VF Corporation (NYSE: VFC), a global leader in branded lifestyle apparel, footwear and accessories, today announced the availability of an investor presentation on VF’s investor relations website in connection with the previously announced separation of VF’s Jeanswear organization into an independent, publicly traded company. The new company, named Kontoor Brands, Inc., will comprise the Wrangler®, Lee® and Rock & Republic® brands, and the VF OutletTM business.
The investor presentation provides information regarding Kontoor Brands’ business, strategy, and historical financial results, as well as the company’s initial three-year financial roadmap and full year 2019 outlook.
The separation is on track to be completed in late May 2019, subject to final approval by VF’s Board of Directors, customary regulatory approvals, and tax and legal considerations.
The presentation is available at www.ir.vfc.com
For more information regarding the planned separation, please visit www.TwoGlobalLeaders.com
Initial Full Year 2019 Outlook for Kontoor Brands
The initial outlook for Kontoor Brands’ fiscal year ended December 28, 2019, is as follows:
- Revenue is expected to exceed USD 2.5 billion, reflecting a mid-single-digit decline compared with full year 2018 adjusted revenue. The company’s 2019 revenue outlook includes an approximate 1 to 2 percentage point negative impact from foreign currency exchange rates. Excluding the negative impact of foreign currency exchange rates, impacts of customer bankruptcies, and strategic business exits, full year 2019 adjusted revenue is expected to be relatively consistent with full year 2018 adjusted revenue. In line with prior expectations, revenue for the three months ended March 30, 2019, is expected to decline at a mid-single-digit rate, consistent with the full year outlook.
- Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”)* is expected to range between USD 340 million and USD 360 million, reflecting a mid-single-digit to low double-digit decline compared with full year 2018 adjusted EBITDA. In line with prior expectations, the majority of the anticipated decline in full year 2019 adjusted EBITDA is the result of an expected decline in adjusted EBITDA for the three months ended March 30, 2019, due primarily to inventory management and other operational actions taken prior to the planned separation, which is intended to successfully position Kontoor Brands for the future. The previously referred to customer bankruptcies are also expected to negatively impact full year 2019 adjusted EBITDA.
- Capital Expenditures are expected to range between USD 55 million and USD 65 million, including approximately USD 30 million to USD 40 million to support the design and implementation of a global enterprise resource planning (ERP) system. The global ERP system implementation is expected to require approximately USD 80 million to USD 90 million of capital investment over a two- to three-year period and is expected to result in significant efficiencies and cost savings once fully implemented.
- Other full year assumptions include an effective tax rate of approximately 24 %, and approximately USD 60 million of interest expense.
Note:*Non-GAAP Financial Measures
Initial 2020 to 2021 Outlook for Kontoor Brands
Kontoor Brands’ initial 2020 to 2021 outlook is as follows:
- Revenue is expected to increase at a low single-digit compound annual growth rate (CAGR) over the period, which is consistent with the long-term outlook previously provided.
- Adjusted EBITDA* is expected to increase at a mid-single-digit CAGR over the period.
- Capital Expenditures are expected to range between USD 105 million and USD 110 million in aggregate over the period, including approximately USD 80 million to USD 90 million to support the design and implementation of a global ERP system. Significant efficiencies and cost savings are expected once fully implemented.
Financial information contained in this release and the investor presentation referenced herein include certain financial measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting policies in the United States of America (GAAP), which include or exclude certain items from the most directly comparable GAAP financial measure. Definitions of these non-GAAP measures are included in the investor presentation referenced herein. These non-GAAP measures differ from reported GAAP measures and are intended to illustrate what management believes are relevant period-over-period comparisons and are helpful to investors as an additional tool for further understanding and assessing Kontoor Brands’ expected ongoing operating performance. Such non-GAAP measures should be viewed in addition to, and not as an alternative for, reported results under GAAP.
VF Corporation (NYSE: VFC) outfits consumers around the world with its diverse portfolio of iconic lifestyle brands, including Vans®, The North Face®, Timberland®, Wrangler® and Lee®. Founded in 1899, VF is one of the world’s largest apparel, footwear and accessories companies with socially and environmentally responsible operations spanning numerous geographies, product categories and distribution channels. VF is committed to delivering innovative products to consumers and creating long-term value for its customers and shareholders. For more information, visit www.vfc.com