INVESTOR UPDATE SUMMER 2017
SAFE HARBOR We (PVH Corp.) obtained or created the market and competitive position data used throughout this presentation from research, surveys or studies conducted by third parties, information provided by customers and industry or general publications. Industry publications and surveys generally state that they have obtained information from sources believed to be reliable but do not guarantee the accuracy and completeness of such information. While we believe that each of these studies and publications and all other information are reliable, we have not independently verified such data and we do not make any representation as to the accuracy of such information. The information in our presentation contains certain forward-looking statements which reflect our view as of May 24, 2017 of future events and financial performance. These forward-looking statements are subject to risks and uncertainties indicated from time to time in our SEC filings, as more fully discussed in our safe harbor statements and risk factors found in our SEC filings. These risks include our right to change strategies, objectives and intentions; our need to use significant cash flow to service our debt obligations; our vulnerability to weather, economic conditions, fuel prices, fashion trends, loss of retail accounts, epidemics, war, terrorism, scarcity of raw materials, fluctuations in foreign currency exchange rates and other factors; our reliance on the sales of our business partners; and our exposure to the behavior of our associates, business partners and licensors. As such, our future results could differ materially from previous results or our expectations as of May 24, 2017. We do not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimate regarding revenue or earnings, whether as a result of the receipt of new information, future events or otherwise. This presentation includes non-gaap financial measures, as defined under SEC rules. Reconciliations of these measures are included at the end of this presentation. Our SEC filings are available on our website at pvh.com and the SEC s website at sec.gov. Investor Update Summer 2017 2
PVH BY THE NUMBERS PVH HISTORY ESTABLISHED IN 1881 ~35,000 ASSOCIATES GLOBALLY PVH FOUNDATION (THE COMPANY S PHILANTHROPIC DIVISION) HAS BEEN IN EXISTENCE FOR 30+ YEARS OUR 2016 REPORTED $8.2 REVENUES WERE BILLION ~1,000,000 GARMENT WORKERS IN OUR SUPPLY CHAIN WE OPERATE IN OVER 40 COUNTRIES ~50% REVENUES GENERATED OUTSIDE OF THE U.S. 2016 GLOBAL RETAIL SALES $18.3 BILLION Investor Update Summer 2017 3
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CORPORATE RESPONSIBILITY (CR) IS CENTRAL TO HOW WE CONDUCT BUSINESS Investor Update Summer 2017 5
THREE DISTINCT BUSINESSES, ALL POSITIONED FOR GLOBAL GROWTH 2016 Global Retail Sales: $8.4 BN Revenues: $3.1 BN EBIT Margin*: 13.6% Constant Currency EBIT Margin*: 15.2% 2016 Global Retail Sales: $6.6 BN Revenues: $3.5 BN EBIT Margin*: 11.1% Constant Currency EBIT Margin*: 13.4% 2016 Global Retail Sales: $3.3 BN Revenues: $1.6 BN EBIT Margin*: 6.6% * Figures exclude certain amounts that were deemed non-recurring or non-operational. Constant currency measures also exclude impact of foreign exchange. Refer to Appendix for GAAP reconciliations. Investor Update Summer 2017 6
PVH IS A GLOBAL LEADER IN THE APPAREL INDUSTRY PVH is one of the largest global apparel companies with over $8 billion in revenues $12.0 2016 Revenue ($ in billions) $8.2 $6.6 $4.6 $4.5 $4.5 $3.6 $3.0 $3.0 $2.4 $2.2 $0.3 Source: Factset. Consensus estimate for Michael Kors. Investor Update Summer 2017 7
CALVIN KLEIN AND TOMMY HILFIGER ARE KEY DRIVERS TO OUR BUSINESS Calvin Klein & Tommy Hilfiger currently account for ~80% of PVH s revenues and ~90% (1) of PVH s EBIT 19% 11% 43% 43% 38% Total Revenue by Business (2016) 46% EBIT (1) by Business (2016) TOMMY HILFIGER CALVIN KLEIN HERITAGE BRANDS (1) Figures exclude certain amounts that were deemed non-recurring or non-operational, as well as corporate expenses. Refer to Appendix for GAAP reconciliations. Investor Update Summer 2017 8
PVH HAS A SIGNIFICANT GLOBAL PRESENCE Approximately 50% of PVH s revenues are generated outside the U.S. and approximately 75% of PVH s EBIT (1) is subject to foreign exchange risk 11% 8% 12% 25% 52% 23% 29% 40% U.S. Europe Asia Pacific Americas (excluding U.S.) Note: Americas (excluding U.S.) includes Canada, Mexico, South America, Central America and the Caribbean; Europe includes the Middle East and Africa; Asia Pacific includes Australia and New Zealand. (1) Figures exclude certain amounts that were deemed non-recurring or non-operational. Investor Update Summer 2017 9
PVH GLOBAL STORE COUNTS BY REGION (AS OF APRIL 3, 2017) NORTH AMERICA (1) TOTAL STORES: ~590 Tommy Hilfiger: ~240 Calvin Klein: ~185 Van Heusen: ~165 LATIN AMERICA (3) EUROPE (2) TOTAL STORES: ~1,695 Tommy Hilfiger: ~820 Calvin Klein: ~875 ASIA PACIFIC (6) TOTAL STORES: ~330 Tommy Hilfiger: ~220 (4) Calvin Klein: ~110 (5) TOTAL STORES: ~2,620 Tommy Hilfiger: ~590 Calvin Klein: ~2,030 1. Includes the U.S., Canada and Mexico. 2. Includes the Middle East and Africa; includes concession locations and franchisee and distributor stores. 3. Includes Central and South America and the Caribbean. 4. All locations are licensee stores. 5. Includes franchisee and distributor stores. 6. Includes concession, franchisee and, for Tommy Hilfiger, licensee stores. Investor Update Summer 2017 10
$ Millions A RICH HISTORY OF SALES AND EARNINGS GROWTH $9,000 $8,000 Revenue & EPS Growth (2003 2016) ($8.45 Constant $8.00 Currency) $7.30 $7.03 $7.05 $6.80 $6.58 $8,241 $8,203 $7.00 $8,216 $8,020 $7,000 $5.44 $6.00 $6,000 $4.31 $5,891 $6,043 $5.00 $5,000 $4,000 $2.62 $3.21 $2.99 $2.79 $4,637 $4.00 $3.00 $3,000 $2,000 $1,000 $1.88 $1.37 $0.98 $2,425 $2,397 $2,399 $2,091 $1,909 $1,548 $1,641 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $2.00 $1.00 $0.00 Note: 2003-2007 figures not restated for change in accounting for retirement plans. 2003-2006 and 2008-2016 figures exclude certain amounts that were deemed non-recurring or non-operational. 2016 constant currency EPS also excludes impact of foreign exchange. Refer to Appendix for GAAP reconciliations. Investor Update Summer 2017 11
