net revenues
related to the company's direct-to-consumer business grew 10
percent, primarily due to performance and expansion of the retail
network as well as e-commerce growth. The company had 70 more
company-operated stores at the end of the first quarter of 2019
than it did a year prior. Reported net revenues related to the
company's wholesale business grew 5 percent, reflecting growth in
all regions.
First quarter net income attributable to Levi Strauss & Co.
increased $166 million, primarily due to charges in the prior year
from the transitional impact of the 2017 Tax Cuts and Jobs Act of
$99 million for the remeasurement of deferred tax assets and
liabilities and $37 million on undistributed foreign earnings.
First quarter adjusted net income grew 81 percent, primarily due
to a $37 million transition charge in the prior year on
undistributed foreign earnings, as well as $26 million higher
Adjusted EBIT in the current year. First quarter Adjusted EBIT grew
14 percent inclusive of unfavorable currency translation effects
and 21 percent on a constant-currency basis, primarily due to a
combination of the higher net revenues and leverage on Selling,
general and administrative (SG&A) costs. Additional information
regarding adjusted net income and Adjusted EBIT, non-GAAP financial
measures, is provided at the end of this press release.
First Quarter 2019 Highlights
- On a reported basis, gross margin for
the first quarter was 54.6 percent of net revenues compared with
54.9 percent in the same quarter of fiscal 2018, primarily due to
90 basis-points of unfavorable transactional currency impact, which
was partially offset by the margin benefit from growth in the
company's global direct-to-consumer channel.
- SG&A expenses for the first quarter
were $582 million compared with $563 million in the same quarter of
fiscal 2018 primarily reflecting the growth and expansion of the
company's direct-to-consumer business, partially offset by the
favorable impact of currency. SG&A expenses as a percent of net
revenues declined 130 basis-points compared to the same quarter of
fiscal 2018, as leverage on base costs and lower advertising due to
the timing of the company's advertising campaigns were only
partially offset by the higher direct-to-consumer-related
costs.
- Operating income for the first quarter
of $201 million was up 15 percent compared to the same quarter of
fiscal 2018 reflecting higher revenues and a 100 basis-point
increase in operating margin.
- Diluted earnings per common share
attributable to common stockholders for the first quarter of 2019
was 37 cents, as compared with a five-cent loss per common share
for the same quarter of fiscal 2018. The loss in 2018 was due to
the charges from the transitional impact of the 2017 Tax Cuts and
Jobs Act.
Regional Overview
Reported regional net revenues and operating income for the
quarter are set forth in the table below:
Net Revenues Operating Income * Three Months Ended
% Increase Three Months Ended % Increase ($ millions)
February 24,2019
February 25,2018
February 24,2019
February 25,2018
Americas $ 717 $ 657
9
%
$ 124 $ 111 11 % Europe $ 465 $ 453 3 % $
122
$ 115 6 % Asia $ 253 $ 234 8 % $ 43 $ 41 6 %
* Note: Regional operating income is equal
to regional Adjusted EBIT.
- In the Americas, net revenues grew 9
percent on a reported basis and 10 percent on a constant-currency
basis, reflecting higher revenues across both wholesale and
direct-to-consumer channels across the region. Operating income for
the region grew 11 percent on a reported basis and 12 percent on a
constant-currency basis on the higher net revenues and lower
advertising costs, which were partially offset by higher
direct-to-consumer costs and increased distribution costs to
support higher volume.
- In Europe, net revenues grew 3 percent
on a reported basis and 10 percent on a constant-currency basis,
reflecting continued broad-based growth across direct-to-consumer
and wholesale channels. The region's operating income grew 6
percent on a reported basis and 13 percent on a constant-currency
basis reflecting the net revenues growth and a higher gross margin
from a shift towards the direct-to-consumer channel, partially
offset by higher direct-to-consumer and distribution costs.
