2024-03-14 06:50:18 ET
Samsonite International S.A. (SMSOF)
Q4 2023 Earnings Conference Call
March 13, 2024 09:00 PM ET
Company Participants
William Yue - Investor Relations
Kyle Gendreau - Chief Executive Officer
Reza Taleghani - Chief Financial Officer
Conference Call Participants
Dustin Wei - Morgan Stanley
Linda Huang - Macquarie
Presentation
William Yue
Hi. Good morning, everyone. Thank you very much for taking the time to join our 2023 Annual Results Presentation. I'm William, Head of Investor Relations for Samsonite. And today, we have our CEO, Kyle Gendreau and CFO, Reza Taleghani to present our results.
And our CEO, Kyle will begin with a few remarks. Thank you.
Kyle Gendreau
Okay. Thanks, everyone. You can hear me all right? Yes. Good. Thanks for coming. We are pretty excited to be here. It's been a little while since we've done actually an earnings release here in Hong Kong. But what a wonderful set of results to talk about. So I'm going to give you a business update. Reza will give you a financial update like we normally do. I will give you an outlook because everyone's here for outlook. I was reading a lot of the reports this morning. Everybody wants to understand where we are and what's cooking. We will talk about that. And then very happy to take questions at the end. So ready to roll, William? Ready?
William Yue
Yes.
Kyle Gendreau
Okay. 2023 was amazing, is the way I would describe it. I think everybody – and I was reading a lot of the reports this morning in line with what people were expecting, but let's not underestimate how strong these results are. Our sales approaching $3.7 billion, up 30.4% to last year. Tremendously strong across all brands, all regions. Everything that we are touching is moving in a really positive way. And I might say in our higher margin brands or higher margin regions moving faster as Asia recovered, Tumi really is kicking in and Samsonite very strong. All of that is given the effect that we expected on margin, both gross margin and bottom line. But I would tell you the entire business is delivering on all fronts on that front.
EBITDA $709 million, let's call it $710 million, I would've rounded it to $710 million. Super strong numbers, 19.3% with advertising stepping up, so this is moving margins as we lean into push the business. Very strong gross margin, 59.3%, I would tell you. And I think we have Q4 in here as well, 59.9% in Q4. Q1 is looking even a little bit stronger. So the gross margin metrics and everything that we've been guiding and elevating on all of our brands is delivering. That's up 580 basis points in 2019 just for scale.
We continue to invest in our business, right? So as we come out of pandemic and we are on strong footing, these results on EBITDA are on the back of us, really leaning into the business. So we move the advertising spend $242 million, 6.6%. You'll see us bring that up next year. I guess we are in this year 2024. I have ambitions to bring that up closer to 7%, and it's up meaningfully from 2019. So when you see that margin expansion, I mean, not 2019, but 2022. When you see that margin expansions with advertising up 120 basis points to what we did a year ago. So really very, very strong.
I think one of the pieces that I've known for a long time, and I think people generally understand, but this business generates cash. Not only do we generate cash when things are going well, like you are seeing in these numbers. But even during pandemic, if you were watching what we were able to do to manage this business and generate cash almost the entire time has been tremendous. So we generate $284 million of cash. We've put back in our dividend program as much of you have read already last night. I think that's important.
And importantly, we've de-levered the business, even ahead of my own expectations. We are now 1.53x debt. Many people ask for the last three, four, five years what's your target debt levels. We typically say 2% – 2x or below. We are well below that and continuing to delever as we move into next year. And with that, we've also increased our financial flexibility. When you look at our overall liquidity up $100 million from last year, $1.6 billion gives us tremendous flexibility in managing the business and just continues to be on a footing of all strengths.
So we are excited about the results. We'll go through a lot more details here as well, but this is kind of capturing the highlights which on the next page, again, I always try to capture fun things and Reza gets into the details. But on this page, this is really telling a story of tremendous result on everywhere you can look within our results. So you can see we are up 30%, up 17.5% to 2019. If I adjust for ebags third-party, which we are all aware that we had called that business during the pandemic and it's not reflected here, but if I adjust for that, we are closer to 20%, up to 2019. So really a tremendous result. Reza will go through that....
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Samsonite International S.A. (SMSOF) Q4 2023 Earnings Call Transcript