Tile Shop Holdings, Inc. · OTC:TTSH
Tile Shop — The Tile Shop — SPAC Merger (June 2012)
38 slides from Tile Shop's SPAC merger presentation, Jun 27, 2012
Slide 1: The Tile Shop Investor Presentation
theTile Shop oom fem et a INVESTOR PRESENTATION June 27, 2012
Slide 2: Forward-Looking Statements
Forw ater toaing Ser
Slide 3: Additional Information and Participants in the Solicitation
Additional Information and Participants in the Solicitation poe ahr iat eine oedema eters errs
Slide 4: Agenda
AGENDA = Investment Highlights = The Tile Shop Story = Sales and Growth Strategy = JWCAC / The Tile Shop Combination Heme gnew ‘ reser cot
Slide 5: Leading Specialty Retailer of Tile
LEADING SPECIALTY RETAILER OF TILE Founded in 1985 by CEO Bob Rucker Dedicated retailer to the home tile market Products include ceramic tile, stone tile, application material and accessories Broad, diverse offering of ~4,000 products 61 stores in 20 states; three distribution centers Geographically
Slide 6: Attributes of a Successful Specialty Retailer
.TTRIBUTES OF A SUCCESSFUL SPECIALTY RETAILER Attributes Attractive Industry Unique Value Proposition Compelling Unit Economics’ ‘Significant Unit Growth Consistent Same Store Sales Best-in-Class Margins Driven Management Team Ete shen ‘© Consumer remodeling demand drives stable trafic Success? ‘= L
Slide 7: Investment Highlights
INVESTMENT HIGHLIGHTS
Slide 8: Same Store Sales Growth 2006 - 2012 YTD
Same Store Sales Growth 2006 - 2012 YTD INDUSTRY LEADING PERFORMANCE Paine Store Sales Growth 2006=2012YTD | Te Shop induct” = Heme gen : reser cot
Slide 9: Proven Unit Growth
PROVEN UNIT GROWTH
Slide 10: Attractive Store Economics
ATTRACTIVE STORE ECONOMICS [Your 3 ‘Store Sales ‘$1,900,000 '$2/500,000, ‘Ag). 4Wall Contribution $400,000 $700,000 ‘Ad. 4Wall Contrbution Margin” 21% 28% Net Cash investment $1,400,000 (Cash on Cash Retum 40% % TREsHoR com
Slide 11: Driving Best-in-Class Margins
DRIVING BEST-IN-CLASS MARGINS The Tile Shop Historical Adj. EBITDA Margins = 2% 2% Ed "aaa 2008 2008 210 mA Strong and Stable Adj. EBITDA Margins Tie shen " ‘muesHorcom
Slide 12: Experienced Management Team
EXPERIENCED MANAGEMENT TEAM Bob Rucker — Founder & CEO Carl Randazzo — Sr VP, Retail = Founded Tile Shop in 1985 = 20 years with The Tile Shop = Personally involved in “sourcing” © Started as store manager = Oversees management team and high level «= Oversees all stores and store management company
Slide 13: Top Tier Metrics Among Elite Retailers
TOP TIER METRICS AMONG “ELITE RETAILERS” 2010 — 2012E Sales CAGR 2012E Adj. EBITDA Margin i Mh lin i GLEE 826 con] 7 | Projected Long - Term Earnings Growth _| Ill
Slide 14: Compelling Valuation
COMPELLING VALUATION
Slide 15: The Tile Shop Story
THE TILE SHOP STORY
Slide 16: Company History
COMPANY HISTOR ® 1985: CEO Bob Rucker founded the first store in Rochester, MN 1991: started manufacturing grout, sealer and setting materials 1992: with DIY movement gaining steam, expanded outside of Minnesota 2003: laid the blueprint for unique global sourcing platform 2008: leveraged its market
Slide 17: Tile Industry: Ceramic & Stone Trends
TILE INDUSTRY—CERAMIC & STONE TRENDS (Sn Mans)
Slide 18: Peerless Within Its Category
PEERLESS WITHIN ITS CATEGORY Strong Customer Service Product Selection Competitive Pricing In Stock Position Primary Customer Contractor | Contractor { aa | florida retour BOE Wdaltile Fragmented Competition with No National Specialty Player Players
Slide 19: The Tile Shop Mission
THE TILE SHOP MISSION
Slide 20: The Tile Shop Retail Format
THE TILE SHOP RETAIL FORMA’ Average store is 23,000 square feet (approximately 15% warehouse space) Located in high visibility / traffic retail areas Sells primarily to end user (home owner) jicrme snew » sutsnor-cou
