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Talon International Outlines Strategic Growth Plans In Investor Meetings

Talon International, Inc. (OTCQB: TALN) today discussed its three-year growth plans and financial outlook at the Singular Investor Conference in Beverly Hills, CA and in meetings with investors.

Talon is a leading global supplier of custom zippers and apparel accessories (“trim”) and provides a total solution for the design, development, manufacturing and delivery of zippers and trim products. Headquartered in Los Angeles, with regional offices throughout North America, Europe and Asia, Talon supplies many of the world’s most recognizable brands with zippers, customized trim and TekFit © stretch technology products.

“Talon International’s rich brand heritage dates back to 1893 when the Talon branded zipper was created as the first sliding zipper device, and 120 years later the brand continues to be a leader and an innovator within the apparel industry,” said Lonnie Schnell, Talon’s Chief Executive Officer. “We are the only single-source partner for all apparel accessory needs. Our quality products and commitment to extraordinary customer service distinguish us from competitors in the highly-fragmented, multi-billion dollar zipper and trim markets.

“Following a multi-year turnaround, Talon is profitable and on track to deliver over $50 million of revenue in fiscal 2013, reflecting a more than 15 percent increase over fiscal 2012. Looking ahead, we are focused on executing our strategy for sustained and profitable growth. Our growth initiatives include cross-selling both zipper and trim products to our existing customer base, developing new customer relationships, innovating new products, expanding geographically and assessing product alliances and tuck-in acquisitions to grow our business. We are excited about the opportunities ahead for Talon and believe we are well positioned to deliver profitable growth and to create value for both our shareholders and our customers.”

Strategic Growth Initiatives

Talon’s three-year strategic growth plan includes the following key initiatives:

Expand Roster of Brands Talon works to expand its roster of brands by leveraging its strong relationships throughout the apparel, retail and manufacturing industries. Talon believes its U.S. and Europe presence is a significant competitive advantage in winning and serving customers in these markets. The majority of apparel manufacturing occurs in a variety of markets around the world while most sourcing decisions are made in the U.S. and Europe where the majority of the world’s leading apparel companies maintain headquarters.

Increase Market Share and Sales with Current Customers Talon emphasizes cross-selling its products to current customers to ensure the optimal utilization of its full line of services and products. Through frequent communication, exchange of product development ideas and sales visits with customers, Talon showcases the breadth of its products and capabilities with the goal of increasing customer penetration across all product lines.

Build Out Global Sales Team to Penetrate New and Existing Markets – Talon has global reach through its sales and marketing offices in the U.S., U.K., China, Hong Kong, Taiwan, India, Bangladesh, Vietnam and Indonesia. The company has developed a highly coordinated sales and marketing approach that provides a multi-level sales process and identifies new business opportunities at the same time. This process requires strong relationships with apparel brands to secure nominations and approvals on upcoming product launches and programs. Relationships at the manufacturing level are equally important since Talon’s local sales teams work directly with the identified factories to spec the sampling, service and delivery requirements for approved zipper and trim solutions. The close coordination between Talon and the factory teams then leads to new business opportunities with other brands served by the factory. Talon remarkets these new opportunities to brand merchants in the U.S. and Europe. Ongoing investment in building and maintaining a robust sales and marketing team is vital to serving the dynamic needs of Talon’s global customer base and critical to generating revenue growth.

Enter New Geographies with Significant Retail and Manufacturing Opportunities – Talon’s comprehensive network of quality manufacturing facilities gives it flexibility and leverage to serve its customers wherever they decide to source garments. The company’s proven quality manufacturing and delivery capabilities can be replicated throughout key manufacturing regions and promising new markets. The ability to respond to customer demand while expanding its network of local facilities and lowering production costs is a distinct competitive advantage in attracting and retaining leading apparel brands. Talon is targeting expansion in key growth markets such as India, Bangladesh, Vietnam, Turkey and Central America.

Develop and Introduce New Products – Talon is committed to continuous innovation to improve existing products and to develop new ones that address changing fashion trends and consumer preferences. Based on customer interest, the company has accelerated marketing TekFit®, its advanced, patented fabric technology which has several applications, including a stretchable waistband for men’s and women’s pants, shorts, uniforms and other garments. Over time, Talon expects TekFit to become a significant complement to its core zipper and trim product lines. Talon continues to invest in research and development through its product development groups within the U.S., Europe and Asia through specialty products such as TekFit, KidsZips® and Footwear Zips.

Assess Product Alliances and Strategic Tuck-In Acquisitions – Talon’s strategy is to provide a full line of specialty zipper and trim products. Accordingly, the company will opportunistically pursue strategic alliances that complement its current offerings and existing relationships with retailers. The multi-billion dollar apparel accessory industry is highly fragmented with hundreds of small participants. Talon will evaluate opportunities to acquire high-quality companies to expand its customer base and increase opportunities to cross-sell its entire product line to new apparel brands.

Financial Outlook

Based on its strategic plan and growth initiatives, over the next three years, Talon anticipates achieving revenue growth of 10 to 12 percent per year, while maintaining its historic gross margins in the range of 32 to 34 percent, and generating EBITDA returns of 8 to 9.5 percent of sales. Revenue growth will be driven in part by increasing market share expansions and adding new apparel brands and nominations by approximately 10 percent per year, as well as continued geographic expansion. These targets exclude any contribution from potential strategic alliances and tuck-in acquisitions.

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