Schmitt Industries, Inc. · OTC:SMIT
Schmitt Industries — Shareholder Meeting (December 2021)
32 slides from Schmitt Industries's shareholder meeting presentation, Dec 16, 2021
Slide 1: Annual Shareholders' Meeting December 10, 2021
SCHMITT INDUSTRIES ANNUAL SHAREHOLDERS’ MEETING DECEMBER 10, 2021
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Statements made in this presentation may constitute "forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21€ of the Securities Exchange Act of 1934, as amended. Such forward-looking statements relate to, with
Slide 3: Agenda
Agenda |. Introduction to Schmitt Il. Year in Review lll. Measurement Segment IV. Ice Cream Segment V. Plan of Action VI. Questions
Slide 4: Intro to Schmitt Industries
Intro to Schmitt Industries § C | M | T T Holding company that invests in, operates, and builds middle-market businesses to create shareholder value. Value investing DNA, turnaround skillset. NASDAQ: SMIT Cash: ~$7.4m* Real Estate: Nicolai Street Two Operating Segments | Acuity” (act’ Portland, OR
Slide 5: Schmitt's Board, Executives and Leadership
Schmitt’s Board, Executives and Leadership %328e@ Michael R. Zapata Charles Davidson Lillian Tung Alexandre Zyngier Chairman, CEO Nominating and Governance Chair Compensation Chair Audit Chair 2018 2016 2020 2021 * Diverse board with range of skillsets * Focused on strong corporate governance and cr
Slide 6: Brief History
Brief History 2016 - Schmitt is a Portland, Oregon-based manufacturer with 3 product lines (SBS, Acuity, and XACT), real estate and a history of losses 2017 - Sententia Capital, the investment fund run by Michael Zapata, makes initial investment in Schmitt 2018 - Sententia files 13D and runs activis
Slide 7: Agenda
Agenda |. Introduction to Schmitt Il. Year in Review lll. Measurement Segment IV. Ice Cream Segment V. Plan of Action VI. Questions
Slide 8: Schmitt Progression
Schmitt Progression SMIT Stock Price Announcement of new AS2100 & 8 R2700 sensors 7 6 Sententia Passive Announcement of 5 Investment Xact Website Share Repurchases Relaunch 13D Filing 4 Opened new flagship scoop 3 shop at Prospect Park West Strategic Ample Hills Partial Portland Real 1 Reorganizatio
Slide 9: Revenue Growth Over Last Months
Revenue Growth Over Last 12 Months Quarterly Revenue by Segment USD Millions $5.0 $4.0 $3.0 $2.0 $1.0 1.0 $0.0 27 20 09 17 09 11 18 a 2QFY21 © 3QFY21.4QFY21 mice Cream © Measurement 38 08 1QFY22 -O—0—-0---0--6 Key Events July 7, 2020: Reopens Red Hook Factory and begins opening NY scoop shops Aug 31
Slide 10: Schmitt Cash Flow Bridge
Schmitt Cash Flow Bridge Schmitt Cash Flow Summary (May 2020 - Aug 2021) COMDovehangimpact USO mitions Jed pet aferecosits 504 /nra cots contents oa higeaaton si meena #5 Operating tosses $8 $4.7 ‘e Fexoyupgade Lea Pew buat Warehouse upgrade $4 Sots buck Exp implantation . $2 Retail store investment
Slide 11: Portland Real Estate Asset Update
Portland Real Estate Asset Update (1) Real Estate Assets in Portland Provide Source of Funds for Expansion (2) Value Realization from Portland Real Estate Expected to Exceed Original $6.5m Target for Combined Assets 28¢ Street Real Estate Nicolai Street Real Estate SS Operational facility for SBS Di
Slide 12: Schmitt Progression
Schmitt Progression Phase 1: Value Realization (hidden assets) + 2018 - 2019: Schmitt 1.0 (SBS > $10.5m) Phase 2: Value Investing * 2019 - 2020: Share Repurchases, Business Investment, Portfolio Investment Phase 3: Value Creation * 2020 - 2021: Focus on Developing Businesses, Strategic Alternatives
Slide 13: Agenda
Agenda |. Introduction to Schmitt Il. Year in Review lll. Measurement Segment IV. Ice Cream Segment V. Plan of Action VI. Questions 13
Slide 14: Measurement (SMS) Revenue
Measurement (SMS) Revenue USD Thousands $2,500 $2,000 $1,500 $1,000 $500 $0 Jan Feb. = Mar Apr, = Mays Jun Jul, «= Aug. = Sep-Oct «Ss NCO —2019 —2020 —2021 Est + $3.7Mestimated 2021 revenue vs $4.1M last year * 10% decine ven byAcuity producing; Xact forecast to sight exceed 2020 revenue SCHMITT u
Slide 15: SMS Plan of Action - 2021
SMS Plan of Action - 2021 5-year goal: Shift revenue from $8 to $6 million and achieve 13% EBITDA margins (act’ Acuity + Lower Bill of Materials cost TAM Expansion and market share gains + Expand into adjacent markets Customized OEM focus through ultrasonic and cellular New key customer wins + Enhan
