V.f. Corporation · NYSE:VFC
V.f — Merger or Acquisition (August 2018)
25 slides from V.f's merger presentation, August 2018
Slide 1: VF to Separate into Two Independent Companies with Enhanced Prospects for Long-Term Value Creation
VF TO SEPARATE INTO TWO INDEPENDENT COMPANIES WITH ENHANCED PROSPECTS FOR LONG-TERM VALUE CREATION August 2018
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Certain written and oral statements included in this presentation are "forward- of members of VF’s management; VF's ability to protect trademarks and other looking statements" within the meaning of the federal securities laws. Forward- intellectual property rights; possibl
Slide 3: Long Track Record of Delivering Superior Shareholder Value
LONG TRACK RECORD OF DELIVERING SUPERIOR SHAREHOLDER VALUE Transformational portfolio actions have been critical milestones along VF’s value creation journey Acquisition of Acquisition of Vans Acquisition of Acquisition of >17% The North Face Timberland Williamson-Dickie Annual TSR Mfg. Co. ® ® Sinc
Slide 4: Separation Consistent with Active Portfolio Management Strategy and Capital Allocation Priorities
SEPARATION CONSISTENT WITH ACTIVE PORTFOLIO MANAGEMENT STRATEGY AND CAPITAL ALLOCATION PRIORITIES May October April June August Moving 2017 2017 2018 2018 2018 Forward Reshape the Portfolio Distort 4 Transform Asia CHOICES Model Elevate DTC 4
Slide 5: Compelling Rationale for a Separation
COMPELLING RATIONALE FOR A SEPARATION Enhances strategic and management focus Creates opportunity to focus investment on strategic priorities Provides flexibility to pursue independent strategies and diverging paths to value creation Drives more efficient allocation of capital Aligns each company wi
Slide 6: Two Independent Companies with Enhanced Prospects for Long-Term Value Creation
TWO INDEPENDENT COMPANIES WITH ENHANCED PROSPECTS FOR LONG-TERM VALUE CREATION NewCo Global apparel and footwear powerhouse anchored Global leader in denim with strong iconic brands in activity-based outdoor, active and work lifestyles steeped in rich heritage and authenticity Revenue >$11B Revenue
Slide 7: Two Highly Attractive Business and Financial Profiles
TWO HIGHLY ATTRACTIVE BUSINESS AND FINANCIAL PROFILES VF RemainCo NewCo Revenue Growth High Single Digit Low Single Digit Gross Margin >50% >40% EBITDA Margin Mid-Teen High-Teen Work Other Outdoor Wrangler Active Lee DTC Revenue Mix DTC Wholesale Wholesale Int'l U.S. Int'l U.S. Dividend Payout Ratio
Slide 8: Aggregate Dividend Expected to Increase Post Separation
AGGREGATE DIVIDEND EXPECTED TO INCREASE POST SEPARATION Projected Dividend per Share (Subject to Board Approval) VF VF RemainCo & NewCo $3.00 $3.00 $2.50 $2.50 $2.00 $2.00 $1.50 $1.50 $1.00 $1.00 FY20E FY21E FY22E FY20E FY21E FY22E VF RemainCo NewCo Projected Dividend Yield Projected Dividend Yield
Slide 9: Transaction Details
TRANSACTION DETAILS Tax-free distribution of NewCo shares to VF shareholders Transaction NewCo will comprise Jeans and VF Outlet businesses Structure Expect to incur one-time charges related to the transaction Both companies expected to be well capitalized with flexibility to fund growth pri
Slide 10: VF RemainCo: Brand Portfolio Focused on High Quality Growth Assets
VF REMAINCO: BRAND PORTFOLIO FOCUSED ON HIGH QUALITY GROWTH ASSETS Global leader in branded apparel, Outdoor Active Work footwear and accessories anchored in activity-based outdoor, active and work lifestyles Highly diversified business model with attractive growth profile - Well diversified acr
Slide 11: VF RemainCo: Separation Provides Enhanced Prospects for Long-Term Value Creation
VF REMAINCO: SEPARATION PROVIDES ENHANCED PROSPECTS FOR LONG-TERM VALUE CREATION 1 2 3 4 5 6 Enhances Increases Reduces Improves Enhances Optimizes focus on investment operational business flexibility balanced TSR simplified, capacity and and model to pursue delivery with high quality opportunity ma
Slide 12: VF RemainCo: Attractive Business Mix with Large International & DTC Platforms
