Financial Data and Key Metrics Changes - In 2019, adjusted revenue was $2.52 billion, aligning with guidance of over $2.5 billion, despite pressures from brand elevating initiatives [22][24] - Adjusted EBITDA for 2019 was $341 million, consistent with guidance of $340 million to $360 million [23][72] - Adjusted earnings per share (EPS) for the fourth quarter was $0.97, with a full-year adjusted EPS of $3.84 [72][82] Business Line Data and Key Metrics Changes - Wrangler brand's global revenue declined 5%, with U.S. revenue down 3% due to domestic factors [67][68] - Lee brand's global revenue decreased by 11%, with U.S. revenue down 12% impacted by the retail environment and strategic exits [69][70] - Digital wholesale business grew 52%, indicating strong performance in the direct-to-consumer channel [66][72] Market Data and Key Metrics Changes - U.S. revenues, representing 79% of total revenue, declined 6%, with approximately 4 points driven by strategic quality of sales initiatives [62][63] - International revenues, accounting for 21% of total revenue, fell 13%, primarily due to quality of sales efforts [63][64] - China business increased 2% for the full year, but fourth-quarter revenue was down 7% due to shipment timing [64][86] Company Strategy and Development Direction - The company is focused on a two-horizon strategic plan, with Horizon 1 aimed at establishing a foundation for sustainable growth and Horizon 2 targeting accelerated growth [12][25] - Investments in brand elevation, innovation, and sustainability are key components of the strategy to drive long-term growth [34][50] - The company plans to expand distribution channels and enhance digital capabilities to capture new market opportunities [41][52] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the dynamic environment due to COVID-19 but expressed confidence in the underlying fundamentals of the business [9][26] - The company has created a task force to monitor the coronavirus situation and has contingency plans in place [27][86] - Despite anticipated near-term impacts from COVID-19, management remains optimistic about regaining momentum as conditions normalize [28][93] Other Important Information - The company paid down $127 million in debt within seven months post-separation, exceeding initial guidance [21][24] - A robust free cash flow generation is expected, with projections of over $325 million in cash flow from operations for 2020 [83][84] - The company plans to maintain a dividend payout of $0.56 per share, reflecting a commitment to returning cash to shareholders [21][82] Q&A Session Summary Question: Guidance and coronavirus impact - The guidance excludes the impact of coronavirus, but Q1 is expected to see an additional 4% revenue decline due to the situation [90][96] Question: Trends in China and Europe - Prior to COVID-19, the China business was performing well, with double-digit growth in January, but is now facing challenges due to store closures [97][100] Question: Cash flow and long-term prospects - The company expects significant improvements in working capital, with a cash flow guidance of $325 million excluding ERP expenses [103][105]
Kontoor(KTB) - 2019 Q4 - Earnings Call Transcript