Duluth Holdings Inc. · NASDAQ:DLTH
Duluth — Investor Presentation (June 2019)
23 slides from Duluth's investor presentation, Jun 14, 2019
Slide 1: Investor Presentation First Quarter 2019
/ Investor Presentation First Quarter 2019 June 14,2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation dated June 14, 2019 includes “forwardooking statements* within the meaning of the Private Securities Litigation Reform Act of 1995. ll statements, other than statements of historical facts included in this presentation, including statements concerning Dul
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 Jun
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: 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 June 14,2019
Slide 7: Growth Strategy
Growth Strategy
Slide 8: Growth Strategies
Growth Strategies June 14,2019 3 Grow Women’s Business 4 Broaden Assortmentin Select Men's Product Categories
Slide 9: Build Brand Awareness
Sag atl es as sefand Awareness 4 - Build = Digital Advertising Paid-for search and banner ads » Social media (organic and sponsored) >» Targeted emails —~— _ 2018 —— 0+ ST! ES = TV Advertising > Strategically placed national ads >» Memorable, humorous ads = Catalog >» Captivating storytelling >» Pro
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 @ Full Line © Outlet " Hig
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 Net Sales $141 (Sin millions) 2014 2015 2016 2017 2018 Duane June 14,2019
Slide 14: Broaden Assortment in Select Men's Product Categories
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: First Quarter 2019 Financial Results
(Gin milions) nae Gross Profit ghee — oo 40% cy 14 (Sin mtions) ™ Retail say 3 mos. 2018 3 mos. 2019 3mos. 2018 3 mos. 2019 (4/29/2018) (6/5/2019) (4/29/2018) (6/5/2019) Margin 55.8% 53.3% Adjusted EBITDA’ Net Income? (Sin mlions) (Sin mlions) $2.6 | 7 ($4.4) 3 mos. 2018 3 mos. 2019 (4/29/2018) (615
Slide 17: Year Ended February 3, 2019
Year Ended February 3, 2019 (Sin mlions) Direct 20.5% = Retail — 2017 2018 (1/28/2018) (23/2019) Adjusted EBITDA’ (Sin mifons) $52 $46 2017 2018 (1/28/2018) (23/2019) Margin 9.8% 9.1% | Aglustedto reflectthe add-back of stock compensation expense. Dux TH Excudes net cone vad to nonconrong eet eat Ju
Slide 18: Balance Sheet and Liquidity
As of May 5. ($ in millions) 2019 Cash $ 0.5 Debt: Line of Credit 39.2 Total Debt 39.2 Total Shareholders’ Equity 151.1 Total Capitalization $ 190.3 Debtto Capital ratio 20.6% DuantH ® $0.5 million of cash with $39.2 million of debt outstanding’ = $130 million credit facility ($80 million line of cr
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 $4
Slide 20: Long-Term Targets
Long-Term Targets I Long-term Goal Assumptions Net Sales ~$1 Billion Open ~15 stores per year 50-60% retail stores / 40-50% direct Adjusted EBITDA Low double digits Stable gross margin Margin Rate Leverage expenses Benefits from IT / omnichannel investments CAPEX $220M New stores and remodels Over 5
Slide 21: Appendix
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Slide 22: Adjusted EBITDA Reconciliation
Three Months Ended ($ in millions) May 5,2019 April 29, 2018 Net loss $ (76) $ (0.7) (+) Depreciation and amortization 44a 23 (+) Interest expense 08 08 (+) Amortization of build-to-suit leases capital contribution 0.2 : () Income tax benefit 2.7) (0.2) EBITDA $ (49) $ E (+) Stock based compensation
Slide 23: Announced Store Openings
bea” * seni a eat \ Announced Store Openings ks Location Timing Gross Sq Ft Friendswood, TX Opened March7, 2019 16,026 Katy, TX Opened Marché, 2019 16,000 Wichita, KS Opened March 21,2019 15,385 Spokane Valley, WA Opened April 11, 2019 15,656 Jacksonville, FL Opened May 2, 2019 14,557 Rogers, AR Ope