VF Corp. has 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 Outlet 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, 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.