Signet Jewelers Limited · NYSE:SIG
Signet Jewelers — Q4 FY2015 Earnings Presentation
20 slides from Signet Jewelers's earnings presentation, Mar 26, 2015
Slide 1: Fiscal 2015 Fourth Quarter & Fiscal Year Results
Fiscal 2015 Fourth Quarter & Fiscal Year Results Thursday, March 26, 2015
Slide 2: Forward Looking Statements & Other Disclosure Matters
Forward Looking Statements & Other Disclosure Matters Forward-Looking Statements - This presentation contains statements which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, based upon management's beliefs and expectations
Slide 3: Q4 Fiscal 2015 Financial Results
Q4 Fiscal 2015 Financial Results • Increased same store sales 4.2% • Sterling division up 3.7% • Zale division up 3.7% • UK division up 7.5% • Earnings per share (EPS) $2.84, up 30.3%; adjusted EPS $3.06, up 40.4% from fourth quarter Fiscal 2014 • On comparable basis, EPS $2.53, up 16.1% from fourth
Slide 4: Sterling Q4 Performance Drivers
Sterling Q4 Performance Drivers • Superior guest experience • Merchandise: Bridal, Diamonds in Rhythm • Targeted marketing • Multichannel: Outlets, eCommerce
Slide 5: Zale Q4 Performance Drivers
Zale Q4 Performance Drivers • Bridal, branded diamond collections • New marketing • In-store teams and events • Other drivers (e.g. Canada, kiosks, e-commerce)
Slide 6: Three-Year Net Synergies from Zale Acquisition
Three-Year Net Synergies from Zale Acquisition Estimated Synergy Sources by Functional Area $150M - $175M in Operating Profit Contribution Expense Reduction Supply chain and 20% purchasing Repair Estimated Total Net Synergy Timing services and 50% brand cross 100% selling 30% 80% To come 60% 40% 20%
Slide 7: UK Q4 Performance Drivers
UK Q4 Performance Drivers • Focus on selling diamonds • Watches • Sales channel development (e.g. stores, e-comm) • Expanded marketing program • Implementation of selling and collaborative culture H.Samuel tv advertisement
Slide 8: Fiscal 2015 Accomplishments
Fiscal 2015 Accomplishments • Zale acquisition and integration • Brand development and line extensions • UK turnaround • Omni-channel advances • 1-team mindset established • Profitable comp sales growth leading to • Jared Vault operating margin expansion • Vertical integration; DeBeers • Dividend gr
Slide 9: Q4 Fiscal 2015 Sales Performance
Q4 Fiscal 2015 Sales Performance Change in Total sales Exchange Change in Total sales same store at constant translation total sales (in millions) Fourth Quarter Fiscal 2015 sales1 exchange rate2 impact2 Kay 4.6% 7.0% — 7.0% $862.8 Jared 2.6% 6.2% — 6.2% $416.7 Regional brands — (11.7)% — (11.7)% $7
Slide 10: Non-GAAP Reconciliation (in millions of $)
Non-GAAP Reconciliation (in millions of $) Adjustments Adjusted Signet Purchase Accounting Transaction Costs Signet Sales 2,289.2 (12.8) — 2,276.4 Cost of goods sold (1,352.3) (12.0) — (1,364.3) Gross margin 936.9 (24.8) — 912.1 SGA (629.3) 4.0 (9.2) (634.5) Other operating income, net 54.1 — — 54.1
Slide 11: Q4 Fiscal 2015 Operating Income (Loss)
Q4 Fiscal 2015 Operating Income (Loss) Q4 FY2015 Q4 FY2014 % of % of Division $m $m Division Sales Sales Sterling Jewelers division 260.0 19.1% 227.9 17.7% Zale division¹ 36.1 5.7% na na UK Jewelry division 53.8 19.4% 51.7 19.0% Other² (18.2) nm (9.0) nm Signet $331.7 14.6% 270.6 17.3% 1. Zale Divis
Slide 12: Q4 Fiscal 2015 Adjusted Signet Detail
Q4 Fiscal 2015 Adjusted Signet Detail¹ Adjusted Signet Zale operations Adjusted Signet excluding Zale² $m % $m % $m % Sales 1,639.7 100.0% 649.5 100.0% 2,289.2 100.0% Cost of goods sold (951.7) (58.0)% (400.6) (61.7)% (1,352.3) (59.1)% Gross margin 688.0 42.0% 248.9 38.3% 936.9 40.9% SGA (439.6) (26
Slide 13: Q4 Fiscal 2015 Adjusted Income Statement Highlights
Q4 Fiscal 2015 Adjusted Income Statement Highlights¹ % of Adjusted $m Sales Operating Income Q4 2014 $270.6 Adjusted gross margin 936.9 40.9% Adjusted selling, general & admin. (629.3) (27.5)% Other operating income 54.1 2.4% Adjusted operating income Q4 2015 $361.7 15.8% Adjusted earnings per share
Slide 14: Fiscal 2015 Inventory
Fiscal 2015 Inventory • Ending inventory $2,439.0 million, up $951.0 million due to • Zale division inventory of $917.6 million • Sterling division increase of $50.2 million • Inventory levels well-positioned for the first quarter of Fiscal 2016
Slide 15: Credit Metrics
Credit Metrics Fiscal 2015 Fiscal 2014 Accounts receivable, net (in millions) $1,567.6 $1,374.0 Sterling credit participation 60.5% 57.7% Sterling average monthly collection rate 11.9% 12.1% Fourth Quarter Fiscal 2015 Fiscal 2014 Sterling credit participation 58.3% 55.5% Sterling average monthly col
Slide 16: Credit Statistics
Credit Statistics (in millions) Fiscal 2015 Fiscal 2014 Net bad debt ($160.0) ($138.3) Interest income from in-house customer $217.9 $186.4 finance programs Net Impact $57.9 $48.1 Fourth Quarter Fiscal 2015 Fiscal 2014 Net bad debt ($54.3) ($45.5) Interest income from in-house customer $56.5 $47.8 f
Slide 17: Capital Allocation Strategy
Capital Allocation Strategy • Maintain strong balance sheet that provides flexibility • Support execution of strategic priorities • Invest in business • Return excess cash to shareholders • Ensure adequate liquidity • Committed to maintaining investment grade rating • Key capital strategy tenets • A
Slide 18: Adjusted Leverage Ratio Calculation, FY 2015
Adjusted Leverage Ratio Calculation, FY 2015 ($ in mils.) $1,553 x 70% = $1,087 Managed Financing Captive finance receivables assumption debt $1,364 + $97 = $1,461 Loans and Balance sheet Long-term debt overdrafts debt $1,461 + $3,703 - $1,087 = $4,077 Balance sheet Captive finance 8x rent Adjusted
Slide 19: Financial Guidance
Financial Guidance First Quarter Fiscal 2016 Same store sales 3% to 4% EPS $1.42 to $1.49 Adjustments: Purchase accounting ($0.12) to ($0.10) Transaction costs ($0.03) Adjusted EPS (EPS less adjustments per share) $1.57 to $1.62 In first quarter Fiscal 2016, adjusted EPS is expected to be favorably
Slide 20: Y ZALES
Y ZALES ‘SAMUEL PE©PLES JEWELLER ERNEST JONES ———=—_—— CANADA'S 1 DIAMOND STORE LOVE & LIFE I JAR Of Jewelry Pago da SIGNET JEW ELER S