Step One Clothing Limited · ASX:STP
Step One Clothing — FY2023 Earnings Presentation
34 slides from Step One Clothing's earnings presentation, Aug 24, 2023
Slide 1: FY23 Results Presentation
For personal use only 24 AUGUST 2023 Greg Taylor, CEO and Founder Nigel Underwood, CFO 1
Slide 2: Agenda
For personal use only 01 FY23 Results Highlights 02 FY23 Results Overview 03 FY23 Financial Summary 04 Market Context and Strategy 05 Outlook 06 Questions 2
Slide 3: FY23 Results Highlights
FY23 Results Highlights Profitable with a strong balance sheet For personal use only Revenue Gross Margin Dividend FSC® Certification $65.2m 80.7% 5 cents per share FSC® C183245 Down 9.7% vs pcp Down 1.3% vs pcp Confidence in End-to-end supply our future chain certification EBITDA Cash Average order
Slide 4: FY23 Results Overview
For personal use only 4
Slide 5: FY23 Operational Highlights
FY23 Operational Highlights Making better use of what we have For personal use only PRODUCT MARKETING PROCESSES / CAPABILITY • Introduction of new core • Channel expansion, • First Australian Clothing colour range for Men and including partnership with company with FSC® certification (FSC® C183245)
Slide 6: Our Markets
Our Markets A tailored strategy for each region For personal use only AUSTRALIA UK USA Focus areas: Focus areas: Focus areas: • Clear messaging 'what problem • Back to basics by centralising • Appointment of local agency does Step One solve' in all marketing to reduce cost and to manage marketing co
Slide 7: Step One for Women
Step One for Women Expanding our Women specific product range For personal use only • Introduction of the Women’s line in January 2022 resulted in our addressable market doubling in size • Moving forward we have sought and received feedback on expanding our product lines and enhancing customer choic
Slide 8: Step One for Men
Step One for Men Our product solves a problem For personal use only • Continued attention to our Men’s product offering, which makes up 89% of sales. We reduced our colour release cadence, but we still have fun naming them • Something for everyone with a sizes ranging from XS to 6XL, styles and of c
Slide 9: Strong Online Engagement
Strong Online Engagement High conversion rates and continued customer database growth For personal use only WEBSITE TRAFFIC AVERAGE CONVERSION RATE CUSTOMER DATABASE GROWTH 6 months, M, excl Amazon 6 months, % excl Amazon 6 months, #’000, excl Amazon 9.4 7.7 120 1,358 7.1 7.0 9.3% 137 65% 7.6% 8.1%
Slide 10: Value proposition remains strong
Value proposition remains strong AOQ has increased indicating customer value proposition remains with customers who For personal use only know the product AVERAGE QUANTITY PER AVERAGE REVENUE PER ITEM CUSTOMER MIX1 ORDER (AOQ) (PRICE) 6 months, #/order, excl Amazon 6 months, #/order, excl Amazon 6 m
Slide 11: Importance of DTC model
Importance of DTC model Driving brand awareness while continuing to engage with loyal following For personal use only Marketing costs are not locked in to allow a pivot when required MARKETING STRATEGY MARKETING CHANNELS NEW EXISTING CUSTOMER CUSTOMER TV AND PR (awareness) Awareness and Life Engagin
Slide 12: FY23 Financial Summary
es —_ Ajuo asn jeuo Jed JO4
Slide 13: Financial Highlights
Financial Highlights Strong revenue and attractive gross profit margins in a difficult market For personal use only SALES REVENUE GROSS PROFIT PROFORMA EBITDA 1 6 months, $M 6 months, $M/% 6 months, $M/% 38.1 10.0 30.0% 35.9 26.9% 34.1 1.4 34.1 1.2 9.0 2.1 25.0% 29.3 8.0 27.6 11.0 19.5% 20.8% 10.7 1
Slide 14: Strong Operational Metrics
Strong Operational Metrics Strong returning customer order rates demonstrates trust in our product For personal use only CUSTOMER ORDERS1 AVERAGE ORDER VALUE (AOV)2 CUSTOMER MIX3 6 months, #‘000, excl Amazon 6 months, $ per Order, excl Amazon 6 months, #/order, excl Amazon 90.3 88.5 488 84.5 457 78.
