V.f. Corporation · NYSE:VFC
V.f — Merger or Acquisition (August 2017)
23 slides from V.f's merger presentation, Aug 14, 2017
Slide 1: Establishing a Global Leader in Workwear
ESTABLISHING A GLOBAL LEADER IN WORKWEAR August 14, 2017 1
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Certain 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 therefore involve severa
Slide 3: More Active Portfolio Management
MORE ACTIVE PORTFOLIO MANAGEMENT RESHAPE THE PORTFOLIO 2016 2017 Q2 Q3 Q1 Q2 Q3 Q4 DISTORT TRANSFORM COMPLETED SALE OF ASIA CONTEMPORARY MODEL BRANDS COMPLETED SALE OF LICENSING BUSINESS ACQUISITION OF Choices WILLIAMSON-DICKIE ELEVATE ONGOING… DTC 3 2021 STRATEGIC CHOICES: TOP PRIORITY
Slide 4: Why Invest in Workwear?
WHY INVEST IN WORKWEAR? EXPLOIT VF’s FAVORABLE UNIQUE FRAGMENTED FINANCIALLY ECONOMIC / CAPABILITIES MARKETPLACE ATTRACTIVE FISCAL SECTOR CONDITIONS 4
Slide 5: Estimated Global Workwear Market
ESTIMATED GLOBAL WORKWEAR MARKET LARGE GROWING FOOTWEAR $30B TOTAL APPAREL $6B $24B UNDER-PENETRATED Sources: IPSOS, VF Workwear Foundation Study & VF estimates 5
Slide 6: Workwear Market Is Highly Fragmented
WORKWEAR MARKET IS HIGHLY FRAGMENTED SEVERAL LARGE A SEA OF OTHER VF PORTFOLIO COMPETITORS COMPETITORS 6
Slide 7: VF Portfolio Management Criteria
VF PORTFOLIO MANAGEMENT CRITERIA STRATEGIC FINANCIAL Access to attractive Accretive growth and consumer segments, margin profile category adjacencies Strong free cash flow Capability additions yield and enhancements TSR > 15% return on capital Synergies with existing over time VF portfol
Slide 8: Williamson-Dickie Is a Strong Portfolio Fit
WILLIAMSON-DICKIE IS A STRONG PORTFOLIO FIT PORTFOLIO LENSES CRITERIA ASSESSMENT Attractive Consumer Segment ✓ Large growing market, VF becomes a global leader STRATEGIC ✓ Strong B2B/B2C presence, Assets and Capabilities scalable digital platform, large international opportunity STRATEGIC FINANCIAL
Slide 9: Transaction Summary
TRANSACTION SUMMARY PURCHASE PRICE ~$820 million ESTIMATED CLOSING Q4 2017 subject to government approval and other customary conditions FINANCING Cash <1x LTM Revenue TRANSACTION MULTIPLES 11x LTM Adjusted EBITDA ~$200M 2017 Revenue ACCRETION1 ~$0.02 2017 EPS Minimal impact to leverage metrics & li
Slide 10: Williamson-Dickie Overview
WILLIAMSON-DICKIE OVERVIEW Founded in 1922 in Fort Worth, Texas Family owned, private company Global, billion dollar(1) brand portfolio with deep heritage and authenticity Unique product portfolio serving diverse consumers, channels and categories Direct presence in more than 100 countries
Slide 11: Williamson-Dickie Revenue Breakdown
WILLIAMSON-DICKIE REVENUE BREAKDOWN Brand Region Channel Asia Others Non-US 6% Licensing DTC 2% 14% Americas 14% 12% Kodiak 6% Walls EMEA Wholesale 7% 16% B2B 60% 24% US 66% Dickies 73% Dickies is an iconic, global brand with significant International & DTC presence Note: Revenue breakdown based on
Slide 12: Strategic Rationale
STRATEGIC RATIONALE Positions VF as the advantaged owner of a $1.7 billion portfolio of global workwear brands Opportunity to disrupt a highly fragmented market; Access new growth pools Scale and synergies present significant value creation opportunity VF International, DTC and Tax platforms positio
Slide 13: Powerful Portfolio of Complementary Assets and Capabilities