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TOMMY HILFIGER BRAND OVERVIEW 2016 REGIONAL BREAKOUT GLOBAL RETAIL SALES: $6.6 BN REPORTED REVENUES: $3.5 BN 4% 10% 8% 46% 41% 46% 45% 47% 45% North America (1) Latin America (2) Asia Pacific (3) Europe (4) One of the world s leading DESIGNER LIFESTYLE Brands Celebrates the essence of CLASSIC AMERICAN COOL STYLE Strong GLOBAL BRAND AWARENESS (1) North America includes Canada and Mexico. (2) Latin America includes South America, the Caribbean and Central America. (3) Asia Pacific includes Australia and New Zealand. (4) Europe includes the Middle East and Africa. Investor Update Summer 2017 14
TOMMY HILFIGER BRAND OVERVIEW STYLE / TARGET Hilfiger Collection: The pinnacle of the Tommy Hilfiger product offerings, blending the brand s Americana styling with contemporary influences and a playful fashion edge. The collection targets 25 to 40-year-old consumers and includes designs that premiere on the runway during New York Fashion Week. Tommy Hilfiger Tailored: Targeting 25 to 40-year-olds, this line integrates elevated, sophisticated style with the brand s American menswear heritage. From structured suiting to more relaxed tailoring, classics are modernized with precision fit, premium fabrics, updated cuts, rich colors and luxurious details executed with the brand s signature twist. Tommy Hilfiger: Our core line, which embodies the brand s classic American cool spirit and preppy with a twist designs, focusing on a 25 to 40-year-old consumer. Hilfiger Denim: Targeting the 18 to 30-year-old denim-oriented consumer, the line focuses on premium denim separates, footwear, bags, accessories, eyewear and fragrance. Tommy Jeans capsule collection was launched in 2016 in North America and Europe. DISTRIBUTION Global Flagship and Anchor Stores, Global tommy.com, Select Global Wholesale Select Global Retail, Global tommy.com, Global Wholesale Global Retail, Global tommy.com, Global Wholesale Global Retail, Global tommy.com, EU & International Wholesale Investor Update Summer 2017 15
TOMMY HILFIGER REGIONAL DISTRIBUTION OF OUR BRAND PORTFOLIO North America Europe Asia Pacific Latin America Investor Update Summer 2017 16
TOMMY HILFIGER GROWTH OPPORTUNITIES PRODUCTS CHANNELS MARKETS WOMEN S APPAREL MEN S TAILORED RETAIL ASIA PACIFIC UNDERWEAR ACCESSORIES DIGITAL COMMERCE WHOLESALE Investor Update Summer 2017 17
TOMMY HILFIGER GLOBAL MARKETING & COMMUNICATIONS OBJECTIVE: Build on consumer-centric go-to-market strategies to maintain global brand relevance & momentum INVESTMENT: Over $160 million in 2016 global marketing spend FOCUS: Reaching a new, millennial consumer Women s Apparel, Footwear & Accessories Supermodel Gigi Hadid continues as global ambassador for Tommy Hilfiger women s Tommy Hilfiger leads industry transition to See Now, Buy Now with #TOMMYNOW runway model & global media platform Hilfiger Denim Tommy Jeans Logo Capsule Collection: Blending our brand DNA with pop culture to reach the new millennial consumer Millennial ambassadors: Sofia Richie, Anwar Hadid, and Lucky Blue Smith represent the bold, youthful spirit of the campaign Investor Update Summer 2017 18
TOMMY HILFIGER BUSINESS OVERVIEW & FINANCIALS Tommy Hilfiger Business Summary 2016 Reported Revenues: $3.5 BN International Revenues: ~$1.9 BN North America Revenues: ~$1.6 BN 2016 Reported EBIT Margin (1) : 11.1% 2016 Constant Currency EBIT Margin (1) : 13.4% (1) EBIT margin excludes certain amounts that were deemed non-recurring or non-operational. Constant currency measures also exclude impact of foreign exchange. Refer to Appendix for GAAP reconciliation of EBIT. Investor Update Summer 2017 19
TOMMY HILFIGER INTERNATIONAL OVERVIEW Healthy brand with premium positioning overseas Tommy Hilfiger International EBIT margin reached a peak level of 15.7% (1) on a constant currency basis in 2016 Marketing efforts focused on digital and social media 2016 EUROPE REVENUES 59% 41% Europe continues to experience solid multi-year business trends Localized management differentiates brand from peers BY DISTRIBUTION MODEL (1) WHOLESALE RETAIL Net sales growth in all major EMEA (Europe, Middle East & Africa) markets in 2016 Operates the largest digital commerce business within PVH, which posted double-digit comparable sales growth in 2016 Japan: Repositioning in progress, with early signs of improvement China: Our acquisition of the remaining 55% stake in our China joint venture closed in April 2016 (1) EBIT margin excludes certain amounts that were deemed non-recurring or non-operational. Constant currency measures also exclude impact of foreign exchange. Refer to Appendix for GAAP reconciliations. DÜSSELDORF, GERMANY (1) Retail and wholesale split excludes licensing revenues. Investor Update Summer 2017 20
TOMMY HILFIGER NORTH AMERICA OVERVIEW Continued wholesale sales growth through key partners: U.S. Exclusive partnership with Macy s for sportswear; opportunity to expand categories outside of sportswear through other wholesale partners Canada Retail partnership with Hudson s Bay Company Tommy Hilfiger s womenswear wholesale business in U.S. and Canada licensed to G-III 2016 REVENUES BY DISTRIBUTION MODEL(1) 31% 26% 69% WHOLESALE RETAIL Improvements in quality, styling and in-store presentations Investments in digital commerce and digital marketing driving brand relevance and consumer engagement Digital commerce posting strong growth, driven by improvements to site design, technology and social media efforts (1) Retail and Wholesale split excludes licensing revenues. Investor Update Summer 2017 21
TOMMY HILFIGER LICENSED BUSINESSES OVER TIME, WE LOOK TO ASSUME MORE DIRECT CONTROL OVER VARIOUS LICENSED REGIONS ASIA PACIFIC RETAIL SALES: ~$355MM* LATIN AMERICA & MEXICO RETAIL SALES: ~$425MM* JOINT VENTURE INDIA AUSTRALIA BRAZIL MEXICO (Formed joint venture on 11/30/16) DISTRIBUTOR INDONESIA VIETNAM PHILIPPINES LICENSE KOREA HONG KONG TAIWAN MALAYSIA LATAM SINGAPORE Investor Update Summer 2017 22 * Licensed businesses only.
