Step One Clothing Limited · ASX:STP
Step One Clothing — H1 2023 Earnings Presentation
30 slides from Step One Clothing's earnings presentation, Feb 22, 2023
Slide 1: 1H23 Results Investor Presentation
For personal use only 22 FEBRUARY 2023 Greg Taylor, CEO and Founder Nigel Underwood, CFO 1
Slide 2: Agenda
For personal use only 01 1H23 Results Highlights 02 1H23 Results Overview 03 1H23 Financial Summary 04 Market Context and Strategy 05 Outlook 06 Questions 2
Slide 3: 1H23 Results Highlights
1H23 Results Highlights Profitable with a strong balance sheet For personal use only Average FSC Certification Revenue Gross Margin order value (AOV) 1 $35.9m 80.7% End-to-end FSC $90.26 supply chain Down 5.7% vs pcp Down 2.4% vs pcp Up 16% vs pcp certification EBITDA Cash Website Visits Customers $
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Slide 5: 1H23 Operational Highlights
1H23 Operational Highlights Making better use of what we have For personal use only PRODUCT MARKETING PROCESSES / CAPABILITY • Introduction of new core • Targeted campaigns to • Recognition of ESG credentials colour range for Men and disengaged customers with FSC certification for the Step One brand
Slide 6: Strong Online Engagement
Strong Online Engagement Increased conversion rates and customer database growth For personal use only WEBSITE TRAFFIC AVERAGE CONVERSION RATE CUSTOMER DATABASE GROWTH 6 months, M, excl Amazon 6 months, % of website visits, excl Amazon 6 months, #’000, excl Amazon 9.4 9.3% 7.1 7.0 65% 7.6% 8.1% 7.5%
Slide 7: Value proposition remains strong
Value proposition remains strong Price has increased along with AOQ indicating customer value proposition remains with customers who know the product For personal use only AVERAGE QUANTITY PER AVERAGE REVENUE PER ITEM CUSTOMER MIX 6 months, % of all Orders, excl Amazon ORDER (AOQ) 6 months, $AUD/ite
Slide 8: Importance of DTC model
Importance of DTC model Driving brand awareness while continuing to engage with loyal following For personal use only MARKETING STRATEGY MARKETING CHANNELS NEW EXISTING CUSTOMER CUSTOMER TV AND PR (awareness) Awareness and Product Life Engaging Changing Content SOCIAL MEDIA Education (engagement) OR
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Slide 10: Financial Highlights
Financial Highlights Strong revenue and attractive gross profit margins in a difficult market For personal use only SALES REVENUE GROSS PROFIT PROFORMA EBITDA 1 6 months, $M 6 months, $M/% 6 months, $M/% 38.1 10.0 30.0% 35.9 26.9% 34.1 1.4 34.1 1.2 9.0 2.1 25.0% 8.0 27.6 11.0 19.5% 20.8% 10.6 10.7 7
Slide 11: Strong Operational Metrics
Strong Operational Metrics Strong returning customer order rates demonstrates trust in our product For personal use only CUSTOMER ORDERS1 AVERAGE ORDER VALUE (AOV)2 CUSTOMER MIX3 6 months, #‘000, excl Amazon 6 months, $ per Order, excl Amazon 6 months, % of all Orders, excl Amazon 91.0 488 84.5 457
Slide 12: Strong Operational Metrics: Advertising and Cost to Acquire Customers
Strong Operational Metrics Marketing and advertising key to growing the business For personal use only ADVERTISING1,2 COST TO ACQUIRE CUSTOMERS1,2,3,4 6 months, $M/% of Revenue 6 months, $ per customer order, excluding Amazon 56.8% 50.3% 40.8% 39.2% 36.3% 17.2 33.2% 32.4% 15.7 14.9 1.7 12.4 1.3 0.7
Slide 13: Income Statement
Income Statement 1H23 1H22 1 Movement For personal use only $'000 $'000 $'000 % COMMENTARY Australia 24,113 25,601 (1,488) -5.8% UK 10,619 11,031 (412) -3.7% USA 1,161 1,444 (283) -19.6% • Revenue declined 5.7% on pcp Revenue 35,893 38,076 (2,183) -5.7% Cost of sales (6,925) (6,424) (501) 7.8% • Gro
Slide 14: Balance Sheet
Balance Sheet As at As at Variance 31 December 2022 30 June 2022 $'000 $'000 $'000 % For personal use only ASSETS Current Assets COMMENTARY Cash and cash equivalents 32,550 34,110 (1,560) -4.6% Trade and other receivables 269 42 227 540.5% • Strong cash of $32.6m with no debt Inventories 26,705 25,3
Slide 15: Cash Flow Statement
Cash Flow Statement 1H23 1H22 Variance For personal use only $'000 $'000 $'000 % COMMENTARY COMMENTARY Cash flows from operating activities Receipts from customers (inclusive of GST/VAT) 40,158 40,818 660 1.6% • Cash receipts impacted by Payments to suppliers and employees (inclusive of GST/VAT) (39
