Duluth Holdings Inc. · NASDAQ:DLTH
Duluth — Q2 2019 Earnings Presentation
23 slides from Duluth's earnings presentation, Sep 13, 2019
Slide 1: Investor Presentation Second Quarter 2019
/ Investor Presentation Second Quarter 2019 September 13, 2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation dated September 13, 2019 includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts induded in this presentation, including statements concern
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 Sep
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 September 13,2019
Slide 7: Growth Strategy
Growth Strategy
Slide 8: Growth Strategies
Growth Strategies ‘September 13,2019 3 Grow Women’s Business 4 Broaden Assortmentin Select Men's Product Categories
Slide 9: Digital Advertising
= Digital Advertising > Paid-for search and banner ads > Social media (organic and sponsored) 4. eee Oe (0+ ST ES —~— _ 2018 —— >» Targeted emails = TV Advertising > Strategically placed national ads >» Memorable, humorous ads = Catalog >» Captivating storytelling >» Productlayouts AMP YOUR « AIRFLO
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 A. @ Full Line © Outlet "
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 September 13
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: Quarter Ended August 2019
iS Ended August (Gin milions) $122 (Sin milions) m Direct $111 40.2% ™ Retail aad $65 0 $¢ $62 AS 3mos. 2018 3 mos. 2019 3 mos. 2018 3 mos. 2019 (7/29/2018) (8/4/2019) (7/29/2018) (8/4/2019) Margin 56.2% 53.1% Adjusted EBITDA‘ Net Income? (Sin mlions) (Sin milions) $13.4 $6.4 $96 3 mos. 2018 3 mos.
Slide 17: Year Ended February 3, 2019
Year Ended February 3, 2019 Gross Profit (Sin mlions) (Sin milions) Direct 20.5% , 18.9% $310 ™ Retail $471 568 $141 ua $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) $46 oe $23 $23 2017 2018 2017 2
Slide 18: Strong Balance Sheet and Liquidity
fF Stro 1g Balance Sheet and Liquidity" As of ($ in millions) 2019 Cash $ 35 * $3.5million of cash with $45.0 million of debt outstanding’ Debt: * $130million credit facility ($80 million Line of Credit 45.0 line of creditand $50 million ofterm Total Debt 45.0 loan capacity) = Fiscal 2019 expected c
Slide 19: FY 2019 Guidance
’ Ras} FY 2019 Guidance i 2018 Actual 2019 Guidance Assumptions Net Sales $568.1M $610M to $620 Direct low-single digit growth: Retail up to 45% of total 2019 net sales Adjusted EBITDA $51.8M $51M to $55M. (2%) to 6% YOY Growth EPS $0.72 $0.60 to $0.66 26.5% tax rate and 32.4 million shares o/s CAPE
Slide 20: Long-Term Targets
Long-Term Targets I Assumptions Net Sales ~$1 Billion Up to 100 retail locations 50-60% retail stores / 40-50% direct Adjusted EBITDA Low double digits Stable gross margin Margin Rate Leverage expenses Benefits from omnichannel and customer analytics investments CAPEX $30M to $40M New stores and rem
Slide 21: Appendix
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Slide 22: Adjusted EBITDA Reconciliation
3 Months Ended August 19, July 18, (Sin millions) 2019 2018 Net income (loss) 18 65 (#) Depreciation and amortization 50 28 (+) Interest expense 12 12 (+) Amortization of build-to-suit leases captital contribution 03 (J+) Income tax benefit (expense) o7 22 EBITDA 9.0 27 (#) Stock based compensation
Slide 23: Openings
Openings Location Timing Gross Sq Ft Friendswood, TX Opened March 7, 2019 16,026 Katy, TX Opened March 8, 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 Opened May 16, 2019 15,656 Danbury, C