Slide 1: 2018 Q2 Investor Update
owt a Sis miom | fe ; , ire Th School ene Bh dp he 2018 Q2 Investor Update August 7, 2018
Slide 2: 2018 YTD Performance / Outlook — Executive Summary
NA School Specialty. 2018 YTD Performance / Outlook — Executive Summary * The 1H of 2018 reported limited organic revenue growth; however, bookings in Q2 and early Q3 have been exceptionally strong and support an outlook for 3% + full year organic growth. + In2018, we have seen a more significant sh
Slide 3: Update on 2018 Key Business Objectives
NA School Specialty. Update on 2018 Key Business Objectives + 215 Century Safe School Value Proposition; implementing refinements of Team-Sell model y + Leverage momentum in the Furniture, 1&I and Science categories; improve AV Tech Achieve Organic assortment; optimize pricing; strengthen digital ma
Slide 4: Q2 2018 — Key Updates: Revenue Momentum Building Heading into Peak Season
NA School Q2 2018 — Key Updates Specialty. Revenue Momentum Building Heading into Peak Season Q2 revenue up $9.1M, or 5.7% / YTD revenueup $11.3M, or 4.4% * First half revenue growth primarily driven by the inclusion of Triumph Learning (“TL”). However, overall bookings momentum strengthened signifi
Slide 5: Q2 2018 — Key Updates: Bookings Momentum Balanced Across Customer Base
NA School s Q2 2018 — Key Updates Specialty. Bookings Momentum has been balanced across customer base strengthening our overall market position Balanced strength across both large and small-to-medium sized districts - Larger districts (Tiers 1-4 or the Top 500 Districts in the U.S) are down 4.2% YTD
Slide 6: Q2 2018 — Key Updates: Operations and Other Key Areas of Focus
« Q2 2018 — Key Updates NA School Specialty. Operations and Other Key Areas of Focus Key growth initiatives showing progress Bookings with Channel Partners (etailers) and through other funding organizations such as Adopt-A-Classroom and Donors Choose are showing strong growth YTD; overall, bookings
Slide 7: Q2 2018 — Key Updates: Momentum Building with Key Areas of Success
NA School Q2 2018 — Key Updates Specialty. Momentum Building with Key Areas of Success Heading into Peak Season Operations performing effectively & cost structure improvements continue + TL Integration was completedat end of Q1. Product fulfillment has been relocated to Nashua facility; system conve
Slide 8: Financial Update
Slide 9: 2018 Q2 Financial Performance Summary
2018 Q2 Financial Performance Summary 2018 1+ Half Income Statement Summary 2018 1+ Half Revenue Breakdown (#039;sin mations) _ FY17 Actual Variance (S'sin mitions) Variance Revenue $268.6 $2573 $113 Supplies $133.7 $135.0 (81.3) PRESALE $94.9 $95.0 (90.1) Furniture $76.3 $65.4 $109 Gross Mang 45% | 36
Slide 10: Fiscal Year 2018 — Revenue / Order Summary
NA School w Fiscal Year 2018 — Revenue / Order Summary Specialty. 2018 1” Half Revenue by Product Category Booked Orders through July, 2018 FY18 Actual FY17 Actual Variance FY18 Actual FY17 Actual Variance Supplies $133.7 1.0% | Supplies $206.0 $193.6 6.4% Furniture $763 $854 16.7% | Furniture | sto
Slide 11: Fiscal Year 2018 First Half Financial Review — Gross Margin
NA School Specialty. u Fiscal Year 2018 First Half Financial Review — Gross Margin Gross profit of $94.9 million in first half of 2018 was down $0.1 in as compared to the first half of 2017; YTD gross margin of 35.3% for 2018 was down 160 bps YOY. Excluding product development amortization, YTD gros
Slide 12: Fiscal Year 2018 — First Half Financial Review
Fiscal Year 2018 — First Half Financial Review F scxo0 Specialty. SCBA expense of $110.9 millionin 1H FY18 vs. $99.2 million in 1H 2017, an increase of $11.7M. The adoption of ASC 606 resulted in the accelerated recognition of $2.5 million of catalog expenses in 1H 2018; this is timing-related as AS
Slide 13: Working Capital Analytics / Other Cash Flow Drivers
as Working Capital Analytics / Other Cash Flow Drivers sro, Q2 2018 Q22017 Q2 2016 Q2 2015 EET) Actual Actual Actual Actual (1) Accounts Receivable $00.5 $87.5 $78.7 $75.5 Inventories $131.8 $124.9 $128.7 $131.0 Deferred Catalog Costs $0.0 $6.8 $6.5 $4.5 Prepaid Expense and Other Current Assets $23.
