Slide 1: Investor Presentation Q2 2024
Investor Presentation Q2 2024 September 13, 2024 PAGE 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain information in this presentation contains forward-looking information. This information is based on management’s reasonable assumptions and beliefs in light of the information currently available to us and are made as of September 12, 2024. Actual results and the t
Slide 3: Our Mission: To Inspire the World to be At Home with Nature
OUR MISSION To Inspire the World to be At Home with Nature PAGE 3
Slide 4: Our Roots
Our Roots Roots was founded in 1973 by Michael Budman and Don Green, who met at summer camp in Algonquin Park, where they first fell in love with the ideals and beauty of Canada. Starting from a little cabin, they were inspired by nature and Canada's wilderness to create Roots. With its uncompromisi
Slide 5: Our History
Our History 1973 1980 1998 2015 2020 2023 Michael Budman and Roots moves onto its Roots has created the Searchlight Capital New executive Roots launched 50th Don Green founded core business – Olympic outfits of Partners acquires leadership team. anniversary celebrations Roots, centered selling athle
Slide 6: Iconic Canadian Brand with a Global Community
Iconic Canadian Brand with a Global Community 1 Rich heritage of delivering high-quality, versatile and stylish products to customers that span all ages and genders High-Quality, Versatile, Purpose-Driven Products 2 Mix of iconic classics and new pieces that resonate with customers Omni-Channel Stra
Slide 7: Our Values | What Guides Us
Our Values | What Guides Us Community Authenticity Integrity Freedom We are a place of inclusivity, diversity and open- While we draw inspiration from We always strive to do We celebrate the individuality of mindedness. the world around us, we never what’s right and to build style as a form of self-
Slide 8: Q2 Financial Highlights
Q2 Financial Highlights • Sales of $47.7 million, compared to $49.4 million last year o DTC sales were $36.4 million compared to $37.1 million last year o DTC Comparable sales were nearly flat, at (0.2%) o Double-digit digital sales growth in both US and China • DTC gross margin declined 100bps year
Slide 9: Product Highlights
Product Highlights • Activewear achieved another quarter of double-digit growth, now representing a core offering from Roots • Launched a summer version of minimal logo Cloud fleece, which resonated well with consumers • Strong sell-through of our Northern Athletics summer program, that was centered
Slide 10: Brand & Customer Engagement
Brand & Customer Engagement • Building on our brand ambassador program launched in Q1, enhancing brand visibility through authentic, relatable representatives that embody our core values • Thoughtfully enhancing our marketing and brand messaging, which can be seen through our “back-to-school” and ne
Slide 11: Operational Highlights
Operational Highlights • Inventory challenges in certain core fleece collections were addressed towards the end of Q2 • Enhancing store experience, with construction commencing at our new Robson location, blending Roots heritage in nature with a brighter, more modern aesthetic o Eaton Centre remodel
Slide 12: Looking Ahead
Looking Ahead • Looking to build on the notable sales quarter-over-quarter improvements we have achieved in Q2. o While early in Q3, pleased to see growth during the “back-to- school” period. • Pleased with the progress made on improving product margins year-over-year and expect this trend to contin
Slide 13: Second-Quarter Sales
Second-Quarter Sales Total Sales DTC Sales P&O Sales $49.4M $47.7M $37.1M $36.4M $12.3M $11.3M Q2-2023 Q2-2024 Q2-2023 Q2-2024 Q2-2023 Q2-2024 • Strengthened sales in certain core fleece • DTC comparable sales were nearly flat programs as inventory was replenished • Decreased sales to Taiwan due to
Slide 14: Gross Margin
Gross Margin Total DTC 62.7% 61.7% 56.4% 55.5% Q2-2023 Q2-2024 Q2-2023 Q2-2024 • Increased mix of higher-margin licensing royalties (+) • Improved product costing and lower discounting (+) • Lower DTC gross margin (-) • Lower benefits from reversal of inventory provision accrual (-) • Unfavourable F
Slide 15: DTC Gross Margin Bridge
DTC Gross Margin Bridge Improved product costing and lower discounting 230 bps (330) bps 62.7% 61.7% Q2-2023 Product Margin Unfavourable FX, Duty Timing, & Q2-2024 Expansion Release of LY Inventory Provision 100 basis points decline in DTC gross margin PAGE 15
Slide 16: SG&A Expenses
SG&A Expenses $32.3M $31.8M Q2-2023 Q2-2024 • Savings from ongoing cost management initiatives, including lower store occupancy costs • Lower variable selling costs • Partially offset by higher personnel costs as a result of legislative minimum wage increases PAGE 16
Slide 17: Profitability
Profitability Net Income (Loss) Adjusted EBITDA1 ($3.0M) ($3.1M) ($5.3M) ($5.2M) Q2-2023 Q2-2024 Q2-2023 Q2-2024 (in millions of $CAD) (1) Adjusted EBITDA is a non-IFRS measure. See "Appendix" at the end of this presentation. PAGE 17
Slide 18: Balance Sheet & Cash Flow
Balance Sheet & Cash Flow Net Debt(1) $62.4M $50.9M Total liquidity $40.8M ~2.30x Leverage Ratio (1) $44.0M (21% YoY reduction) Q2-2023 Q2-2024 Inventory (in millions of $CAD) (1) Net Debt is a non-IFRS measure defined as long-term debt less cash (net of bank indebtedness). Leverage Ratio is a non-I
Slide 19: Summary
Summary • Optimistic about the trends we experienced this quarter, a notable improvement over the first quarter and solid “back-to- school” growth to start Q3 • Inventory is in a much healthier position as we head into the back half of the year • Marketing enhancements and refining our brand messagi
Slide 20: Appendix
Appendix PAGE 20
Slide 21: Non-IFRS Measures and Industry Metrics
Non-IFRS Measures and Industry Metrics This presentation makes reference to certain non-IFRS measures including certain metrics specific to the industry in which we operate. These measures are not recognized measures under International Financial Reporting Standards as issued by the International Ac
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