Slide 21: Broad Product Assortment
BROAD PROD SORTMENT 4,000 specialty tile products Complementary installation accessories and materials Vast majority of products are “contro! branded Private label concentration provides:
Slide 22: ~60 Full Size Room Displays Showcasing Creative Ideas
~60 Full Size Room Displays Showcasing Creative Ideas and Unique Combinations
Slide 23: Customer Empowerment
MER EMPOWERMENT shen
Slide 24: Direct Sourcing Key Competitive Advantage
DIRECT SOURCI EY COMPETITIVE ADVANTAGE : + Proees Sobel ot ean - '* Eliminates middle men + secure urqin deine + Dives margin * Long-standing supplier relationship Largest customer for many of its suppliers Local Sourcing Contacts in 17 Countries Te Shep, Py ‘TRESHOPcoM
Slide 25: a TuEsHoR cou
a TuEsHoR cou
Slide 26: Knowledgeable and Motivated Sales Force
KNOWLEDGEABLE AND MOTIVATED SALES FORCE = Highly trained design / sales consultants ‘Average tenure of store managers §3 years ‘Store managers promoted trom within = Manager and salesforce compensation tied to store level profitability ‘Compensation well above industry standards + Average store mana
Slide 27: Target Customer
RC OMER Primarily home owner versus professional tile installer Focused on remodeling and existing home improvement projects New construction consumers focused primarily on “custom homes" Female ages 38 — 55 seeking © Quality products © Broad selection © Knowledgeable customer service Average ticket
Slide 28: Sales Strategy
SALES STRATEGY Promotion to Local Installers at Each “Grand Opening” Consistent Advertising in Local “Lifestyle Magazines” Website Designed to Educate Consumer ‘Shown to Drive Sales ‘Stunning Store Displays and Invaluable Customer Service Drive Consumer & Installer Traffic Knowledgeable & Incentiviz
Slide 29: Growth Strategy: Target Competitive Areas
OWTH STR GY: TARGET COMPETITIVE AREAS = Targeting areas with 400,000 gross population = Close proximity to tile competitors = Average household income $65,000+ = Regional shopping destinations Ridgeway, VA
Slide 30: Store Growth Plans
STORE GROWTH PLANS | Double The Store Base Over Next Several Years | t H _« / 2k 014 OA ZARA HA ZOOA SOTA beh OA DDWOA GHIA Toor AOE a Hemmegnee ‘mesworcou
Slide 31: JWCAC / The Tile Shop Combination
JWCAC / THE TILE SHOP COMBINATION
Slide 32: Transaction Overview
TRANSACTION OVERVIEW ‘+ Parent of Tho Tile Shop CTTS') to bocome pubic traded on NASDAQ upon a combination wah LINC Aequsion Corp. (OTC: JCA) “otal enterprise value of ~$500 milion and equity valu of $437 milion Proforma net debt of $84 millon (1.2x 2012E Adj. EBITDA) ‘$100 mition in cash © 285 mili
Slide 33: Transaction Terms
TRANSACTION TERMS (ad Soro implied Erterprse Vale 32 Proforma Net Dest Cy ‘Shares Qustanding (eM) 0 437 Valuation Multiples 0% mt Public ,, Sponsor inh bd Shares Warrants” Warrants Total PEG on 06 TieStopOwes 20516 =n Pattie ws 28 - 184 Pe 18% 187% JINCAC Founders 47. - 49 37 ‘Ag, EBITDA Mute 9m 8%
Slide 34: Projected Financial Performance
PROJECTED FINANCIAL PERFORMANCE ‘Adj. EBITDA Number of Stores ook x ss
Slide 35: Appendix
APPENDIX
Slide 36: Key JWCAC Terms
KEY JWCAC TERMS Corporate Structure Delaware ¢ Corporation ‘Amount Raised 125,000,000 Public Shares Outstanding 12,500,000 ‘Amount in Trust @ IPO $10.00 per share ‘“JWA"— common stock / OTC Exchange / Ticker
Slide 37: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATIO =o EO Net Income (loss) $23.2 $29.7 $31.4 Interest Expenses 05 05 04 Income Taxes 07 06 07 Depreciation & Amortization 7.0 2: 87 Stock-based Compensation 03 05 1.4 Adj. EBITDA $31.7 $98.6 $42.6
Slide 38: Tile Shop Comparable Companies
TILE SHOP COMPARABLE COMPANIES