Slide 14: Capitalization Summary
NA School Specialty. u Capitalization Summary Actual Total Net Debt Increase Driven by: ‘Cash and Cash Equivalents $8.64 $6.90 $857 $9.16 a) $19.6M related to TL acq = b) $2.1M additional PIK note BL Facility, maturing in 2022 $61.50 $44.13 $46.40 361.00 ‘Term Loan, maturing in 2022 $112.50 $109.31
Slide 15: Direct Cash Flow Calculations
as Direct Cash Flow Calculations (amounts in thousands) 6 Months Ended ine 30, 2018 Adjusted EBITDA (477) =$ 7,568 Capex (5,978) (8,167) Prod Dev (2,650) (1,050) Proceeds from sales 100 - Unrealized FX (gain) loss 69 (30) Other (2,920) (2,213) Change in WC (55,860) (45,742) Unkveraged free CF (67,71
Slide 16: Impact of the Adoption of ASC 606
School Specialty. as Impact of the Adoption of ASC 606 Summary income Statement impact: Revenues $263.1 $6.4 $268.6 Cost of revenues $169.6 S44 $1737 Accounts Receivable soor | $02) | S905 Gross proft Soa6 OF] Soro: Inventories, net $1374 $66) $131.8 Deferred catalog costs $60 $6.0) S- SG&A $108.2 $
Slide 17: 2018 Outlook: Significant Top- and Bottom-Line Improvements
School ” 2018 Outlook: Significant Top- and Bottom-Line Improvements OSpeciatty 2017 Actual vs. 2018 Outlook Updated As of 8/7/2018 At or above high end of original Revenue $658.4 $680 - $695 3.3% -5.6% YOY Growth range Gross Profit $243.2 $252 - $261 ~$9M -$18M YOY improvement Slightly below the lo
Slide 18: Appendix
Slide 19: Consolidated Statement of Operations
1 Consolidated Statement of Operations For the Three Months Ended NA School Specialty. For the Six Months Ended Tune 30,2018 July 1, 2017, Tune 30, 2018 Tuly 1, 2017, Revenues S 169272 160177 $ 268,559 S$ 257.288 Cost of revenues. 110,528 99,682 173,694 162,269 Gross profit 58744 60.495 4,865 95,019
Slide 20: Condensed Consolidated Balance Sheet
2 Condensed Consolidated Balance Sheet June 30,2018 ASSETS (Current assets: (Cashand cash eauivalents Accounts receivable less allowance for doub ful accounts of S1310and $1136 respectively... Inventories. net Defered catalor costs ‘Prepaid expenses and other current assets Refindabl incone taxes...
Slide 21: Condensed Consolidated Statement of Cash Flows
@ School wd x Condensed Consolidated Statement of Cash Flows Specialty. Jume30.2018 JaleL2017 Cash Rows fomoperting acti: ‘Netincome.._...._. - - a eons s 18,660) $ (16,640) ‘Adpstasat is Soe ual thao b ical Sel pemtg eles Doe toma whe sel illbmemete: 938 oan js a ae ne RRR en 22s ‘Amoriaton of bt f
Slide 22: Fiscal 2018 Outlook: Reconciliation to Non-GAAP
Fiscal 2018 Outlook: Reconciliation to Non-GAAP School Specialty. The Company's Adjusted EBITDA and Leveraged Free Cash Flow outlook for FY18 are non-GAAP measures. Reconciliations of these non-GAAP measures to the nearest GAAP financial measures are presented in the following tables: Operating inco
Slide 23: Safe Harbor Statement
4 School Specialty. 23 Safe Harbor Statement This presentation contains statements about School Specialty’s future financial condition, results of operations, equity value, expectations, plans, or prospects, including the information regarding our Fiscal 2018 financial and performance and business o
Slide 24: Non-GAAP Financial Information
NA School * Non-GAAP Financial Information Specialty. Non-GAAP Financial Information This presentation includes references to Adjusted EBITDA, Leveraged/Unleveraged Free Cash Flow, and Total Debt, each of which isa non-GAAP financial measure. Adjusted EBITDA represents net income (loss) adjusted for