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Kontoor Brands
🇺🇸 NYSE:KTB
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Dec 28, 2019

Kontoor Brands Q4 2019 Earnings Report

Kontoor Brands' Q4 2019 results were reported, showing revenue decline due to transformational changes, but adjusted EPS exceeded expectations.

Key Takeaways

Kontoor Brands reported a revenue decrease of 10% to $653 million in Q4 2019, impacted by strategic quality-of-sales initiatives and a major U.S. retailer bankruptcy. Despite the revenue decline, adjusted EPS was $0.97, and adjusted operating margin increased to 13.1%.

GAAP EPS was $0.50, while adjusted EPS reached $0.97 for Q4 2019.

Revenue decreased to $653 million, a 10% year-over-year decline.

Adjusted operating margin increased 130 basis points to 13.1% of revenue.

Adjusted EBITDA increased 130 basis points to 14.2% of revenue.

Total Revenue
$653M
Previous year: $2.76B
-76.4%
EPS
$0.97
Previous year: $0.91
+6.6%
Operating Margin
9%
Adjusted EBITDA margin
14.2%
Free Cash Flow
$778M
Gross Profit
$266M
Previous year: $2.32B
-88.5%
Cash and Equivalents
$107M
Previous year: $96.8M
+10.4%
Free Cash Flow
$778M
Previous year: -$163M
-578.6%
Total Assets
$1.52B
Previous year: $2.46B
-38.3%

Kontoor Brands

Kontoor Brands

Kontoor Brands Revenue by Segment

Kontoor Brands Revenue by Geographic Location

Forward Guidance

Kontoor Brands provided its outlook for the fiscal year ending January 2, 2021, excluding the impact of COVID-19. Revenue is expected to be largely consistent with full year 2019 adjusted revenue, with branded Wrangler® and Lee® revenue anticipated to increase low-single digits.

Positive Outlook

  • Revenue is expected to be largely consistent with full year 2019 adjusted revenue.
  • Branded Wrangler® and Lee® revenue are anticipated to increase low-single digits.
  • Gross margin is expected to be in the range of 41.0 percent to 41.5 percent.
  • Adjusted EBITDA is expected to be in the range of $350 million to $360 million.
  • The total reduction in long-term debt for 2020 is anticipated to be in excess of $125 million.

Challenges Ahead

  • Other non-strategic revenues are expected to decline double-digits.
  • The negative impact of 2019 strategic business exits, quality-of-sales initiatives and lower revenue associated with non-strategic lines of business is expected to contribute up to 3 points of headwind to full year 2020 revenue.
  • First half revenue is expected to decline.
  • 2020 includes an additional five months of interest expense that impacts full year adjusted EPS by approximately $0.23 compared with 2019 adjusted EPS.
  • Capital expenditures (including ERP) are expected to range between $55 million and $70 million.

Revenue & Expenses

Visualization of income flow from segment revenue to net income

Company Overview

Full financial data and analysis

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