Samsonite Group S.a. · HKEX:1910
Samsonite — Samsonite International — Q3 2020 Earnings Presentation
38 slides from Samsonite's earnings presentation, Nov 12, 2020
Slide 1: 2020 Third Quarter Results
2020 THIRD QUARTER RESULTS NOVEMBER 12, 2020 Samsonite International S.A. Stock Code: 1910
Slide 2: Disclosure Statement
Disclosure Statement This presentation and the accompanying slides (the “Presentation”) which have been prepared by Samsonite International S.A. (“Samsonite” or the “Company”) do not constitute any offer or invitation to purchase or subscribe for any securities, and shall not form the basis for or b
Slide 3: Agenda
Agenda Business Update Financial Highlights Outlook Q&A Page 3
Slide 4: Successfully managing the business through the global pandemic
Successfully managing the business through the global pandemic Aggressive early actions on costs and cash burn have been taken and have positioned Samsonite for success. Fixed SG&A decreased by approximately 40%(1), or US$100.6 million, in Q3 2020 compared to Q3 2019; Over $600mm of in-year cash sav
Slide 5: Sequential improvement in performance during the third quarter of 2020
The Company’s performance continued to see sequential improvement during the third quarter of 2020 as markets around the world gradually emerged from lockdown Monthly sales trend (2) (1,2) Net sales in September 2020 decreased by 60.4%(1) year-on-year, compared to declines of 63.3%(1) in August and
Slide 6: DTC e-commerce and non-travel products helped mitigate the sales decrease
The Company’s DTC e-commerce channel and diverse set of product categories, particularly non-travel products, have helped mitigate the sales decrease Year over year comparison of sales by channel Year over year comparison of Travel vs. Non-travel sales (41.0%) (1) (48.1%) (1) (63.3%) (1) (57.2%) (1)
Slide 7: Non-travel brands perform better than core travel brands
The Company’s non-travel brands continue to perform better relative to the core travel brands, however travel brands are also showing a gradual rebound Brand sales trend by month (1) Q1 Q2 H1 Jul Aug Sep Q3 YTD Sep Core Travel Brands Samsonite (24.5%) (79.4%) (53.6%) (71.1%) (66.8%) (64.2%) (67.6%)
Slide 8: U.S. airport checkpoint numbers gradually increasing since April
U.S. airport checkpoint numbers have gradually been increasing since April, but remain down significantly vs. prior year October 18, 2020 (Sunday) was the first time that over 1 million people passed through U.S. airport checkpoints since mid-March. U.S. airports are seeing a gradual uptick in trave
Slide 9: Gradual recovery in travel driven by domestic travel
The gradual recovery in travel is being driven by domestic travel Year-on-year change in Revenue Passenger-kilometers (RPK’s) Source: IATA publications Air travel demand continues to recover but the pace of that recovery remains slow. The gradual recovery is being driven by domestic travel as govern
Slide 10: China shows steady improvement since February, particularly in DTC
China continues to show steady improvement since February, particularly in DTC channels Monthly sales trend (1) (2) Overall sales in China have improved to approximately -18%(1,2) in October, from -70.6%(1) in February. DTC channels within China have steadily recovered to growth of +30.1%(1) in Sept
Slide 11: Aggressively reducing operating costs to counter sales decrease
The Company continues to aggressively reduce operating costs to counter the significant sales decrease caused by COVID-19 Advertising & Promotion Page 11 (1) Stated on a constant currency basis.
