Kontoor Brands, Inc. · NYSE:KTB

Kontoor Brands — Merger or Acquisition (April 2019)

46 slides from Kontoor Brands's merger presentation, April 2019

1. Slide 1: Kontoor Brands, Inc. Separation Update: Supplemental Information

   KONTOOR BRANDS, INC. SEPARATION UPDATE: SUPPLEMENTAL INFORMATION APRIL 2019

2. Slide 2: Forward-Looking Statements

   FORWARD-LOOKING STATEMENTS Certain written and oral statements included in this presentation are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting VF and Kontoor

3. Slide 3: Disclaimer

   DISCLAIMER Non-GAAP Financial Measures Financial information contained in this presentation includes certain financial measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting policies in the United States of America (GAAP),

4. Slide 4: Separation Overview and Transaction Update

   SEPARATION OVERVIEW AND TRANSACTION UPDATE 4

5. 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 paths to value creation Drives more efficient allocation of capital Aligns each company with its nat

6. Slide 6: Two Independent Companies with Enhanced Prospects for Long-Term Value Creation

   TWO INDEPENDENT COMPANIES WITH ENHANCED PROSPECTS FOR LONG-TERM VALUE CREATION Global apparel and footwear powerhouse anchored Global apparel leader with strong iconic brands in activity-based outdoor, active and work lifestyles steeped in rich heritage and authenticity Revenue(1) ~$11B Revenue(1) ~

7. Slide 7: Two Highly Attractive Business and Financial Profiles

   TWO HIGHLY ATTRACTIVE BUSINESS AND FINANCIAL PROFILES VF Corporation (RemainCo) Kontoor Brands Long-Term Revenue Growth High Single Digit Low Single Digit Gross Margin (1) 53% 42% EBITDA Margin (1) 16% 14% Work Other Outdoor Wrangler Active Lee DTC Revenue Mix(1) DTC Wholesale Wholesale Int'l U.S. I

8. Slide 8: Transaction Details

   TRANSACTION DETAILS  Tax-free distribution of Kontoor Brands shares to VF Corporation shareholders Transaction Structure  Kontoor Brands will include the Wrangler® and Lee® brands, and the VF Outlet™ business  Both companies expected to be well capitalized with flexibility to fund growth prioriti

9. Slide 9: VF Corporation (RemainCo)

   VF CORPORATION (REMAINCO) 9

10. Slide 10: VF Corporation (RemainCo): Key Investment Highlights

    VF CORPORATION (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 fina

11. Slide 11: VF Corporation (RemainCo): Brand Portfolio Focused on High Quality Growth Brands

    VF CORPORATION (REMAINCO): BRAND PORTFOLIO FOCUSED ON HIGH QUALITY GROWTH BRANDS  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 d

12. Slide 12: VF Corporation (RemainCo): Separation Provides Enhanced Prospects for Long-Term Value Creation

    VF CORPORATION (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

13. Slide 13: VF Corporation (RemainCo): Attractive Business Mix with Large, Growing International & DTC Platforms

    VF CORPORATION (REMAINCO): ATTRACTIVE BUSINESS MIX WITH LARGE, GROWING INTERNATIONAL & DTC PLATFORMS Revenue by Channel (1) Revenue by Geography (1) DTC – Brick & Americas Wholesale - Mortar (non-U.S.) Workwear Asia Wholesale – U.S. Specialty & Other DTC – Digital Europe U.S. Wholesale – Wholesale -

14. Slide 14: VF Corporation (RemainCo): More Growth Focused Long-Term Total Shareholder Return Algorithm

    VF CORPORATION (REMAINCO): MORE GROWTH FOCUSED LONG-TERM TOTAL SHAREHOLDER RETURN ALGORITHM 14 - 16% ~2% ~1% 4 -5% 7 - 8% Revenue Margin Share Dividend Yield Multiple M&A Total Growth Expansion Repurchase Expansion Shareholder Return 14

15. Slide 15: VF Corporation (RemainCo): Capital Allocation Priorities

    VF CORPORATION (REMAINCO): CAPITAL ALLOCATION PRIORITIES BEYOND ORGANIC GROWTH REMAIN UNCHANGED 1 2 3 SHARE M&A DIVIDEND REPURCHASE 15

