Xcel Brands, Inc · NASDAQ:XELB
Xcel Brands — Investor Presentation (April 2018)
38 slides from Xcel Brands's investor presentation, Apr 17, 2018
Slide 1: Investor Presentation February 2018
INVESTOR PRESENTATION FEBRUARY 2018 NASDAQ: XELB
Slide 2: Safe Harbor Statement
2 SAFE HARBOR STATEMENT FORWARD LOOKING STATEMENTS Certain statements in this presentation, as well as certain oral statements made by management during the presentation, constitute “forward - looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 199
Slide 3: Index
INDE X OVERVIEW STRATEGY BRANDS PLATFORM FINANCIALS GROWTH SUMMARY Page 4 Page 8 Page 14 Page 21 Page 26 Page 31 Page 35 3
Slide 4: Overview
OVERVIEW 4
Slide 5: Xcel Brands is a consumer products company
5 XCEL BRANDS, INC. (NASDAQ:XELB) IS A CONSUMER PRODUCTS COMPANY ENGAGED IN THE DESIGN, PRODUCTION, LICENSING, MARKETING AND DIRECT - TO - CONSUMER SALES OF BRANDED APPAREL, FOOTWEAR, ACCESSORIES, JEWELRY, HOME GOODS, AND OTHER CONSUMER PRODUCTS, AND THE ACQUISITION OF DYNAMIC CONSUMER LIFESTYLE BRA
Slide 6: Company Snapshot
STRONG BALANCE SHEET EQUITY REVENUE & EBITDA 6 COMPANY SNAPSHOT BUSINESS Founded 5 Owned Brands $420MM Retail Sales of our Brands (1) $31.7MM Revenues (2) 6 - Year Revenue CAGR (5) $8.0MM Adjusted EBITDA (2)(4) 20% $21.4MM Term Debt (2)(6) Cash (2) 1.4x Leverage Ratio (2)(6) $10.2MM $2.80 Share Pric
Slide 7: Investment Rationale
7 INVESTMENT RATIONALE Existing business with strong free cash flow Proven historical growth in revenues and EBITDA Strong balance sheet minimizes risk and allows for investments to drive future growth Fast - to - Market supply chain and Integrated Technology platforms position Xcel to grow market s
Slide 8: Strategy
STRATEGY 8
Slide 9: Disruptive Forces Are Affecting the Retail Industry
9 DISRUPTIVE FORCES ARE AFFECTING THE RETAIL INDUSTRY 5 CROWDED MARKET Over - distribution, rise of off - price 4 FAST FASHION Customers demand faster supply chains, 52 Seasons 3 CUSTOMER VOICE Marketing changed, customer wants input and controls trend 2 E - COMMERCE Mall traffic is decreasing 1 PRI
Slide 10: Causing Extreme Headwinds
10 SEARS HOLDINGS TO CLOSE 63 MORE STORES - Wall Street Journal, November 2017 MACY’S TO CLOSE 100 STORES AS E - RIVALS AND DISCOUNTING HIT LEGACY RETAILERS - New York Times, August 2016 WHY J. CREW’S VISION OF PREPPY AMERICA FAILED - The New Yorker, May 2017 22 RETAILERS AT RISK OF BANKRUPTCY - Tim
Slide 11: But There Are and Will Be Winners
11 BUT THERE ARE AND WILL BE WINNERS… HOW INDITEX AND ZARA ARE WINNING - Forbes, December 2017 AMAZON APPAREL ZIPS PAST DEPARTMENT STORES - Barron’s, May 2017 WHY STITCH FIX IS THE FUTURE OF CLOTHING - Inverse.com, October 2017 11
Slide 12: The Solution
12 THE SOLUTION 1 Give the customer what they want, when they want it, at a price that they can confirm is fair 2 Drive customer engagement with exclusive, dynamic brands and media content 3 Deliver superior product quality and margins to retail partners and customers
Slide 13: Xcel Brands Strategy
• Investments in integrated technologies to advance design and sourcing processes • Current technologies include 3D Design, Consumer Insight Testing, Trend Analytics, and Data Science • Investments in new technologies with a focus on Artificial Intelligence, Machine Learning and Blockchain technolog
Slide 14: Our Brands
OUR BRANDS 14
Slide 15: Our Brands
15 OUR BRANDS
Slide 16: Isaac Mizrahi Brands
16 I S A A C M I Z R A H I B R A N D S TIMELESS COSMOPOLITAN STYLE IS… Wit, irreverence, happiness and fun. Confidence, with a wink and a nod. It’s an infusion of bold color. The unexpected and iconic elements of New York. $2.5BB+ Lifetime Retail Sales 4x CFDA Award Winner Social Followers 240,000+
Slide 17: Judith Ripka Brands
17 J U D I T H R I P K A B R A N D S $2.0BB+ Lifetime Retail Sales TOP 5 Most Trusted Jewelry Brands Social Followers 100,000+ WHEN A WOMAN IS WEARING MY JEWELRY, I WANT HER TO FEEL AS IF SHE IS WRAPPED IN ONE OF LIFE’S GREATEST LUXURIES. - Judith Ripka Recent Retail Partnerships/Distribution: • QVC
Slide 18: H Halston Brands
18 H H A L S T O N B R A N D S $1.0BB+ Lifetime Retail Sales Iconic American Fashion Brand Social Followers 225,000+ YOU ARE ONLY AS GOOD AS THE PEOPLE YOU DRESS. - Roy Halston Frowick Recent Retail Partnerships: • QVC • Lord & Taylor • Hudson’s Bay • Dillard’s
Slide 19: C. Wonder Brands
C. WONDER IS… where classic gets a fresh spin where luxury is guilt - free and where everything great happens all at once. C. Wonder reveals through discovery, the spontaneous, fun, and indulgent side of our customer, and promises that with each experience, she gets closer to her best self. 19 C W O