- In Asia, net revenues grew 8 percent on
a reported basis and 14 percent on a constant-currency basis,
reflecting strong performance across traditional wholesale,
franchisee and direct-to-consumer channels. Revenue growth was
broad-based across the region's markets, including China. The
region's operating income grew 6 percent on a reported basis and 13
percent on a constant-currency basis, reflecting higher revenues
partially offset by a decline in gross margin driven by product
cost investment.
Cash Flow and Balance Sheet
At February 24, 2019, cash and cash equivalents of $622
million and short-term investments of $100 million were
complemented by $806 million available under the company's
revolving credit facility, resulting in a total liquidity position
of approximately $1.5 billion. Net debt at the end of the first
quarter of 2019 was $319 million.
Cash from operations for the first three months of fiscal 2019
was $56 million, a decrease of $10 million compared to the first
three months of fiscal 2018. The decrease primarily reflects higher
payments for employee incentive compensation related to strong
fiscal 2018 results, partially offset by lower pension plan
contributions.
Adjusted free cash flow for the first three months of fiscal
2019 was $17 million, an increase of $52 million compared to the
first three months of fiscal 2018. The increase was due to the
timing of proceeds from the settlement of forward foreign exchange
contracts, partially offset by the decrease in cash from operations
and a higher dividend payment. The company previously announced a
$110 million dividend for fiscal 2019, half of which was paid in
the first quarter.
A reconciliation of net debt and adjusted free cash flow,
non-GAAP financial measures, is provided at the end of this press
release.
Annual Guidance
The company's expectations for fiscal 2019, as compared to
fiscal 2018, are as follows:
- Constant-currency net revenues growth
of mid-single digits; and
- Constant-currency Adjusted EBIT margin
flat-to-slightly up.
The company noted that due to the timing of its fiscal year
ending the final Sunday of November, fiscal 2019 will not contain
the benefit of a Black Friday, which normally represents about
half-a-point of annual net revenues and an additional 25
basis-points of Adjusted EBIT margin.
Additionally, the company anticipates capital expenditures of
approximately $190 - $200 million and nearly 100 new
company-operated store openings in fiscal 2019.
Investor Conference Call
The company’s first-quarter 2019 investor conference call will
be available through a live audio webcast at https://engage.vevent.com/rt/levistraussao~8997045
on April 9, 2019, at 2 p.m. Pacific / 5 p.m. Eastern or via
the following phone numbers: 800-891-4735 in the United States and
Canada, or +1-973-200-3066 internationally; I.D. No.
8997045. A replay is available the same day on http://www.levistrauss.com/investors/earnings-webcast
and will be archived for three months. A telephone replay is also
available through April 15, 2019, at 855-859-2056 in the United
States and Canada or +1-404-537-3406 internationally; I.D. No.
8997045. Please see http://www.levistrauss.com/investors/earnings-webcast
for a discussion and reconciliation of non-GAAP measures referenced
on the investor conference call.
About Levi Strauss & Co.
Levi Strauss & Co. is one of the world's largest brand-name
apparel companies and a global leader in jeanswear. The company
designs and markets jeans, casual wear and related accessories for
men, women and children under the Levi's®, Dockers®, Signature by
Levi Strauss & Co.™, and Denizen® brands. Its products are sold
in more than 110 countries worldwide through a combination of chain
retailers, department stores, online sites, and a global footprint
of approximately 3,000 retail stores and shop-in-shops. Levi
Strauss & Co.'s reported fiscal 2018 net
revenues were $5.6 billion. For more information, go to
http://levistrauss.com.
Forward Looking Statement
This press release and related conference call contains, in
addition to historical information, forward-looking statements,
including statements related to: inventory levels; gross margin;
SG&A and advertising costs; revenues growth; adjusted EBIT
margin; dividends; expectations for and projected capital
expenditures in fiscal 2019; store openings; and currency impacts.
