VF Announces Availability of Investor Presentation, Provides Initial Three-Year Financial Roadmap & Full Year 2019 Outlook fo...
April 26 2019 - 6:15AM
Business Wire
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 ir.vfc.com. For more
information regarding the planned separation, please
visit 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
$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 $340 million and $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 $55 million and $65 million, including
approximately $30 million to $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 $80 million to $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 percent, and
approximately $60 million of interest expense.
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 $105 million and $110 million in
aggregate over the period, including approximately $80 million to
$90 million to support the design and implementation of a global
ERP system. Significant efficiencies and cost savings are expected
once fully implemented.
*Non-GAAP Financial Measures
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.
About VF
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.
Forward-looking Statements
Certain statements included in this release and attachments are
"forward-looking statements" within the meaning of the federal
securities laws. Forward-looking statements are made based on our
expectations and beliefs concerning future events impacting VF and
Kontoor and therefore involve several risks and uncertainties. You
can identify these statements by the fact that they use words such
as “will,” “anticipate,” “estimate,” “expect,” “should,” and “may”
and other words and terms of similar meaning or use of future
dates. We caution that forward-looking statements are not
guarantees and that actual results could differ materially from
those expressed or implied in the forward-looking statements.
Potential risks and uncertainties that could cause the actual
results of operations or financial condition of VF or Kontoor to
differ materially from those expressed or implied by
forward-looking statements in this release include, but are not
limited to: risks associated with the proposed spin-off of VF’s
Jeanswear business, including the risk that the spin-off will not
be consummated within the anticipated time period or at all; the
risk of disruption to VF’s business in connection with the proposed
spin-off and that VF could lose revenue as a result of such
disruption; the risk that the companies resulting from the spin-off
do not realize all of the expected benefits of the spin-off; the
risk that the spin-off will not be tax-free for U.S. federal income
tax purposes; the risk that there will be a loss of synergies from
separating the businesses that could negatively impact the balance
sheet, profit margins or earnings of both businesses; and the risk
that the combined value of the common stock of the two
publicly-traded companies will not be equal to or greater than the
value of VF common stock had the spin-off not occurred. There are
also risks associated with the relocation of VF’s global
headquarters and a number of brands to the metro Denver area,
including the risk of significant disruption to VF operations, the
temporary diversion of management resources and loss of key
employees who have substantial experience and expertise in VF’s
business, the risk that VF may encounter difficulties retaining
employees who elect to transfer and attracting new talent in the
Denver area to replace our employees who are unwilling to relocate,
the risk that the relocation may involve significant additional
costs to us and that the expected benefits of the move may not be
fully realized. Other risks for both companies include foreign
currency fluctuations; the level of consumer demand for apparel,
footwear and accessories; disruption to distribution systems;
reliance on a small number of large customers; the financial
strength of customers; fluctuations in the price, availability and
quality of raw materials and contracted products; disruption and
volatility in the global capital and credit markets; response to
changing fashion trends, evolving consumer preferences and changing
patterns of consumer behavior, intense competition from online
retailers, manufacturing and product innovation; increasing
pressure on margins; ability to implement their business strategy;
ability to grow their international and direct-to-consumer
businesses; each company and its vendors’ ability to maintain the
strength and security of information technology systems; the risk
that facilities and systems and those of third-party service
providers may be vulnerable to and unable to anticipate or detect
data security breaches and data or financial loss; ability to
properly collect, use, manage and secure consumer and employee
data; stability of manufacturing facilities and foreign suppliers;
continued use by suppliers of ethical business practices; ability
to accurately forecast demand for products; continuity of members
of management; ability to protect trademarks and other intellectual
property rights; possible goodwill and other asset impairment;
maintenance by licensees and distributors of the value of VF’s
brands; ability to execute and integrate acquisitions; changes in
tax laws and liabilities; legal, regulatory, political and economic
risks; the risk of economic uncertainty associated with the pending
exit of the United Kingdom from the European Union ("Brexit") or
any other similar referendums that may be held; and adverse or
unexpected weather conditions. More information on potential
factors that could affect VF's financial results is included from
time to time in VF's public reports filed with the Securities and
Exchange Commission, including VF's Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q and more information on potential
factors that could affect Kontoor Brands' financial results is
included in Kontoor Brands’ registration statement on Form 10 filed
with the Securities and Exchange Commission.
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version on businesswire.com: https://www.businesswire.com/news/home/20190426005027/en/
VF CorporationJoe Alkire,
336-424-7711Vice President, Corporate Development, Investor
Relations andFinancial Planning & AnalysisorCraig Hodges,
336-424-5636Vice President, Corporate Affairs
VF (NYSE:VFC)
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