Levi Strauss gets funds at high-grade rate via ‘strong’ balance sheet

By Devika Patel

Knoxville, Tenn., Oct. 9 – Levi Strauss & Co. management said it has a “strong” balance sheet and that the company is “in a good place,” with the ability to access capital at the same rates as investment-grade companies.

“We have a pretty strong balance sheet,” executive vice president and chief financial officer Harmit Singh said on the company’s third quarter ended Aug. 26 earnings conference call on Tuesday.

“We don’t necessarily have a target leverage ratio.

“We believe we are in a good place right now.

“We’re one notch below investment-grade as evaluated by S&P as well as by Moody’s.

“We’re able to access capital at rates that investment-grade companies can, so we feel good about where we are.

“So, over time, as you’ve seen our leverage ratio decline, over time the decline in leverage ratios will be a result of improved earnings as against paydown of debt,” Singh said.

Third quarter adjusted EBIT was $162 million, compared to $147 million during the same time a year ago.

As of Aug. 26, cash and cash equivalents were $613 million, and the company had $669 million available under its revolving credit facility, resulting in a total liquidity position of $1.28 billion.

Net debt at the end of the third quarter was $449 million, compared to $444 million at year-end.

The company’s leverage declined to 1.5x from 1.8x a year ago.

Levi Strauss is a San Francisco-based apparel and jeanswear company.

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