The company has based these forward-looking statements on its
current assumptions, expectations and projections about future
events. Words such as, but not limited to, “believe,” “will,” “so
we can,” “when,” “anticipate,” “intend,” “estimate,” “expect,”
“project” and similar expressions are used to identify
forward-looking statements, although not all forward-looking
statements contain these words. These forward-looking statements
are necessarily estimates reflecting the best judgment of senior
management and involve a number of risks and uncertainties that
could cause actual results to differ materially from those
suggested by the forward-looking statements. Investors should
consider the information contained in the company's filings with
the U.S. Securities and Exchange Commission (the “SEC”), including
its Annual Report on Form 10-K for fiscal year 2018 and its
Quarterly Report on Form 10-Q for the quarter ended
February 24, 2019, especially in the “Management's Discussion
and Analysis of Financial Condition and Results of Operations” and
“Risk Factors” sections. Other unknown or unpredictable factors
also could have material adverse effects on future results,
performance or achievements. In light of these risks,
uncertainties, assumptions and factors, the forward-looking events
discussed in this press release and related conference call may not
occur. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date stated
or, if no date is stated, as of the date of this press release and
related conference call. The company is not under any obligation
and does not intend to update or revise any of the forward-looking
statements contained in this press release and related conference
call to reflect circumstances existing after the date of this press
release and related conference call or to reflect the occurrence of
future events, even if such circumstances or future events make it
clear that any expected results expressed or implied by those
forward-looking statements will not be realized.
Non-GAAP Financial Measures
The company reports its financial results in accordance with
generally accepted accounting principles in the United States
(“GAAP”) and the rules of the SEC. To supplement its financial
statements prepared and presented in accordance with GAAP, the
company uses certain non-GAAP financial measures, such as adjusted
free cash flow, net debt, Adjusted EBIT, adjusted net income and
constant-currency net revenues, to provide investors with
additional useful information about its financial performance, to
enhance the overall understanding of its past performance and
future prospects and to allow for greater transparency with respect
to important metrics used by management for financial and operating
decision-making. The company presents these non-GAAP financial
measures to assist investors in seeing its financial performance
from management's view and because it believes they provide an
additional tool for investors to use in computing the company's
core financial performance over multiple periods with other
companies in its industry. The tables found below present adjusted
free cash flow, net debt, Adjusted EBIT, adjusted net income and
constant-currency net revenues and corresponding reconciliations of
these non-GAAP financial measures to the most directly comparable
financial measures calculated in accordance with GAAP. Non-GAAP
financial measures have limitations in their usefulness to
investors because they have no standardized meaning prescribed by
GAAP and are not prepared under any comprehensive set of accounting
rules or principles. Certain items that may be excluded or included
in non-GAAP financial measures may be significant items that could
impact the company’s financial position, results of operations and
cash flows and should therefore be considered in assessing the
company’s actual financial condition and performance. Non-GAAP
financial measures are subject to inherent limitations as they
reflect the exercise of judgment by management in determining how
they are formulated. Some specific limitations include but are not
limited to, the fact that such non-GAAP financial measures: (a) do
not reflect cash outlays for capital expenditures, contractual
commitments or liabilities including pension obligations,
post-retirement health benefit obligations and income tax
liabilities, (b) do not reflect changes in, or cash requirements
for, working capital requirements; and (c) they do not reflect the
interest expense, or the cash requirements necessary to service
interest or principal payments, on indebtedness. In addition,
non-GAAP financial measures may be calculated differently from, and
therefore may not be directly comparable to, similarly titled
measures used by other companies. As a result, non-GAAP financial
measures should be viewed as supplementing, and not as an
alternative or substitute for, the company's financial results
prepared in accordance with GAAP. The company urges investors to
review the reconciliation of these non-GAAP financial measures to
the most directly comparable GAAP financial measures included in
this press release, and not to rely on any single financial measure
to evaluate its business. See “RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES FOR THE FIRST QUARTER OF 2019” below for
reconciliation to the most comparable GAAP financial measures.
