INVESTOR PRESENTATION FIRST QUARTER 2016

Transcription

1 INVESTOR PRESENTATION FIRST QUARTER 2016

2 SAFE HARBOR STATEMENT This presentation may contain forward-looking statements relating to the future performance and financial condition of HSNi, its operating segments and its consolidated subsidiaries. Forward-looking statements are based on management's current expectations and assumptions which may not prove to be accurate. Forward-looking statements are not guarantees of performance or historical facts and there are a number of known and unknown risks, uncertainties, contingencies and other factors (many of which are outside our control) that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include but are not limited to: our ability to attract new and retain existing customers in a cost-effective manner; our exposure to intense competition and our ability to effectively compete for customers; changes in political, business and economic conditions, particularly those that affect consumer confidence, consumer spending or digital sales growth; changes in our relationships with pay television operators, vendors, manufacturers and other third parties; failure to attract and retain television viewers and secure a suitable programming tier of carriage and channel placement for the HSN television network programming; changes in shipping and handling costs, particularly if we are unable to offset them; any technological or regulatory developments that could negatively impact the way we do business, including regulations regarding state and local sales and use taxes; risks associated with possible systems failures and/or security breaches, including any breach that results in the theft, transfer or unauthorized access or disclosure of customer, employee or company information, or the failure to comply with various laws applicable to HSNi in the event of such a breach; any material change in HSNi's business prospects and/or strategy, including whether HSNi's initiatives and investments will be effective; our ability to offer new or innovative products and services through various platforms in a cost effective manner and consumer acceptance of these products and services; risks associated with acquisitions including the ability to successfully integrate new businesses and achieve expected benefits and results; risks associated with litigation, audits, claims and assessments; and the loss of any key member of our senior management team. More information about potential factors that could affect HSNi's business and financial results is included in our filings with the U.S. Securities and Exchange Commission. Other unknown or unpredictable factors that could also adversely affect HSNi's business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, any forward-looking statements may not prove to be accurate. All written or oral forward-looking statements that are made or attributable to us are expressly qualified in their entirety by this cautionary notice. Accordingly, you should not place undue reliance on any forward-looking statements, which only reflect the views of HSNi management as of the date of this press release. Such statements speak only to the date such statements are made and HSNi does not undertake to update any forward-looking statements. Historical results should not be considered as an indication of future performance. 2

3 DIVERSITY OF BRANDS, PRODUCTS, CHANNELS OF DISTRIBUTION MULTI-CHANNEL DIRECT TO CONSUMER REACH $4 BILLION IN SALES $2 BILLION IN DIGITAL SALES, 50%+ PENETRATION 21% OF TOTAL SALES FROM MOBILE 3

4 HSNi 64M units shipped per year Customer database of 60M Mobile: fastest platform HSN CORNERSTONE BRANDS 69% digital sales penetration up 220 bps over the prior year 7 premiere lifestyle brands 330M catalogs shipped annually 42% digital sales penetration up 210 bps over the prior year 95M homes, Live 24/7, 364 HSN2 in 50M+ homes Shop by Remote patented technology HSN HD in 55M homes First retail gaming destination HSN Arcade 4

5 TRANSFORMING HSNi FOR GROWTH LEVERAGING SYNERGIES AND MAXIMIZING EFFICIENCIES ACROSS THE ORGANIZATION 5

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12 CUSTOMER GROWTH ACTIVE CUSTOMER FILE BEST CUSTOMER 5M+ +1% $1,400 $1,200 $1,000 $800 $600 $400 $200 REVENUE PER MULTI-BUYER BY ORDERING METHOD $771 $793 $1,289 $0 HSN DIGITAL ONLY HSN TV ONLY HSN TV & HSN DIGITAL 12

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15 INCREASE IN SALES INCREASE IN VIEWERSHIP INCREASE IN DIGITAL TRAFFIC 15

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19 WHO WE ARE OUR PORTFOLIO OUR VISION OUR REACH Cornerstone is a portfolio of interactive aspirational direct to consumer family & home lifestyle brands 79% Home, 21% Apparel Lead the digital transformation of traditional catalog direct to consumer commerce 69% Digital Penetration, 330M Catalogs 19

20 THE CORNERSTONE ADVANTAGE Best in class platform, extensive direct to consumer capabilities, great brands and great product PLATFORM Size and Scale Infrastructure Leverage CAPABILITIES 20 Aspirational imagery and content Customer contact competency Translate to digital

21 TRANSFORMING THE BUSINESS 21

22 HEIGHTENED IMMERSIVE EXPERIENCES 22

23 EXTENDING THE EXPERIENCE The store emphasizes Ballard s strength in customization and design authority 23 23

24 TRANSFORMING THE BUSINESS Net Sales Circulation Digital 1,200 70% NET SALES/CIRCULATION 1, % 60% 55% 50% 45% DIGITAL % LTM 3/ % 24

25 FRONTGATE To become the authoritative luxury home brand offering products of the finest design and quality delivering long term value that consistently exceeds our customers expectations. Mean Household Income $260K+ 20%+ own a second home 25

