Toys R Us — Investor Presentation (July 2015)
28 slides from Toys R Us's investor presentation, Jul 30, 2015
Slide 1: Toys"R"Us, Inc. Investor Presentation
Exhibit 99.1 Toys“R”Us, Inc. Investor Presentation July 30, 2015
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains “forward-looking” statements within the meaning of the federal securities laws, and such statements are intended to be covered by the safe harbors created thereby. These forward-looking statements reflect our current views with respect to, among
Slide 3: David Brandon, Chairman & CEO
David Brandon Chairman & CEO 3|
Slide 4: Company Overview and FY 2014/Q1 2015 Highlights
1 Company Overview and FY 2014/Q1 2015 Highlights 4|
Slide 5: Toys"R"Us Unique Brand Strengths
Toys“R”Us Unique Brand Strengths Iconic brand with Net sales of $12 billion global recognition – 61% U.S.; 39% International – Significant liquidity Growing international Strongest growth coming from China presence and Southeast Asia $1.2 billion in global Omnichannel initiatives providing internet
Slide 6: Global Footprint and Growing International Presence
Global Footprint and Growing International Presence As of May 2, 2015 OPERATED INT’L MARKETS ACCOUNTED FOR 39% OF TOTAL 2014 ANNUAL NET SALES North America Asia Europe Australia Operated: 953 Operated*: 323 Operated: 287 Operated: 34 Licensed: 59 Licensed: 53 Middle East Africa Licensed: 58 Licensed
Slide 7: Company Highlights – FY 2014/YTD 2015
Company Highlights – FY 2014/YTD 2015 First annual Adj. EBITDA FFG savings Moving Improving net sales grew by target eCommerce customer growth since 10% in FY increased in-house by 1 satisfaction FY 2010 2014 to $325M mid-2016 2 4 6 8 10 2014 YTD 2015 1 3 5 7 9 11 Extended Refinanced FFG delivers Q1
Slide 8: Growth - eCommerce
Growth - eCommerce Bringing eCommerce platform in-house by mid-2016 to increase control $’s in millions Omnichannel Traditional DC Fulfillment 8|
Slide 9: Improving U.S. Gross Margin Trends
Improving U.S. Gross Margin Trends 39.0% 36.5% 36.4% 37.0% 35.9% 35.3% 35.0% 36.0% 35.0% 33.5% 33.0% 32.4% 31.0% 30.2% 29.0% Q1 Q2 Q3 Q4 2013 2014 2015 Excludes($51M) chargein Q4 2013(+1.5%impact),$11M benefit in Q1 2014(-0.7%impact) and ($19M) chargein Q2 2014 (+1.3%impact) related to excess and ob
Slide 10: Fit For Growth Savings
Fit For Growth Savings $’s in millions Initiatives Domestic International Consolidated Marketing Effectiveness $84 $-- $84 End-to-End 21 -- 21 Margin Private Label 18 12 30 Sub-total Margin $123 $12 $135 In-Store Operations 53 14 67 Supply Chain 4 9 13 SG&A Organizational Effectiveness 25 12 37 Proc
Slide 11: Forward Adjusted EBITDA Momentum
Forward Adjusted EBITDA Momentum $’s in millions LTM Adj. EBITDA Net Debt / LTM Adj. EBITDA Deleveraged by 1.5x 8.5x $25 $747+ 7.5x $22 7.0x $700+ 6.4x $685 $642 $583 FY 2013 FY 2014 LTM Estimated FAO / ConsultantEstimated 2013 2014 2014 2015 Q1 2015 LTM Times Fees / Pro Forma Q2 2015 Square Other L
Slide 12: Global Liquidity
Global Liquidity $’s in millions Significant liquidity even during FY 2014 peak borrowing Liquidity Reconciliation with corresponding excess availability of $910 Gross Borrowing Capacity Cash Usage (including LCs) Main drivers of change in total liquidity $2,500 $2,410 between Q1 2014 and Q1 2015 ar
Slide 13: Debt Maturities
Debt Maturities $’s in millions | As of FY 2014 Maturity Profile 1,600 1,400 1,200 UK Propco Delaware 2017 Maturity Profile 1,000 FILO Q1 Q2 Q3 Q4 Propco II 800 Notes $ -- $ -- $450 $725 600 Delaware Delaware B-2/B-3 Propco I B-4 Loan 400 Term Loan Inc. Notes Inc. Notes 200 0 2015 2016 2017 2018 201
Slide 14: Toys"R"Us Transformation
Toys“R”Us Transformation Entering Phase 4 Executing Growth 3 Become Fit for • Hired CEO, David Executed Growth Brandon 2 Develop High • Streamline costs • Insourcing Executed Performing Teams • $325M of cost eCommerce 1 savings Transformed • New management Customer Experience hires • $155M through •