Slide 12: EBITDA and cash burn showing improvement in Q3 2020
The Company is seeing the benefits from the comprehensive cost reduction actions with EBITDA and cash burn showing improvement in Q3 2020 Quarterly Adjusted EBITDA and cash burn(1) Adjusted EBITDA and cash burn have improved since Q2 2020 due to the Company’s quick and comprehensive cost reduction a
Slide 13: Liquidity of approximately US$1.5 billion
With significant liquidity of approximately US$1.5 billion, the Company is confident it has sufficient capacity to navigate the challenges from the COVID-19 pandemic The Company bolstered its balance sheet by drawing US$810 million on its revolving credit facility in March and adding US$600 million
Slide 14: Cash preservation and savings initiatives
The Company is focused on cash preservation and savings initiatives to reposition the profit profile of the business The Company is mitigating the impact of lower sales on cash flow through quickly identifying and implementing over US$600 million of expected in-year cash savings, inclusive of: Fixed
Slide 15: Streamlining the organization and repositioning the store portfolio
The Company is taking significant actions to streamline the organization and reposition our store portfolio for more sustained profitability While very difficult, we are making the tough decisions to best position Samsonite for the future. Our teams are engaged, energized and poised to capture the d
Slide 16: Commitment to sustainability remains a key strategy
Commitment to sustainability remains a key strategy for the Company Continue to advance “Our Responsible Journey” – the Company’s global strategy and commitment to lead the industry in sustainability, which we announced in March 2020. Samsonite has diverted more than 63 million rPET bottles from the
Slide 17: Proxis exemplifies innovation and sustainability
ProxisTM exemplifies the Company’s commitment to innovation and sustainability Proxis™, Samsonite’s new hard-shell collection is highly resilient with a most innovative design. The outer shell is made from patented Roxkin™ material, a new proprietary and exclusive material that bounces back into sha
Slide 18: Innovative product offerings for current and future consumer needs
The Company remains focused on strengthening its long- term market position through innovative product offerings that address current and future consumer needs The overall awareness and interest in sanitizing and disinfecting has increased exponentially due to the current pandemic. The Company is co
Slide 19: New backpack Konnect-i
The Company continues its commitment to innovation with its new backpack, Konnect-i Konnect-i, Samsonite’s new backpack with Jacquard™ by Google, is an everyday bag that connects with a wearer’s smartphone. The Jacquard Tag connects with the Jacquard app to allow you to control your smartphone from
Slide 20: Agenda
Agenda Business Update Financial Highlights Outlook Q&A Page 20
Slide 21: 3rd Quarter 2020 Results Highlights
3rd Quarter 2020 Results Highlights Net sales improved to US$327 Gross profit margin, as reported, was 44.9% for Q3 The dramatic decrease in net The decrease of US$160.7 million from US$201 million in the 2020 compared to 55.7% for Q3 2019. The sales had a significant impact on million in Adjusted N
Slide 22: Q3 sales down in all regions but rebounded from Q2 lows
Q3 sales remain down in all regions due to global travel restrictions and lockdowns, but have rebounded from the lows in Q2 Constant Currency -64.3% -63.4% -65.7% -74.2% Growth Page 22 (1) Stated on a constant currency basis.
Slide 23: Asia sales trend improving each month since April 2020
The sales trend in Asia has continued to improve each month since April 2020, and has correlated well with the recovery in domestic China RPK Sales growth vs. Revenue Passenger-Kilometer (RPK) growth The sales recovery within China and the Asia region has correlated with the recovery in domestic Chi
Slide 24: YTD September 2020 Results Highlights
YTD September 2020 Results Highlights Constant currency net sales Gross margin was down 780bp from The decrease in net sales had a The decrease in Adjusted Net decrease of 57.3%(1), with Q1 prior year with approximately 519bp of significant impact on Adjusted Income (Loss) was due mainly down 26.1%(
Slide 25: YTD sales down in all regions, gradually recovering
YTD sales remain down in all regions due to COVID-19 impacts, but have been gradually and steadily recovering from the lows in Q2 YTD September Q1 Q2 Q3 YTD Q3 Q1 Q2 Q3 YTD Q3 Q1 Q2 Q3 YTD Q3 Q1 Q2 Q3 YTD Q3 Constant Currency Growth -24.0% -74.0% -64.3% -55.5% -32.7% -75.6% -63.4% -57.9% -23.4% -85.