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CALVIN KLEIN BRAND OVERVIEW 2016 REGIONAL BREAKOUT GLOBAL RETAIL SALES: $8.4 BN REPORTED REVENUES: $3.1 BN 3% 17% 3% 20% 60% 20% 54% 23% 6% 4% 19% 19% North America (1) Latin America (2) Asia Pacific (3) Europe (4) 52% ONE OF THE BEST KNOWN DESIGNER NAMES IN THE WORLD. BOLD, PROGRESSIVE IDEALS. SEDUCTIVE, AND OFTEN MINIMAL, AESTHETIC. (1) North America includes Canada and Mexico. (2) Latin America includes South America, the Caribbean and Central America. (3) Asia Pacific includes Australia and New Zealand. (4) Europe includes the Middle East and Africa. Investor Update Summer 2017 24
CALVIN KLEIN BRAND OVERVIEW CALVIN KLEIN 205W39NYC CK Calvin Klein CALVIN KLEIN Calvin Klein Jeans Calvin Klein Underwear Our halo brand, under which men s and women s high-end designer apparel & accessories, as well as home items, are sold. This line was formerly called Calvin Klein Collection. Calvin Klein By Appointment, a bespoke collection, was launched in April 2017. Our contemporary brand, offering modern, sophisticated, fashionable items including apparel and accessories. This line was formerly called Calvin Klein Platinum. The line is sold online in the U.S. and distribution is growing internationally across select markets. Our master brand includes offerings such as men s and women s sportswear, outerwear, fragrance, accessories, footwear, performance apparel, men s dress furnishings, women s dresses, suits and handbags, and items for the home. Offerings include men s and women s jeans and related apparel, which are distributed worldwide, and accessories, which are distributed in Europe, Asia and Brazil. With roots in denim, it is the casual expression of the CALVIN KLEIN brand and is famous for its unique details and innovative washes. As one of the world s leading designer underwear brands for men and women, Calvin Klein Underwear is known across the globe for provocative, cutting-edge products and marketing campaigns, consistently delivering innovative designs with superior fit and quality. Investor Update Summer 2017 25
CALVIN KLEIN REGIONAL DISTRIBUTION OF OUR BRAND PORTFOLIO CALVIN KLEIN 205 W39 NYC CK Calvin Klein CALVIN KLEIN Calvin Klein Jeans Calvin Klein Underwear Calvin Klein Performance North America (including Joint Venture) Europe Asia Pacific (including Joint Ventures) Latin America Distributors Brazil (Outlet) (Australia & India) (China) Investor Update Summer 2017 26
CALVIN KLEIN GROWTH OPPORTUNITIES PRODUCTS CHANNELS MARKETS GROWTH REGIONS EUROPE JEANSWEAR WOMEN S INTIMATES STORES DIGITAL COMMERCE ASIA PACIFIC APPAREL ACCESSORIES TRAVEL RETAIL SHOPS IN SHOPS Investor Update Summer 2017 27
CALVIN KLEIN GLOBAL MARKETING & COMMUNICATIONS OBJECTIVE: To create marketing campaigns with one singular, cohesive and aspirational brand voice showcasing the CALVIN KLEIN lifestyle INVESTMENT: With over $330 million in global annual marketing spend in 2016, (~45% funded by licensees), we leverage CALVIN KLEIN s brand heritage to grow the top and bottom line Appointment of Raf Simons as Chief Creative Officer of CALVIN KLEIN will help unify our brands from a commercial and creative perspective Investor Update Summer 2017 28
CALVIN KLEIN BUSINESS OVERVIEW AND FINANCIALS SUMMARY FINANCIALS 2016 Reported Revenues $3.1 BN Despite the fact that we brought back in house our two largest apparel categories in 2013, over 50% of the brand s global retail sales continues to be from licensing 2016 Reported EBIT Margin (1) 13.6% PAST TODAY 2016 Constant Currency EBIT Margin (1) 15.2% Licensee 89% Licensee 55% (1) EBIT margin excludes certain amounts that were deemed non-recurring or non-operational. Constant currency measures also exclude impact of foreign exchange. Refer to Appendix for GAAP reconciliation of EBIT. Directly Operated 11% 2012 Directly Operated 45% 2016 Investor Update Summer 2017 29
CALVIN KLEIN NORTH AMERICA OVERVIEW Healthy positioning across wholesale and retail channels 2016 Digital commerce growing double-digits, driven by recent investments in website navigation and technology Provocative 360 marketing campaigns are a driving force behind the brand, leveraging traditional and digital platforms REVENUES BY DISTRIBUTION MODEL 57% 43% WHOLESALE RETAIL Underwear experiencing strong revenue growth, particularly on the women s side Jeanswear turnaround moving forward; Customer responding to investments in product, quality, styling, consumer engagement and product experience All categories performed well at retail Note: Retail and wholesale split excludes licensing revenues. Investor Update Summer 2017 30
CALVIN KLEIN INTERNATIONAL OVERVIEW ASIA PACIFIC Distribution primarily through retail channel (concession shops and free-standing stores) Strong brand positioning across all categories Largest categories: Jeans and underwear; Biggest opportunities: Sportswear and performance KOREA ~20% CENTRAL & SOUTHEAST ASIA PACIFIC ~30% CHINA ~50% 2016 REVENUE BY REGION EUROPE Distribution ~50% retail / ~50% wholesale in 2016 Largest categories: Jeans and underwear; Biggest opportunities: Sportswear and accessories Europe is the largest regional opportunity for CALVIN KLEIN, as we turn around Calvin Klein Jeans and capitalize on the strong consumer appetite for Calvin Klein Underwear LATIN AMERICA (PRIMARILY BRAZIL) Distribution primarily through wholesale channel Brand positioned well, with strong consumer relevance and acceptance across product lines Largest category: Jeans; Biggest opportunities: Underwear, sportswear and performance Investor Update Summer 2017 31
CALVIN KLEIN LICENSING 7 significant partnerships represented over 80% of licensing and advertising revenue in 2016 Over time, we look to assume more direct control over various licensed businesses where we have core competencies WOMEN S APPAREL GLOBAL RETAIL SALES FRAGRANCE FOOTWEAR G-III $1.7BN COTY $1.2BN JIMLAR ~$290MM MEN S TAILORED WATCHES + JEWELRY CK CALVIN KLEIN / ASIA EYEWEAR PEERLESS SWATCH ~$235MM CLUB 21 ~$140MM MARCHON ~$260MM ~$130MM Investor Update Summer 2017 32