Constant-currency
The company reports operating results in accordance with GAAP,
as well as on a constant-currency basis in order to facilitate
period-to-period comparisons of its results without regard to the
impact of fluctuating foreign currency exchange rates. The term
foreign currency exchange rates refers to the exchange rates used
to translate the company's operating results for all countries
where the functional currency is not the U.S. Dollar into U.S.
Dollars. Because the company is a global company, foreign currency
exchange rates used for translation may have a significant effect
on its reported results. In general, the company's financial
results are affected positively by a weaker U.S. Dollar and are
affected negatively by a stronger U.S. Dollar as compared to the
foreign currencies in which it conducts its business. References to
operating results on a constant-currency basis mean operating
results without the impact of foreign currency exchange rate
fluctuations.
The company believes disclosure of constant-currency results is
helpful to investors because it facilitates period-to-period
comparisons of its results by increasing the transparency of the
underlying performance by excluding the impact of fluctuating
foreign currency exchange rates. However, constant-currency results
are non-GAAP financial measures and are not meant to be considered
as an alternative or substitute for comparable measures prepared in
accordance with GAAP. Constant-currency results have no
standardized meaning prescribed by GAAP, are not prepared under any
comprehensive set of accounting rules or principles and should be
read in conjunction with the company's consolidated financial
statements prepared in accordance with GAAP. Constant-currency
results have limitations in their usefulness to investors and may
be calculated differently from, and therefore may not be directly
comparable to, similarly titled measures used by other
companies.
The company calculates constant-currency amounts by translating
local currency amounts in the prior-year period at actual foreign
exchange rates for the current period. The company's
constant-currency results do not eliminate the transaction currency
impact of purchases and sales of products in a currency other than
the functional currency.
Source: Levi Strauss & Co. Investor Relations
LEVI STRAUSS & CO. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) February 24, 2019
November 25, 2018 (Dollars in thousands)
ASSETS Current Assets: Cash and cash equivalents $ 621,934 $
713,120 Short-term investments in marketable securities 100,017 —
Trade receivables, net of allowance for doubtful accounts of $8,332
and $10,037 633,534 534,164 Inventories: Raw materials 5,900 3,681
Work-in-process 2,889 2,977 Finished goods 905,488 877,115
Total inventories 914,277 883,773 Other current assets
177,540 157,002 Total current assets 2,447,302
2,288,059 Property, plant and equipment, net of accumulated
depreciation of $998,131 and $974,206 463,840 460,613 Goodwill
236,127 236,246 Other intangible assets, net 42,822 42,835 Deferred
tax assets, net 398,008 397,791 Other non-current assets 120,269
117,116 Total assets $ 3,708,368 $ 3,542,660
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’
EQUITY Current Liabilities: Short-term debt $ 23,477 $ 31,935
Accounts payable 329,913 351,329 Accrued salaries, wages and
employee benefits 215,811 298,990 Accrued interest payable 16,648
6,089 Accrued income taxes 34,624 15,466 Accrued sales allowances
109,663 — Other accrued liabilities 474,256 348,390
Total current liabilities 1,204,392 1,052,199 Long-term debt
1,017,660 1,020,219 Postretirement medical benefits 72,752 74,181
Pension liability 193,297 195,639 Long-term employee related
benefits 84,607 107,556 Long-term income tax liabilities 10,281
9,805 Other long-term liabilities 116,353 116,462
Total liabilities 2,699,342 2,576,061 Commitments and
contingencies Temporary equity 322,984 299,140
Stockholders’ Equity: Levi Strauss & Co. stockholders’ equity
Common stock — $.001 par value; 1,200,000,000 shares authorized;
375,874,600 shares and 376,028,430 shares issued and outstanding
376 376 Additional paid-in capital — — Accumulated other
comprehensive loss (416,370 ) (424,584 ) Retained earnings
1,094,636 1,084,321 Total Levi Strauss & Co.
stockholders’ equity 678,642 660,113 Noncontrolling interest 7,400
7,346 Total stockholders’ equity 686,042
667,459 Total liabilities, temporary equity and
stockholders’ equity $ 3,708,368 $ 3,542,660
The notes accompanying our consolidated
financial statements in our Form 10-Q are an integral part of these
consolidated financial statements.
