Roots Corp. · TSX:ROOT
Roots — Q3 2024 Earnings Presentation
22 slides from Roots's earnings presentation, Dec 11, 2024
Slide 1: Investor Presentation Q3 2024
Investor Presentation Q3 2024 December 11, 2024 PAGE 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain information in this presentation contains forward-looking information. This information is based on management’s reasonable assumptions and beliefs in light of the information currently available to us and are made as of December 10, 2024. Actual results and the ti
Slide 3: Our Mission: To Inspire the World to be At Home with Nature
OUR MISSION To Inspire the World to be At Home with Nature PAGE 3
Slide 4: Our Roots
Our Roots Roots was founded in 1973 by Michael Budman and Don Green, who met at summer camp in Algonquin Park, where they first fell in love with the ideals and beauty of Canada. Starting from a little cabin, they were inspired by nature and Canada's wilderness to create Roots. With its uncompromisi
Slide 5: Our History
Our History 1973 1980 1998 2015 2020 2023 Michael Budman and Roots moves onto its Roots has created the Searchlight Capital New executive Roots launched 50th Don Green founded core business – Olympic outfits of Partners acquires leadership team. anniversary celebrations Roots, centered selling athle
Slide 6: Iconic Canadian Brand with a Global Community
Iconic Canadian Brand with a Global Community 1 Rich heritage of delivering high-quality, versatile and stylish products to customers that span all ages and genders High-Quality, Versatile, Purpose-Driven Products 2 Mix of iconic classics and new pieces that resonate with customers Omni-Channel Stra
Slide 7: Our Values | What Guides Us
Our Values | What Guides Us Community Authenticity Integrity Freedom We are a place of inclusivity, diversity and open- While we draw inspiration from We always strive to do We celebrate the individuality of mindedness. the world around us, we never what’s right and to build style as a form of self-
Slide 8: Q3 Financial Highlights
Q3 Financial Highlights • Sales of $66.9M, compared to $63.5M last year o DTC sales were $54.2M compared to $52.2M last year o DTC comparable sales growth was +5.8% o P&O sales were $12.7M compared to $11.3M last year • DTC gross margin improved 160bps year-over-year o DTC product margin increased b
Slide 9: Brand & Customer Engagement
Brand & Customer Engagement • Built on our brand ambassador program that launched in Q1 and continued to generate organic connections with our target audience, resulting in strong engagement metrics. • Our “back-to-school” and newly launched Fall campaigns provided consumers with a new, modern persp
Slide 10: Product Highlights
Product Highlights • Fall Signature collection, the first collection fully influenced by our Creative Director, Joey Gollish, offered consumers a modern logo and innovative styling options to complement our core collections. • Activewear achieved another quarter of double-digit growth, continuing to
Slide 11: Operational Highlights
Operational Highlights • Completed phase one of our new Robson Street flagship store, which will feature new contemporary design concepts and modern digital features focused on improving the customer shopping experience. • First anniversary of our endless aisle program, improving customers’ access t
Slide 12: Looking Ahead
Looking Ahead • Optimistic about maintaining the positive momentum into the holiday period, while navigating the evolving consumer landscape. o As a reminder, there was an extra week in the fourth quarter of fiscal 2023, which represented $2.2M of sales last year • Continued product margin tailwinds
Slide 13: Third-Quarter Sales
Third-Quarter Sales Total Sales DTC Sales P&O Sales $63.5M $66.9M $52.2M $54.2M $11.3M $12.7M Q3-2023 Q3-2024 Q3-2023 Q3-2024 Q3-2023 Q3-2024 • Strengthened sales in active and core fleece • DTC comparable sales grew 5.8% collections • Increased sales to Taiwan due to timing • P&O sales increased fr
Slide 14: Gross Margin
Gross Margin Total DTC 64.0% 62.4% 60.0% 58.4% Q3-2023 Q3-2024 Q3-2023 Q3-2024 • Increased product margin expansion (+) • Improved product costing and lower discounting (+) • Increased mix of royalties from licensing of the Roots brand (+) • Unfavourable foreign exchange impact on U.S. dollar purcha
Slide 15: DTC Gross Margin Bridge
DTC Gross Margin Bridge Improved product costing and lower discounting (90) bps 250 bps 64.0% 62.4% Q3-2023 Product Margin Unfavourable FX Q3-2024 Expansion 160 basis points increase in DTC gross margin PAGE 15
Slide 16: SG&A Expenses
SG&A Expenses $33.8M $34.5M 53.2% of sales 51.6% of sales Q3-2023 Q3-2024 • Increased personnel costs as a result of legislative minimum wage increases • Higher variable selling costs from increased DTC sales • Scaling as a percentage of sales PAGE 16
Slide 17: Profitability
Profitability Net Income Adjusted EBITDA(1) $2.4M $5.5M $7.1M $0.5M Q3-2023 Q3-2024 Q3-2023 Q3-2024 (1) Adjusted EBITDA is a non-IFRS measure. See "Appendix" at the end of this presentation. PAGE 17
Slide 18: Balance Sheet & Cash Flow
Balance Sheet & Cash Flow Net Debt(1) ($6.0M) $52.9M Free Cash Flow (1) $46.9M ~2.4x Leverage Ratio (1) $60.4M (1.6% YoY reduction) Q3-2023 Q3-2024 Inventory (1) Net Debt is a non-IFRS measure defined as long-term debt less cash (net of bank indebtedness). Leverage Ratio is a non-IFRS ratio defined
Slide 19: Summary
Summary • Pleased with our third quarter results and the continued momentum into early Q4, as we begin the holiday season. • Marketing and operational enhancements are working in unison, leading to refined brand messaging and an improved omni- channel experience, heading into the holiday season. • I
Slide 20: Appendix
Appendix PAGE 20
Slide 21: Non-IFRS Measures and Industry Metrics
Non-IFRS Measures and Industry Metrics This presentation makes reference to certain non-IFRS measures including certain metrics specific to the industry in which we operate. These measures are not recognized measures under International Financial Reporting Standards as issued by the International Ac
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