School Speciality Inc · OTC:SCOO
School Speciality — School Specialty — Q2 FY2015 Earnings Presentation
32 slides from School Speciality's earnings presentation, Dec 4, 2014
Slide 1: Fiscal 2015 Second Quarter and Six Month Results Update
\ oe School Specialty, Inc. Fiscal 2015 Second Quarter and Six Month Results Update December 4, 2014
Slide 2: About School Specialty - Our Business
About School Specialty - Our Business Business Summary Business Segment Overview A leading distributor of supplies, furniture, technology products, Distribution supplemental learning products and curriculum solutions to the ‘education marketplace =Founded in 1959 and headquartered in Greenville, WI
Slide 3: About School Specialty — Our Diverse Assortment & Offering
About School Specialty — Our Diverse Assortment & Offering We offer educators and those responsible for purchasing for education, the widest assortment of products within our target markets and product categories. We continuously assemble products and solutions that help teachers teach and advance s
Slide 4: About School Specialty - Key Competitive Advantages
About School Specialty - Key Competitive Advantages = For the past 18 months, we have embarked on an aggressive tumaround plan to better service our customers and generate long-term sustainable value for ‘our shareholders. Through enhancements in operations and service functions, new innovation in o
Slide 5: Fiscal 2015 Six Month Financial Highlights
Fiscal 2015 Six Month Financial Highlights The first half of School Specialty’s Fiscal Year encapsulates the Company's core back-to-school shipping season. The Company's peak shipping weeks fall in the end of the 15 Quarter/beginning of the 2" Quarter and therefore, year-over-year comparisons of eit
Slide 6: Fiscal 2015 Six Month Financial Highlights — Distribution Business Review
Fiscal 2015 Six Month Financial Highlights — Distribution Business Review The first half of School Specialty’s Fiscal Year encapsulates the Company's core back-to-school shipping season. The Company's peak shipping weeks fall in the end of the 15 Quarter/beginning of the 2" Quarter and therefore, ye
Slide 7: Fiscal 2015 Six Month Financial Highlights — Curriculum Business Review
Fiscal 2015 Six Month Financial Highlights — Curriculum Business Review The first half of School Specialty’s Fiscal Year encapsulates the Company's core back-to-school shipping season. The Company's peak shipping weeks fall in the end of the 15 Quarter/beginning of the 2"? Quarter and therefore, yea
Slide 8: Consolidated Combined Statement of Operations
Consolidated Combined Statement of Operations ‘SCHOOL SPECIALTY, INC. (CONS OLD ATED COMBINED STATEMENTS OF OPERATIONS a Thousands, Except Per Share Amounts) ‘Uneusites / Non-GAAP Predecessor Now-GAar Successor Compny Successor Company Company Combined ‘Taree Months Ended Three Months Ended SixMonth
Slide 9: Adjusted EBITDA Comparisons
Adjusted EBITDA Comparisons SCHOOL SPECIALTY, INC. CONSOLIDATED COMBINED STATEMENTS OF OPERATIONS: (a Thousands, Except Per Share Amounts) Unaudited / Non-GAAP Non-GAAP Successor Company ‘Successor Company Combined Three Months Ended ThreeMonths Ended Six Months Ended Six Months Ended October 25,201
Slide 10: FY15 Business Update & Corporate Priorities
FY15 Business Update & Corporate Priorities
Slide 11: Fiscal 2015 Update — Key Focus Areas and Achievements
Fiscal 2015 Update — Key Focus Areas and Achievements SS O Successful Realignment of Nationwide Sales Force O_ Distribution Center Consolidation and Optimization 0 SKU Rationalization and Improvements in Inventory Management 0 Rightsizing and Aligning the Organization to Drive Efficiencies and Botto
Slide 12: Successful Realignment of Nationwide Sales Force
Successful Realignment of Nationwide Sales Force Implementation of an inside/outside sales coverage model New alignment broken out by territory and product category Designed to capitalize on SSI's key competitive differentiators — assortment and service Outside Sales Territory and organization redes
Slide 13: Distribution Center Consolidation and Optimization
Distribution Center Consolidation and Optimization F14/ FY15 Actions & Accomplishments Closed Fresno, CA and Salina, KS facilities Consolidated inventory to Mansfield, OH and Greenville, WI Mansfield set up as primary distribution center Greenville configured for peak-season support and e-tail/retai
Slide 14: SKU Rationalization and Improvements in Inventory Management
SKU Rationalization and Improvements in Inventory Management Actions Driving Tangible Results Warehouse consolidation continues to drive inventory reduction Ongoing SKU rationalization also driving inventory down; continued focus on working capital efficiency Approximately 15,000 SKU's removed over
Slide 15: Rightsizing and Aligning the Organization to Drive Efficiencies
Rightsizing and Aligning the Organization to Drive Efficiencies and Bottom-Line Performance Key Initiatives to Right size and Align for the Future Creation of one leadership and support structure with multiple product segments Scaled and more efficient Distribution Center alignment and new sales cov
Slide 16: Changes in Executive Leadership Structure
