Levi Strauss leverage drops to 1.2x, lowest ratio since 2019

By Devika Patel

Knoxville, Tenn., Jan. 27 – Levi Strauss & Co. decreased its total debt to the last 12 months’ adjusted EBITDA ratio dramatically in 2021 to its lowest leverage since 2019. The company generated its highest revenue since 1998 last year.

The company’s leverage ratio decreased to 1.2x at the end of the fourth quarter of 2021, compared to 4.9x at the end of the fourth quarter of 2020.

Net debt at the end of the fourth quarter was $125 million.

“Our leverage ratio is now 1.2x, the lowest it has been since mid-2019,” executive vice president and chief financial officer Harmit Singh said on the company’s fourth quarter and year ended Nov. 28, 2021 earnings conference call on Wednesday.

Cash and cash equivalents were $810 million and short-term investments were $92 million as of Nov. 28, 2021, and the company had $794 million available under its revolving credit facility, resulting in a total liquidity position of approximately $1.7 billion.

“Cash and liquidity remain strong,” Singh said.

Adjusted free cash flow is almost twice what it was in 2019.

“Adjusted free cash flow for the year was $230 million, nearly double the $116 million of 2019, again demonstrating how we are emerging stronger from the pandemic with higher profitability and improved cash management and working capital with a shorter cash-conversion cycle,” Singh said.

The company’s management is pleased with the results despite supply chain issues during the fourth quarter, when demand outstripped supply.

“After returning to pre-Covid revenue levels in Q3, momentum accelerated through Q4, and today’s results reflect robust financial performance across the board,” president and chief executive officer Chip Bergh said on the call.

“Our Q4 revenues were $1.7 billion, up 22% to 2020 and 7% to 2019.

“Consumer demand remained very strong and outstripped supply by approximately $50 million in the quarter or 3% of revenue due to supply chain constraints.

“The quarter punctuated a very strong fiscal 2021 performance delivering our highest revenue since 1998,” Bergh said.

Levi Strauss is a San Francisco-based clothing company.

© 2015 Prospect News.
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