Duluth Holdings Inc. · NASDAQ:DLTH
Duluth — Investor Presentation (January 2016)
36 slides from Duluth's investor presentation, Jan 19, 2016
Slide 1: Investor Presentation 3Q 2015
Investor Presentation 3Q 2015 January 19, 2016
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation dated January 19, 2016 includes “forward-looking statements” within the meaning of U.S. federal securities laws, inducing Duluth Holdings Inc.'s (dba Duluth Trading Company) (‘Duluth Trading” or the “Company’) intended use of proceeds from its initial pub
Slide 3: Fire Hose Work Pants
FIRE HOSE WORK PANTS ONE TOUGH SON GOB Auas ©
Slide 4: Duluth Trading at a Glance
a Glance Differentiated, Everyday Lifestyle Brand Solution-Based Design Humorous and Distinctive Marketing Outstanding and Engaging Customer Experience Attractive, Loyal Customer Base Omnichannel Presence with Complete Distribution Control Large, Addressable Market Opportunity Seasoned Management Te
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
Slide 6: History and Evolution
Invents The Bucket Boss underthe company name “Portable Products” Creates the frst trades panel witha group of construction workers, dockhands, cycle riders, hippies and hard-as- nals yahoos Establishes frst headquarters—3 refurbished dredge bargein Duluth, MN ‘on Lake Superior PPPs DeantH istory an
Slide 7: Call Center, Distribution Centers and Retail Stores
° Call Center oe 4 Nafiisy © Owned Distribution Center Retail Stores © 3 PL Distribution Centers
Slide 8: Track Record of Growth
| of Growth and Continuous year-over-year growth every quarter, without exception (in millions) $300 $150 $0 12010 rot | 12011 Roll 12012 ig TTM Net Sales 12013 12014 12015 = Continuous net sales growth while also increasing adjusted EBITDA margins and profitability: +28% Net Sales CAGR from CY2009-
Slide 9: Investment Highlights
N A AEDS Feed Ba a) ARMACHILLOT Investment Highlights
Slide 10: Differentiated, Everyday Lifestyle Brand
Differentiated, Everyday Lifestyle Brand Tough enoughfor work yet comfortable enough for everyday casual wear istomer Profession = Create personal connections with our customers who lead the Modern, Self-Reliant American Lifestyle 100% = Workwear heritage is the foundation of our authentic ing Trade
Slide 11: Positioned within attractive segments of the U.S. apparel and footwear market
Positionedwithin attractive segments of the U.S. apparel and footwear market Large, Addressable $264+ Billion Market... ..-with Trendsin Our Favor (Sin blions) 334 . Hobby / Workwear! Rucyedsar Outdoor Wear Apparel Footwear, and Accessories Market OT orci: curonentsr, expe teres i consutng seconde r
Slide 12: Wide Customer Presence
ide Customer Presence U.S. Population 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 2 =
Slide 13: Omnichannel Presence with Complete Distribution Control
PS DuamtH Cae (1), Basedon point of transaction (2) Asofllovember 2015. includes two outlet stores. v Present our brand in a consistent manner v Implement controlled pricing strategy y Own the relationship with our customers v Capture the full margin of our products v Reduce logistics complexities a
Slide 14: Solution-Based Design
“Therearea whole lotta legs, torsos, feet and crotches out there counting onus” Buck Naked™ Underwear Crouch Gusset® Pants DuluthFlex® Fire Hose® Pants Sti and restrictive Restrictive pants in sensitive underwear areas 1 aac 5) ry , c a = l = “ Additional fabric lets our Fast-drying, odor-fighting c
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 f Angry Beaver, Buck Naked™ Guy and Grab-Happy Grizzly Sy =
Slide 16: Outstanding and Engaging Customer Experience
PS fF e | Outs tanding 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 * Contentrich, user-friendly website designed to provide an
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 * Mt. Horeb, WI (2010) * Belleville, WI (Outlet) (2012) = Port Washington, WI (2012) = Bloomington, MN (2013) * Duluth, MN (2014) * Fridley, MN (2014) = Ankeny, [A(
Slide 18: Attractive, Loyal Customer Base
id ike, SURE Cre gna nieas Attrac! tive, Loyal Customer Base Broad appealto men and women who lead the Modem, Self-Reliant American Lifestyle Our Core Consumers Are. v ...Satisfied and Engaged with our Brand: 200,000+ product reviews on our website, over 90% of which are 4 or 5 stars v_ ...Loyal: ~7
Slide 19: Seasoned Management Team Driving an Impassioned Culture
Embraces the Modern, Self-Reliant American Lifestyle and has fostered an impassioned culture Years with Years of Name Title pula teding’ (Experencs Prior Experience ‘Steve Schlecht Executive Chairman and Founder 4 45 DY223H GEMPLERS. JewelOsco StephaniePugliese _PresidentandCEO 7 24 LANDS'END® ANN I