Slide 26: Adjusted EBITDA Bridge YTD September 2020
Savings initiatives have significantly softened the impact of the dramatic sales reduction on Adjusted EBITDA Adjusted EBITDA Bridge YTD September 2020 Approximately US$(63) million from change in sales mix and promotional activity, US$(37) million from increased inventory reserves and restructuring
Slide 27: Financial Highlights
Financial Highlights Net sales decreased by 57.3%(1) for YTD September 2020 (Q1 -26.1%(1), Q2 -77.9%(1), and Q3 -64.7%(1)) from the prior year due to the negative impacts of the COVID-19 pandemic on the retail environment and global travel industry. As a result of lower net sales, Adjusted EBITDA fo
Slide 28: Financial Highlights (cont.)
Financial Highlights (cont.) Net working capital at September 30, 2020 was US$85.9 million lower than September 30, 2019 despite much lower sales due to actions taken to quickly reduce the inflow of inventory. Capital expenditures and software purchases of US$22.7 million for YTD September 2020 were
Slide 29: Q3 2020 SG&A costs cut by almost half
Q3 2020 SG&A costs were cut by almost half compared to Q3 2019 as the Company focused on operating costs reduction The Company has aggressively cut and continues to identify additional opportunities to reduce non- advertising fixed operating expenses to mitigate the impact of lower sales on profit a
Slide 30: Additional fixed cost savings identified and executed
Management has continued to identify and execute additional fixed cost savings since the end of Q2, and is committed to position the cost structure for long-term profitability Savings Savings identified to Savings identified to Estimated (1) (1) annualized realized date and estimated date and estima
Slide 31: Non-cash impairment charges
The Company incurred non-cash impairment charges related to certain intangible assets and our store portfolio, primarily related to overall market conditions due to COVID-19 US$M Q1 2020 Q2 2020 Q3 2020 YTD Q3 2020 Non‐cash impairment charge on goodwill and tradenames 732.0 ‐ ‐ 732.0 Non‐cash impair
Slide 32: Aggressively reducing operating costs to counter sales decrease
The Company continues to aggressively reduce operating costs to counter the significant sales decrease caused by COVID-19 Advertising & Promotion SG&A (including Advertising & Promotion) within Adjusted EBITDA decreased by US$177.3 million, or -46.5%(1), in Q3 2020 compared to Q3 2019. Advertising &
Slide 33: Balance Sheet
Balance Sheet US$m September 30, December 31, September 30, $ Chg Sep‐20 % Chg Sep‐20 Net debt of US$1,716.4 2019 2019 2020 vs. Sep‐19 vs. Sep‐19 million at September 30, Cash and cash equivalents Trade and other receivables, net 395.7 390.6 462.6 396.0 1,510.9 141.3 1,115.2 (249.3) 281.8% ‐63.8% 20
Slide 34: Working Capital
Working Capital US$m September 30, September 30, $ Chg Sep‐20 % Chg Sep‐20 Management continues to aggressively 2019 2020 vs. Sep‐19 vs. Sep‐19 Working Capital Items manage working capital, and despite a weak Inventories $ 622.9 $ 527.4 $ (95.5) ‐15.3% sales environment net working capital was Trade
Slide 35: Capital expenditures and software purchases put on hold
Almost all capital expenditures and software purchases were put on hold at the end of Q1 2020 resulting in YTD Sep 2020 spend being US$25.4 million lower than YTD Sep 2019 Capital Expenditure by project type US$m YTD Sep 2019 YTD Sep 2020 Anticipating approximately US$90 Retail 26.3 7.1 million redu
Slide 36: Agenda
Agenda Business Update Financial Highlights Outlook Q&A Page 36
Slide 37: Near-term focus during COVID-19
Near-term focus during COVID-19 Ensuring the safety and well-being of our employees, customers and partners continues to be a top priority of the Company. We have taken significant actions to preserve cash and remain focused on identifying and implementing additional permanent savings to further red
Slide 38: Agenda
Agenda Business Update Financial Highlights Outlook Q&A Page 38
Samsonite International — Q3 2020 Earnings Presentation on 6ix