Kmd Brands Limited · NZX:KMD
Kmd Brands — 1H FY23 Earnings Presentation
30 slides from Kmd Brands's earnings presentation, Mar 22, 2023
Slide 1: 1H FY23 Results Presentation
1H FY23 RESULTS PRESENTATION 22 MARCH 2023
Slide 2: Today's Agenda
TODAY’S AGENDA 1. KMD RETURNS TO GROWTH IN 1H FY23 3 2. STRONG FINANCIAL PERFORMANCE 8 3. GROWTH ACROSS ALL BRANDS 16 4. FOCUSED STRATEGY UNDERPINS 20 GROWTH OUTLOOK 24 5. APPENDICES 2 1 H F Y 2 3 R E S U LT S P R E S E N TAT I O N
Slide 3: KMD Returns to Growth in 1H FY23
SECTION 1 KMD RETURNS TO GROWTH IN 1H FY23 3 1 H F Y 2 3 R E S U LT S P R E S E N TAT I O N
Slide 4: Financial Highlights 1H FY23
FINANCIAL HIGHLIGHTS 1H FY23 $547.9m 58.7% $45.3m $16.5m NZ 3cps Sales growth Gross margin Underlying Underlying Dividend +34.5% improvement EBITDA1 NPAT1 declared 100 bps 1H FY22 $407.3m 1H FY22 57.7% 1H FY22 $10.2m 1H FY22 -$5.1m 1H FY22 NZ 3cps 1. Statutory results include the impact of IFRS 16 l
Slide 5: Operational Achievements
OPERATIONAL ACHIEVEMENTS BUILD GLOBAL ELEVATE LEVERAGE OPERATIONAL LEAD IN BRANDS DIGITAL EXCELLENCE ESG • Sales growth across all brands and • Loyalty • EBITDA margin • B Corp all key regions • Club Rip Curl launched. +120,000 • Rolling 12 month basis up, targeting • Rip Curl, Kathmandu, and Oboz n
Slide 6: KPI Progress Update
6 KPI PROGRESS UPDATE SHORT-TERM MEDIUM-TERM EBITDA MARGIN*2 OBOZ SALES OPPORTUNITY KATHMANDU RETAIL STORE COUNT % of sales US $m ~100 ~200 15.0% 11.3% 158 155 155 9.4% 53.7 7.8% 45.7 41.3 >> >> >> Jan 22 Jul 22 Jan 23 Target Jan 22 Jul 22 Jan 23 Target Jan 22 Jul 22 Jan 23 Target WORKING CAPITAL RI
Slide 7: B Corp Certified
B CORP CERTIFIED KMD BRANDS HAS ACHIEVED B CORP CERTIFICATION • In 2019, Kathmandu made history as one of the first significant apparel brands in ANZ to become B Corp certified • In 2023, Rip Curl and Oboz have achieved certification as well as the Rip Curl wetsuit factory OnSmooth in Thailand. The
Slide 8: Strong Financial Performance
SECTION 2 STRONG FINANCIAL PERFORMANCE 8 1 H F Y 2 3 R E S U LT S P R E S E N TAT I O N
Slide 9: Profit & Loss
PROFIT & LOSS KMD BRANDS Statutory Underlying RECORD FIRST HALF SALES NZ $m*2 1H FY23 1H FY22 1H FY23 1H FY22 Var % • Q1 strong sales recovery, cycling Australasian COVID lockdowns last year SALES 547.9 407.3 547.9 407.3 34.5% • Q2 sales growth on last year’s post-COVID lockdown rebound, supported b
Slide 10: Strong Diversified Sales Growth
STRONG DIVERSIFIED SALES GROWTH SALES GROWTH 1H FY23 VS 1H FY22 +124.3% +37.2% +31.5% Oboz Licensing / Royalties +6.9% Rest of World +27.1% Europe Wholesale BY BY +52.8% BY BRAND CHANNEL North REGION America +51.2% -2.2% Kathmandu Online +46.2% +33.6% +18.8% Retail AU & NZ Rip Curl RECORD FIRST HALF
Slide 11: Diversified Channel Mix
