Samsonite International S.A. Announces Results for the Three and Nine Months Ended September 30, 2023

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PR Newswire

HONG KONG, Nov. 13, 2023

Third quarter 2023 consolidated net sales up 21.2%¹ year-on-year and
22.4%¹^, 2, 3 above the third quarter of 2019 driven by growth across all core brands

Significant expansion in gross profit margin and Adjusted EBITDA margin⁴
during the three months ended September 30, 2023

Continued balance sheet deleveraging powered by strong profit growth and Free Cash Flow⁵ with
net leverage ratio⁶ at lowest level since acquisition of Tumi

HONG KONG, Nov. 13, 2023 /PRNewswire/ -- Samsonite International S.A. ("Samsonite" or "the Company", together with its consolidated subsidiaries, "the Group"; SEHK stock code: 1910), a leader in the global lifestyle bag industry and the world's best-known and largest travel luggage company, today published its unaudited condensed consolidated financial results for the three and nine months ended September 30, 2023.

In this press release, certain financial results for the three and nine months ended September 30, 2023, are compared to both the three and nine months ended September 30, 2022, and the three and nine months ended September 30, 2019. Comparisons to the three and nine months ended September 30, 2019, are provided because they are the most recent comparable periods during which the Company's results were not affected by COVID-19.

Overview
Commenting on the results, Mr. Kyle Gendreau, Chief Executive Officer, said, "We are excited by Samsonite's outstanding results for the third quarter of 2023, during which we delivered significant improvement in profitability, powered by strong year-on-year net sales gains across all regions and core brands. Our gross profit margin and Adjusted EBITDA margin⁴ both reached record highs, reflecting the increased net sales contribution from our higher-margin Asia region and Tumi brand, and the benefits of our streamlined and efficient cost structure. Our strong profits and Free Cash Flow⁵ enabled us to continue to de-lever our balance sheet and end the quarter with our net leverage ratio⁶ at 1.81x, the lowest since we acquired Tumi in 2016."

"The strong demand during the recent summer travel season clearly demonstrates the resilience in consumer demand for travel and Samsonite's opportunities for future growth. As we close out this year and look ahead to 2024, outbound travel from China, which is in the early stages of recovery, is expected to continue to steadily improve in the coming quarters, while travel growth in markets that reopened earlier, including North America and Europe, has begun to normalize following the strong rebound in 2022 and year-to-date 2023."

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Mr. Gendreau concluded, "Looking ahead, we are well positioned to outpace the market, as we continue to prioritize investments to support organic growth of our business. We will continue to emphasize investments in our higher-margin Tumi and Samsonite brands, with a focus on product innovation and sustainability initiatives, further enhancements to our global retail store network, and marketing. At the same time, we are managing promotional activity and our non-marketing SG&A expenses to drive positive operating leverage and grow net sales at a fundamentally higher margin profile. With substantial liquidity and continued de-leveraging of our balance sheet, we are confident that Samsonite has the financial capacity and flexibility to drive sustainable and profitable long-term growth by capitalizing on the strength of our brands and unique global scale."

Table 1: Key Financial Highlights for the Three Months Ended September 30, 2023

US$ millions, except per share data	Three months ended September 30, 2023	Three months ended September 30, 2022	Percentage increase (decrease) 2023 vs. 2022	Percentage increase (decrease) 2023 vs. 2022 excl. foreign currency effects¹
Net sales	957.7	790.9	21.1 %	21.2 %
Gross profit	570.9	435.2	31.2 %	31.4 %
Gross profit margin	59.6 %	55.0 %
Operating profit	182.6	121.8	50.0 %	50.6 %
Profit attributable to the equity holders	115.4	58.2	98.2 %	101.6 %
Adjusted Net Income⁷	125.7	64.9	93.9 %	96.9 %
Adjusted EBITDA⁸	194.0	134.1	44.7 %	46.1 %
Adjusted EBITDA Margin⁴	20.3 %	17.0 %
Basic earnings per share – US$ per share	0.080	0.040	97.3 %	100.6 %
Diluted earnings per share – US$ per share	0.079	0.040	96.0 %	99.3 %
Adjusted basic earnings per share⁹ – US$ per share	0.087	0.045	92.9 %	95.9 %
Adjusted diluted earnings per share⁹ – US$ per share	0.086	0.045	91.6 %	94.6 %

2023 Third Quarter Highlights
The Group's consolidated net sales increased by 21.2%¹ year-on-year to US$957.7 million for the three months ended September 30, 2023. With the support of substantial investments in marketing, the Group capitalized on the robust summer travel demand to achieve strong net sales gains across all core brands and regions. The Samsonite, Tumi and American Tourister brands achieved year-on-year net sales growth of 20.1%¹, 29.8%¹ and 19.8%¹, respectively. Net sales in Asia, where travel reopened later than other regions, rose by 44.9%¹ year-on-year, while net sales in North America, Europe and Latin America increased by 10.0%¹, 6.7%¹ and 16.5%¹, year-on-year, respectively.