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HERITAGE BRANDS OVERVIEW & FINANCIALS SUMMARY FINANCIALS 2016 Reported Revenues $1.6 BN 2016 Reported EBIT Margin (1) 6.6% HERITAGE BRANDS Underwear / Core Intimates Sportswear Dress Furnishings Swimwear (1) Excludes certain amounts that were deemed non-recurring or non-operational. Refer to Appendix for GAAP reconciliation of EBIT. TRUE&CO. LICENSED BRANDS INCLUDE: Chaps Geoffrey Beene Investor Update Summer 2017 Kenneth Cole Reaction MICHAEL Michael Kors 34 Michael Kors Collection Sean John
HERITAGE BRANDS STRATEGIES Brand management, as we are committed to designing and marketing quality, trend-right products that offer great value to our customers. Leveraging and enhancing each brand s positioning in the market. Maximizing distribution, particularly through wholesale partners (in stores and online) and pure play digital commerce retailers. Enhancing profitability by capitalizing on supply chain opportunities and maintaining a critical focus on inventory management. Introducing products with advanced technologies and new features. Investor Update Summer 2017 35
FINANCIAL Investor Update Summer 2017 OVERVIEW 36
PVH FINANCIAL HISTORY ($ in Millions, except per share data) Warnaco Acquisition 2012 2013 2014 2015 2016 Revenues $6,043 $8,216* $8,241 $8,020 $8,203 Gross Margin 53.8% 52.4%* 52.6%* 51.6%* 53.4%* (54.8%* Constant Currency) EBIT* $752 $967 $921 $842 $794 EBIT Margin* 12.4% 11.8% 11.2% 10.5% 9.7% (11.3% Constant Currency) EPS* $6.58 $7.03 $7.30 $7.05 $6.80 ($8.45 Constant Currency) EPS Growth* 21% 7% 4% -3% -4% (+20% Constant Currency) * Figures exclude certain amounts that were deemed non-recurring or non-operational. Constant currency measures also exclude impact of foreign exchange. Refer to Appendix for GAAP reconciliations. Investor Update Summer 2017 37
PVH CONSOLIDATED SUMMARY OF 1Q17 PERFORMANCE 1Q17 YoY Change Revenues $2.0BN reported +5% constant currency* +4% reported Gross Margin 54.3% Up 170bps* Gross Margin (constant currency)* 54.7% Up 210bps Non-GAAP EBIT* $193MM (including foreign currency impact) +9% constant currency +2% (including foreign currency impact) Non-GAAP EBIT Margin* 9.7% Down 10bps Non-GAAP EBIT Margin (constant currency)* 10.1% Up 30bps Non-GAAP EPS* $1.65 (including $0.11 negative impact from foreign currency) +17% (when excluding the $0.11 negative impact from foreign currency) * Figures exclude certain amounts that were deemed non-recurring or non-operational. Constant currency measures also exclude impact of foreign exchange. Refer to Appendix for GAAP reconciliations. Investor Update Summer 2017 38
PVH FINANCIAL HISTORY FREE CASH FLOW ($ in millions) GROSS LEVERAGE RATIO** $700 $600 $500 $400 $300 $469 77% $573 98% $643 117% $467 84% 140% 120% 100% 80% 60% 3.4 3.2 3.0 2.8 3.3x 3.1x 3.0x 3.1x 3.0x $200 $100 $0 $110 19% 2013 2014 2015 2016 LTM 1Q17 Free Cash Flow 40% 20% 0% Free Cash Flow / Non-GAAP Net Income* 2.6 2.4 2.2 2.0 2013 2014 2015 2016 LTM 1Q17 Debt paydown of ~$1.7 billion since the Warnaco acquisition NOTE: Free cash flow defined as cash flow from operations less capital expenditures, contingent payments to Mr. Klein and dividends. * Figures exclude certain amounts that were deemed non-recurring or non-operational. Refer to Appendix for GAAP reconciliations. ** Figures exclude certain amounts that were deemed non-recurring or non-operational. Refer to Appendix for GAAP reconciliations. Gross leverage ratio includes issuance of 350mm of senior unsecured notes in 2Q16. Investor Update Summer 2017 39
APPENDIX Investor Update Summer 2017 40
GAAP to Non-GAAP Net Income Per Common Share Reconciliations (2003-2006) GAAP to Non-GAAP Reconciliations Net Income (Loss) Per Common Share (Dollars and Shares in Millions, Except Per Share Data) 2006 2005 2004 2003 Net Income (Loss) per Common Share Calculation GAAP Adjustments (1) Non-GAAP GAAP Adjustments (2) Non-GAAP GAAP Adjustments (3) Non-GAAP GAAP Adjustments (4) Non-GAAP Net Income $ 155.2 $ 6.4 $ 148.8 $ 103.9 $ 103.9 $ 58.6 $ (12.1) $ 70.7 $ 14.7 $ (35.8) $ 50.5 Preferred Stock Dividends on Converted Stock 3.2 3.2 2.1 $ 2.1 20.0 20.0 Inducement Payment and Offering Costs 10.9 10.9 14.2 14.2 Net Income (Loss) Available to Common Stockholders $ 141.1 $ (7.7) $ 148.8 $ 87.6 $ 16.3 $ 103.9 $ 58.6 $ (12.1) $ 70.7 $ (5.3) $ (35.8) $ 30.5 Total Shares for Diluted Net Income (Loss) per Common Share 53.5 (3.2) 56.7 51.7 (3.3) 55.0 51.6 51.6 30.3 (0.7) 31.0 Diluted Net Income (Loss) per Common Share $ 2.64 $ 2.62 $ 1.70 $ 1.88 $ 1.14 $ 1.37 $ (0.18) $ 0.98 (1) Adjustments for 2006 represent the elimination of (i) a gain associated with the sale by our subsidiary on January 31, 2006 of minority interests in certain entities that operate various licensed Calvin Klein jeans and sportswear businesses in Europe and Asia; (ii) costs resulting from the departure in February 2006 of our former chief executive officer; (iii) costs associated with closing our apparel manufacturing facility in Ozark, Alabama in May 2006; (iv) the tax effects associated with the foregoing pre-tax items; and (v) an inducement payment and offering costs incurred in connection with the voluntary conversion by the holders of our Series B convertible preferred stock of a portion of such stock into shares of common stock and the subsequent sale of a portion of such common shares by the holders. The inducement payment and offering costs resulted in a reduction of net income available to common stockholders for purposes of calculating diluted net income per common share. (2) Adjustments for 2005 represent the elimination of (i) an inducement payment and offering costs incurred in connection with the voluntary conversion by the holders of our Series B convertible preferred stock of a portion of such stock into shares of common stock and the subsequent sale of such common shares by the holders. The inducement payment and offering costs resulted in a reduction of net income available to common stockholders