School Speciality Inc · OTC:SCOO
School Speciality — School Specialty — Q3 2017 Earnings Presentation
22 slides from School Speciality's earnings presentation, Nov 8, 2017
Slide 1: Fiscal Year 2017 Third Quarter Financial Results
Fiscal Year 2017 Third Quarter Financial Results November 8, 2017
Slide 2: A Message from our CEO
Q3 2017 NY School A Message from our CEO 0” 8 Specialty. “Through the first nine months of fiscal 2017, our gross margins and operating expenses are tracking better than our internal plan and we continue to take actions to improve our platform, lower our cost structure, and grow the bottom- line. Wh
Slide 3: Fiscal Year 2017: Third Quarter Financial Review
Fiscal Year 2017: DB scroot Third Quarter Financial Review Specialty. 5 Imassessing the Q3 results, it is important to understand the impact of the 1-week calendar shift. © Q3 2017 represents the 13-week period from July 2, 2017 to September 30, 2017; whereas Q3 2016 represents the 13-week period fr
Slide 4: Third Quarter Financial Review
Fiscal Year 2017: DB scroot Third Quarter Financial Review A Specialty ing, general and administrative (“SG&A”) expenses of $64.7 milli © SG&A costs related to Triumph Learning were $2.4 nin the quarter, which includes $0.9 million of transaction-related and integration expenses; adjusting for this,
Slide 5: Q3 Revenue Review
Fiscal Year 2017: . (| School 3 Quarter Revenue Review LY Specialty. (5 amounts in thousands) 201703 201603 Change _% Change Supplies $124,876 $ 136172 $ (11,296) “8.3% Furniture Bg840 84,971 3.869 4.65% Instruction & Intervention 17.468 «14,183, 3,285 23.2% AV Tech 4331 4443 (122) “2.5% Agendas 26,
Slide 6: YTD Revenue Review
Fiscal Year 2017: J School YTD Revenue Review 0” 8 Specialty. Supplies $ 260,223 $ 264,561 $ (4,338) 1.6% Furniture 154,208 140,63 «13,565, 9.6% Instruction & Intervention B79 3065 «= «3,284 «LO. AV Tech Bay 13.60 (63) 05% Agendas 530 40577 (7,087) -17.4% Freight Revenue 8108 7,02 = 1,085 18:1% Cust
Slide 7: Third Quarter and Nine-Month SG&A Review
Fiscal Year 2017 Third Quarter and Nine-Month SG&A Review a3 yD 2017 2016 217 2016 Total SGRA costs S 64604 § 64454 $163,882 $168,977 Less Daa 2920.28 9307 10,690 Stock-based compensation 572 48 1663 41.168 FX (gain) loss 40 81 Fr (664) SG8A for Triumph Learning 1846, - 1846 - Restructuring-related
Slide 8: Consolidated Statement of Operations
Consolidated Combined Le / School Statement of Operations LY A Specialty SCHOOL SPECIALTY,INC. ‘CONSOLIDATED STATEMENTS OF OPERATIONS dn Thousands, Except Per Share Amounts) For the Three Months Ended For the Nine Months Ended ‘September 30,2017 ___September 24,2016 _September 30,2017 _ September 24
Slide 9: Adjusted EBITDA Comparisons
Adjusted EBITDA Comparisons (| School Specialty. a ‘SCHOOL SPECIALTY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (a Thousands, Except Per Share Amounts) For the Three Months Ended For the Nine Months Ended September 30,2017 __ September 24,2016 _ September 30,2017 _ September 24,2016 Adjusted Earnin
Slide 10: Balance Sheet Review
School Specialty. Y, Balance Sheet Review
Slide 11: Consolidated Balance Sheet Comparison
Consolidated Balance Sheet Comparison \ (Resa SCHOOL SPECIALTY. INC. ‘CONDENSED CONS OLDATEDBAL ANCE SHEETS (UNAUDITED) (ie Taousands, Excet Sharsaed Per Star Aaa) Sepenber30 2017 September 24.2016 September 30 2017 September 24.2016 assers LIABILTIES AND STOCKHOLDERS’ EQUTTY ‘Cueat asat: (Cora! lpi
