Slide 1: Investor Presentation Q1 2024
Investor Presentation Q1 2024 June 10, 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 June 7, 2024. Actual results and the timing
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: Quarterly Financial Overview
Quarterly Financial Overview • Total sales decline of 9.7% YoY; DTC sales decline of 11.3% o Full-price DTC sales grew YoY, but limited due to inventory shortage in core cooper fleece collection o Lower off-price sales due to the improved inventory position • DTC gross margin expansion as a result o
Slide 9: Brand & Customer Engagement
Brand & Customer Engagement o Launched a special edition collection for Barbie’s 65th anniversary that generated strong engagement with new and existing customers o Launched our spring marketing campaign, highlighting our broad range of products made with sustainable materials o Completed renovation
Slide 10: Product Highlights
Product Highlights o Activewear, One, and Cloud collection sales increased by double digits this quarter o Growth in newness was tempered by missed cooper fleece sales as a result of stronger than anticipated holiday 2023 sales leading to inventory shortfall in Q1 o Over 90% of our products are made
Slide 11: Operational Highlights
Operational Highlights • Launched our data warehouse, critical to support data analytics and to unlock future AI capabilities • Enhanced our infrastructure by implementing AI-based technology • Automated inventory allocation and replenishment system launched in Q1 • AI-driven online personalization
Slide 12: Looking Ahead
Looking Ahead • Focus on maintaining positive brand momentum and customer engagement by improving our creative assets, partnerships, and events • Drive growth in key established business categories like active, One, and Cloud • Inventory replenishment for cooper fleece in early H2 2024 • Continuousl
Slide 13: First-Quarter Sales
First-Quarter Sales Total Sales DTC Sales P&O Sales $41.5M $35.4M $37.5M $31.4M $6.1M $6.1M Q1-2023 Q1-2024 Q1-2023 Q1-2024 Q1-2023 Q1-2024 • Lower markdown sales due to cleaner • Driven by declines in DTC segment; (8.2%) • Positive wholesale sales in Asia (Taiwan and inventory position comp sales C
Slide 14: Gross Margin
Gross Margin Total DTC 61.3% 62.1% 59.0% 59.0% Q1-2023 Q1-2024 Q1-2023 Q1-2024 • Improved DTC gross margin (+) • Improved product costing and lower markdowns (+) • Higher mix of lower margin wholesale sales (-) • Lower inventory provision reversal from prior year-end (-) • Unfavourable FX impact (-)
Slide 15: DTC Gross Margin Bridge
DTC Gross Margin Bridge Increased full-price sales, locked in costing improvements, and less markdowns (170) bps 62.1% 61.3% 250 bps Q1-2023 Product Margin Unfavourable FX & Q1-2024 Release of LY Inventory Provision 80 basis points improvement in DTC gross margin PAGE 15
Slide 16: SG&A Expenses
SG&A Expenses $33.0M $32.0M Q1-2023 Q1-2024 • Savings from ongoing cost management initiatives • Lower variable selling costs • Partially offset by higher personnel costs as a result of legislative minimum wage increases PAGE 16
Slide 17: Profitability
Profitability Net Income Adjusted EBITDA1 ($8.0M) ($8.9M) ($5.8M) ($8.0M) Q1-2023 Q1-2024 Q1-2023 Q1-2024 1 Adjusted EBITDA is a non-IFRS measure. See "Appendix" at the end of this presentation. (in millions of $CAD) PAGE 17
Slide 18: Balance Sheet & Cash Flow
Balance Sheet & Cash Flow Net Debt $72.4M Total liquidity $41.0M $31.7M ~1.80x Net leverage ratio (1) $35.4M (29.8% YoY reduction) Inventory Q1-2023 Q1-2024 ($14.6M) (1.7% YoY improvement) Annual Free Cash Flow(2) (in millions of $CAD) (1) Defined as total net debt over trailing 12-month Adjusted EB
Slide 19: Summary
Summary • Optimistic about the long-term profitable growth opportunities for the brand, with great progress made on strategic initiatives • Expect product gross margin tailwinds to continue in 2024 from improved product costing • Replenishment of core inventory will occur by Q3; second half of year
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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