School Speciality Inc · OTC:SCOO
School Speciality — School Specialty — Q2 FY2017 Earnings Presentation
25 slides from School Speciality's earnings presentation, Aug 9, 2017
Slide 1: Fiscal Year 2017 Second Quarter Financial Results
Fiscal Year 2017 Second Quarter Financial Results August 9, 2017
Slide 2: Fiscal Year 2017 Second Quarter CEO Commentary
Fiscal Year 2017 Second Quarter-CEO Commentary V7 Soooelty. 2 | “As our second quarter results demonstrate, we continue to make progress in executing our plan and driving both top- and bottom-line improvements. Revenue grew almost 10%, gross margins were fairly stable and our expenses continue to de
Slide 3: Fiscal Year 2017 Second Quarter Financial Review
Fiscal Year 2017 — Second Quarter Financial Review \ (| School Revenue of $160.2 millionvs. $145.9 mi Specialty. n, up $14.3 million or 9.8%. Distribution segment revenue grew YOY in Q2, up $10.9 million or 8.3%; majority of product categories grew YOY, with the largest increase in the Furniture cat
Slide 4: Second Quarter and Six-Month Revenue Review
Fiscal Year 2017 4 . School Second Quarter and Six-Month Revenue Review rY 4 Specialty. Category/Segment Changes in 2: Early Learningand Special Needs products, formerly partof instructionalSolutions, are now included within Supplies. Science nts in thousands) mie _2msa2 cr yro2017__ YT 2016 suplies
Slide 5: Second Quarter and Six-Month SG&A Review
Fiscal Year 2017 i . School Second Quarter and Six-Month SG&A Review rY 4 Specialty. >| 7 SG&A Analysi a2 YTD 217 2016 2017 2016 & \Gihtiied eliven manana Total SG&A costs $ SL721 $ 53212 $ 99,189 § 100,528 controls, while maintaining investments in the Less: business. D&A 3,103 3,738 6,387 7,897 St
Slide 6: Consolidated Combined Statement of Operations
Consolidated Combined Statement of Operations (| School Specialty. a SCHOOL SPECIALTY. INC. ‘CONSOLIDATED STATEMENTS OF OPERATIONS (ia Thousands. Exept Per Share Amounts) For the Three Months Ended For the Six Months Ended July1,2017 Tune 25,2016 July], 2017 ‘June 25,2016 Revenves. e e cone 160177 $
Slide 7: Adjusted EBITDA Comparisons
Adjusted EBITDA Comparisons (| School Specialty. a ‘SCHOOL SPECIALTY, INC. ‘CONSOLIDATED STATEMENTS OF OPERATIONS (Ga Thousands, Except Per Share Amounts) For the Three Months Ended For the Six Months Ended Tuy, 2017 June 25, 2016 Tuy, 2017 Sune 25,2016 Adjusted Earnings before interest, taxes, depr
Slide 8: Balance Sheet Review
School Specialty. Y, Balance Sheet Review
Slide 9: Consolidated Balance Sheet Comparison
Consolidated Balance Sheet Comparison \ (| School ASSETS ‘Covent est: Cash and casheastaleas, ats acerabl, las alowance foreoubeslacsounts of 51.073 681099, eventos, at. ‘Refoncable income tres ‘Totalcurent srsets Popany,plet and equipment set cose ntagiblaassers net Development costs asd 0 Deferedi
Slide 10: Balance Sheet Review - Working Capital
Balance Sheet Review - Working Capital NY Soooelty. Accounts Recevable S os55 sas sors mo S121 s imzs usr s a7 s sas a0 inventors $ 915 sas m8 5 BO 5 MES B05 72 $785 7825 B2 Prapasexperseandotrercumemsate 5 SS 7S aS us 5 n2S uss m5 Sos us HS Accounts Payable 5 3525 S55 m5 5 DS 5 mo S BS HI SIs mis B
Slide 11: Balance Sheet Review - Debt
Balance Sheet Review - Debt School 1 & Specialty. 2017 Second Quarter Comments As of ZANT [Net debt declined by $19.1 million or 10.2%. $4.0 million payment related to Cash and cash equivalents $6900 § 8870 refinancing fees and $2.5 million related to higher vendor notes, offset by TTM positive FCF
Slide 12: Free Cash Flow Analysis
Free Cash FlowAnalysis (| School Specialty. Adjusted EBITDA Capex Prod Dev Unrealized FX (gain) loss Other ‘Change in WC Unleveraged free CF Cash Interest Taxes Leveraged free CF GAAP CF Operating Investing 6 Months Ended July 1, 2017 (46,424) (60.218) 6,529) 293 (55,454) (46,237) @.217) (55,454) $
