Duluth Holdings Inc. · NASDAQ:DLTH
Duluth — Q4 2015 Earnings Presentation
35 slides from Duluth's earnings presentation, Apr 8, 2016
Slide 1: Investor Presentation 4Q 2015
Drone. Investor Presentation 4Q 2015 April 8, 2016
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation dated April 8, 2016 includes “forwardooking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. all statements, other than statements of historical facts included in this presentation, including statements concerning Du
Slide 3: Introduction to Duluth Trading
FIRE HOSE SON OF A... WORK PANTS Introduction to Duluth Trading
Slide 4: Differentiated, Everyday Lifestyle Brand
Differentiated, Everyday Lifestyle Brand Solution-Based Design Humorous and Distinctive Marketing Outstanding and Engaging Customer Experience Attractive, Loyal Customer Base = Direct m Retail Omnichannel Presence with Complete Distribution Control Large, Addressable Market Opportunity Seasoned Mana
Slide 5: The Modern, Self-Reliant American Lifestyle
The Modern, Self-Reliant American Lifestyle Men and women who are hands-on, value a job well done and are often outdoors for work and hobbies “April 8, 2016
Slide 6: Company history and milestones
story and invents The Establishes frst Introduces ‘Opens first store in (Opens first outlet in ‘Opens Ankeny, IA Bucket Boss headquarters—a heroically tough Mount Horeb, Wi Belevile, WI store underthe refurbished dredge yetsonFireHose® | companyname _bargein Duluth, MIN workwear “Portable ‘on Lake S
Slide 7: Only available at Duluth Trading - complete distribution control of our brand
Only available at Duluth Trading —- complete distribution control of our brand © Owned Distribution Center © 3 PL Distribution Centers “April 8.2016 Retail Website Call Center Retail Stores
Slide 8: Continuous year-over-year growth every quarter, without exception
| Continuous year-over-year growth every quarter, without exception = Continuous net sales Bol growth and profitability: ig TTM Net Sales (Sin millions) $450 +29% Net Sales CAGR from CY2009-FY2015 +47% Operating 5150 Income CAGR from CY2009-FY2015 $300 $0 12010 12011 12012 12013 12014 212018 Dut ; “
Slide 9: Investment Highlights
\ WITH THE ARMAGH Investment Highlights
Slide 10: Differentiated, Everyday Lifestyle Brand
4 " : >, Differentiated, Everyday Lifestyle Brand Tough enoughfor work yet comfortable enough for everyday casual wear | Customer Profes: ) = Create personal connections with our customers who lead the Modern, Self-Reliant American Lifestyle 400% = Workwear heritage is the foundation of our authenti
Slide 11: Positioned within attractive segments of the U.S. apparel and footwear market
Positioned within attractive segments of the U.S. apparel and footwear market | Large, Addressable $264+ Billion Market... ..-with Trendsin Our Favor (Sin blions) $264 ‘Our Addressable Market Apparel, Footwear, and ‘Accessories Market Workwear! Hobby / Outdoor Wear “April 8, 2016 Our Modern, Self-Re
Slide 12: Nationwide customer base aligned with U.S. population
es “April 8, 2016 v Nationwide customer base aligned geographically with U.S. population v Unique ability to know where our customers are through our direct sales channel Top Three Markets #1~= California #2 Texas #3 > New York
Slide 13: Direct Segment
Direct Segment een e-Commerce (79%)\0 Catalog (21%)\0 v Presentour brand in a consistent manner v |mplementcontrolled pricing strategy y Own the relationship with our customers v Capture the full margin of our products v Reduce logistics complexities and costs ULUT Ff) 22s ont ofransacton TRADING Af
Slide 14: Solution-based product design
“Thereare a whole lotta legs, torsos, feet and crotches out there counting onus” | Buck Naked™ Underwear Crouch Gusset® Pants DuluthFlex® Fire Hose® Pants Z ey ~ a 4 Soggy and restrictive Restrictive pants in sensitive Pants that constrict movement underwear areas 2 ( Y : Additional fabric lets our
Slide 15: Humorous and distinctive marketing
Gives our products anidentity and enhances our brand | = Makes shopping for our products fun with attention-grabbing | advertisements that are humorous, irreverent and quirky = National advertising campaigns feature characters such as our Giant Angry Beaver, Buck Naked™ Guy and Grab-Happy Grizzly Sd
Slide 16: Outstanding and Engaging Customer Experience
we geet : ae eee et Ni ae “is yy * are itstanding and Engaging Customer Experience Treating our customers like next-door neighbors creates loyalty and drives repeat purchases = Seamless, consistent omnichannel brand experience that makes shopping fun and hassle-free = Content-rich, user-friendly web
Slide 17: Outstanding Customer Experience: Retail Stores
Outstanding Customer Experience: Retail Stores Retail stores designedto bring our brand to life with engaging and entertaining elements Current s = Mt. Horeb, WI(2010) = Belleville, WI (Outlet) (2012) = Port Washington, WI (2012) = Bloomington, MN (2013) = Duluth, MN (2014) = Fridley, MN (2014) = An
Slide 18: Attractive, Loyal Customer Base
