Duluth Holdings Inc. · NASDAQ:DLTH
Duluth — Q3 2018 Earnings Presentation
24 slides from Duluth's earnings presentation, Dec 7, 2018
Slide 1: Investor Presentation Third Quarter 2018
/ Investor Presentation Third Quarter 2018 December7, 2018
Slide 2: Forward-Looking Statements
Forward-Looking Statements ‘This presentation dated December 7, 2018 includes “forwardooking statements® within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts included in this presentation, including statements concernin
Slide 3: Introduction to Duluth Trading Co.
Introduction to Duluth Trading Co.
Slide 4: Workwear Heritage is the Foundation of our Authentic, Everyday Lifestyle Brand
= Workwear Heritage is the Foundation of our Authentic, Everyday Lifestyle Brand = Long History of Product Innovation and Solution-Based Design = Humorous and Distinctive Marketing = Outstanding and Engaging Customer Experience = Nationwide Omnichannel Presence with Controlled Distribution Duane Dec
Slide 5: Investment Highlights
Py 4 In en c = Rapidly growing lifestyle brand with well-established direct business Multiple revenue growth opportunities > Build brand awareness to expand customer base > Expand retail presence with attractive unit economics >» Grow women’s business >» Broaden men’s assortment Strategic investment
Slide 6: Sales and Adjusted EBITDA growth
= Sales and = Strong track record of 20%+ revenue and Adjusted EBITDA growth = Strategic investments support long-term objectives (Sin milions) (Sin millions) 2014 2015 2016 2017 2018E 2014 2015 2016 2017 2018E OREN December 7.2018
Slide 7: Growth Strategy
Growth Strategy
Slide 8: Growth Strategies
Growth Strategies 3 4 Grow Broaden Women’s Assortmentin Business Select Men's Product Categories TRADING puLUTH TRADING STORES aa TAR RATED CN DULUTHTRADING.COM Duane ; December 7.2018
Slide 9: Brand Awareness
fe bestest ia Brand Awareness = Digital Advertising > Paid-for search and banner ads Hes > Social media (organic and sponsored) 4.3 ae >» Targeted emails oe, mamstern, | | Ay WATCH @ TV ADS = TV Advertising >» Strategically placed national ads -~ “| > Memorable, humorous ads I = Catalog >» Captivati
Slide 10: Retail store expansion: ~100 potential store locations
= Identified markets with ~100 potential store locations > Utilize direct segment data to determine markets with existing customer base >» Focus on regions with demographic that aligns with target customer » Geographic diversity indicates significant white space opportunity >» 43stores openedatend o
Slide 11: Markets Grow with New Stores & Improve Over Time
? : Markets Grow with New Stores & Improve Over Time Direct sales growth accelerates in store markets 18 to 24 months Total Sales in a store market grow up to 3X with the presence of retail after opening, as evidenced by the higher growth rates in older store markets Average Increase in Total Salesi
Slide 12: Retail Stores Attract New, More Valuable Customers
Retail Stores Attract New, More Valuable Customers Retail customers more likely to shop across channels, categories, and spend more Multi-Channel Buyers Multi-Category Buyers Sales Per Customer Retail Buyer Direct Segment Retail Buyer Direct Segment Retail Buyer Direct Segment Buyer Buyer Buyer 2 D
Slide 13: Grow Women's Business
Grow Women’s Business Net sales increased 37% in 2017 Continued customer acquisition through marketing investments and retail presence Expand product offering to address more of her lifestyle Introduce plus sizes in Fall 2018 (Sin millions) $110 2013 2014 2015 2016 2017 Duane December 7.2018 a3
Slide 14: Net sales increased 22% in 2017 (Men's)
Net sales increased 22% in 2017 Extend core products through color, fabric and size Increase penetration in spring and transitional product (rain, mid- weight jackets, etc.) Continue to introduce products that expand occasions for wear Expansion of closet share in sub- brands » Duluth-Built Business
Slide 15: Financial Review
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Slide 16: Year Ended January 28, 2018
Year Ended January 28, 2018 (in milions) % Direct ariel 7 Retail $376 2016 2017 (1/29/2017) (1/28/2018) Adjusted EBITDA‘ (Sin mlions) $i6 $41 2016 2017 (1/29/2017) (1/28/2018) Margin 10.9% 9.8% | Aglustedto reflectthe add-back of stock compensation expense. Dux TH Excudes net cone vad to nonconrong
Slide 17: Three Months Ended October 28, 2018
thos (Sin millons) = = Direct a ™ Retail $84 sar | ah $47 = 3 mos. 2017 3 mos. 2018 (10/29/2017) (10/28/2018) Adjusted EBITDA" (Sin milions) $1.9 | = 3 mos. 2017 3 mos. 2018 (10/29/2017) (10/28/2018) Margin 22% 0.9% + adlustedto reflectthe add-back of stock compensation expense, 2 Excludes net incom
Slide 18: Nine Months Ended October 28, 2018
nded October Gross Profit (Sin mlions) 23 (Sin milions) = Direct 252% > $318 ee aed $179 Retail $254 $145 ets) a —_— 9mos. 2017 9 mos. 2018 9 mos. 2017 9 mos. 2018 (10/29/2017) (10/28/2018) (10/29/2017) (10/28/2018) Margin 57.2% 56.4% Adjusted EBITDA’ Net Income? (Sin mlions) (Sin milions) $16.7 $3.
Slide 19: Balance Sheet and Capitalization
As of ($ in millions) 2018 Cash $25 * $2.5million of cash with $66.4 million of debt outstanding’ Debt: * $130million credit facility ($80 million SRV Term Loan 14 line of creditand $50 million of term Line of Credit 65.0 loan capacity) Total Debt oo = Fiscal 2018 expected capital . expenditures, ne
Slide 20: FY 2018 Guidance
FY 2018 Guidance 2017 Actual 2018 Guidance Assumptions Net Sales $471.4M $555M to $575M Direct mid-single digit growth; Retail $215M-$225M Adjusted EBITDA $46.4M $53M to $56M 14% to 21% YOY Growth EPS $0.72 $0.79 to $0.84 26% tax rate and 32.4 million shares o/s CAPEX' $42.8M $50M to $55M 15 new sto
Slide 21: Long-Term Targets
Long-Term Targets I 2017 Actual Lony Assumptions Net Sales $471.4M ~$1 Billion Open ~15 stores per year 50-60% retail stores / 40-50% direct Adjusted EBITDA 9.8% Low double digits Stable gross margin Margin Rate Leverage expenses Benefits from IT / omnichannel investments CAPEX $42.8M $220M New stor
Slide 22: Appendix
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Slide 23: Adjusted EBITDA Reconciliation
(Sin milfons) 3Months Ended © 9Months Ended _Fiscal Year Ended October October October October January January 28, 29, 28, 29, 28, 29, 201820172018 2017_~—S2018 2017 Net Income/{Loss) $ GA)$ (07) $ 27 $ 40 $ 236 $ 215 (+) Depreciation & Amorization 31 18 82 54 73 47 (+) Interest Expense, net 16 (07
Slide 24: Planned Store Openings
Openings" Location Timin Gross Sq Ft Friendswood, TX First half 2019 16,026 Katy, TX First half 2019 16,000 Wichita, KS First half 2019 15,385 Spokane Valley, WA First half 2019 15,656 Jacksonville, FL First half 2019 14,557 Rogers, AR First half 2019 15,656 Danbury, CT Firsthalf 2019 9,792 Madison.