PVH pays down $500 million of debt in 2013; Q4 revenues up 25%

By Lisa Kerner

Charlotte, N.C., March 26 - PVH Corp. beat its fourth-quarter earnings guidance, according to chairman and chief executive officer Emanuel "Manny" Chirico.

"We saw a strong outperformance against our projections in both (the) Calvin Klein and Tommy Hilfiger businesses, despite the overall difficult retail environment that's been plaguing us, particularly in North America," Chirico said during the company's earnings conference call on Wednesday.

Chirico said the Tommy Hilfiger business had a strong performance in North America and Europe, offset by weakness in Japan. The Calvin Klein business exceeded earnings estimates, with strong results in the United States, Brazil and Asia.

PVH's Heritage Brands businesses came in according to plan, said Chirico.

The Warnaco integration processes and conversions remain on track. PVH is also "on plan" for projected expense synergies. The company completed the Warnaco acquisition in February 2013.

Chirico noted that PVH continues to see a challenging retail environment in the first quarter that will be impacted by unusually cold weather and a later Easter holiday.

Revenues up, debt down

Chief financial officer Mike Shaffer said the company's fourth-quarter revenues were up 25% year over year at $2.1 billion, with $479 million attributable to Warnaco.

PVH paid down more than $500 million of debt in 2013, $50 million higher than previous guidance, Shaffer said on the call. The company anticipates $400 million of debt repayments in 2014.

During the fourth quarter of 2013, the Bridgewater, N.J.-based apparel company made debt repayments totaling $297 million on its outstanding term loans, according to the earnings news release.

Interest expense for the fourth quarter was up at $45 million from $28 million a year ago, on a non-GAAP basis. The rise was attributed to an increase in the company's total debt incurred at the time of the Warnaco acquisition. For the full year, interest expense increased to $184 million from $114 million, also on a non-GAAP basis.

Financial highlights

PVH's fourth-quarter earnings per share of $1.43 exceeded guidance by three cents. The company reported EPS of $7.03 for the full year, compared with $6.58 in 2012.

Full-year revenue was up 36% year over year at $8.2 billion.

EBITDA was up 15% on a non-GAAP basis for the quarter at $207 million and up $215 million for the year at $967 million.

Looking ahead to full-year 2014, Shaffer said revenues are expected to be up 3%.

EPS is projected to be in a range of $7.40 to $7.50, and net interest expense is expected to be about $145 million.

PVH is a Bridgewater, N.J.-based apparel company.

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