16. Slide 16: VF Corporation (RemainCo) Excluding Kontoor Brands: 2017 Reconciliation

    VF CORPORATION (REMAINCO) EXCLUDING KONTOOR BRANDS: 2017 RECONCILIATION 52 weeks ended December 30, 2017 ($ in millions) Pre-Tax Revenue EBITDA EBIT Income VF Corp – Consolidated $11,811.2 $1,779.5 $1,502.4 1,416.5 (a) Transaction and other costs - 20.5 20.5 20.5 (b) VF Corp – Adjusted $11,811.2 $1,

17. Slide 17: VF Corporation (RemainCo) Excluding Kontoor Brands: 2018 Reconciliation

    VF CORPORATION (REMAINCO) EXCLUDING KONTOOR BRANDS: 2018 RECONCILIATION 52 weeks ended December 29, 2018 ($ in millions) Pre-Tax Revenue EBITDA EBIT Income VF Corp – Consolidated $13,681.1 $2,028.2 $1,740.3 $1,645.9 (f) Transaction and other costs - 165.7 165.7 165.7 (g) VF Corp – Adjusted $13,681.1

18. Slide 18: VF Corporation (RemainCo): Reconciliation Notes

    VF CORPORATION (REMAINCO): RECONCILIATION NOTES (a) Revenue and Pre-Tax Income represent historical VF financial information obtained from the Form 10-K for the fiscal year ending December 30, 2017. EBIT and EBITDA represent historical VF financial information derived from the Form 10-K for the fisc

19. Slide 19: Kontoor Brands

    KONTOOR BRANDS 19

20. Slide 20: Kontoor Brands: Key Investment Highlights

    KONTOOR BRANDS: 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 (i.e. Horizon 2) Strong customer relationships, reliable Opportunity to unlock significant supply cha

21. Slide 21: Kontoor Brands at a Glance

    KONTOOR BRANDS AT A GLANCE Kontoor Brands is a global apparel leader focused on the design, manufacturing, sourcing, marketing, and distribution of a portfolio of brands, including the iconic Wrangler® and Lee® brands Two iconic and authentic brands in Wrangler® and Lee® with 200 combined years of h

22. Slide 22: Kontoor Brands: Separation to Unlock Stronger Long-Term Value Creation Potential

    KONTOOR BRANDS: 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 distrib

23. Slide 23: Reconfiguring Kontoor Brands' Global Approach

    RECONFIGURING KONTOOR BRANDS’ GLOBAL APPROACH VF Portfolio Management Standalone Kontoor Approach  Independently operating Jeans  Focused management team business units across three instilling an energized regional offices standalone culture  Separate and brand-specific:  Unified global brand an

24. Slide 24: Kontoor Brands: Highly Attractive Business Following Separation

    KONTOOR BRANDS: HIGHLY ATTRACTIVE BUSINESS FOLLOWING SEPARATION Kontoor Brands Financial Snapshot (1) Compelling Rationale for a Separation Revenue ~$2.7B Enhances strategic and management focus; positions Gross Margin 42% company for stronger, more sustainable long-term value creation EBITDA Margin

25. Slide 25: Kontoor Brands: Well Positioned in an Attractive Industry

    KONTOOR BRANDS: WELL POSITIONED IN AN ATTRACTIVE INDUSTRY Global Jeanswear Market Share Industry Insights  Highly consistent and predictable industry with attractive market size and growth over time Levi’s • ~4% CAGR since 2004 • ~4% CAGR over the last 3 years  Market projected to grow by ~5% glob

26. Slide 26: Kontoor Brands: Reliable, Low Cost Supply Chain is an Advantage

    KONTOOR BRANDS: RELIABLE, LOW COST SUPPLY CHAIN IS AN ADVANTAGE Global Supply Chain Capabilities Kontoor Brands Competitive Advantage >170M Units Supplied in 2018 Speed to market Supply chain consistency Customer service Global footprint Product procurement strategies Internal manufacturing faciliti