for purposes of calculating diluted net income per common share. (3) Adjustments for 2004 represent the elimination of (i) charges related to debt extinguishment costs; (ii) charges associated with the closing of certain outlet retail stores and exiting the wholesale footwear business and other related costs; (iii) the tax effects associated with the foregoing pre-tax costs; and (iv) a tax benefit associated with the realization of certain state net operating loss carryforwards. (4) Adjustments for 2003 represent the elimination of (i) charges related to integration costs associated with our acquisition of Calvin Klein; (ii) charges associated with the impairment and closing of certain outlet retail stores and exiting the wholesale footwear business and other related costs; (iii) a gain resulting from our sale of the minority interest in Gant Company AB; and (iv) the tax effects associated with the foregoing pre-tax items. Calvin Klein integration costs consist of (a) the operating losses of certain Calvin Klein businesses, which we have closed or licensed, and associated costs in connection therewith and (b) the costs of certain duplicative personnel and facilities incurred during the integration of various logistical and back office functions. Investor Update Summer 2017 41
GAAP to Non-GAAP Net Income Per Common Share Reconciliations (2008-2010) GAAP to Non-GAAP Reconciliations Net Income Per Common Share (Dollars and Shares in Millions, Except Per Share Data) 2010 2009 2008 GAAP Adjustments (1) Non-GAAP GAAP Adjustments (2) Non-GAAP GAAP Adjustments (3) Non-GAAP Net Income per Common Share Calculation Net Income (Loss) $ 54.4 $ (236.0) $ 290.4 $ 153.5 $ 7.2 $ 146.3 $ 39.1 $ (116.9) $ 156.0 Total Shares for Diluted Net Income per Common Share 67.4 67.4 52.5 52.5 52.2 52.2 Diluted Net Income per Common Share $ 0.81 $ 4.31 $ 2.92 $ 2.79 $ 0.75 $ 2.99 (1) Adjustments for 2010 represent the elimination of (i) the costs incurred in connection with our acquisition and integration of Tommy Hilfiger, including transaction, restructuring and debt extinguishment costs, short-lived non-cash valuation amortization charges and the effects of hedges against Euro to U.S. dollar exchange rates relating to the purchase price; (ii) the costs incurred in connection with our exit from the United Kingdom and Ireland Van Heusen dresswear and accessories business; (iii) the recognized actuarial loss on retirement plans; (iv) the tax effects associated with the foregoing pre-tax costs; and (v) a tax benefit related to the lapse of the statute of limitations with respect to certain previously unrecognized tax positions. (2) Adjustments for 2009 represent the elimination of (i) the costs incurred in connection with our restructuring initiatives announced in the fourth quarter of 2008, including the shutdown of domestic production of machine-made neckwear, a realignment of our global sourcing organization, reductions in warehousing capacity and other initiatives to reduce corporate and administrative expenses; (ii) the recognized actuarial loss on retirement plans; (iii) the tax effects associated with the foregoing pre-tax costs; and (iv) a net tax benefit related principally to the lapse of the statute of limitations with respect to certain previously unrecognized tax positions. (3) Adjustments for 2008 represent the elimination of (i) the costs incurred in connection with our restructuring initiatives announced in the fourth quarter of 2008, including the shutdown of domestic production of machine-made neckwear, a realignment of our global sourcing organization, reductions in warehousing capacity and other initiatives to reduce corporate and administrative expenses; (ii) fixed asset impairment charges for approximately 200 of our retail stores; (iii) the recognized actuarial loss on retirement plans; (iv) the operations of our Geoffrey Beene outlet retail division and the costs associated with the closing of such division; and (v) the tax effects associated with the foregoing pre-tax costs. Investor Update Summer 2017 42
GAAP to Non-GAAP Net Income Per Common Share Reconciliations (2011-2013) GAAP to Non-GAAP Reconciliations Net Income Per Common Share (Dollars and Shares in Millions, Except Per Share Data) 2013 2012 2011 GAAP Adjustments (1) Non-GAAP GAAP Adjustments (2) Non-GAAP GAAP Adjustments (3) Non-GAAP Total Earnings Before Interest and Taxes $ 513.4 $ (453.5) $ 966.9 $ 660.4 $ (91.2) $ 751.6 $ 491.2 $ (190.7) $ 681.9 Net Income per Common Share Calculation Net Income Attributable to PVH Corp. $ 143.5 $ (437.5) $ 581.0 $ 433.8 $ (52.6) $ 486.4 $ 275.7 $ (121.2) $ 396.9 Total Shares for Diluted Net Income per Common Share 82.6 82.6 73.9 73.9 72.9 72.9 Diluted Net Income per Common Share $ 1.74 $ 7.03 $ 5.87 $ 6.58 $ 3.78 $ 5.44 (1) Adjustments for 2013 represent the elimination of (i) the costs incurred in connection with our acquisition and integration of The Warnaco Group, Inc. ( Warnaco ) and the related restructuring; (ii) the loss incurred in connection with the sale of substantially all of the assets of the G. H. Bass & Co. ( Bass ) business, including related costs; (iii) the income due to the amendment of an unfavorable contract, which resulted in the reduction of a liability recorded at the time of the Tommy Hilfiger acquisition; (iv) the costs incurred in connection with our debt modification and extinguishment; (v) the interest expense incurred prior to the Warnaco acquisition closing date related to the $700 of senior notes issued in 2012; (vi) the recognized actuarial gains on retirement plans; (vii) the tax effects associated with the foregoing pre-tax items; (viii) non-recurring discrete tax items related to the Warnaco integration; and (ix) a non-recurring discrete tax item attributable to an increase in our previously-established liability for an uncertain tax position related to European and U.S. transfer pricing arrangements. (2) Adjustments for 2012 represent the elimination of (i) the costs incurred in connection with our integration