Slide 12: Balance Sheet Review - Working Capital
Balance Sheet Review - Working Capital (seared Specialty. acpumsrayane, 388 netwodingcapta 8 8 b Mach ne Note: September 2017 working capital amountsinclude Triumph Learning acquired networking capital. DSO's, DIOH and DPO's have been calculated excluding the impactoof Triumph Learningto ensure comp
Slide 13: Balance Sheet Review - Debt
Balance Sheet Review - Debt School 1 & Specialty. 2017 Third Quarter Comments [Net debt increased by $5.0 million or 2.796 increase relatedto $18.1 million paid for the acquisition of assets of Triumph Learning, $4.0 million of debt refinancing Cash and cash equivalents 8 B17 S$ 7,388 fees and $2.6
Slide 14: Free Cash Flow Analysis
Free Cash Flow Analysis w4 School Specialty. Nine Months Ended ‘Adjusted EBITDA. Capes ProdDev Unrealized FX (cuir) loss. Proceeds ftom sales Other Change in WC Usteveraged ftee CF CashInterest Taxes Leverageditee CF Cash pid or acquistion Toul CashFlow GAAP CF Operating Investing 6250) 63085 7603)
Slide 15: FY17 Corporate Updates
FY17 Corporate Updates N (Resa Successfully Refinanced Debt 5 Debtrefinancingtook place in April 2017; lowers cost of capital and provides capital capacity for strategic initiatives, including acquisitions. Key factor in lowering cash interest by approximately $1.0 million in Q3 and $2.1 million YTD
Slide 16: FY17 Primary Business Focus Areas
FY17 Primary Business Focus Areas \ (Resa Further the “21st Century Safe Schoo!” Value Proposition © Providingthe righttraining, the rightequipment and the correct action plan to achieve @ 21* Century learningenvironment that addresses the social, ‘emotional and physical well-being of students. © So
Slide 17: Fiscal 2017 Guidance
School Specialty. Y, Fiscal 2017 Guidance
Slide 18: Fiscal 2017 Guidance - Updated
N (| School Fiscal 2017 Guidance - Updated Specialty: Metric FY16 Actual FY2017 Updated Guidance* Revenue now expected to be up approximatel Revenue $558.3 business flat with positive impact of TLacquisition ation) anticipated t decline 110-140 bps based Jan (Excl. PD Amare) s 377% an mix and higher
Slide 19: Fiscal 2017 Outlook: Reconciliation to Non-GAAP
Fiscal 2017 Outlook: DB scroot Reconciliation to Non-GAAP besecalty = The Company's Adjusted EBITDA and Leveraged Free cash flow outlook for FY17 are non-GAAP measures. Reconciliations of these non-GAAP measures to the nearest GAAP financial measures are presented in the following tables: Low End of
Slide 20: Safe Harbor Statement
Safe Harbor Statement NY echee pecialty. This presentation contains statements about School Specialty’s future financial condition, results of operations, expectations, plans, or prospects, including the information under the headings “FY 2017 Corporate Updates”, “FY17 Primary Business Focus Areas”,
Slide 21: Non-GAAP Financial Information
Non-GAAP Financial Information N (Resa Non-GAAP Financial information ‘This presentation includes references to Adjusted EBITDA, Leveraged/Unleveraged Free Cash Flow, Normalized SG&A, and Total Debt, each of whichis a non- GAAP financial measure. Adjusted EBITDA represents netincome adjusted for: pr
Slide 22: Investor Contacts
Investor Contacts: Ryan Bohr EVP & Chief Operating Officer 920-882-5868 Ryan.Bohr@schoolspecialty.com Kevin Baehler EVP & Chief Financial Officer 920-882-5882 Kevin.Baehler@schoolspecialty.com Glenn Wiener Investor Relations 212-786-6011 gwiener@GWCco.com