Xcel Brands, Inc · NASDAQ:XELB
Xcel Brands — Investor Presentation (May 2019)
37 slides from Xcel Brands's investor presentation, May 28, 2019
Slide 1: Investor Presentation First Quarter 2019
INVESTOR PRESENTATION First Quarter 2019 NASDAQ: XELB
Slide 2: Safe Harbor Statement
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 1995. T
Slide 3: Index
INDEX OVERVIEW Page 4 STRATEGY Page 8 BRANDS Page 14 PLATFORM Page 21 FINANCIALS Page 26 GROWTH Page 31 SUMMARY Page 35 3
Slide 4: Overview
OVERVIEW 4
Slide 5: Xcel Brands is a consumer products company
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 AND RELATED LIFESTYLE PRODUCTS SUCH AS FOOTWEAR, ACCESSORIES, JEWELRY, HOME GOODS, HEALTH & BEAUTY AND OTHER CONSUMER PRODUCTS; AS WE
Slide 6: Company Snapshot
COMPANY SNAPSHOT BUSINESS REVENUE & EBITDA 2011 5 $440MM $37MM 19% $8.3MM Founded Owned Brands Retail Sales of Revenues(2) 6-Year Revenue Adjusted EBITDA(2)(4) our Brands(1) CAGR(5) EQUITY STRONG BALANCE SHEET $1.70 18.6MM $31.6MM $22MM $6.8MM 1.83x Share Price(3) Weighted Average Market Cap(3) Term
Slide 7: Highlights
HIGHLIGHTS ✓ Existing business with strong free cash flow ✓ Proven historical growth in revenues and EBITDA ✓ Fast-to-Market supply chain and state-of-the-art Integrated Technology platforms position Xcel at the forefront of the industry ✓ Diversified Omni-Channel Distribution ✓ Strong balance sheet
Slide 8: Strategy
STRATEGY 8
Slide 9: Disruptive forces are affecting the retail industry
DISRUPTIVE FORCES ARE AFFECTING THE RETAIL INDUSTRY 1 PRICE INFORMATION Price transparency, showrooming 5 2 CROWDED E-COMMERCE MARKET Mall traffic is Over-distribution, rise decreasing of off-price 3 4 CUSTOMER FAST FASHION VOICE Customers demand Marketing changed, faster supply chains, customer wan
Slide 10: Causing extreme headwinds
CAUSING EXTREME HEADWINDS BONTON FILES FOR CHAPTER 11 BANKRUPTCY - Women’s Wear Daily, February 2018 THE 3 BIG PROBLEMS WITH OMNI CHANNEL RETAIL - Forbes, December 2018 LORD & TAYLOR TO CLOSE FLAGSHIP STORE AFTER SELLING TO WEWORK - Business Insider, June 2018 CHARLOTTE RUSSE FILES FOR BANKRUPTCY, C
Slide 11: But there are and will be winners
BUT THERE ARE AND WILL BE WINNERS… WHY ZARA SUCCEEDS: IT FOCUSES ON PULLING PEOPLE ON, NOT PUSHING PRODUCT OUT - Forbes, April 2018 RETAIL SUCCESS HINGES ON USING TECHNOLOGY AND DATA — WITH A STRATEGY - Women’s Wear Daily, May 2018 HOW KOHL’S BECAME AND REMAINING RELEVANT - Forbes, October 2018 11
Slide 12: The Solution
THE SOLUTION Give the customer what they want, when they want it, 1 at a price that they can confirm is fair Drive customer engagement with exclusive, 2 dynamic brands and media content Develop intelligently designed products by 3 leveraging technology (minimize fashion risk) Deliver superior produc
Slide 13: Xcel Brands Strategy
XCEL BRANDS STRATEGY MEDIA PARTNERSHIPS AND FAST-TO-MARKET DESIGN INTEGRATED TECHNOLOGY DYNAMIC BRANDS 360 MARKETING AND SOURCING MODEL PLATFORM • Dynamic consumer brands • Media partnerships include • Over 85 designers in NYC Design • Investments in integrated including owned brands Isaac QVC, TSC,
Slide 14: Our Brands
OUR BRANDS 14
Slide 15: Our Brands
OUR BRANDS 15
Slide 16: Isaac Mizrahi Brands
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+ 4x 200,000+ Lifetime Retail Sales CFDA Award Winner Social Followers Rec
Slide 17: Judith Ripka Brands
J U D I T H R I P K A B R A N D S 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 $2.0BB+ TOP 5 100,000+ Lifetime Retail Sales Most Trusted Jewelry Social Followers Brands Recent Retail Partnerships/Distribution: • QVC •
Slide 18: Halston Brands
