Adairs Ltd. · ASX:ADH
Adairs — Merger or Acquisition (November 2021)
16 slides from Adairs's merger presentation, Nov 25, 2021
Slide 1: Acquisition of Focus on Furniture
Adairs Limited Acquisition of Focus on Furniture Investor Presentation 25 November 2021
Slide 2: Transaction overview
Transaction overview 1 Adairs has agreed to purchase Focus on Furniture, a vertically integrated omni-channel furniture designer and retailer operating in Australia. Transaction ▪ Adairs has agreed to acquire 100% of Focus on Furniture (“Focus”) for an Enterprise Value of $80m on a debt free basis ▪
Slide 3: Focus overview
Focus overview 2 Focus is a vertically integrated, omni-channel furniture and bedding retailer targeting the Australian middle market. Overview ▪ Omni-channel retailer operating 23 stores with a small but growing online channel ▪ Offers a collection of well designed, functional and on trend home His
Slide 4: Strategic alignment
Strategic alignment 3 The Focus business model is a strong strategic fit with Adairs. The acquisition expands the Group’s presence in home furniture, transforming the Group into a broader portfolio of attractive businesses all targeting the Australian home furnishings and furniture middle market. Bu
Slide 5: The opportunity
The opportunity 4 Focus has an attractive growth profile supported by a clear set of initiatives. We see potential sales of $250m+ within 5 years. Large market The Australian home furniture market is c.$8.3b. Focus is a small player in a large market with significant opportunities for growth driven
Slide 6: Large market with category growth opportunities
Large market with category growth opportunities 5 The Australian home furniture TAM is c.$8.3b. Focus is a small player targeting the key middle market home furniture categories – Lounge, Bedroom and Dining – with clear opportunities for range expansion (e.g. Outdoor, Home Office, Storage). $13.3b A
Slide 7: Adairs Group post-acquisition
Adairs Group post-acquisition 6 Adairs Group Total Addressable Pro-forma FY21 Pro-forma FY21 Stores Market (TAM) Sales1 Online Sales1 192 $13.3 billion $654 million $201 million (all profitable) FY21 Sales1 FY21 Channel Mix1 FY21 Product Mix1 Mocka 9.2% 9% Online 37.3% Focus 31% 24% Adairs 31.5% 67%
Slide 8: Transaction structure, funding and financial implications
Transaction structure, funding and financial implications 7 Acquisition of 100% of the shares in Focus on an EV/EBIT multiple of 2.4x FY21 actual EBIT ($32.8m) with immediate EPS accretion (no synergies assumed). Financial impact on Adairs Transaction structure and funding ▪ Without assuming any syn
Slide 9: Summary
Summary 8 Highly profitable business with excellent growth potential acquired for $80 million – acquisition multiple of 2.4x FY21 EBIT – double-digit EPS accretion in FY23 (first full year of ownership) Adairs Group is well positioned to support and accelerate the growth strategies of Focus Adairs G
Slide 10: Appendices
Appendices 1. Store network map 2. Store network growth potential 3. Product overview
Slide 11: Appendix - Store network
Appendix 1 - Store network 10 Network of 23 stores, predominantly in Victoria. Typical store size is 1,500-2,000 square metres. State / Territory Stores GLA m2 Victoria (Greater Melbourne) 11 17,647 Victoria (Regional) 4 8,079 NSW (Greater Sydney) 1 3,365 NSW (Regional) 3 5,376 ACT (Canberra) 1 2,12
Slide 12: Appendix - Store network growth potential
Appendix 2 - Store network growth potential 11 Focus has 23 stores today. National furniture businesses have 50-60 stores (Adairs has over 50 homemaker stores). We believe there is the potential to operate a network of 50-60 profitable Focus stores across Australia. ▪ Adairs existing property team w
Slide 13: Appendix - Product overview
Appendix 3 - Product overview 12
Slide 14: Appendix - Product overview (continued)
Appendix 3 - Product overview (continued) 13
Slide 15: Appendix - Product overview (continued)
Appendix 3 - Product overview (continued) 14
Slide 16: Disclaimer
Strong Omni Channel Execution Disclaimer Some of the information contained in this presentation contains “forward-looking statements” which may not directly or exclusively relate to historical facts. These forward-looking statements reflect Adairs Limited current intentions, plans, expectations, ass