LEVI STRAUSS & CO. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(LOSS)
Three Months Ended
February 24, 2019
February 25, 2018
(Dollars in thousands, except per share
amounts)(Unaudited)
Net revenues $ 1,434,458 $ 1,343,685 Cost of goods sold 651,650
605,561 Gross profit 782,808 738,124 Selling, general
and administrative expenses 581,896 563,202 Operating
income 200,912 174,922 Interest expense (17,544 ) (15,497 ) Other
income (expense), net (1,646 ) (10,400 ) Income before income taxes
181,722 149,025 Income tax expense 35,271 167,654 Net
income (loss) 146,451 (18,629 ) Net loss (income) attributable to
noncontrolling interest 126 (383 ) Net income (loss)
attributable to Levi Strauss & Co. $ 146,577 $ (19,012 )
Earnings (loss) per common share attributable to common
stockholders: Basic $ 0.39 $ (0.05 ) Diluted $ 0.37 $ (0.05 )
Weighted-average common shares outstanding: Basic 377,077,111
376,165,783 Diluted 393,234,825 376,165,783
The notes accompanying our consolidated
financial statements in our Form 10-Q are an integral part of these
consolidated financial statements.
LEVI STRAUSS & CO. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
Three Months Ended February 24, 2019
February 25, 2018 (Dollars in
thousands)(Unaudited) Net income (loss) $ 146,451
$ (18,629 ) Other comprehensive income (loss), before related
income taxes: Pension and postretirement benefits 3,422 3,360
Derivative instruments 1,737 (22,848 ) Foreign currency translation
gains 4,086 19,781 Unrealized gains on marketable securities 890
290 Total other comprehensive income, before related
income taxes 10,135 583 Income taxes (expense) benefit related to
items of other comprehensive income (1,741 ) 4,846
Comprehensive income, net of income taxes 154,845 (13,200 )
Comprehensive income attributable to noncontrolling interest (54 )
(644 ) Comprehensive income (loss) attributable to Levi Strauss
& Co. $ 154,791 $ (13,844 )
The notes accompanying our consolidated
financial statements in our Form 10-Q are an integral part of these
consolidated financial statements.
LEVI STRAUSS & CO. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
Three Months Ended February 24, 2019
February 25, 2018 (Dollars in
thousands)(Unaudited) Cash Flows from Operating
Activities: Net income (loss) $ 146,451 $ (18,629 ) Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation and amortization 28,559 32,821 Unrealized
foreign exchange losses 9,046 10,022 Realized (gain) loss on
settlement of forward foreign exchange contracts not designated for
hedge accounting (4,618 ) 10,303 Employee benefit plans’
amortization from accumulated other comprehensive loss and
settlement loss 3,422 3,360 Stock-based compensation 1,497 5,256
Other, net (413 ) 1,624 (Benefit from) provision for deferred
income taxes (795 ) 129,542 Change in operating assets and
liabilities: Trade receivables 69,672 59,497 Inventories (48,120 )
(61,867 ) Other current assets (6,162 ) (16,100 ) Other non-current
assets (2,251 ) (3,405 ) Accounts payable and other accrued
liabilities (48,041 ) 14,659 Restructuring liabilities (4 ) (44 )
Income tax liabilities 19,496 26,194 Accrued salaries, wages and
employee benefits and long-term employee related benefits (110,338
) (126,939 ) Other long-term liabilities (1,579 ) (124 ) Net cash
provided by operating activities 55,822 66,170
Cash Flows from Investing Activities: Purchases of property,
plant and equipment (36,149 ) (30,996 ) Proceeds (Payments) on
settlement of forward foreign exchange contracts not designated for