Slide 15: Financial Summary
@ Financial Summary Toysfius 15
Slide 16: Toys"R"Us, Inc. Summary P&L – Full Year
Toys“R”Us,Inc. Summary P&L– Full Year $’s in millions Net Sales Adjusted Gross Margin $12,543 $243 $12,604 $83 $4,521 $4,439 $4,438 $12,361 FY 2013 FY 2014 FX Adjusted FY FY 2013 FY 2014 FX Adjusted FY 2014 2014 Net Sales (1.5%) 0.5% Adj. Gross Margin 35.9% 35.9% SFS Change 0.0% 0.0% Adjusted SG&A A
Slide 17: Toys"R"Us, Inc. Summary P&L – Q1 2015
Toys“R”Us,Inc. Summary P&L– Q1 2015 $’s in millions Net Sales Adjusted Gross Margin $2,479 $131 $2,456 $2,325 $907 $50 $912 $862 Q1 2014 Q1 2015 FX Adjusted Q1 Q1 2014 Q1 2015 FX Adjusted Q1 2015 2015 Net Sales (6.2%) (0.9%) Adj. Gross Margin 37.1% 37.1% SFS Change (1.0%) (1.0%) Adjusted SG&A Adjust
Slide 18: 2015 North American ABL Availability
2015 North American ABL Availability $’s in millions $2,000 $1,500 $777 $1,000 $703 $490 $854 $500 $844 $848 $877 $464 $342 $216 -- $103 $99 Q4 Q1 Q2 Q3 Q4 Q1 2013 2014 2015 Usage (incl LC's) Excess Availability (net of $125 million covenant) 18 |
Slide 19: 2015 European/Australian ABL Availability
2015 European/Australian ABL Availability $’s in millions $200 $150 $138 $100 $70 $122 $81 $50 $107 $86 $61 $65 $21 $33 -- -- -- Q4 Q1 Q2 Q3 Q4 Q1 2013 2014 2015 Usage Excess Availability 19 |
Slide 20: Trade Credit Overview
© Trade Credit Overview Toysfus 20|
Slide 21: Big Three Credit Insurers
Big Three Credit Insurers Euler Hermes Atradius Coface • S&P rated: AA- • Moody’s rated: A3 • Moody’s rated: A2 • In business for 99 years • In business for 90 years • In business for 70 years • 34% market share (#1) • 31% market share • Present in 99 countries • Look after 52,000 companies • Presen
Slide 22: Trade Creditor Illustrative Example
Trade Creditor Illustrative Example Terms Original Potential Offer Inventory Purchase Amount $100 $100 Terms Net / 45 1.5% / 10 Payment Amount $100 $98 APR -- 16.0% • In certain instances we may assist vendors with early payments, which is a timing based action • However, in these instances we work
Slide 23: Inventory By Region
Inventory By Region $’s in millions Domestic Europe/Asia/Australia Canada $3,324 $266 $2,396 $2,344 $890 $177 $2,164 $169 $2,064 $142 $172 $779 $733 $569 $663 $2,168 $1,440 $1,442 $1,353 $1,329 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 Total Liquidity $1,505 $1,176 $1,407 $1,773 $1,125 Note: Includes
Slide 24: Appendix
© Appendix Toysfaus 24|
Slide 25: Capital Structure
Capital Structure $’s in millions | as of May 2, 2015 Senior Notes| $850 Toys“R”Us, Inc. Toys“R”Us- Toys“R”Us Toys“R”Us Delaware, Inc. Japan Asia Joint Venture Europe (Toys-Delaware) ABL | $367 ABL | $33 Credit Lines|$36 Short-term borrowings| $6 Loansand Notes | $1,525 Bank Loans | $59 Toys“R”Us Pr
Slide 26: Capital Structure Overview
Capital Structure Overview As of May 2, 2015 Amortization & Principal Repayments Fiscal Year ($'s in millions) Maturity Rate Amount 2015 2016 2017 2018 2019 2020+ CFR/CCR: B3/B- Cash $453 Delaware Recourse Debt U.S./Canadian ABL 3/21/19 L + 1.50% $367 $-- $-- $-- $-- $367 $-- FILO 10/24/19 L + 7.25%
Slide 27: Toys"R"Us, Inc. Annual Adjusted EBITDA Reconciliation
Toys“R”Us, Inc. Annual Adjusted EBITDA Reconciliation Fiscal Year ($'s in millions) 2010 2011 2012 2013 2014 Operating earnings (loss) attributable to Toys "R" Us, Inc. $647 $580 $555 ($353) $187 Depreciation and amortization 388 403 407 388 377 EBITDA $1,035 $983 $962 $35 $564 Adjustments: (1) Obso
Slide 28: Toys"R"Us, Inc. Quarterly Adjusted EBITDA Reconciliation
Toys“R”Us, Inc. Quarterly Adjusted EBITDA Reconciliation LTM ($'s in millions) Q1 2013 Q1 2014 Q2 2014 Q1 2015 Q1 2014 Q1 2015 Q2 2015F Operating (loss) earnings attributable to Toys "R" Us, Inc. ($73) ($91) ($43) ($31) ($371) $247 $281 Depreciation and amortization 100 104 95 87 392 $360 353 EBITDA