Samsonite Group (1910) H2 2013 earnings summary

Executive summary

• Fourth consecutive year of record results; 2013 sales exceeded $2B, up 15% YoY, and EBITDA rose 18%.

• Results reflected broad geographic and brand growth, with China contributing only 9.4% of sales and growth spanning more than 100 countries.

• Priorities include sustained brand investment, organic growth and acquisitions, with a stated goal to double the business size in four to five years.

Financial highlights

• Sales rose 15% YoY and 16% in constant currency; EBITDA increased 18%, or $42M, and net income exceeded $2B in sales for the first time.

• Net income growth was cited as 13% in the opening summary; CFO later cited reported growth of 18.6%, adjusted growth of 13.2%, and nearly 17% excluding non-cash option costs.

• Gross margin declined by a few bps, mainly due to regional and channel mix; EBITDA margin reached 16.6%, up 40 bps and a record.

• Advertising and promotion totaled $129M, or 6.3% of sales; operating cash flow was $193M and net cash reached $210M.

• CapEx was $57M, supporting retail rollout and added warehouse and manufacturing capacity in Europe.

Outlook and guidance

• Targeting double-digit organic sales growth; EBITDA and net income growth expected in the vicinity of 15%, subject to continued execution and M&A.

• 2014 EBITDA margin expansion of 20–40 bps expected, supported by fixed-cost/SG&A leverage; gross margin may edge up with mix, then stabilize.

• Operating cash flow expected to exceed $200M in 2014, with similar EBITDA-to-cash conversion; marketing investment expected to remain near 6.5% of sales.

• U.S. growth expected near the travel market and slightly better; Asia expected to strengthen, Europe to improve with double-digit growth mainly in euros, and Latin America to contribute more profit.

• China B2B orders were expected to recover, with several orders already being executed in Q2 and a larger return anticipated in H2 2014.