hedge accounting 55,818 (10,303 ) Payments to acquire short-term
investments (99,880 ) — Net cash used for investing
activities (80,211 ) (41,299 )
Cash Flows from Financing
Activities: Proceeds from short-term credit facilities 13,442
17,511 Repayments of short-term credit facilities (12,556 ) (16,944
) Other short-term borrowings, net (9,422 ) (14,537 ) Repurchase of
common stock, including shares surrendered for tax withholdings on
equity award exercises (3,914 ) (14,844 ) Dividend to stockholders
(55,000 ) (45,000 ) Other financing, net (296 ) (386 ) Net cash
used for financing activities (67,746 ) (74,200 ) Effect of
exchange rate changes on cash and cash equivalents and restricted
cash 952 5,597 Net decrease in cash and cash
equivalents and restricted cash (91,183 ) (43,732 ) Beginning cash
and cash equivalents, and restricted cash 713,698 634,691
Ending cash and cash equivalents, and restricted cash
$ 622,515 $ 590,959 Less: Ending restricted cash (581 ) (729 )
Ending cash and cash equivalents 621,934 590,230
Noncash Investing Activity: Property, plant
and equipment acquired and not yet paid at end of period $ 10,513 $
10,574 Property, plant and equipment additions due to build-to-suit
lease transactions 7,842 723 Realized loss on foreign currency
contracts not yet paid at end of period 51,200 —
Supplemental
disclosure of cash flow information: Cash paid for interest
during the period $ 2,778 $ 1,628 Cash paid for income taxes during
the period, net of refunds 17,157 11,939
The notes accompanying our consolidated
financial statements in our Form 10-Q are an integral part of these
consolidated financial statements.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES FOR THE FIRST QUARTER OF 2019
The following information relates to non-GAAP financial
measures, and should be read in conjunction with the investor call
held on April 9, 2019, discussing the company’s financial
condition and results of operations as of and for the quarter ended
February 24, 2019. Adjusted EBIT, adjusted net income, net
debt, adjusted free cash flow, constant-currency net revenues and
constant-currency Adjusted EBIT are not financial measures prepared
in accordance with GAAP. As used in this press release: (1)
Adjusted EBIT represents net income (loss) plus income tax expense,
interest expense, other (income) expense, net, impact of changes in
fair value on cash-settled stock based compensation, and
restructuring related charges, severance and other, net; (2)
adjusted net income represents net income (loss), impact of changes
in fair value on cash-settled stock based compensation,
restructuring related charges, severance and other, net,
remeasurement of deferred tax assets and liabilities, and tax
impact of adjustments; (3) net debt represents total debt,
excluding capital leases, less cash and cash equivalents and
short-term investments in marketable securities; (4) Adjusted free
cash flow represents cash from operating activities less purchases
of property, plant and equipment, proceeds (payments) on settlement
of forward foreign exchange contracts not designated for hedge
accounting, repurchase of common stock including shares surrendered
for tax withholdings on equity award exercises, and cash dividends
to stockholders; (5) constant-currency net revenues represents net
revenues without the impact of foreign currency exchange rate
fluctuations; and (6) constant-currency Adjusted EBIT represents
Adjusted EBIT without the impact of foreign currency exchange rate
fluctuations.