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Slide 17: Strategy: Global growth opportunity
Strategy Global growth opportunity For personal use only PRODUCT MARKET SIZE1 CAPITAL LIGHT PARTNERSHIPS ADJACENCIES Every person needs Low capital invested Engage in partnerships Natural adjacencies to underwear • Ownership of Brand, • Grow brand presence on men’s underwear designs, and Amazon and
Slide 18: Business Model
Business Model Step One is built on an innovative product and customer engagement model with a strong ESG focus For personal use only 1. DESIGN 4. ESG FOCUS Functional Product Features DESIGN ESG Transparent production process • UltraGlyde™ panels • FSC certification of supply chain • Elastic 3D pou
Slide 19: Sustainable and Ethical Supply chain
Sustainable and Ethical Supply chain Our ESG credentials are baked into our entire product lifecycle, from inception to delivery The Step One Brand is now certified by FSC1 For personal use only FABRIC OTHER GARMENT RAW MATERIALS STEP ONE MANUFACTURING MANUFACTURING MANUFACTURE PACKAGING CHINA MANUF
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Slide 21: Looking forward
Looking forward Step One will continue to prioritise profitability over growth For personal use only Profitable growth Expanding the customer Expanding our range funnel Investing in capability and Continuous improvement in Expanding sales channels product innovation customer experience and marketpla
Slide 22: Thank You! Q+A
Real people wearing Step One… Thank You! Q+A Browse our product range on www.stepone.life while we are talking For personal use only 4.7 13,278 reviews1 4.6 20,938 reviews1 1. Customer reviews taken from respective websites as at 17 February 2023. 22
Slide 23: For personal use only
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Slide 24: Product Features
Product Features Step One underwear is design focused – with UltraGlydeTM panels, comfort pouches, and comfortable organically grown Bamboo – it has revolutionised the underwear For personal use only market for all genders BAMBOO FABRIC • Wicks away sweat and has excellent breathing qualities SOFT A
Slide 25: A Brief History of Step One
A Brief brief history History of Step One STEP ONE Founder-led business with highly scalable model & strong track record of growth For personal use only SCALE + HELLO UK! HELLO US! WOMEN’S LAUNCH STEP ONE IS BORN PRODUCTION GROWS COMPOSTABLE UK market testing Following a testing New product range Id
Slide 26: Flexible Production Cycle
Flexible Production Cycle A highly flexible production cycle which can be managed to meet demand For personal use only Delays in global export logistics Production facilities in China and Vietnam: are affecting shipping, offloading & transfer to • Maintain flexibility across production cycle warehou
Slide 27: Local Distribution
Local Distribution For personal use only • Product is warehoused in each country with 3PLs in Australia East Coast, UK East Coast & USA West Coast • 3PLs manage all inventory & logistics in each country o Receive product from the port of entry o Receipt product into their warehousing systems o Secur
Slide 28: Proforma Income Statement
Proforma Income Statement For personal use only FY20 FY21 FY22 FY23 $’000 1H20 2H20 1H21 2H21 1H22 2H22 1H23 Australia 9,304 11,943 23,359 17,309 25,601 20,995 24,113 COMMENTARY UK 0 1,000 10,726 10,323 11,031 11,013 10,619 USA 0 0 0 0 1,444 2,103 1,161 Revenue 9,304 12,943 34,085 27,632 38,076 34,1
Slide 29: Proforma Adjustments
Proforma Adjustments For personal use only FY20 FY21 FY22 FY23 $’000 1H20 2H20 1H21 2H21 1H22 2H22 1H23 COMMENTARY Statutory NPAT / (NLAT) 1,948 1,649 4,564 (4,683) (3,816) 813 5,275 • No proforma adjustments made Less Costs in 1H23 - share based payments 0 133 2,967 4,900 6,076 0 0 - IPO costs 0 0
Slide 30: Important Notice
Important Notice The material in this presentation has been prepared by Step One Clothing Limited (ASX: STP) (“Step One” or the “Company") and is general For personal use only background information about Step One’s activities current as at the date of this presentation. The information is given in