Slide 16: Xact Plan of Action
Xact Plan of Action Xact Focus on Revenue Growth + Accomplished through new products that open new markets + New Products through Partnership + Expected first product launch date December 2021 New Products, New Markets. + Better Product at Lower Costs * Opens cellular market and new verticals (oils,
Slide 17: Acuity Plan of Action
Acuity Plan of Action Acui Create a niche market through custom applications Opens OEM Focused Share gains + TAM expansion One of the only U.S based manufacturers Leverage brand recognition nue Growt Strong forecast for Q1 from legacy customers coming back online after COVID Addition of new Territor
Slide 18: Agenda
Agenda |. Introduction to Schmitt Il. Year in Review lll. Measurement Segment IV. Ice Cream Segment V. Plan of Action VI. Questions 18
Slide 19: Ample Hills 1.0
Ample Hills 1.0 Strong brand that failed due to fixable causes: @actory Issues * 2years behind schedule and ~$4.5m over budget * Opened with <40% capacity utilization leading to cash burn Odveriy aggressive expansion + Large stores on premium properties with low sales * Limited location or cost anal
Slide 20: Ample Hills - Keys To Success
Ample Hills - Keys To Success & Investment in OurTeam Reet, Data Backed Decisions Revenue Growth & Cost Management Purpose-Driven Company 20
Slide 21: Ample Investments
Ample Investments Schmitt Cash Flow Summary (May 2020 - Aug 2021) COMDovehangimpact USO mitions Jed pet aferecosits 504 /nra cots contents oa higeaaton si meena #5 Operating tosses $8 $4.7 ‘e Fexoyupgade Lea Pew buat Warehouse upgrade $4 Sots buck Exp implantation . $2 Retail store investments $0 Ma
Slide 22: Three Phases
Three Phases ¢ Highest Risk Period due to COVID 19 * Cash Burn Conscious * Rehire Amployees + Reopen Factory Phase 1 Stabilize Ample Hills Focused Store Footprint Expansion * Increase Factory Utilization ¢ Establish Operating Best-Practices Prove Store Economics Phase 2 Build the Foundation Discipli
Slide 23: Key Levers
Key Levers Optimize Four Revenue Streams to Maximize Ecosystem Retail Stores Wholesale Grow Ample Hills = Footprint = Ee Implement Factory Improvements mpi rail, Realize Margin bea Expansion Factory E-Commerce
Slide 24: Brand Building Initiatives
Brand Building Initiatives Widow Jane & Crown Maple Collaboration Baked by Melissa Collaboration 24
Slide 25: Brand Building Initiatives
Brand Building Initiatives Succession Collaboration Fan Flavor-Naming Contest SMOOTH MINTY MAILY CHOCOLATE (CE CREAM vara HOUSEMADE FUDGE BROWNIES asm Pieces Nicholas Braun (Succession Actor) on set OF PEPPERMINT CANDIES 5
Slide 26: In the Headlines
In the Headlines Succession Collaboration Prospect Park Opening Z ZS . eiesttins = Bomnsrer Soseation’ themed lee Ample Hills Opens Park Stope Outpost in cream is coming to NYC Restored Storefront Next to Nitahawic There's A ‘Succession’= Themed Ice Cream Named For A Brutal Pun From The thrillist; P
Slide 27: Ample Hills Strategy
Ample Hills Strategy Increase Utilization Grow intemal volume demand Wholesale E-commerce [= Grow Footprint [ = Serve all fans Build and Amplify the Brand The Better We Do, The More We Can Give Back eA Expand the Footprint
Slide 28: Agenda
Agenda |. Introduction to Schmitt Il. Year in Review lll. Measurement Segment IV. Ice Cream Segment V. Plan of Action VI. Questions 28
Slide 29: Schmitt Progression
Schmitt Progression Phase 1: Value Realization (hidden assets) + 2018 - 2019: Schmitt 1.0 (SBS > $10.5m) Phase 2: Value Investing * 2019 - 2020: Share Repurchases, Business Investment, Portfolio Investment Phase 3: Value Creation * 2020 - 2021: Focus on Developing Businesses, Strategic Alternatives
Slide 30: Plan of Action
Plan of Action 1. Continue to stabilize and improve Ample Hills systems and processes 2. Execute 3-4 store openings in 2022 3. Maintain factory utilization >75% 4. Explore sale of Nicolai Street buildings to fund future growth plans, consider future growth funding 5. Opportunistically consider M&A o
Slide 31: Ample Hills Online Discount
Ample Hills Online Discount We hope our shareholders enjoy our products as much as we do. (eee) : 10% OFF use code “SMIT” Ls njoy 2-day shipping on your order! romeo enmestiten @amplehills
Slide 32: Shareholder Question & Answer Session
Shareholder Question & Answer Session 32
Schmitt Industries — Shareholder Meeting (December 2021) on 6ix