Adjusted EBIT:
Three Months Ended
February 24,2019
February 25,2018
(Dollars in millions) (Unaudited) Most comparable
GAAP measure: Net income (loss) $ 146.5 $ (18.6 )
Non-GAAP measure: Net income (loss) 146.5 (18.6 ) Income tax
expense 35.3 167.7 Interest expense 17.5 15.5 Other expense, net
1.6 10.4 Impact of changes in fair value on cash-settled stock
based compensation 5.3 5.0 Restructuring and related charges,
severance and other, net 0.1 0.3
Adjusted EBIT
$ 206.3 $ 180.3 Adjusted
EBIT margin 14.4 % 13.4 % Depreciation and amortization 28.6
32.8
Adjusted EBITDA $ 234.9
$ 213.1
Adjusted net income:
Three Months Ended
February 24,2019
February 25,2018
(Dollars in millions) (Unaudited) Most comparable
GAAP measure: Net income (loss) $ 146.5 $ (18.6 )
Non-GAAP measure: Net income (loss) 146.5 (18.6 ) Impact of
changes in fair value on cash-settled stock based compensation 5.3
5.0 Restructuring and related charges, severance and other, net 0.1
0.3 Remeasurement of deferred tax assets and liabilities — 99.1 Tax
impact of adjustments (1.0 ) (2.4 )
Adjusted net income
$ 150.9 $ 83.4 Adjusted
net income margin 10.5 % 6.2 %
Net debt:
February 24,2019
November 25,2018
(Dollars in millions)
(Unaudited)
Most comparable GAAP measure: Total debt, excluding capital
leases $ 1,041.1 $ 1,052.2
Non-GAAP
measure: Total debt, excluding capital leases $ 1,041.1 $
1,052.2 Cash and cash equivalents (621.9 ) (713.1 ) Short-term
investments in marketable securities (100.0 ) —
Net
debt $ 319.2 $ 339.1
Adjusted free cash flow:
Three Months Ended
February 24,2019
February 25,2018
(Dollars in millions) (Unaudited) Most comparable
GAAP measure: Net cash provided by operating activities $ 55.8
$ 66.2
Non-GAAP measure: Net cash
provided by operating activities $ 55.8 $ 66.2 Purchases of
property, plant and equipment (36.1 ) (31.0 ) Proceeds (Payments)
on settlement of forward foreign exchange contracts not designated
for hedge accounting 55.8 (10.3 ) Repurchase of common stock,
including shares surrendered for tax withholdings on equity award
exercises (3.9 ) (14.8 ) Dividend to stockholders (55.0 ) (45.0 )
Adjusted free cash flow $ 16.6 $
(34.9 )
Constant-currency net revenues:
Three Months Ended February 24, 2019
February 25, 2018
%Increase (Dollars in millions)
(Unaudited) Total revenues As reported $ 1,434.5 $
1,343.7 6.8 % Impact of foreign currency exchange rates —
(47.8 ) * Constant-currency net revenues $ 1,434.5 $ 1,295.9
10.7 %
Americas As reported $ 717.3 $ 657.2
9.1 % Impact of foreign currency exchange rates — (5.5 ) *
Constant-currency net revenues - Americas $ 717.3 $ 651.7
10.1 %
Europe As reported $ 464.7 $ 452.7 2.7
% Impact of foreign currency exchange rates — (30.3 ) *
Constant-currency net revenues - Europe $ 464.7 $ 422.4
10.0 %
Asia As reported $ 252.5 $ 233.8 8.0 %
Impact of foreign currency exchange rates — (12.0 ) *
Constant-currency net revenues - Asia $ 252.5 $ 221.8
13.8 %
_____________
* Not meaningful
Constant-currency Adjusted EBIT:
Three Months Ended February 24, 2019
February 25, 2018
%Increase (Dollars in millions)
(Unaudited) Adjusted EBIT $ 206.3 $ 180.3 14.4 % Impact of
foreign currency exchange rates — (10.1 )
*
Constant-currency Adjusted EBIT $ 206.3 $ 170.2 21.2
% Constant-currency Adjusted EBIT margin (1) 14.4 % 13.1 %
_____________
(1) We define constant-currency Adjusted
EBIT margin as constant-currency Adjusted EBIT as a percentage of
constant-currency net revenues.
* Not meaningful
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