VF REMAINCO: ATTRACTIVE BUSINESS MIX WITH LARGE INTERNATIONAL & DTC PLATFORMS Revenue by Channel Revenue by Geography Americas DTC – B&M WS - Work (non-U.S.) Asia WS – U.S. Specialty & Other DTC – Digital Europe U.S. WS – Digital WS – Int’l Large DTC and digital Attractive wholesale mix Large intern
Slide 13: VF RemainCo: TSR Delivery More Growth Focused
VF REMAINCO: TSR DELIVERY MORE GROWTH FOCUSED 14 - 16% ~2% ~1% 4 -5% 7 - 8% Revenue Margin Share Dividend Yield Multiple M&A Total Growth Expansion Repurchase Expansion Shareholder Return 13
Slide 14: VF RemainCo: Capital Allocation Priorities Beyond Organic Growth Will Remain Unchanged
VF REMAINCO: CAPITAL ALLOCATION PRIORITIES BEYOND ORGANIC GROWTH WILL REMAIN UNCHANGED 1 2 3 SHARE M&A DIVIDEND REPURCHASE 14
Slide 15: VF RemainCo: Key Investment Highlights
VF REMAINCO: KEY INVESTMENT HIGHLIGHTS Global apparel and footwear powerhouse Stable of strong brands focused on anchored in activity-based, outdoor, highly attractive and growing consumer active, and work lifestyles segments and categories Best-in-class management team Attractive financial profile
Slide 16: NewCo: Leading Denim Portfolio with Global Scale
NEWCO: LEADING DENIM PORTFOLIO WITH GLOBAL SCALE Revenue by Brand • Global, iconic brands steeped in deep heritage and authenticity >$1.5B • Leading player in denim globally ~$1.0B • Steady growth, consistent profitability and strong cash flow support high dividend payout 1. Numbers above on an adju
Slide 17: NewCo: Experienced Board and Management Team Focused on Execution Has Been Designated
NEWCO: EXPERIENCED BOARD AND MANAGEMENT TEAM FOCUSED ON EXECUTION HAS BEEN DESIGNATED Robert Shearer Richard Carucci Juliana Chugg Chairman of the Board Board Member Board Member Scott Baxter Rustin Welton Randy Fortenberry Scott Deitz Chief Executive Officer Chief Financial Officer Vice President,
Slide 18: NewCo: Separation to Unlock Stronger Long-Term Value Creation Potential
NEWCO: SEPARATION TO UNLOCK STRONGER LONG-TERM VALUE CREATION POTENTIAL 1 2 3 4 5 6 7 Opportunity Robust Provides Opportunity Opportunity Opportunity Provides to streamline cash flow flexibility to to invest in to expand to pursue flexibility operations generation pursue and extend distribution indu
Slide 19: NewCo: Global Business with Established International Footprint and Deep Category & Channel Expertise
NEWCO: GLOBAL BUSINESS WITH ESTABLISHED INTERNATIONAL FOOTPRINT AND DEEP CATEGORY & CHANNEL EXPERTISE Revenue by Channel Revenue by Geography Americas WS – U.S. DTC – B&M Asia (non-U.S.) Specialty & Other DTC – Digital WS – U.S. Mid-tier WS – Digital & Dept Stores Europe WS – Int’l U.S. WS – U.S. Ma
Slide 20: NewCo: Capital Structure Flexibility
NEWCO: CAPITAL STRUCTURE FLEXIBILITY NewCo is expected to be well capitalized with flexibility to support strong dividend, rapidly paydown debt, and fund growth and capital allocation priorities Target Operating Cash Flow Breakdown ($ in millions) $500 $400 ~40% of ~40% of ~40% of Operating Operatin
Slide 21: NewCo: TSR Delivery Driven by Strong Capital Returns
NEWCO: TSR DELIVERY DRIVEN BY STRONG CAPITAL RETURNS 8 – 10% ~5% 2 - 3% 1 - 2% Revenue Margin Dividend Share Multiple M&A Total Growth Expansion Yield Repurchase Expansion Shareholder Return 21
Slide 22: NewCo: Capital Allocation Priorities
NEWCO: CAPITAL ALLOCATION PRIORITIES SHARE 1 2 REPURCHASE Opportunistically DEBT DIVIDEND PAYDOWN M&A Potential Over time 22
Slide 23: NewCo: Key Investment Highlights
NEWCO: KEY INVESTMENT HIGHLIGHTS Global leader in denim with iconic Opportunity to pursue industry brands steeped in deep heritage and consolidation and strategic M&A over authenticity time Strong customer relationships, best-in- NewCo Opportunity to unlock significant class supply chain, channel an
Slide 24: Next Steps
NEXT STEPS 2H CALENDAR 2018 1H CALENDAR 2019 Finalize NewCo executive management Finalize Form 10 and Board of Directors composition NewCo roadshow Draft and file initial Form 10 Rating agency process Finalize NewCo capital structure Financing execution Establish distribution date
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