Levi Strauss expects leverage to decline over 2021 from debt paydown

By Devika Patel

Knoxville, Tenn., April 9 – Levi Strauss & Co. has a sturdy balance sheet, with strong liquidity and a negative net debt.

The company has been tackling its 5% notes with a refinancing and paying down principal and management expects leverage to fall over the course of this year.

“Cash and liquidity remain strong and, at the end of the quarter, net debt was negative,” executive vice president and chief financial officer Harmit Singh said on the company’s first quarter ended Feb. 28 earnings conference call on Thursday.

The company recently refinanced and paid down most of its 5% note. The remainder will be paid down later this year and leverage is expected to fall.

“We refinanced $500 million of our 5% U.S. dollar note, obtaining a substantially lower coupon of 3.5% and, in March, we paid down most of our 5% note.

“The lower coupon in debt reduction will save us $20 million annually in interest expense.

“We expect to pay down the remaining $200 million of 5% notes in the second half of this year and, with business trends improving, we expect substantial improvement in our leverage ratio as we move through the remainder of the year,” he said.

Levi Strauss is a San Francisco-based clothing company.

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