Slide 20: Highline Collective Brands
20 H I G H L I N E C O L L E C T I V E B R A N D S Created for Millennials, Highline Collective is an accessible women’s and men’s trend - right, fast - to - market apparel and accessories brand that delivers new styles weekly. This collection is everything you want, now! Recent Retail Partnerships:
Slide 21: Platform
PLATFORM 21
Slide 22: What We Do
22 WHAT WE DO
Slide 23: Fast-to-Market Virtual Vertical Platform
23 FAST - TO - MARKET VIRTUAL VERTICAL PLATFORM Xcel has developed a fast - to - market, technology driven “virtual vertical” platform for its retail partners, designed to create clear advantages over other retail competition, including the ability to: • Implement a fast - to - market vertical retai
Slide 24: Fast-to-Market Platform
24 FAST - TO - MARKET PLATFORM (1) Initial Mark - Up (IMU) is based margin of initial retail price over landed cost. (1)
Slide 25: Integrated Technology Platform
25 INTEGRATED TECHNOLOGY PLATFORM Xcel’s strong free cash flow and low leverage enables it to invest in infrastructure and technology to drive future growth. Since 2016, Xcel has made substantial investments into the following integrated technologies: • Trend Analytics • Consumer Insight Testing • D
Slide 26: Financial Overview
FINANCIAL OVERVIEW 26
Slide 27: Working Capital Light Revenue Model
27 WORKING CAPITAL LIGHT REVENUE MODEL • Xcel generates revenues through the following sources: - Royalties - Design Fees - Margin Participation - Marketing and other fees • By partnering with retailers and suppliers through its Virtual Vertical model, Xcel minimizes working capital requirements and
Slide 28: Retail Sales
28 RETAIL SALES 2011 (pro - forma) 2012 2013 2014 2015 2016 2017 ▪ EST. SALES AT RETAIL (1) $114MM $142MM $212MM $380MM $400MM $420MM $420MM $450.0MM 24.3% CAGR (2) (1) Estimated sales at retail based on royalty reports, with retail sales estimated based on wholesale sales. Retail Sales do not re pr
Slide 29: Revenue & EBITDA
(1) Adjusted EBITDA is a non - GAAP unaudited term. For the definition of Adjusted EBITDA and a reconciliation to net income (loss), s ee the Company’s annual form 10 - K. See Table A (2) Based on growth in Net Revenues from 2012 through 2017. 29 REVENUE & EBITDA $ 1.350B $450.0MM $32.6MM +20% CAGR
Slide 30: Strong Balance Sheet
As of December 31 , 2017 , Xcel had $ 10 . 2 MM of cash against $ 21 . 4 MM of Term Debt, which resulted in Net Debt ( 3 ) of $ 11 . 2 MM • Compared with Adjusted EBITDA for 2017 , this resulted in Leverage of 1 . 4 x 30 STRONG BALANCE SHEET $ 1.350B $450.0MM $32.6MM $420MM $420MM (1) Total Debt is
Slide 31: Growth
GROWTH 31
Slide 32: Organic Growth Drivers
32 ORGANIC GROWTH DRIVERS Growth of Existing Businesses Category Expansion Geographic Expansion Channel Growth ▪ Further expansion of IMNYC, H Halston, and Highline Collective within Hudson’s Bay, Lord & Taylor, and Dillard’s ▪ Continued growth of our Direct - Response Television Brands ▪ Discussion
Slide 33: Brand Acquisition Strategy
33 BRAND ACQUISITION STRATEGY Xcel is seeking to acquire and/or enter into ventures with brands that are Strategic, Synergistic, and Accretive to our existing business and shareholders . We are also working with our partners in China to develop strategies to bring popular Chinese brands to the Unite
Slide 34: Key Drivers for 2018-2020
34 KEY DRIVERS FOR 2018 - 2020 • Continued growth of existing QVC and Department Store Businesses • Launch and growth of key ancillary categories (denim, footwear, handbags, mens ) • Private Label production through Fast - to - Market Platform • Selectively leverage Fast - to - Market Platform acros
Slide 35: Summary
SUMMARY 35
Slide 36: Summary
SUMMARY • Developing innovative solutions to address the changes in our industry. Xcel gives our customers what they want, when they want it, at a price they can confirm as fair. • Dynamic, iconic brands engage customers through media and Ubiquitous - Channel distribution. • Working capital light bu
Slide 37: Table A: Adjusted EBITDA
37 TABLE A Adjusted EBITDA: (amounts in thousands) 2012 2013 2014 2015 2016 2017 Net income (loss) 4,284$ 1,532$ (1,032)$ 2,574$ 2,737$ (10,122)$ Goodwill impairment - - - - - 12,371 Depreciation and amortization 856 873 935 1,379 1,560 1,562 Interest and finance expense 2,175 1,726 1,488 1,804 1,84
Slide 38: www.xcelbrands.com
NASDAQ: XELB WWW.XCELBRANDS.COM