ef as ee -oyal Customer Base ~ Broad appealto men and women who leadthe Modem, Self-Reliant American Lifestyle Our Core Consumers Are. y ...Satisfied and Engaged with our Brand: 200,000+ product reviews on our website, over 90% of which are 4 or 5 stars y ...Loyal: ~70% Net Promoter Score, and 76% o
Slide 19: Seasoned Management Team
Years with Years of Name Title Duluth Trading Experience Prior Experience ‘Steve Schlecht Executive Chairman and Founder 14 45 DYE] GEMPLERS. JewelOsco StephaniePugliese _PresidentandCEO 7 24 LANDS'END® ANN INC. Mark DeOrio SVP and CFO 5 29 a bitricn Sv of Onnichanel Customer Expeence 4 28 Jim Burke
Slide 20: Growth Strategy
| DRY ON THE FLY” PANTS & SHORT Growth Strategy
Slide 21: Growth Strategies
Growth Strategies 3 Broaden Assortmentin Select Men's Product Categories “April 8, 2016 4 Grow Women’s Business
Slide 22: Build Brand Awareness to Continue Customer Acquisition
+ 4 Build Brand Awareness to Continue Customer Acquisition @000 91% 85% 82% 78% 66% T Lil DRBERH | corner? @colonbs LLBean TERY Gadotay vanns eno Cutwtiao TY By 36% of respondents were aware of the Duluth Trading brand but have never purchased our product 99% 98% 95% 94% . 92% 89% i 82% = Purchased
Slide 23: Build brand awareness and drive sales through comprehensive marketing strategy
= Build brand awareness and drive sales transactions through comprehensive marketing strategy - Traditional Advertising National television advertisements Radio marketing Collateral print (newspaper inserts, postcards) Outdoor marketing (billboards) - Digital Advertising Campaigns Search engine opti
Slide 24: Store Potential in Identified Markets
9 6 : mo 2013 2014 2018” Store Potential in Identified Markets Existing stores profitable in both metropolitan and rural locations across muttiple markets Identified markets with ~100 locations that have attractive customer and population density metrics High concentration of existing Duluth Trading
Slide 25: Addition of retail has tripled net sales in Minneapolis-St. Paul area
00 Addition of retail has tripled the volume of total net sales in the Minneapolis-St. Paul area 2012: 2013 / 2014: Minneapolis-St. Paul Metro Area 2014: “April 8.2016 Strong market presence in Minneapolis- St. Paul in direct business ¥ Opened stores in Bloomington (2013) and Fridley (2014) ¥ Total
Slide 26: Broaden assortment in select men's product categories
| Broaden assortment in categories that exhibit high potential with our Modern, Self-Reliant American Lifestyle introduce products = Increase penetration in spring and transitional outerwear (rain, mid-weight jackets, etc.) = Expand assortment and accelerate growth of Alaskan Hardgear® that expand 2
Slide 27: Grow Women's Business
* Utilize performance fabrics to solve problems year-round yy 59% CAGR from = Expand offering in non-crewneck silhouettes and build CY2012-FY2015to innovation around Longtail T® solution silhouette 20% of Net Sales = Build on success of woven shirts in innovative fabrics like ¥ Women have lower Arma
Slide 28: Financial Review
Financial Review
Slide 29: Gross Profit, Adjusted EBITDA and Pro Forma Net Income
Gross Profit (Sin mlions) 237.3% AoR= 3 ae ; $131.0 z i (Sn mons) ™ Direct 236.0% meal ass a , $231.9 537 8 $208.9 2013 2014 2015 Adjusted EBITDA” (Sn mons) 2013, 2014 2015 Margin 56.4% 56.5% 57.0% Proforma Net Income®) (Sin milions) S176 2013 2013 2014 2015 Margin 10.8% Margin 5.7% 6.1% 5.7% (2) Ad
Slide 30: Capitalization and free cash flow
{Sin millions) Cash Debt: Term Loan Other Debt Total Debt ‘Total Shareholders’ Equity Total Capitalization “April 8.2016 Strong free cash flow generation with ability to fund organic growth High conversion of EBITDAto cash flow Fiscal 2016 expected capital expenditures of $24 million to $25 million
Slide 31: Long-term growth targets
~20% Net Sales Growth: Adjusted EBITDA Growth: 25% Net Income Growth: 25% 1at management's projections willbe achieved, and actualresutts may vary materaly from whatis indicated by targets,
Slide 32: Investment highlights summary
Large, Addressable Market Opportunity Differentiated, Everyday Lifestyle Brand with Attractive, Loyal Customer Base Omnichannel Presence with Complete Distribution Control Demonstrated Track Record of Growth and Profitability Proven Strategy for Long-Term Growth Seasoned Management Team Driving an I
Slide 33: Appendix
FOR DOWN-AND-DIRTY WORK AN OVERALL IMPROVEMENT
Slide 34: Adjusted EBITDA reconciliation
(Sin millions) 2013A 2014A 205A Net Income $161 $ 244 $ 277 (+) Depreciation & Amorization 12. «18 «(28 (4) Interest Expense, net 02 03 03 (+) Income Tax Expense - - 13 EBITDA $175 $ 263 $ 322 ‘Adjustments (+) Non-Cash Stock Based Compensation Expense O41 O41 07 (+) Payment for a Portion of the Gran
Slide 35: Pro Forma Net Income reconciliation
(Sin millions) 2013 2014A —-2015A Income Attributable to Controlling Interest Before Provision for Income Taxes $ 15.5 $ 236 $ 288 (-) Provision for Income Taxes “? 62 95 415 Pro Forma Net Income $93 $ 142 $ 17.3 ‘Note: 2013-2015 financials presented are Fiscal Year ended the Sunday nearestto Januar