26 Distinguish the brand as an indispensable decorating resource that satisfies our customers' passion for decorating by offering creative ideas, expert advice and exclusive, timeless home décor of exceptional quality and value presented in fresh, inspiring ways. Mean Household Income $125K+ 26

27 GRANDIN ROAD Create extraordinary yet affordable products that connect effortlessly and beautifully with the everyday life of the grandinroad woman. Mean Household Income $210K+ 27

28 To help our customers add value and convenience to their homes by providing simple solutions and clever problem solvers that are qualitycrafted, competitively priced, and designed to make life easier. Mean Household Income $75K+ 28

29 GARNET HILL We are dedicated to providing quality and excellence in everything we do. Our mission is to delight you, exceeding your expectations every step of the way with unique product, exceptional design and outstanding service. That's the Garnet Hill way. Mean Household Income $170K+ 29

30 CHASING FIREFLIES Inspiring children and grownups to embrace the wonder of childhood with products that will surprise, charm and delight. Mean Household Income $150K+ 30

31 TRAVELSMITH For travelers venturing around the corner or around the world, TravelSmith is the premier apparel, gear and advice outfitter for their journey. Mean Household Income $125K+ Average of 5-7 trips per year 31

32 HSNi STRONG HISTORICAL GROWTH 2008 LTM 3/2016 CAGR Revenue 4.5% Adjusted EBITDA 11.7% Adjusted EPS (1) 22.1% 0% 10% 20% 30% (1) Diluted EPS from continuing operations excluding certain significant items Note: All years restated for discontinued operations 32

33 HSNi CONSISTENT IMPROVEMENT IN OPERATING PERFORMANCE REVENUE ($MM) EBITDA ($MM) $4,000 $400 $3,500 $3,000 $2,500 $2,671 $2,636 $2,884 $3,069 $3,267 $3,404 $3,588 $3,691 $3,665 $350 $300 $250 $259 $303 $324 $338 $342 $357 $350 $2,000 $200 $212 $1,500 $150 $157 $1, LTM 3/2016 $ LTM 3/2016 (1) 2008 LTM 3/2016 Note: All years restated for discontinued operations 33

34 HSN HISTORICAL FINANCIALS REVENUE ($MM) EBITDA ($MM) $3,000 $350 $2,500 $2,000 $1,500 $1,000 $1,957 $2,008 $2,116 $2,160 $2,265 $2,312 $2,476 $2,542 $2,520 $300 $250 $200 $150 $100 $160 $196 $214 $235 $251 $261 $289 $303 $297 $500 $50 $ LTM 3/2016 $ LTM 3/2016 (1) 2008 LTM 3/2016 Notes: All years restated for discontinued operations. 34

35 CORNERSTONE HISTORICAL FINANCIALS REVENUE ($MM) EBITDA ($MM) $1,200 $1,000 $800 $600 $400 $714 $628 $768 $909 $1,002 $1,092 $1,112 $1,149 $1,145 $90 $75 $60 $45 $30 $45 $68 $73 $77 $53 $55 $53 $200 $ LTM 3/2016 $15 $0 $ LTM 3/2016 (1) 2008 LTM 3/2016 Notes: All years restated for discontinued operations. EBITDA CAGR calculation excludes 2008, when EBITDA was negative. 35

36 HSNi STRONG & STABLE CASH FLOW CASH FROM OPERATIONS ($MM) BY BUSINESS SEGMENT (1) CAPEX FREE CASH FLOW(²) CORNERSTONE HSN $250 $200 $150 $137 $200 $147 12% $100 $97 $50 $0 $40 $ LTM 3/ % (1) 3-year Historical Average (2) FCF defined as Cash from Operations less Capital Expenditures 36

37 HSNi RETURNING CAPITAL TO SHAREHOLDERS DIVIDEND Date 9/28/11 10/31/12 11/6/13 11/4/14 Event Initiation 44% Increase 39% Increase 40% Increase Qrtrly $0.125 $0.180 $0.250 $0.350 Yield 1.4% 1.4% 1.9% 2.1% (1) (3) (5) (7) Payout 25.6% 35.1% 32.1% 45.3% (2) (4) (6) (8) SHARE REPURCHASES Event Announcement (9/28/11) Shares Repurchased Announcement (1/28/15) Shares Repurchased #Shares $ $60 Date 1/28/15 Event Special One Time $10.00 Yield 13.3% (9) Payout 310% (10) CUMULATIVE PAYOUT (1) As of 09/28/11. Calculated as annual dividend per share / price per share (2) As of 09/28/11. Calculated as dividend per share / LTM EPS (3) As of 10/31/12. Calculated as annual dividend per share / price per share (4) As of 10/31/12. Calculated as dividend per share / LTM EPS (5) As of 11/6/13. Calculated as annual dividend per share / price per share (6) As of 11/6/13. Calculated as dividend per share / LTM EPS (7) As of 11/4/14. Calculated as annual dividend per share / price per share (8) As of 11/4/14. Calculated as dividend per share / LTM EPS (9) As of 1/28/15. Calculated as special dividend per share / price per share (10) As of 1/28/15. Calculated as special dividend per share / LTM EPS 37 Total Cumulative Qtrly Dividends Cumulative Share Repurchases Special Dividend $1,272 $230 $518 $524

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