27. Slide 27: Kontoor Brands Leadership Team

    KONTOOR BRANDS LEADERSHIP TEAM Years at VF Name & Title Relevant Experience Corp (1)  Most recently served as Group President of Jeanswear and previously of Americas West Scott Baxter  VP and Group President – Outdoor & Action Sports Americas, and previously of Jeanswear Americas, President & 11 I

28. Slide 28: Kontoor Brands: Long-Term Total Shareholder Return Delivery Driven by Strong Capital Returns

    KONTOOR BRANDS: LONG-TERM TOTAL SHAREHOLDER RETURN 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 28

29. Slide 29: Kontoor Brands: Capital Allocation Priorities

    KONTOOR BRANDS: CAPITAL ALLOCATION PRIORITIES SHARE 1 2 REPURCHASE Opportunistically DEBT DIVIDEND PAYDOWN Long-Term Adjusted Gross Leverage1 Target < 3x M&A Potential Over Time (1) Definitions of non-GAAP measures and GAAP to non-GAAP reconciliations are included in the appendix to this presentatio

30. Slide 30: Kontoor Brands: Near Term "Horizon 1" Focus

    KONTOOR BRANDS: NEAR TERM “HORIZON 1” FOCUS Addressing Macro Conditions  Leveraging Wrangler® strength, amplifying growth in accretive digital channels to more effectively harness denim category tailwinds and minimize U.S. wholesale challenges  Beginning to implement pricing actions and cost savin

31. Slide 31: Focus on "Horizon 1" Execution to Set Strong Foundation for "Horizon 2" Success

    FOCUS ON “HORIZON 1” EXECUTION TO SET STRONG FOUNDATION FOR “HORIZON 2” SUCCESS Strengthen the business and TSR Drivers establish long-term advantage Dividend, profit Prove and margin and growth accelerate the driven Kontoor model Continue to stabilize Dividend and profit the business margin driven

32. Slide 32: Kontoor Brands: Revenue Reconciliation

    KONTOOR BRANDS: REVENUE RECONCILIATION 52 weeks ended ($ in millions) 12/30/17 12/29/18 $2,655.4 $2,534.1 (a) Revenue (Jeanswear segment revenue reported by VF) 113.1 125.2 Other category (b) Wrangler® RIGGS segment reclassification - 62.2 (c) Carve-out accounting adjustments 61.6 42.5 (d) Revenue (

33. Slide 33: Kontoor Brands: EBITDA and Pre-Tax Income Reconciliation

    KONTOOR BRANDS: EBITDA AND PRE-TAX INCOME RECONCILIATION 52 weeks ended ($ in millions) 12/30/17 12/29/18 EBIT (Jeanswear segment profit reported by VF) $421.9 $361.7 (a) Other category (3.1) (0.5) (b) Depreciation & amortization 56.8 31.0 (g) EBITDA (as derived from VF SEC filings) 475.6 392.2 Wran

34. Slide 34: Kontoor Brands: Reconciliation Notes

    KONTOOR BRANDS: RECONCILIATION NOTES (a) For the 52 weeks ended December 30, 2017, represents the historical Jeanswear reportable segment as reported in the VF Form 10-K for the fiscal year ending December 30, 2017. For the 52 weeks ended December 29, 2018, represents the aggregation of the historic

35. Slide 35: Appendix

    APPENDIX @ 35

36. Slide 36: VF Corporation (RemainCo) Non-GAAP Definitions

    VF CORPORATION (REMAINCO) NON-GAAP DEFINITIONS Financial information contained in this presentation includes certain financial measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting policies in the United States of America

37. Slide 37: VF Corporation (RemainCo) Non-GAAP Definitions

    VF CORPORATION (REMAINCO) NON-GAAP DEFINITIONS EBITDA: Net income calculated in accordance with U.S. GAAP, excluding income (loss) from discontinued operations, interest income and expense, income taxes, depreciation and amortization. Adjusted EBITDA: EBITDA (as defined above), excluding transaction

38. Slide 38: Kontoor Brands Non-GAAP Definitions

    KONTOOR BRANDS NON-GAAP DEFINITIONS Financial information contained in this presentation includes certain financial measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting policies in the United States of America (GAAP), wh