POWERFUL PORTFOLIO OF COMPLEMENTARY ASSETS AND CAPABILITIES Capital stewardship > $1 billion(1) portfolio of Financial discipline diverse, global brands Supply chain expertise Diverse product portfolio DIVERSIFIED Access to new growth International, DTC, and Tax Platforms VALUE pools (
Slide 14: Provides Access to New, Larger Growth Pools
PROVIDES ACCESS TO NEW, LARGER GROWTH POOLS CURRENT FORWARD VF W-D MARKET TREND OUTLOOK OFFERING OFFERING + Services Size of Market (# of employees) Healthcare Manufacturing Construction Transportation Mining - 14
Slide 15: Attractive Revenue Growth Opportunity
ATTRACTIVE REVENUE GROWTH OPPORTUNITY >$1B Acquisition plan includes 4% revenue CAGR through 2021 Significant contribution from International, DTC, and new initiatives (e.g. lifestyle) North America core growth assumption provides room for additional synergy 2017 Int'l DTC New Core 2021 Outloo
Slide 16: Multiple Levers to Improve Profitability
MULTIPLE LEVERS TO IMPROVE PROFITABILITY 45% 40% Williamson-Dickie profitability well below VF 35% Workwear 30% Significant growth, gross margin, and 25% expense synergy opportunities 20% 15% Acquisition plan includes 14% operating 10% margin target by 2021; leaves room for 5% additional value
Slide 17: 2021 Operating Margin Assumption Provides Additional Value Creation Opportunity
2021 OPERATING MARGIN ASSUMPTION PROVIDES ADDITIONAL VALUE CREATION OPPORTUNITY 25% 20% 2021 operating margin target remains below % Operating Margin VF Workwear and industry peers 15% Additional synergies could unlock further value 10% creation 5% 0% Heritage Group Workwear Current 2021 Target
Slide 18: Accelerates VF 2021 Revenue Growth Profile
ACCELERATES VF 2021 REVENUE GROWTH PROFILE >$15B Opportunity to add more than $1 billion of >$14B revenue by 2021 VF 2021 revenue now expected to exceed $15 billion 2016 – 2021 revenue now expected to increase at a 5% to 7% CAGR 2021 2021 Organic Revised Note: 2021 references in this presentat
Slide 19: Accelerates VF's 2021 Earnings Growth Plan
ACCELERATES VF’S 2021 EARNINGS GROWTH PLAN >$5.00 Opportunity to drive more than $5.00 of earnings power by 2021 Immediately accretive to 2017 EPS and free cash flow excluding transaction and other deal- $2.96 related expenses 2017 2021 Revised Outlook Revised Outlook Note: 2021 references in th
Slide 20: 2017 Financial Implications
2017 FINANCIAL IMPLICATIONS PREVIOUS CURRENT OUTLOOK OUTLOOK Revenue $11,650 $11,850 Gross Margin 49.8% 49.5% Adjusted Operating Margin1 ~14% ~13.7% Tax Rate ~21% ~21% Adjusted EPS1 $2.94 $2.96 20 (1) Excluding transaction and other deal-related expenses
Slide 21: 2021 Plan TSR Update
2021 PLAN TSR UPDATE +14% to +16% +1% +3% +3% +3% +4% to +6% REVENUE MARGIN SHARE DIVIDEND WD ADDITIONAL P/E TOTAL GROWTH EXPANSION REPURCHASE YIELD ACQUISITION M&A MULTIPLE SHAREHOLDER RETURN EARNINGS PER SHARE GROWTH 21
Slide 22: VF + Williamson-Dickie: Diversified Value Creation Roadmap
VF + WILLIAMSON-DICKIE: DIVERSIFIED VALUE CREATION ROADMAP 1 2 3 4 Mid-Single-Digit Operating Unlock Value Strong FCF Yield Revenue Growth Margin from VF Tax and Return on Improvement Platform Capital SUSTAINABLE TOTAL SHAREHOLDER RETURN 22
Slide 23: Establishing a Global Leader in Workwear
ESTABLISHING A GLOBAL LEADER IN WORKWEAR 23