VF Announces Availability of Investor Presentation, Provides Initial Three-Year Financial Roadmap and Full Year 2019 Outlook for Kontoor Brands, Inc.

GREENSBORO, N.C.–(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

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

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
  • Other full year assumptions include an effective tax rate of
    approximately 24 percent, and approximately $60 million of interest

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
® 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.


VF Corporation
Joe Alkire,
Vice President, Corporate Development, Investor
Relations and
Financial Planning & Analysis
Hodges, 336-424-5636
Vice President, Corporate Affairs

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