39. Slide 39: Kontoor Brands Non-GAAP Definitions

    KONTOOR BRANDS NON-GAAP DEFINITIONS EBITDA: Net income as calculated in accordance with U.S. GAAP from the Combined Statements of Income contained within the Kontoor Brands Form 10, excluding other interest income, net, income taxes, related party interest income, net, and depreciation and amortizat

40. Slide 40: VF Corporation: Reconciliation of Net Income (GAAP) to EBIT & EBITDA (Non-GAAP)

    VF CORPORATION: RECONCILIATION OF NET INCOME (GAAP) TO EBIT & EBITDA (NON-GAAP) ($ in millions) 52 weeks ended 52 weeks ended December 30, 2017 December 29, 2018 VF Corp Net Income (GAAP) $614.9 $1,383.8 Loss from discontinued operations 106.3 7.6 Income taxes 695.3 254.5 Interest income (16.1) (14.

41. Slide 41: Kontoor Brands: Reconciliation of Net Income (GAAP) to EBIT & EBITDA (Non-GAAP)

    KONTOOR BRANDS: RECONCILIATION OF NET INCOME (GAAP) TO EBIT & EBITDA (NON-GAAP) ($ in millions) 52 weeks ended 52 weeks ended December 30, 2017 December 29, 2018 Kontoor Brands Net Income (GAAP) $116.2 $263.1 (as reported in Form 10) Income taxes 243.0 77.0 Related party interest income, net (3.4) (

42. Slide 42: VF Corporation (RemainCo): Reconciliation of Gross Profit (GAAP) to Adjusted Gross Profit

    VF CORPORATION (REMAINCO): RECONCILIATION OF GROSS PROFIT (GAAP) TO ADJUSTED GROSS PROFIT (NON-GAAP) 52 weeks ended December 29, 2018 ($ in millions) Cost of Revenue Goods Sold Gross Profit Gross Margin VF Corp (as derived from VF SEC filings) $13,681.1 $6,738.4 $6,942.7 50.7% Jeanswear Segment (2,5

43. Slide 43: Kontoor Brands: Reconciliation of Gross Profit (GAAP) to Adjusted Gross Profit

    KONTOOR BRANDS: RECONCILIATION OF GROSS PROFIT (GAAP) TO ADJUSTED GROSS PROFIT (NON-GAAP) 52 weeks ended December 29, 2018 ($ in millions) Cost of Revenue Goods Sold Gross Profit Gross Margin Kontoor Brands (as reported in Form 10) $2,764.0 $1,649.4 $1,114.6 40.3% Restructuring and transaction costs

44. Slide 44: VF Corporation (RemainCo): Reconciliation of Cash from Operations to Adjusted

    VF CORPORATION (REMAINCO): RECONCILIATION OF CASH FROM OPERATIONS (GAAP) TO ADJUSTED CASH FROM OPERATIONS (NON- GAAP) 52 weeks ended ($ in millions) 12/29/18 VF Corp Cash provided by operating activities (as derived from VF SEC filings) $1,193.4 Transaction and Other Costs and Separation Adjustments

45. Slide 45: Kontoor Brands: Reconciliation of Cash from Operations to Adjusted

    KONTOOR BRANDS: RECONCILIATION OF CASH FROM OPERATIONS (GAAP) TO ADJUSTED CASH FROM OPERATIONS (NON-GAAP) 52 weeks ended ($ in millions) 12/29/18 Kontoor Brands Cash used by operating activities (as reported per Form 10) ($96.3) Separation adjustments 46.3 (a) Restructuring & transaction costs 26.7

46. Slide 46: VF Corporation Reconciliation of Segment Revenue

    VF CORPORATION RECONCILIATION OF SEGMENT REVENUE 52 weeks ended December 29, 2018 ($ in millions) Outdoor Active Work Jeans Other VF Corp Three months ended March 31, 2018 (1) $888.0 $1,071.5 $426.1 $639.5 $20.3 $3,045.4 Three months ended June 30, 2018 568.6 1136.9 442.6 603.8 36.2 2,788.1 Three mo

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