Kmd Brands Limited · NZX:KMD
Kmd Brands — Kathmandu Holdings — H1 FY2020 Earnings Presentation
41 slides from Kmd Brands's earnings presentation, Apr 1, 2020
Slide 1: 1H FY20 Results and Equity Raising Presentation
For personal use only Kathmandu Holdings 1H FY20 Results and Equity Raising Presentation
Slide 2: Important Notice and Disclosure
Important Notice and Disclosure Disclaimer For personal use only This presentation has been prepared by Kathmandu Holdings Limited (NZ company number 2334209, ARBN 139 836 918, ticker KMD (NZX and ASX)) (the “Company”) and is dated 1 April 2020. This presentation has been prepared to provide: (i) ad
Slide 3: Important Notice and Disclosure (cont.)
Important Notice and Disclosure (cont.) Non-GAAP financial information For personal use only Certain financial information included in this presentation is non-GAAP financial information. This non-GAAP financial information is not audited, and caution should be exercised as other companies may calcu
Slide 4: Group Vision
Group Vision Maintain brand affinity and cultural alignment while For personal use only leveraging capabilities and delivering synergies Kathmandu, Oboz and Kathmandu, Oboz and Kathmandu, Oboz and Rip Curl to leverage Rip Curl to retain Rip Curl to retain their respective strengths operational owner
Slide 5: 1H FY20 Financial Highlights
1H FY20 Financial Highlights Trading » Rip Curl total sales +3.7% on a comparable basis for three months of ownership: direct to consumer +4.8%, and wholesale +1.8% For personal use only » Outdoor segment total sales +0.4% at constant exchange rates, with same store sales +1.5% Earnings » Underlying
Slide 6: 1H FY20 Operational Highlights
1H FY20 Operational Highlights Rip Curl » Successful completion of the Rip Curl acquisition, including NZ$145m equity raising and syndication of Acquisition A$375m debt facility For personal use only » The Rip Curl acquisition has created a more diversified Group, consisting of three iconic, inspira
Slide 7: COVID-19 Impact and Response
For personal use only COVID-19 Impact and Response 7
Slide 8: COVID-19 Impact
COVID-19 Impact COVID-19 is expected to have a material adverse impact on our operations and financial performance For personal use only » COVID-19 had minimal impact on earnings in 1H FY20 Performance » While there is uncertainty around the extent of the effects on our business and operations, ther
Slide 9: Response to COVID-19
Response to COVID-19 Management and the Board are taking decisive action to address the impacts of COVID-19 and maintain business continuity, while ensuring the health and safety of our team and customers remains our highest priority For personal use only » Our channel agnostic approach and online f
Slide 10: Group Results
For personal use only Group Results 10
Slide 11: Group Result: Overview
Group Result: Overview For personal use only KATHMANDU GROUP IFRS 16 *1 Pre IFRS 16 *1 » Rip Curl has contributed NZ$15.7m to NZ$m *2 1H FY20 1H FY20 1H FY19 Var $ Var % group underlying EBIT result in the three SALES*3 363.7 363.7 229.0 134.7 58.8% months since acquisition GROSS PROFIT 218.9 218.9
Slide 12: Group Result: Segment Summary
Group Result: Segment Summary 1H FY20 1H FY19 Var $ Var % » Outdoor segment includes both Kathmandu and Oboz brands For personal use only NZ$m NZ$m Outdoor segment sales 228.7 229.0 (0.2) (0.1%) » Outdoor segment lower gross margin year on year has led to a Surf segment sales 134.9 - decrease in EBI
Slide 13: Group Result: Balance Sheet
Group Result: Balance Sheet Balance Sheet (NZD (NZ$m) $m)asasat at 3131 January January 1H FY20 1H FY19 For personal use only Inventories 254.6 130.1 Property, plant and equipment 93.1 60.9 Right of Use Asset (IFRS 16) 309.7 - Intangible assets 634.8 384.6 Other assets 105.7 37.7 Total assets (excl.