H A L S T O N B R A N D S YOU ARE ONLY AS GOOD AS THE PEOPLE YOU DRESS. - Roy Halston Frowick $2.0BB+ 225,000+ Lifetime Retail Sales Iconic American Social Followers Fashion Director - Halston Fashion Brand Recent Retail Partnerships: • QVC • Nieman Marcus • Saks 5th Avenue • Bloomingdales • Nordstr
Slide 19: C. Wonder Brands
C W O N D E R B R A N D S 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
Slide 20: Highline Collective Brands
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: • Lord
Slide 21: Platform
PLATFORM 21
Slide 22: What We Do
WHAT WE DO 22
Slide 23: Fast-to-Market Vertical Platform
FAST-TO-MARKET VERTICAL PLATFORM Xcel has developed a fast-to-market, technology driven “vertical” design and sourcing platform for its retail partners, designed to create clear advantages over other retail competition, including the ability to: • Disintermediate the traditional wholesaler by connec
Slide 24: Integrated Technology Platform
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 • Data
Slide 25: Financial Overview
FINANCIAL OVERVIEW 25
Slide 26: Revenue Model
REVENUE MODEL • Xcel’s business model disintermediates the traditional wholesale vendor model • Xcel generates revenues through the following sources: - Royalties - Wholesale Sales - Margin Participation - Marketing and other fees - Design & Sourcing Fees • By partnering with retailers and suppliers
Slide 27: Retail Sales
RETAIL SALES 18.4% CAGR RETAIL SALES(2) $450.0MM $440MM $420MM $420MM $400MM $380MM $212MM $142MM $114MM 2011 2012 2013 2014 2015 2016 2017 2018 (pro-forma) ▪ EST. SALES $114MM $142MM $212MM $380MM $400MM $420MM $420MM $440MM AT RETAIL(1) (1) Estimated sales at retail based on royalty reports, with
Slide 28: Revenue & EBITDA
REVENUE & EBITDA 19% CAGR Revenues (3) $450.0MM $450.0MM $1.350B $35.5MM $37.0MM $32.7MM $27.7MM $31.7MM $420MM $32.6MM $20.7MM $12.7MM $13.4MM $7.0MM $9.3MM $8.5MM $8.0MM $8.4MM $8.3MM $4.5MM $4.2MM 2012 2013 2014 2015 2016 2017 2018 TTM Xcel Brands Revenue $12.7MM $13.4MM $20.7MM $27.7MM $32.7MM $
Slide 29: Strong Balance Sheet
STRONG BALANCE SHEET As of March 31, 2019, Xcel had $6.8MM of cash against $22MM of Term Debt (excluding contingent obligations payable in equity), which resulted in Net Debt(2) of $15.2MM. • Compared with Adjusted EBITDA of $8.3MM for the trailing twelve months ended March, 2019(4), this resulted i
Slide 30: Growth
GROWTH 30
Slide 31: Organic Growth Drivers
ORGANIC GROWTH DRIVERS ▪ Further expansion of IMNYC, H Halston, ▪ Additional categories launched on QVC and Highline Collective within better including athleisure, home, and retailers across the US premium denim planned for 2019 ▪ Continued growth of our Direct-Response ▪ Additional categories added
Slide 32: Acquisitions
ACQUISITIONS In February 2019, we completed the acquisition of the Halston trademarks including the Halston and Halston Heritage brands, which consolidates control of the Halston brands under Xcel. The purchase price was approximately $9.3MM at closing(1), paid through a combination of $8.3MM in cas
Slide 33: Key Drivers for 2019-2020
KEY DRIVERS FOR 2019-2020 • 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 across new brands a
Slide 34: Summary
SUMMARY 34
Slide 35: Summary
SUMMARY • Xcel develops innovative solutions to address the changes in our industry. We give 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. • Xcel provides 360˚ of reta
Slide 36: www.xcelbrands.com
WWW.XCELBRANDS.COM NASDAQ: XELB
Slide 37: Exhibit A Reconciliation of Adjusted EBITDA
EXHIBIT A Reconciliation of Adjusted EBITDA (Unaudited) For the Year Ended December 31, TTM (amounts in millions) 2012 2013 2014 2015 2016 2017 2018 3/31/2019 Net income (loss) $ 4.28 $ 1.53 $ (1.03) $ 2.57 $ 2.74 $ (10.12) $ 1.09 $ 0.72 Depreciation and amortization 0.86 0.87 0.94 1.38 1.56 1.56 1.