Slide 20: Growth Strategy
WITH DRY ON THE FLY* YOUR PANTS Eee oe ee Growth Strategy
Slide 21: Growth Strategies
Growth Strategies 3 Broaden Assortmentin Select Men's Product Categories 4 Grow Women’s Business
Slide 22: Build Brand Awareness to Continue Customer Acquisition
ad S81 y Build Brand Awareness to Continue Customer Acquisition @000 36% of respondents were aware of the Duluth Trading brand but have never purchased our product 99% eal usd 89% 83% 82% LLBean ico By VANDSENDS Calm Cygogyg, carnartt = Purchased = Aware but Never Purchased 'T ‘Source: IRI Clothing
Slide 23: Comprehensive marketing strategy to build brand awareness
= 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 engin
Slide 24: Retail Expansion
ate Retail Expansion " 2000 Significant white space opportunity to grow our U.S. retail presence * Existing stores profitable in both metropolitan and rural locations across muttiple markets = Identified markets with ~100 locations that have ~100 attractive customer and population density metrics *
Slide 25: Retail tripled total net sales in Minneapolis-St. Paul area
Addition of retail has tripled the volume of total net sales in the Minneapolis-St. Paul area 2012: Strong market presence in Minneapolis- . St. Paul in direct business ¥ 2013/ — Opened stores in Bloomington (2013) and 2014: ‘Fridley (2014) Minneapolis-St. Paul 5 Metro Area . | . Total market (direc
Slide 26: Broaden Assortment in Select Men's Product Categories
A ents in Sele Broaden assortment in categories that exhibit high potential with our Modern, Self-Reliant American Lifestyle Inctease penetration in spring and transitional outerwear (rain, mid-weight jackets, etc.) Expand assortment and accelerate growth of Alaskan Hardgear® v Continue to introduce
Slide 27: Grow Women's Business
wee -) Expandofferingto appeal to a wider range of women and lifestyleneeds . Utilize performance fabrics to solve problems year-round yy 550 CAGR from = Expand offering in non-crewneck silhouettes and build 2012-2014 to 19% innovation around Longtail T® solution silhouette of Net Sales = Build on s
Slide 28: Financial Review
Financial Review
Slide 29: Gross Profit, Adjusted EBITDA and Pro Forma Net Income
Gross Profit (Sin millions) 245.4% te 5 c) $92.0 (Sin mitions) mm Direct metal $62.0 2012 2013 2014 Margin 53.6% 56.4% 56.5% Adjusted EBITDA Pro forma Net Income? (Sin milions) (Sin mlions) 2012 2013 2014 2012 2013 Margin 6.7% 10.8% 11.5% Margin 3.1% 5.7% Note: 2013 and 2014 financials presented are
Slide 30: Nine Months Ended November 2015 Results
ei :nded November (Sin mitions) (Sin miions) 34.5% 5.7%, sect i 8 ee $94.7 — $1217 $69.7 ie $108.5 sa 9 mos 2014 9 mos. 2015 9 mos. 2014 9 mos. 2015 (11/2/2014) (11/1/2015) (11/2/2014) (11/1/2015) Margin 57.2% 57.8% Adjusted EBITDA Pro forma Net Income? (Sin mllons) (Sin millon) th “east 113.9 $11.8
Slide 31: Capitalization and Pro Forma Commentary
Asof —ProForma Commentary ($inillions) 1.Nov-15 _As Adjusted Ch 3 025 376 = RecentIPO proceeds were used to repay borrowings under a short-term Debt: note used to fund part of the final “S” Long-Term Line of Credit 30.3 30.3 corp. distribution, with the remaining Term Loan 5.0 5.0 proceeds to be use
Slide 32: Long-Term Growth Targets
Net Sales Growth: ~20% Adjusted EBITDA Growth: 25%t Net Income Growth: 25% ULUT YY neces sesrorctanmeenrs poe nie sheed nd acest aya mea fonwhidtey repens
Slide 33: Investment Highlights Summary
Large, Addressable Market Opportunity Differentiated, Everyday Lifestyle Brand with Attractive, Loyal Customer Base Omnichannel Presence with Complete Distribution Control Profitability Proven Strategy for Long-Term Growth © 9 & 4) Demonstrated Track Record of Growth and © S Seasoned Management Team
Slide 34: Appendix
POR DOWN-AND-DIRTY WORK ee Appendix
Slide 35: Adjusted EBITDA Reconciliation
(Sin millions) 2015 2012A 218A 2014a ——— aaa Netincome S$ 64 $ 161 $ 241 $ 288 57 S$ 16 (#) Depreciation & Amonzation 09 «12 18 06 O68 O08 (+) Interest Expense, net 03 02 03 04 04 04 EBITDA S77 $75 § 263 $ 34 § 64 § 25 “Agjusim ents (+) Non-Cash Stock Based Compensation Expense 04 04 04 02 02 02 (+)
Slide 36: Pro Forma Net Income Reconciliation
2015 (Sin millions) 2012A 2013A 20148 at Qs Net Income Before Provisions for Income Taxes S$ 59 $ 65 $ 6 $ 27 $ 57 $ 15 (-) Provision for income Taxes ‘) 24 62 95 44 23 06 Pro Forma Net Income S$ 36 § 93 § 42 $ 16 $ 34 $ 09 Note: 2013 and 2014 financials presented are Fiscal Year ended the Sunday ne
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