Slide 14: Group Result: Cash Flow
Group Result: Cash Flow For personal use only Cash Flow (NZ$m) (NZD $m) 1H FY20 1H FY19 NPAT 8.1 14.0 Change in working capital (9.9) (39.8) Change in non-cash items 22.6 9.6 Adjusted operating cash flow *1 20.9 (16.2) Key Line Items: Net interest paid (including facility fees)*2 (2.5) (1.4) Income
Slide 15: Outdoor Segment
For personal use only Outdoor Segment 15
Slide 16: Outdoor Segment: Kathmandu and Oboz Profit & Loss
Outdoor Segment: Kathmandu and Oboz Profit & Loss For personal use only OUTDOOR SEGMENT Pre IFRS 16 » Sales growth +0.4% at constant exchange NZ$m$m NZD 1H FY20 1H FY19 Var $ Var % rates SALES 228.7 229.0 (0.2) (0.1%) GROSS PROFIT 138.2 141.9 (3.7) (2.6%) » Gross margin impacted by higher input cost
Slide 17: Outdoor Segment: Kathmandu and Oboz Sales
Outdoor Segment: Kathmandu and Oboz Sales For personal use only Same Store Sales +1.5% Same Store Sales*1 » Same store sales by market (at constant exchange rates): 3.8% 3.4% » AU +2.0% with some impact from bush fires and 1.5% unusually hot weather 0.0% » NZ +0.5% following two years of negative sa
Slide 18: Outdoor Segment: Kathmandu and Oboz Gross Margin
Outdoor Segment: Kathmandu and Oboz Gross Margin For personal use only Outdoor Total 63.9% 62.1% 62.0% 60.4% » Kathmandu gross margin -120 bps (-1.2%) below last year due to: 1H 1H 1H 1H » Higher input costs as a result of FY17 FY18 FY19 FY20 foreign currency Kathmandu » Clearance sales mix higher t
Slide 19: Oboz: Profit & Loss
Oboz: Profit & Loss For personal use only OBOZ US$m USD $m 1H FY20 1H FY19 Var $ Var % SALES 21.3 19.3 2.0 10.4% GROSS PROFIT 8.5 7.6 0.8 11.1% Gross margin 39.6% 39.3% OPERATING EXPENSES (5.2) (4.4) (0.8) 18.2% % of Sales 24.3% 22.7% EBITDA (UNDERLYING) 3.3 3.2 0.0 1.5% EBITDA margin % 15.3% 16.7%
Slide 20: Surf Segment
For personal use only Surf Segment 20
Slide 21: Surf Segment: Rip Curl Profit & Loss
Surf Segment: Rip Curl Profit & Loss For personal use only Rip Curl Gross Profit $ Mix (last 12 months) (NZ$m) SURF SEGMENT (NZD $m) Pre IFRS 16 Other Rest of Nov 19 to 4% World Three months since acquisition 18% Jan 20 Wholesale 40% SALES 134.9 GROSS PROFIT 80.7 BY BY Europe Gross margin 59.8% CHAN
Slide 22: Surf Segment: Rip Curl Sales vs comparable months last year
Surf Segment: Rip Curl Sales vs comparable 3 months last year For personal use only Total Sales +3.7%*1 » Total sales by market (at constant exchange rates): Nov 19 to Nov 18 to » AU & NZ +3.2% (A$m)$m) Total Sales (AUD Var % Jan 20 Jan 19 Direct to Consumer 86.0 82.0 4.8% » Rest of World +4.5%: Nor
Slide 23: Equity Raising
For personal use only Equity Raising 23
Slide 24: Strengthening Group Balance Sheet and Liquidity Position
Strengthening Group Balance Sheet and Liquidity Position » A large number of initiatives have already been undertaken covering distribution, supply chain, leases, various operating and capital For personal use only expenditure, and people. In addition to these changes, the Group is taking pre-emptiv
Slide 25: Summary of Sources & Uses and Pro Forma Capitalisation
Summary of Sources & Uses and Pro Forma Capitalisation Sources & Uses of Funding*1 For personal use only Sources NZ$m A$m Uses NZ$m A$m New equity 207 200 Paydown of existing debt 86 83 Cash to balance sheet 115 111 Transaction costs and financing fees 7 7 Total Sources 207 200 Total Uses 207 200 Pr
Slide 26: Equity Raising Details
Equity Raising Details » NZ$207 million equity raising (Equity Raising), comprising: For personal use only » NZ$30 million underwritten placement (Placement); and Offer size and structure » 1.2 for 1 pro-rata accelerated entitlement offer to raise approximately NZ$177 million (Entitlement Offer) » A
Slide 27: Equity Raising Timetable
Equity Raising Timetable Event Date For personal use only Announcement of Equity Raising Wednesday, 1 April 2020 Record date for the Entitlement Offer Friday, 3 April 2020 Institutional Entitlement Offer and Placement Institutional Entitlement Offer and Placement opens Wednesday, 1 April 2020 Instit
Slide 28: Key Risks Relating to the Equity Raising
Key Risks Relating to the Equity Raising For personal use only » This Section sets out the key risks Kathmandu has identified relating to the Equity Raising. These risks may affect the future operating and financial performance of the Group and the value of Kathmandu shares. Please note that this Se
Slide 29: Key Risks Relating to the Equity Raising (cont.)
