Duluth Holdings Inc. · NASDAQ:DLTH
Duluth — Q4 2018 Earnings Presentation
23 slides from Duluth's earnings presentation, Apr 19, 2019
Slide 1: Investor Presentation Fourth Quarter 2018
/ Investor Presentation Fourth Quarter 2018 April 19, 2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation dated April 19, 2019 indudes “forward-looking statements” within the meaning of the Private Secumties Litigation Reform Act of 1995. All statements, other than statements of historical facts included in this presentation, including statements concerning D
Slide 3: Introduction to Duluth Trading Co.
Introduction to Duluth Trading Co.
Slide 4: Long History of Product Innovation
= Long History of Product Innovation = Humorous and Distinctive Marketing = Outstanding and Engaging Customer = Nationwide Omnichannel Presence = Workwear Heritage is the Foundation of our Authentic, Everyday Lifestyle Brand and Solution-Based Design Experience with Controlled Distribution Duane “Ap
Slide 5: Rapidly growing lifestyle brand with well-established direct business
- = 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 investments support l
Slide 6: Strong track record of 18%+ net sales and Adjusted EBITDA growth
= Strong track record of 18%+ net sales and Adjusted EBITDA growth = Strategic investments support long-term objectives Adjusted EBITDA: a millions) (Sin milions) 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 OREN “April 19,2019
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 ou wae 0 FLU Oe “BTA RATED SOR WT DULUTHTRADING.COM Duane ; “April 19,2019
Slide 9: Digital Advertising
Digital Advertising > Paid-for search and banner ads > Social media (organic and sponsored) “ >» Targeted emails TV Advertising > Strategically placed national ads >» Memorable, humorous ads Catalog >» Captivating storytelling >» Productlayouts Local marketing > Radio and cinema > In-store events Du
Slide 10: Identified markets with ~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 >» 46 stores opened at en
Slide 11: Markets Grow with New Stores & Improve Over Time
? : Markets Grow with New Stores & Improve Over Time Direct sales growth accelerates in store Total Sales in a store market grow up markets 18 to 24 months 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 28% in 2018 Continued customer acquisition through marketing investments and retail presence Expand product offering to address more of her lifestyle Introduced plus sizes in Fall 2018 (Sin millions) $141 2014 2015 2016 2017 2018 Duane “April 19,2019 a3
Slide 14: Net sales increased 19% in 2018
Net sales increased 19% in 2018 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: Three Months Ended February 3, 2019
Gree Gross Profit (Sin mlions) 0% (Sin mlions) 5 Direct gp4g__1%* > 5251 __ 8 sia ™ Retail $87 | ser_| site = a 3 mos. 2017 3 mos. 2018 3 mos. 2017 3 mos. 2018 (1728/2018) (1372019) (1/28/2018) (23/2019) Margin 53.3% 52.4% Adjusted EBITDA‘ Net Income? (Sin mlions) (Sin mlions) $35 $21 $20 . | | 3 mo
Slide 17: Year Ended February 3, 2019
Year Ended February 3, 2019 Gross Profit (Sin mlions) (Sin milions) 9% Direct 18 $310 ™ Retail $261 2017 2018 2017 2018 (1/28/2018) (2/3/2019) (1/28/2018) (2/3/2019) Margin 55.4% 54.6% Aalusted EBITDA: | Netincomes | (Sin mlions) (Sin milions) $62 23 23 $46 s: s: 2017 2018 2017 2018 (1/28/2018) (23/
Slide 18: Strong Balance Sheet and Liquidity
fF Stro 1g Balance Sheet and Liquidity" As of in millions) 2019 Cash $ 0.3 = $0.3 million of cash with $16.5 million of debt outstanding Debt: = $130 million credit facility ($80 million Line of Credit 16.5 line of creditand $50 million ofterm loan capacity) Total Debt 16.5 = Fiscal 2019 expected ca
Slide 19: FY 2019 Guidance
FY 2019 Guidance 2018 Actual 2019 Guidance Assumptions Net Sales $568.1M $645M to $655M Direct mid-single digit growth; Retail up to 45% of total 2019 net sales Adjusted EBITDA $51.8M $60M to $64M. 16% to 24% YOY Growth EPS $0.72 $0.74 to $0.80 27% tax rate and 32.5 million shares o/s CAPEX' $50.8M
Slide 20: Long-Term Targets
Long-Term Targets I 2018 Actual Lony Assumptions Net Sales $568.1M ~$1 Billion Open ~15 stores per year 50-60% retail stores / 40-50% direct Adjusted EBITDA 9.1% Low double digits Stable gross margin Margin Rate Leverage expenses Benefits from IT / omnichannel investments CAPEX $50.8M $220M New stor
Slide 21: Appendix
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Slide 22: Adjusted EBITDA Reconciliation
3Months Ended — Fiscal Year Ended in millions) February January February January 3, 28, 3; 2B, 2019 201820192018 Net Income $ 205$ 196 $ 232 $ 23.6 (+) Depreciation & Amorization 44 22 126 73 (+) Interest Expense, net 23 08 59 20 (+) Income Tax Expense 1594 85 11.9 EBITDA $347 $ 320 $ 50.2 $ 448 Adu
Slide 23: Announced Store Openings
Grate” * catia a eat \ Announced Store Openings ks Location Timing Gross Sq Ft Friendswood, TX Opened March 7, 2019 16,026 Katy, TX Openedmarch 8, 2019 16,000 Wichita, KS Opened March 21, 2019 15,385 Spokane Valley, WA Opened april 11, 2019 15,656 Jacksonville, FL Q1 Fiscal 2019 14,557 Rogers, AR Q2