of Tommy Hilfiger and the related restructuring; (ii) the costs incurred in connection with our acquisition of Warnaco; (iii) the interest expense incurred prior to the Warnaco acquisition closing date related to the $700 of senior notes issued in 2012; (iv) the recognized actuarial losses on retirement plans; (v) the tax effects associated with the foregoing pre-tax costs; and (vi) the tax benefit resulting from the recognition of previously unrecognized net operating loss assets and tax credits. (3) Adjustments for 2011 represent the elimination of (i) the costs incurred in connection with our integration of Tommy Hilfiger and the related restructuring; (ii) the expense incurred associated with settling the unfavorable preexisting license agreement in connection with our buyout of the Tommy Hilfiger perpetual license in India; (iii) the costs incurred in connection with our modification of our credit facility; (iv) the costs incurred in connection with our negotiated early termination of our license to market sportswear under the Timberland brand and the 2012 exit from the Izod women s wholesale sportswear business; (v) the recognized actuarial losses on retirement plans; (vi) the tax effects associated with the foregoing pre-tax costs; and (vii) the tax benefit resulting from revaluing certain deferred tax liabilities Investor due to Update a decrease Summer in the statutory 2017 tax rate in Japan. 43
GAAP to Non-GAAP Reconciliations (2014-2016) GAAP to Non-GAAP Reconciliations Net Income Per Common Share (Dollars and Shares in Millions, Except Per Share Data) 2016 2015 2014 Impact of GAAP Adjustments (1) Non-GAAP Foreign Currency Constant Currency GAAP Adjustments (2) Non-GAAP GAAP Adjustments (3) Non-GAAP Revenue Calvin Klein $ 3,135.2 $ - $ 3,135.2 $ (53.5) $ 3,188.7 Tommy Hilfiger 3,510.8-3,510.8 (42.8) 3,553.6 Heritage Brands 1,557.1-1,557.1 Total Revenue 8,203.1-8,203.1 (99.7) 8,302.8 $ 8,020.3 $ - $ 8,020.3 Tommy Hilfiger International 1,947.5-1,947.5 (39.2) 1,986.7 Total gross profit 4,370.3 (7.3) 4,377.6 (174.1) 4,551.7 4,161.6 19.5 4,142.1 Earnings Before Interest and Taxes Calvin Klein 333.5 (91.8) 425.3 (57.9) 483.2 Tommy Hilfiger 464.1 73.2 390.9 (84.6) 475.5 Heritage Brands 99.0 (3.0) 102.0 Corporate (107.4) 16.7 (124.1) Total Earnings Before Interest and Taxes 789.2 (4.9) 794.1 (144.6) 938.7 760.5 (81.0) 841.5 $ 529.9 $ (390.7) $ 920.6 Tommy Hilfiger International 328.3 88.4 239.9 (72.4) 312.3 Net Income per Common Share Attributable to PVH Calculation Net Income $ 549.0 $ (1.1) $ 550.1 $ 572.4 $ (13.3) $ 585.7 $ 439.0 $ (168.8) $ 607.8 Total Shares for Diluted Net Income per Common Share 80.9 80.9 83.1 83.1 83.3 83.3 Diluted Net Income per Common Share $ 6.79 $ 6.80 $ (1.65) $ 8.45 $ 6.89 $ 7.05 $ 5.27 $ 7.30 YoY Non-GAAP EPS Change -4% 20% -3% (1) Adjustments for 2016 from the elimination of (i) the costs incurred in connection with our integration Warnaco and the related restructuring; (ii) the costs incurred in connection with the discontinuation of several licensed product lines in the Heritage Brands dress furnishings business; (iii) the costs incurred in connection with the licensing to G-III Apparel Group, Ltd. of the Tommy Hilfiger womenswear wholesale business in the U.S. and Canada (the G-III license ), which resulted in the discontinuation of our directly operated Tommy Hilfiger North America womenswear wholesale business in 2016; (iv) the costs incurred in connection with the restructuring associated with the new global creative strategy for CALVIN KLEIN ; (v) the noncash gain recorded to write-up our equity investment in TH Asia, Ltd. ( TH China ), our former joint venture for Tommy Hilfiger in China, to fair value in connection with the acquisition of the 55% interest that we did not already own (the TH China acquisition ); (vi) the one-time costs recorded on our equity investment in TH China prior to the TH China acquisition closing; (vii) the costs incurred in connection with the TH China acquisition, primarily consisting of noncash valuation adjustments and amortization of short-lived assets; (viii) the costs incurred in connection with the amendment of our credit facility; (ix) the noncash costs recorded in connection with the deconsolidation of our subsidiary that principally operated and managed our Calvin Klein business in Mexico ("the Mexico deconsolidation") in connection with the formation of a joint venture in Mexico to operate that and other businesses; (x) the gain recorded in connection with a payment made to us to exit a Tommy Hilfiger flagship store in Europe; (xi) the costs incurred in connection with the early termination of the license agreement for the Tommy Hilfiger men's tailored clothing business in North America (the "TH men's tailored license termination") in order to consolidate under a different licensee the men's tailored businesses for all brands in North America; (xii) the recognized actuarial gain on retirement plans; (xiii) the tax effects associated with the foregoing pre-tax items; and (xiv) the tax benefits associated with discrete items related to the resolution of uncertain tax positions. (2) Adjustments for 2015 from the elimination of (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the costs incurred in connection with the operation of and exit from the Izod retail business; (iii) the costs incurred principally in connection with the discontinuation of several licensed product lines in the Heritage Brands dress furnishings business; (iv) the costs incurred in connection with the G-III license; (v) the gain recorded on our equity investment in the parent company of the Karl Lagerfeld brand ("Karl Lagerfeld"); (vi) the recognized actuarial gain on retirement plans; (vii) the tax effects associated with the foregoing pre-tax items; and (viii) the tax benefits associated with discrete items related to the resolution of uncertain tax positions and the impact of tax law and tax rate changes on deferred taxes. (3) Adjustments for 2014 from the elimination of (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the costs incurred in connection with our exit from the Izod retail business, including noncash impairment charges; (iii) the costs incurred in connection with our exit from a discontinued product line in the Tommy Hilfiger Japan business; (iv) the impairment of certain Tommy Hilfiger stores in North America; (v) the costs incurred related to the sale of the Bass business; (vi) the costs incurred in connection with the amendment and restatement of our credit facility and the related redemption of our 7 3/8% senior notes due 2020; (vii) the net gain on the deconsolidation of certain Calvin Klein subsidiaries in Australia and New Zealand and the previously consolidated Calvin Klein joint venture in India; (viii) the recognized actuarial loss on retirement plans; (ix) the tax effects associated with the foregoing pre-tax items; and (x) the tax benefits associated with discrete items primarily related to the resolution of uncertain tax positions and various Warnaco integration activities. Investor Update Summer 2017 44
GAAP to Non-GAAP Revenue and Gross Margin Reconciliations GAAP to Non-GAAP Reconciliations Revenue and Gross Margin (Dollars in Millions) 2014 (1) 2013 (2) 2008 (3) 2003 (4) GAAP Revenue $ 8,241.2 $ 8,186.4 $ 2,492.0 $ 1,569.0 Adjustments 30.0 (95.0) (21.0) Non-GAAP Revenue 8,216.4 2,397.0 1,548.0 GAAP Gross Profit 4,326.7 4,219.3 Adjustments 6.5 85.6 Non-GAAP Gross Profit 4,333.2 4,304.9 Non-GAAP Gross Margin 52.6% 52.4% (1) Adjustments for 2014 represent the costs incurred in connection with the integration of Warnaco and the related restructuring and the exit of a discontinued product line in the Tommy Hilfiger Japan business. (2) Adjustments for 2013 represent the revenue reduction due to sales returns for certain Warnaco wholesale customers in connection with initiative to reduce excess inventory levels and the costs incurred in connection with the acquisition and integration of Warnaco and the related restructuring. (3) Adjustments for 2008 represent the elimination of the operations of the Geoffrey Beene outlet retail division, which was closed. (4) Adjustments for 2003 represent the elimination of the operations of certain Calvin Klein businesses, which were closed or licensed. Investor Update Summer 2017 45
GAAP to Non-GAAP Reconciliations 1Q17 and 1Q16 GAAP to Non-GAAP Reconciliations Net Income Per Common Share (Dollars and Shares in Millions, Except Per Share Data) Q1 2017 Q1 2016 Impact of GAAP Adjustments (1) Non-GAAP Foreign Currency Constant Currency GAAP Adjustments (2) Non-GAAP Total Revenue $ 1,989.0 $ - $ 1,989.0 $ (30.3) $ 2,019.3 $ 1,917.8 $ - $ 1,917.8 Total Gross Profit 1,080.8-1,080.8 (24.2) 1,105.0 1,006.9 (1.1) 1,008.0 54.3% 54.7% 52.6% Total Earnings Before Interest and Taxes 113.2 (79.3) 192.5 (12.1) 204.6 294.6 106.1 188.5 9.7% 10.1% 9.8% Net Income per Common Share Attributable to PVH Calculation Net Income $ 70.4 $ (59.8) $ 130.2 $ 231.6 $ 108.8 $ 122.8 Total Shares for Diluted Net Income per Common Share 79.0 79.0 81.9 81.9 Diluted Net Income per Common Share $ 0.89 $ 1.65 $ (0.11) $ 1.76 $ 2.83 $ 1.50 YoY EPS Change 17% (1) Adjustments for the first quarter of 2017 from the elimination of (i) the costs incurred in connection with the TH China acquisition, primarily consisting of noncash amortization of shortlived assets; (ii) the costs incurred in connection with the agreements entered into during the quarter for a transaction to restructure our supply chain relationship with Li & Fung Trading Limited ( Li & Fung ), which also provides for the termination of the Company s non-exclusive buying agency agreement with Li & Fung (the Li & Fung termination ); (iii) the costs incurred in connection with the relocation of the Tommy Hilfiger office in New York, including noncash depreciation expense; (iv) the costs incurred in connection with the noncash settlement of certain of our benefit obligations related to our retirement plans as a result of an annuity purchased for certain participants, under which such obligations were transferred to an insurer; (v) the costs incurred in connection with the consolidation of our warehouse and distribution network in North America; and (vi) the tax effects associated with the foregoing pre-tax items. (2) Adjustments for the first quarter of 2016 from the elimination of (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the costs incurred in connection with the discontinuation of several licensed product lines in the Heritage Brands dress furnishings business; (iii) the costs incurred in connection with the G-III license; (iv) the costs incurred in connection with the restructuring associated with the new global creative strategy for CALVIN KLEIN ; (v) the noncash gain recorded to write-up our equity investment in TH China to fair value in connection with the TH China acquisition; (vi) the one-time costs recorded on our equity investment in TH China prior to the TH China acquisition closing; (vii) the costs incurred in connection with the TH China acquisition, a portion of which were noncash valuation adjustments and amortization of short-lived assets; (viii) the tax effects associated with the foregoing pretax items; and (ix) the tax benefits associated with discrete items related to the resolution of uncertain tax positions. Investor Update Summer 2017 46