Changes in Executive Leadership Structure The New Leadership Team of School Specialty Joseph Yorio appointed President and Chief Executive Officer in April 2014 Ryan Bohr appointed EVP and Chief Financial Officer in November 2014 Todd Shaw promoted to EVP Operations in December 2014 Company in advan
Slide 17: FY15 Near-Term Corporate Priorities
FY15 Near-Term Corporate Priorities Key Elements of the Turnaround Plan Operations Continue to drive efficiencies through new design layout, machinery & equipmentinvestments and enhancementsto warehouse management and control operating system ‘Complete the analysis ofthe merits ofa 3PL DC option on
Slide 18: FY15 Near-Term Corporate Priorities (Cont'd)
FY15 Near-Term Corporate Priorities (Cont'd) Key Elements of the Turnaround Plan and Positioning for the Future Q Sales 2 Newsales coverage modelimplemented in 1H15, broken down by region and category with product specialiststo support and drive revenues J Increasedfacus on sales force trainingto se
Slide 19: Balance Sheet Review
School Specialty. Y, Balance Sheet Review
Slide 20: Balance Sheet Review
Balance Sheet Review Key Highlights as of October 26, 2014 = Outstanding ABL facility balance was $9.3 milion vs. $10.6 million as of April 26, 2014 = Have repaidin full in November 2014 = Outstanding gross balance on Term Loan Credit Agreement was $142.7 million vs. $143.9 million as of April 26, 2
Slide 21: Consolidated Balance Sheet Comparison
Consolidated Balance Sheet Comparison SCHOOL SPECIALTY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (hn Thousands, Except Share Data) Successor Company October 25,2014 April 26,2014 October 26, 2013 ASSETS Current assets: Cash and cash equivalents s $ 9008S 10,671 Accounts receivable, les
Slide 22: Consolidated Balance Sheet Comparison (Cont’d)
Consolidated Balance Sheet Comparison (Cont’d) SCHOOL SPECIALTY, ‘CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Gn Thousands, Except Share Data) Successor Company Octobe 14 April 26,2014 October 26,2013 LIABILITIES AND STOCKHOLDERS’ EQUITY (Cunent labilites Cunent maturtiss -long-tem debt s 5 2
Slide 23: Working Capital Analysis
Working Capital Analysis 4Q14__Y.OYGrange 1014 change JAccounts receivable, net ss73 $560,313) S889 SENS SBT S138 SISB (S31) S222 S180 (S42) lnventories se7 S732 S13S) «SEAS «SOB BDS Ss STDKG S187 SAB. Ser? S701 824 Prepaid expenses and other current assets sins S137 833 sz9 S180 (S11.9) «S287 = 819
Slide 24: Direct Cash Flow Analysis
Direct Cash Flow Analysis Combined Six Months Ended Six Months Ended October 25, 2014 Adjusted EBITDA, Capex Product development Proceeds from asset sales Other Change in working capital Unleveraged free cash flow Cash interest Taxes Leveraged free cash flow Reconciliation to GAAP cash flo) Net cash
Slide 25: Financial Outlook
Financial Outlook Market Outlook Investment Considerations
Slide 26: Fiscal 2015 Financial Outlook
Fiscal 2015 Financial Outlook TTT TTT TT TT Updated Guidance for FY15 1 Management reiterated its FY15 Adjusted EBITDA projection of $48 - $54 million 1 FYA46 revenues now expected to be $625 - $640 million Company expects to realize additional savings through Process Improvement Programs and corpor
Slide 27: Market Dynamics Present Compelling Growth Opportunities
Market Dynamics Present Compelling Growth Opportunities SE Education Market Conditions Improving Prek-12 Enrollment (2007-2022) Nation's schools are expected to enter a period of sustained (Gtudentsin we enrollment growth of nearly 3 million preK-12 students from 2014 to milions) 2022 State budgets
Slide 28: Anticipated Growth in Addressable Curriculum Market
Anticipated Growth in Addressable Curriculum Market Curriculum Market Dyna ics = Common Core State Standards identifying weaknesses in student performance, driving increased spend on supplemental curriculum = 43 states have adopted the Common Core State Standards ‘= Curriculum adoptions have been de
Slide 29: Turnaround Plan in Year 2: Significant Opportunities to Drive Revenues, Income and Cash Flow
Turnaround Plan in Year 2: Significant Opportunities to Drive Revenues, Income and Cash Flow Positioning School Specialty for the Future — Revenue Growth Positioning School Specialty for the Future — Operating Expenses =Product innovation/assortment to drive consumable supplies category Pent up dema
Slide 30: Investment Considerations
Investment Considerations Business Stabilization Post- Bankruptcy with Opportunities for Growth Positive Trends in Education End Markets Strang Custonler Resen and One of the Largest Nationwide Reece Distribution Networks for Long-Term Relationships reitones z School Opportunities to Penetrate New &
Slide 31: Safe Harbor Statement/Non-GAAP Financial Information
Safe Harbor Statement/Non-GAAP Financial Information ‘Safe Harbor Statement ‘This presentation contains statements about School Specialty’s future financial conditions, results of operations, expectations, plans, orprospects, including the information under the heading, “Fiscal 2015 Financial Outloo
Slide 32: Investor Contacts
Investor Contacts: Ryan M. Bohr EVP & Chief Financial Officer 920-882-5868 Ryan.bohr@schoolspecialty.com Glenn Wiener Investor Relations 920.243.5392 IR@schoolspecialty.com OG scroa1.