Duluth Holdings Inc. · NASDAQ:DLTH
Duluth — Q4 2017 Earnings Presentation
27 slides from Duluth's earnings presentation, Mar 21, 2018
Slide 1: Investor Presentation 4Q 2017
Investor Presentation 4Q 2017 March 21, 2018
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation dated March 21, 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 concerning D
Slide 3: Fire Hose Work Pants
FIRE HOSE WORK PANTS ONE TOUGH SON GOB Auas ©
Slide 4: The Modern, Self-Reliant American Lifestyle
The Modern, Self-Reliant American Lifestyle Men and women who are hands-on, value a job well done and are often outdoors for work and hobbies March 21,2018
Slide 5: Innovative products solving customer problems
“Therearea whole lotta legs, torsos, feet and crotches out there counting onus” Buck Naked™ Underwear Crouch Gusset® Pants DuluthFlex® Fire Hose® Pants . i y Soggy and restrictive Restrictive pants in sensitive underwear areas: ‘euocmer = CR , : ioe ses 9 | “ Additional fabric lets our Fast-drying,
Slide 6: Gives our products an identity and enhances our brand
Gives our products anidentity and enhances our brand = Makes shopping for our products fun with attention-grabbing advertisements that are humorous, irreverent and quirky = National advertising campaigns feature characters such as our Giant f Angry Beaver, Buck Naked™ Guy and Grab-Happy Grizzly Sy =
Slide 7: Treating our customers like next-door neighbors creates loyalty
PS Treating our customers like next-door neighbors creates loyalty and drives repeat purchases Seamless, consistent omnichannel brand experience that makes shopping fun and hassle-free * Contentrich, user-friendly website designed to provide an enjoyable, informative and efficient shopping experienc
Slide 8: Wide Customer Presence
ide Customer Presence U.S. Population v Nationwide customer base aligned geographically with U.S. population v Unique ability to know where our customers are through our direct sales channel Top Three Markets #1~= New York #2 California : #3 «Texas March 21,2018
Slide 9: Omnichannel Presence with Distribution Control
PS Omnic hannel Bie ecnce with Distribution | ontrol Direct Segment IEE e-Commerce (88%) Catalog (12%) Y Presentour brand in a consistent manner peat ye Dee v Implement controlled pricing strategy y Own the relationship with our customers Retail Segment 29% of 4Q 2017 Net Sales; 99% YoY Growth v Cap
Slide 10: Growth Strategy
WITH DRY ON THE FLY* YOUR PANTS Eee oe ee Growth Strategy
Slide 11: Growth Strategies
Growth Strategies March 21,2018 3 Grow Women's Business 4 Broaden Assortmentin SelectMen’s Product Categories
Slide 12: Advertising and marketing channels drive brand awareness
Broadcast and cable networks = Google paid search andbanner = Tangible vehicle for authentic and Reaches a large national ads humorous storytelling audience * Extends TV advertising to digital + Drives visits to the website and Features both animated Channels retail stores characters and female mode
Slide 13: Retail Expansion
hte Rota Expansion is ; Significant white space opportunity to grow our U.S. retail presence Retail Store Footpi }00 31 16 9 4 6 2013 2014-2018 -2016() 20172 Store Potential in Identified Markets ey | (2 neues tree out sore, Existing stores profitable in both metropolitan and rural locations across
Slide 14: Announced Store Openings
* Announced Store Openings @ Full Line Outlet “March 21,2018 West Fargo, ND (Q1 FY18) Portland, OR (Q1 FY18) Colorado Springs, CO (Q2 FY18) Lubbock, TX (Q2 FY18) Denton, TX (Q2 FY18) Columbus, OH (Q2 FY18) Arlington, TX (Q2 FY18) Oklahoma City, OK (Q3 FY18) South Portland, ME (Q3 FY18) Canton, OH (Q