Slide 13: Fiscal 2017 Key Objectives
Fiscal 2017 Key Objectives Corporate Update
Slide 14: FY17 Corporate Objectives
FY17 Corporate Objectives \ (| Soooelty. Refinance Debt & Address Liquidity Issues in the Public Market 5 Debtrefinancing took place in April 2017; lowers cost of capital and provides capital capacity forstrategic initiatives, including acquisitions, 5 Astock splitis in process and expected to be co
Slide 15: FY17 Corporate Objectives
FY17 Corporate Objectives \ (| Soooelty. = Build Momentum with Process Excellence Initiatives Underway 5 Process launched to certify Green Belts and Black Belts; Lean/SixSigma projects underway across multiple areas of our business. Currently, 4 Black Belts and 12 Green Belts in certification proces
Slide 16: The 21st Century Safe School Initiative
The 21st Century Safe School Initiative (| School Specialty. a = Further the 215 Century Safe School Initiative © Approach brings together Procurement Solutions, Classroom & Office Supplies, Furniture, Facility Safety & Security, Environment-Specific Resources (e.g. Early Learning, inclusion Enablem
Slide 17: Team-Based Selling - Our Vision for the Future
Team-Based Selling— Our Vision for the Future NY Sadie pecialty. Team Sell Safety Early Asymbiotic relationship across category & sales teams to leverage brand and product Security solution strengths and success to increase account penetration and overall market OneForce (CRM) share as One company.
Slide 18: Process Excellence
Process Excellence (| School &” 8 Specialty. Process Excellence is a discipline of process thinking and execution embraced globally Process Excellence enables business units to: a Focus efforts on what matters most to customers a Develop process leaders and change agents a Deliver sustainable bottom
Slide 19: Leverage and Promote our Proprietary Brands
Leverage and Promote our Proprietary Brands NY School Specialty. Guroceirr, ER) batons <7zmarmcr) CLASS, ‘CLASSROOM I SELECT ah Projects Sg Pela. cpo) SMpRT 1a Bdrcow @ PAtzation uae Educational Frey Fever CHS] arrcmer eet ea Powerful and innovative industry brands that our customers know and tr
Slide 20: Fiscal 2017 Guidance
School Specialty. Y, Fiscal 2017 Guidance
Slide 21: Fiscal 2017 Guidance - Updated
Fiscal 2017 Guidance - Updated t School Y (| Specialty. Metr FY2017 initial Guidance FY2017 Updated Guidance tp beintherangesf225-25% prog Revenue $6553 570M - S675 i ‘Gifs esl, PO arvartiation)ant sipated ta decline 110-109 bps 8563 onoage [au (exci. pO amore) 377% anmixand higher effective discoun
Slide 22: Fiscal 2017 Outlook Reconciliation to Non-GAAP
Fiscal 2017 Outlook Reconciliation to Non-GAAP NY School &” 8 Specialty. 22 | co The Company’s Adjusted EBITDA and Leveraged Free cash flow outlook for FY17 are non-GAAP measures. Reconciliations of these non-GAAP measures to the nearest GAAP financial measures are presented in the following tables:
Slide 23: Safe Harbor Statement
Safe Harbor Statement 4 School &” 8 Specialty. Safe Harbor Statement This presentation contains statements about School Specialty’s future financial condition, results of operations, expectations, plans, or prospects, including the information under the headings “Fiscal 2017 Key Objectives” and “Fis
Slide 24: Non-GAAP Financial Information
Non-GAAP Financial Information (| School &” 8 Specialty. Non-GAAP Financial information This presentation includes references to Adjusted EBITDA, LeveragediUnleveraged Free Cash Flow, Operating SG&A, andTotal Debt, non-GAAP financial measures, Adjusted EBITDA represents netincome (loss) adjusted for
Slide 25: Investor Contacts
Investor Contacts: Ryan Bohr EVP & Chief Operating Officer 920-882-5868 Ryan.Bohr@schoolspecialty.com Kevin Baehler EVP & Chief Financial Officer 920-882-5882 Kevin.Baehler@schoolspecialty.com Glenn Wiener Investor Relations 212-786-6011 gwiener@GWCco.com