DIVERSIFIED CHANNEL MIX DIRECT TO CONSUMER SALES (NZ $m) Retail Stores Online Online % of DTC sales 1200.0 17.3% 18.0% 16.0% 1000.0 12.8% 12.3% 14.0% 800.0 12.0% 8.8% 10.0% 600.0 7.1% 8.0% 400.0 24.5 30.1 46.6 6.0% 36.3 47.7 4.0% 200.0 2.0% 321.0 312.0 248.1 228.1 333.5 0.0 0.0% 1H 1H 1H 1H 1H FY19
Slide 12: Delivering Operating Leverage
DELIVERING OPERATING LEVERAGE OPERATING EXPENSES % OF SALES MAINTAINING OPEX INVESTMENT WHILE LEVERAGING SALES GROWTH Variable Expenses Fixed Expenses Total Operating Expenses excl. COVID assistance • 1H FY23 operating expenses 50.4% of sales, demonstrating operating leverage YOY with post-COVID loc
Slide 13: Strong Balance Sheet
STRONG BALANCE SHEET Key Balance Sheet items and ratios*1 INVENTORY POSITION REFLECTS NZ $m Jan 23 Jul 22 Jan 22 • Kathmandu inventory well positioned, c. $24m below Jul 22 • Oboz inventory growth to meet 2H forward orders, cycling significant supply Net working capital 244.4 207.0 187.3 challenges
Slide 14: Half Year Dividend Declared
HALF YEAR DIVIDEND DECLARED Cash Flow (NZ $m) 1H FY23 1H FY22 Dividends declared (NZ $m) NPAT 14.0 (5.5) Interim Final Change in working capital (42.3) (65.3) 42.5 36.2 35.5 Non-cash items 58.2 62.2 21.3 Operating cash flow 29.9 (8.6) 27.2 21.3 Adjusted operating cash flow *1 (11.8) (50.5) 21.3 21.3
Slide 15: Rolling 12 Months
ROLLING 12 MONTHS ROLLING 12 MONTHS SALES BY BRAND (NZ $m) GROUP SALES OVER $1 BILLION IN THE LAST 12 MONTHS Kathmandu Oboz Rip Curl Total • For the first time since Rip Curl was acquired, the Group has experienced a full 12 1,120.4 months of trade without significant interruption from the COVID pan
Slide 16: Growth Across All Brands
SECTION 3 GROWTH ACROSS ALL BRANDS 16 1 H F Y 2 3 R E S U LT S P R E S E N TAT I O N
Slide 17: Rip Curl Profit & Loss
RIP CURL PROFIT & LOSS NZ $m 1H FY23 1H FY22 Var % TOTAL SALES +18.8% WITH GROWTH ACROSS ALL CHANNELS SALES 306.4 257.8 18.8% • Direct-to-consumer sales growth particularly strong in Australasia following lockdowns last year, and Hawaii with the return of international travel EBITDA (underlying*1) 3
Slide 18: Kathmandu Profit & Loss
KATHMANDU PROFIT & LOSS NZ $m 1H FY23 1H FY22 Var % TOTAL SALES +51% WITH STRONG AUSTRALIAN RECOVERY SALES 194.0 128.3 51.2% • Australia +59%*2. Kathmandu’s largest market saw a strong recovery following COVID lockdowns last year *1 12.3 (18.3) - EBITDA (underlying ) EBITDA margin % -14.3% • New Zea
Slide 19: Oboz Profit & Loss
OBOZ PROFIT & LOSS NZ $m 1H FY23 1H FY22 Var % DIVERSIFIED SALES CHANNELS SALES 47.5 21.2 124.3% • Strong online sales growth with high gross margins increasing the mix of direct-to-consumer sales *1 EBITDA (underlying ) 2.9 (0.0) - • Wholesale recovered strongly following last year’s significant su
Slide 20: Focused Strategy Underpins Growth Outlook
SECTION 4 FOCUSED STRATEGY UNDERPINS GROWTH OUTLOOK 20 1 H F Y 2 3 R E S U LT S P R E S E N TAT I O N
Slide 21: Strategic Priorities