Slide 15: Sustainable Top-line Growth
a EEN Sat Sustainable Top-line Growth Direct, retail and total net sales (Sin millions) v4 $376 $304 Eye $232 2014 2015 2016 sDirectsalesmRetallsaes DUSTH “March 21,2018 2017
Slide 16: 2017 Sales by Segment and Division
tate eae bean : Se. \ 2017 Sales by Segment and Division DUSTH 1 “March 21,2018
Slide 17: Expand offering to appeal to a wider range of women
Expandofferingto appeal to a wider range of women and lifestyleneeds = Net sales increased 37% in 2017 to $110 million = 40% CAGR from 2013-2017 = Continue to grow through customer acquisition and new product offerings = Multi-category buyers (men’s and women’s business) spend on average 2X more tha
Slide 18: Broaden assortment in select men's categories
Broaden assortment in categories that exhibit high potential with our Modern, Self-Reliant American Lifestyle = Net sales increased 22% in 2017 to $334 million = Extend core products through color, fabric and size = Increase penetration in spring and transitional product (rain, mid-weight jackets, e
Slide 19: Financial Review
Financial Review
Slide 20: Year Ended January 28, 2018
Year Ended January 28, 2018 (Sin milions) 25.3% metal $376 —— [sat] 2016 2017 Adjusted EBITDA” (Sin mlions) $46 S41 2016 2017 Margin 10.9% 5% Gross Profit a $261 soi 2016 2017 Margin 56.9% bad Net Income?) (Sin milions) $23 S21 2016 oat Margin 5.7% 20% (1) Adustedto reflectthe add-back of stock comp
Slide 21: Fourth Quarter Results
(Sin mitions) Direct metal 3 mos. 2016 (1/29/2017) 3mos. 2017 (1/28/2018) Adjusted EBITDA (in milions) $32 $25 Gross Profit (Sin mlions) SS $116 sor 3 mos. 2016 3 mos. 2017 (1/29/2017) (1/28/2018) Margin 55.4% 53.3% Net Income® (Sin mlions) 3 mos. 2016 3 mos. 2017 (1/29/2017) (1/28/2018) Margin 14.1
Slide 22: Balance sheet and liquidity
(Sin millions) 28-Jan-18 7 , a. Cash $ 29 = $2.9 million of cash with $1.5 million of a8 ms debt outstanding” Debt: = Zero debt outstanding excluding Term Loan 15 Noncontrolling interest Line of Credit 0.0 = No borrowings on the $60.0 million Total Debt 15 revolving creditline Total Shareholders’ Eq
Slide 23: Capital Investments
Capital Investments Net Capital Expenditures % of Net Sales 9.1% 7.6% (Sin millions) $29 2015 2016 2017 Stores MIT mLogistics = Corporate/other DeantH 5-Year capital plan of $220M from 2018 — 2022E, with net capital expenditures % of net sales ranging from 4% - 9% 23 “March 21,2018
Slide 24: Appendix
POR DOWN-AND-DIRTY WORK ee Appendix
Slide 25: Key Tax Reform Provisions
Key Tax Reform Provisions Duluth Trading Company Estimated Impact on Duluth Trading Company Federal tax rate from 35%to 21%. Deferred taxes will berevalued based onnew tax rates. Interest expense deduction limited to net interest expense up to 30% ofadjusted taxable income. Increased year one CAPEXt
Slide 26: FY 2018 Guidance
FY 2018 Guidance 2017 Actual 2018 dance — Assumptio Net Sales $471.4M $555M to $575M Direct mid-single digit growth; Retail $215M-$225M Adjusted EBITDA $46.4M $51M to $54M. 10% to 16% YOY Growth EPS $0.72 $0.79 to $0.84 26% tax rate and 32.4 million shares o/s CAPEX $42.8M $45M to $55M 15 new store
Slide 27: Adjusted EBITDA Reconciliation
3months ended Fiscal Year ended (Sin millions) January 28, January 28, 2018 -2017_—=—«2018_——2017 Net Income. $196 $ 140 $ 236 $ 215 (+) Depreciation & Amorization (+) Interest Expense, net (4) Income Tax Expense 22 18 73 aT 08 o4 20 02 94 88 19135 EBITDA $320 $ 244 $ 448 $ 39.9 ‘Adustments (4) Non-