Slide 1: Investor Presentation Q2 2022
Investor Presentation Q2 2 0 2 2 September 2022 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 September 12, 2022. Actual results and the t
Slide 3: Who We Are
Who We Are 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 uncompromis
Slide 4: Our History
Our History 1973 1980 1998 2015 2017 2020 Michael Budman and Roots moves onto its Roots has created the Searchlight Capital Complete IPO on TSX New executive Don Green founded core business – selling Olympic outfits of Partners acquires 80% Searchlight Capital leadership: CEO, CFO, Roots, centered a
Slide 5: 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 6: Our Values
OUR VALUES Community Be Genuine Integrity Freedom We are a place of While we draw inspiration We always strive to do We celebrate the inclusivity, diversity and from the world around us, what’s right and to build individuality of style as a open-mindedness. We we never forget where we trust and last
Slide 7: Meghan Roach
Meghan Roach President & Chief Executive Officer PAGE 7
Slide 8: Strong Second Quarter Results
Strong Second Quarter Results • Sales increased 22.9% YoY to $47.8M, driven by higher in-store traffic • Benefited from absence of pandemic-related restrictions in Q2 2022 • Excluding subsidies and rent abatements, net loss improved $2.5M YoY and Adjusted EBITDA $2.7M YoY* • Strong financial perform
Slide 9: Mitigating Supply-Chain Challenges
Mitigating Supply-Chain Challenges • Proactive approach o Balancing air freight with premium and regular ocean freight o Incremental improvements in shipping times and freight costs sequentially • Increased inventory o Inventory rose 15% YoY to $54.8M to secure key fall and winter collections o Core
Slide 10: Operating Highlights
Operating Highlights • Beaver Canoe relaunch o Highly successful 40th anniversary celebration o Collection features a diamond-shaped logo with a beaver and trees (100% organic cotton) o Fulfills consumer demand for vintage brands o Relaunch included t-shirts, hoodies, sweats and other accessories •
Slide 11: Outlook
Outlook • Well positioned for second half (~70% annual sales) o Well-balanced inventory o Healthy balance sheet o Prudent capital deployment • Staying course on long-term strategy o Elevating omnichannel experience o Reinforcing brand position globally o Strengthening focus on CSR initiatives o Achi
Slide 12: Mona Kennedy
Mona Kennedy Chief Financial Officer PAGE 12
Slide 13: Second-Quarter Sales
Second-Quarter Sales Total Sales DTC Sales P&O Sales $47.8M $38.5M $38.9M $30.4M $9.3M $8.5M Q2-2021 Q2-2022 Q2-2021 Q2-2022 Q2-2021 Q1-2022 • Strong growth year-over-year from • Higher sales from Taiwan (+) higher store traffic (+) • Increased royalties on licensed • Absence of pandemic-related pro
Slide 14: Gross Margin
Gross Margin Total DTC 64.0% 63.4% 59.3% 58.1% Q2-2021 Q2-2022 Q2-2021 Q2-2022 • Continued promotional discipline through reduced markdowns and less promotional depth (+) • Favourable FX impact (+) • Lower pandemic-related government subsidies (-) • Additional air freight costs (-) PAGE 14
Slide 15: SG&A and Adjusted EBITDA
SG&A and Adjusted EBITDA1 SG&A expenses Adjusted EBITDA 1 $30.6M $21.8M $2.9M ($0.6M) Q2-2021 Q2-2022 Q2-2021 Q2-2022 Q2-2021 Q2-2022 Q2-2021 Q2-2022 As reported Excluding y/y impact of As reported Excluding y/y impact of subsidies and abatements subsidies and abatements 1 Adjusted EBITDA is a non-I
Slide 16: Net Loss
Net Loss Net loss Net loss excluding subsidies and abatements ($1.2M) ($1.2M) ($3.3M) ($3.2M) Q2-2021 Q2-2021 Q2-2022 Q2-2022 Q2-2021 Q2-2022 PAGE 16
Slide 17: Solid Financial Position
Solid Financial Position Net Debt $77.1M $50.2M $26.8M Debt repayment over the past 12 months $59.6M Unused borrowing capacity Q2 2021 Q2 2022 at the end of the second quarter Leverage of 1.1x as at July 30, 2022 (in millions of $CAD) PAGE 17
Slide 18: In Summary
In Summary • Pleased with performance in first half o Store traffic grew significantly YoY, while promotional discipline improved profitability • No government subsidies or rent abatements coming in Q3 2022 o Benefited from $3M in Q3 2021 • Prepared for future uncertainty o Roots is not a fast-fashi
Slide 19: Appendix
Appendix PAGE 19
Slide 20: 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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