Key Risks Relating to the Equity Raising (cont.) For personal use only Risk Details Store and demand » Some of the Group’s stores and customers are located in countries which are heavily affected by the spread of COVID-19. The travel and movement restrictions now in risks place across many countries
Slide 30: Key Risks Relating to the Equity Raising (cont.)
Key Risks Relating to the Equity Raising (cont.) For personal use only Risk Details Banking support risk » The Group is working with its existing banking group and has received a covenant waiver for the periods ending 31 July 2020 and 31 January 2021, and a relaxation of certain covenants for the pe
Slide 31: Strategy
For personal use only Strategy 31
Slide 32: Group Strategy
Group Strategy Become a global outdoor and action sports company underpinned by iconic brands, For personal use only technical products and a focus on sustainability DIVERSIFY THE PROMOTE BUSINESS GROW EACH BRAND REALISE SYNERGIES OUR VALUES Build a portfolio of brands that: » Maintain relentless fo
Slide 33: Revenue Synergy Opportunities
Revenue Synergy Opportunities For personal use only 48 doors in North America c. 1,250 doors in North America Wholesale doorways 16 doors in Europe c. 2,350 doors in Europe Leveraging Rip Curl's global wholesale Global (ANZ, North America, Europe, Geographic presence c. 90% AU & NZ network and Kathm
Slide 34: Sustainability Leadership
Sustainability Leadership For personal use only 34
Slide 35: Outdoor Segment Strategy
Outdoor Segment Strategy For personal use only Transformation from a leading Australasian retailer to a brand-led global multi-channel business GROW CORE ENHANCE THE MARKETS: WIN WITH CUSTOMER AUSTRALIA AND DISTINCTIVE EXPERIENCE BECOME A GLOBAL NEW ZEALAND PRODUCT THROUGH DIGITAL BUSINESS » Superch
Slide 36: Surf Segment Vision, Values, Mission
Surf Segment Vision, Values, Mission For personal use only OUR THE PRINCIPLES OUR VISION & VALUES MISSION To be regarded as the ultimate • Customers To continue developing a surfing company in all that brand image that truly reflects we do… • Creativity & Innovation our brand values and the • Commit
Slide 37: Questions
For personal use only Questions 37
Slide 38: Appendix 1: Statutory to Underlying Profit & Loss
Appendix 1: Statutory to Underlying Profit & Loss For personal use only 1H FY20 1H FY19 KATHMANDU GROUP IFRS 16 Transaction Other IFRS 16 Transaction Presentation Other NZ$m Statutory Leases *1 Costs *2 one-offs *2 Underlying Statutory Leases Costs Adjustm ent *3 one-offs *4 Underlying Sales 363.7 3
Slide 39: Appendix 2: Segment note
Appendix 2: Segment note For personal use only SALES EBIT 1H FY20 (NZ$'000) Outdoor Surf Corporate Total 1H FY20 (NZ$'000) Outdoor Surf Corporate Total SALES per segment note 228,747 134,907 - 363,654 EBIT per segment note 19,221 16,781 (12,242) 23,760 - - - IFRS 16 Leases Adjustment (4,006) (1,073)
Slide 40: Appendix 3: Foreign Selling Restrictions
Appendix 3: Foreign Selling Restrictions For personal use only This document does not constitute an offer of entitlements (“Entitlements”) or new ordinary shares (“New Shares”) of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to an
Slide 41: Appendix 3: Foreign Selling Restrictions (cont.)
Appendix 3: Foreign Selling Restrictions (cont.) For personal use only Switzerland The offering of the New Shares in Switzerland is exempt from requirement to prepare and publish a prospectus under the Swiss Financial Services Act ("FinSA") because such offering is made to professional clients withi