STRATEGIC PRIORITIES BUILD GLOBAL ELEVATE LEVERAGE OPERATIONAL LEAD IN BRANDS DIGITAL EXCELLENCE ESG • Comparable sales growth for all • Loyalty • Working capital • Circularity brands • Continue global rollout of Club Rip • Ongoing inventory management. • Roll out circular business models Curl, and
Slide 22: Trading Update and Outlook
TRADING UPDATE AND OUTLOOK POSITIVE 2H FY23 OUTLOOK • Positive direct-to-consumer sales trends continue TOTAL SALES MONTH OF FEB 23 GROWTH FEB 23 YTD • Group well positioned to continue to benefit from return of international travel and tourism. Holiday destination (Hawaii and Queensland) and Austra
Slide 23: Questions
QUESTIONS 23 1 H F Y 2 3 R E S U LT S P R E S E N TAT I O N
Slide 24: Appendices
SECTION 5 APPENDICES 24 1 H F Y 2 3 R E S U LT S P R E S E N TAT I O N
Slide 25: Appendix 1: Statutory to Underlying Profit & Loss
APPENDIX 1: STATUTORY TO UNDERLYING PROFIT & LOSS GROUP 1H FY23 1H FY22 IFRS 16 Amortisation of Other IFRS 16 Amortisation of Other NZ $m Statutory Leases *1 Customer Relationships *2 Abnormals Underlying Statutory Leases *1 Customer Relationships *2 Abnormals Underlying SALES 547.9 - - - 547.9 407.
Slide 26: Appendix 2: Segment Note
APPENDIX 2: SEGMENT NOTE 1H FY23 1H FY22 SALES (NZ $'000) Rip Curl Kathmandu Oboz Corporate Total Rip Curl Kathmandu Oboz Corporate Total SALES per segment note 306,424 193,968 47,532 - 547,924 257,834 128,277 21,193 - 407,304 SALES (Underlying) 306,424 193,968 47,532 - 547,924 257,834 128,277 21,19
Slide 27: Appendix 3: Balance Sheet
APPENDIX 3: BALANCE SHEET Balance Sheet (NZ $m) Jan 23 Jul 22 Jan 22 Inventories 318.8 295.5 249.6 Property, plant and equipment 77.9 79.2 79.3 Right of Use Asset (IFRS 16) 264.7 250.4 252.3 Intangible assets 704.8 719.3 697.8 Other assets 117.0 137.3 109.1 Total assets (excl. cash) 1,483.2 1,481.7
Slide 28: Brands with Global Reach
BRANDS WITH GLOBAL REACH We operate over 300 stores globally, and our brands are sold in over 8,500 locations EUROPE NORTH AMERICA ~$100m Sales 22 Owned Stores 16 Licensed Stores +2,200 Wholesale Doors ~$240m Sales 32 Owned Stores 20 Licensed Stores ASIA +4,000 Wholesale Doors ~$40m Sales 72 License
Slide 29: B Corp Detail
B CORP DETAIL WHO IS B LAB? • B Lab is a non-profit organisation, founded in United States in 2006, that is transforming the global economy to benefit all people, communities, and the planet • B Lab creates standards, policies, tools, and programs to help businesses balance profit with purpose. Its
Slide 30: Important Notice and Disclosure
IMPORTANT NOTICE AND DISCLOSURE This presentation prepared by KMD Brands Limited (the “Company” or the “Group”) (ASX/NZX:KMD) provides additional comment on the financial statements of the Company, and accompanying information released to the market. As such, it should be read in conjunction with th