Gross profit margin expanded by 460 basis points year-on-year to 59.6% in the third quarter of 2023, driven mainly by year-on-year gross profit margin improvements in all regions and because Asia, the region with the highest gross profit margin, increased its share of total net sales to 39.0% in the third quarter of 2023 from 33.4% in the third quarter of 2022. The increase in gross profit margin was also driven by the higher-margin Tumi brand increasing its share of total net sales to 22.3% in the third quarter of 2023 from 20.9% in the third quarter of 2022, an increased proportion of total net sales attributable to direct-to-consumer ("DTC") net sales, and overall reduced promotional activity.

The Group increased its investment in marketing as planned, spending US$59.4 million during the three months ended September 30, 2023, an increase of 32.5%, year-on-year. Marketing expenses as a percentage of net sales rose to 6.2%, an increase of 50 basis points, year-on-year. The Group remained disciplined in managing fixed selling, general and administrative ("SG&A") expenses, enabling Samsonite to achieve a 44.7% year-on-year increase in Adjusted EBITDA⁸ to US$194.0 million during the third quarter of 2023, while Adjusted EBITDA margin⁴ expanded by 330 basis points to 20.3%. Powered by the increase in Adjusted EBITDA⁸, Samsonite's Adjusted Net Income⁷ nearly doubled to US$125.7 million for the third quarter of 2023.

Compared to the three months ended September 30, 2019, Samsonite's net sales for the three months ended September 30, 2023, increased by 22.4%^{1, 2, 3}. Gross profit margin increased by 390 basis points from 55.7%, driven by increased net sales contribution from the higher-margin Asia region and Samsonite and Tumi brands, and overall reduced promotional activity. The Group's Adjusted EBITDA⁸ increased by US$60.1 million, or 44.9%, from US$133.9 million for the third quarter of 2019, even though net sales as reported only increased by US$36.2 million, and its Adjusted EBITDA margin⁴ increased by 580 basis points from 14.5% in the third quarter of 2019, despite marketing spend as a percentage of net sales rising by 130 basis points from 4.9%. This underscores the positive impact from the Group's streamlined and efficient cost structure, and its ongoing discipline in expense management. As a result, Adjusted Net Income⁷ rose by US$63.8 million, or 102.9%, from US$62.0 million for the third quarter of 2019.

During the three months ended September, 30, 2023, the Group delivered Free Cash Flow⁵ of US$88.8 million and voluntarily repaid US$70.0 million of outstanding borrowings under the Group's revolving credit facility. This enabled the Group to reduce its net debt position to US$1.2 billion¹⁰ and improve its net leverage ratio⁶ to 1.81x as of September 30, 2023. The Group ended the third quarter of 2023 with US$603.4 million in cash and cash equivalents and liquidity of US$1.4 billion¹¹.

Results for the Three Months Ended September 30, 2023
The Group's performance for the three months ended September 30, 2023, is discussed in greater detail below.

Net Sales
Three Months Ended September 30, 2023, vs. Three Months Ended September 30, 2022
For the three months ended September 30, 2023, the Group recorded net sales of US$957.7 million, an increase of 21.2%¹ year-on-year. This growth was powered by strong results in Asia, where travel reopened later than other regions, and robust net sales gains in North America, Europe and Latin America. All core brands delivered double-digit net sales growth, with particular strength behind the Tumi brand.

Three Months Ended September 30, 2023, vs. Three Months Ended September 30, 2019
Compared to the corresponding period in 2019, the Group's net sales for the three months ended September 30, 2023, increased by 14.2%¹, and by 22.4%^{1, 2, 3} when excluding the net sales in Russia and by Speck.

Net Sales Performance by Region

Table 2: Net Sales by Region

Region¹²

Three months ended

September 30, 2023

US$ millions

Three months ended

September 30, 2022

US$ millions

Percentage

increase (decrease)

2023 vs. 2022

Percentage

Increase (decrease)

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