GAAP to Non-GAAP Gross Debt/Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Reconciliations GAAP to Non-GAAP Reconciliations Debt/EBITDA (Dollars in Millions, Except Ratios) 2013 (1) 2014 (2) 2015 (3) 2016 (4) Q1 2016 (5) Q1 2017 (6) 2017 LTM Q1 GAAP Net Income Attributable to PVH Corp. $ 144 $ 439 $ 572 $ 549 $ 232 $ 70 $ 387 Pre-Tax Items Deemed Non-recurring or Non-operational 454 391 81 5 (106) 79 190 GAAP Interest and Taxes 370 91 188 241 63 43 221 GAAP Depreciation and Amortization 314 245 257 322 71 77 328 Interest Items Deemed Non-recurring or Non-operational (1) - - - - - - Depreciation and Amortization Items Deemed Non-recurring or Non-operational (83) (6) (6) (50) (6) (10) (54) Non-GAAP EBITDA as presented $ 1,198 $ 1,160 $ 1,092 $ 1,067 $ 254 $ 259 $ 1,072 Gross Debt, Including Current Portion and Short-term Borrowings $ 3,982 $ 3,557 $ 3,225 $ 3,242 $ 3,224 Capital Lease Obligations 25 18 15 16 16 Total Debt $ 4,007 $ 3,575 $ 3,240 $ 3,258 $ 3,240 Gross Leverage Ratio 3.3 3.1 3.0 3.1 3.0 (1) Amounts that were deemed non-recurring or non-operational for 2013 were (i) the costs incurred in connection with our acquisition and integration of Warnaco and the related restructuring; (ii) the loss incurred in connection with the sale of substantially all of the assets of our Bass business, including related costs; (iii) the income recorded due to the amendment of an unfavorable contract, which resulted in the reduction of a liability recorded at the time of the Tommy Hilfiger acquisition; (iv) the costs incurred in connection with our debt modification and extinguishment; (v) the interest expense incurred prior to the Warnaco acquisition closing date related to the $700 of senior notes issued in 2012; and (vi) the recognized actuarial gain on retirement plans. (2) Amounts that were deemed non-recurring or non-operational for 2014 were (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the costs incurred in connection with our exit from the Izod retail business, including noncash impairment charges; (iii) the costs incurred in connection with our exit from a discontinued product line in the Tommy Hilfiger Japan business; (iv) the impairment of certain Tommy Hilfiger stores in North America; (v) the costs incurred related to the sale of the Bass business; (vi) the costs incurred in connection with the amendment and restatement of our credit facility and the related redemption of our 7 3/8% senior notes due 2020; (vii) the net gain on the deconsolidation of certain Calvin Klein subsidiaries in Australia and New Zealand and the previously consolidated Calvin Klein joint venture in India; and (viii) the recognized actuarial loss on retirement plans. (3) Amounts that were deemed non-recurring or non-operational for 2015 were (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the costs incurred in connection with the operation of and exit from the Izod retail business; (iii) the costs incurred principally in connection with the discontinuation of several licensed product lines in the Heritage Brands dress furnishings business; (iv) the costs incurred in connection with the G-III license; (v) the gain recorded on our equity investment in Karl Lagerfeld; and (vi) the recognized actuarial gain on retirement plans. (4) Amounts that were deemed non-recurring or non-operational for 2016 were (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the costs incurred in connection with the discontinuation of several licensed product lines in the Heritage Brands dress furnishings business; (iii) the costs incurred in connection with the G-III license; (iv) the costs incurred in connection with the restructuring associated with the new global creative strategy for CALVIN KLEIN ; (v) the noncash gain recorded to write-up our equity investment in TH China to fair value in connection with the TH China acquisition; (vi) the one-time costs recorded on our equity investment in TH China prior to the TH China acquisition closing; (vii) the costs incurred in connection with the TH China acquisition, primarily consisting of noncash valuation adjustments and amortization of short-lived assets; (viii) the costs incurred in connection with the amendment of our credit facility; (ix) the noncash costs recorded in connection with the Mexico deconsolidation; (x) the gain recorded in connection with a payment made to us to exit a Tommy Hilfiger flagship store in Europe; (xi) the costs incurred in connection with the TH men's tailored license termination; and (xii) the recognized actuarial gain on retirement plans. (5) Adjustments for the first quarter of 2016 from the elimination of (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the costs incurred in connection with the discontinuation of several licensed product lines in the Heritage Brands dress furnishings business; (iii) the costs incurred in connection with the G-III license; (iv) the costs incurred in connection with the restructuring associated with the new global creative strategy for CALVIN KLEIN ; (v) the noncash gain recorded to write-up our equity investment in TH China to fair value in connection with the TH China acquisition; (vi) the one-time costs recorded on our equity investment in TH China prior to the TH China acquisition closing; and (vii) the costs incurred in connection with the TH China acquisition, a portion of which were noncash valuation adjustments and amortization of short-lived assets. Investor Update Summer 2017 47 (6) Adjustments for the first quarter of 2017 from the elimination of (i) the costs incurred in connection with the TH China acquisition, primarily consisting of noncash amortization of short-lived assets; (ii) the costs incurred in connection with the Li & Fung termination; (iii) the costs incurred in connection with the relocation of the Tommy Hilfiger office in New York, including noncash depreciation expense; (iv) the costs incurred in connection with the noncash settlement of certain of our benefit obligations related to our retirement plans as a result of an annuity purchased for certain participants, under which such obligations were transferred to an insurer; and (v) the costs incurred in connection with the consolidation of our warehouse and distribution network in North America.
GAAP to Non-GAAP Cash Flow Reconciliations GAAP to Non-GAAP Reconciliations Cash Flow (Dollars in Millions) LTM 2013 2014 2015 2016 Q1 2016 Q1 2017 Q1 2017 Cash Flow from Operations $ 412 $ 789 $ 900 $ 955 $ 109 $ (45) $ 801 Less: Capital Expenditures 237 257 264 247 46 68 269 Contingent Payments to Mr. Klein 53 51 51 53 13 13 53 Dividends 12 12 12 12 6 6 12 Free Cash Flow $ 110 $ 469 $ 573 $ 643 $ 44 $ (132) $ 467 Investor Update Summer 2017 48