Slide 15: Strong Operational Metrics: Advertising and Acquisition Cost
Strong Operational Metrics Marketing and advertising key to growing the business For personal use only ADVERTISING1,2 COST TO ACQUIRE CUSTOMERS1,2,3,4 6 months, $M/% of Revenue 6 months, $ per customer order, excluding Amazon 56.8% 40.0 60.0% 50.3% 35.0 50.0% 30.0 40.8% 33.2% 39.2% 38.7% 36.3% 40.0%
Slide 16: Income Statement
Income Statement For personal use only FY23 FY22 1 Movement $'000 $'000 $'000 % COMMENTARY Australia 43,006 46,596 (3,590) -7.7% UK 20,367 22,044 (1,678) -7.6% USA 1,811 3,547 (1,736) -48.9% • Revenue declined 9.7% on pcp Revenue 65,184 72,187 (7,003) -9.7% Cost of sales (12,580) (13,014) 434 -3.3%
Slide 17: Balance Sheet
Balance Sheet As at As at For personal use only Variance 30 June 2023 30 June 2022 $'000 $'000 $'000 % ASSETS Current Assets COMMENTARY Cash and cash equivalents 38,313 34,104 4,209 12.3% Trade and other receivables 619 80 539 673.8% Inventories 23,326 25,383 (2,057) -8.1% • Strong cash of $38.3m wi
Slide 18: Cash Flow Statement
Cash Flow Statement For personal use only FY23 FY22 Variance $'000 $'000 $'000 % COMMENTARY COMMENTARY Cash flows from operating activities Receipts from customers (inclusive of GST/VAT) 73,288 80,204 (6,916) -9.4% Payments to suppliers and employees (inclusive • Cash receipts reduced in line of GST
Slide 19: Market Context and Strategy
For personal use only 19
Slide 20: Strategy: Global growth opportunity
Strategy Global growth opportunity For personal use only PRODUCT MARKET SIZE1 CAPITAL LIGHT PARTNERSHIPS ADJACENCIES Every person needs Low capital invested Engage in partnerships Natural adjacencies to underwear • Ownership of Brand, • Grow brand presence on men’s underwear designs, and established
Slide 21: Business Model
Business Model Step One is built on an innovative product and customer engagement model For personal use only with a strong ESG focus 1. PRODUCT 4. ESG FOCUS Functional Product Features PRODUCT ESG Transparent production process • UltraGlyde™ panels • FSC® certification of supply chain • Elastic 3D
Slide 22: Sustainable and Ethical Supply chain
Sustainable and Ethical Supply chain Our ESG credentials are baked into our entire product lifecycle, from inception to delivery For personal use only Step One is the first Australian clothing label to be certified by the FSC® FABRIC OTHER GARMENT STEP ONE RAW MATERIALS MANUFACTURING MANUFACTURING M
Slide 23: Outlook
For personal use only 23
Slide 24: Looking forward
Looking forward Step One will seek profitable growth For personal use only Profitable growth Expanding the customer Expanding our range funnel Investing in capability and Continuous improvement in Expanding sales channels product innovation customer experience and marketplaces 24
Slide 25: Thank You! Q+A
Real people wearing Step One… Thank You! Q+A Browse our product range on For personal use only www.stepone.life while we are talking 4.7 14,624 reviews1 4.5 20,899 reviews1 1. Customer reviews taken from respective websites as at 17 August 2023. 25
Slide 26: Appendix
APPENDIX: Ajuo asn yeuosied 10-5
Slide 27: Product Features
Product Features Step One underwear is design focused – with UltraGlydeTM panels, comfort pouches, and For personal use only comfortable organically grown Bamboo – it has revolutionised the underwear market for all genders BAMBOO FABRIC • Wicks away sweat and has excellent breathing qualities SOFT A
Slide 28: A Brief History of Step One
A Brief brief history History of Step One STEP ONE Founder-led business with highly scalable model & strong track record of growth For personal use only STEP ONE IS BORN PRODUCTION SCALE + HELLO UK! HELLO US! WOMEN’S FSC ® Idea, Product Dev GROWS COMPOSTABLE UK market testing Following a LAUNCH 1st
Slide 29: Flexible Production Cycle
Flexible Production Cycle A highly flexible production cycle which can be managed to meet demand For personal use only Delays in global export logistics are affecting shipping, Production facilities in China and Vietnam: offloading & transfer to • Maintain flexibility across production cycle warehou
Slide 30: Local Distribution
Local Distribution Local warehousing and fulfilment for prompt customer delivery For personal use only • Product is warehoused in each country with 3PLs in Australia East Coast, UK East Coast & USA West Coast • 3PLs manage all inventory & logistics in each country o Receive product from the port of
Slide 31: Proforma Income Statement
Proforma Income Statement For personal use only FY20 FY21 FY22 FY23 $’000 1H20 2H20 1H21 2H21 1H22 2H22 1H23 2H23 Australia 9,304 11,943 23,359 17,309 25,601 20,995 24,113 18,893 COMMENTARY UK 0 1,000 10,726 10,323 11,031 11,013 10,619 9,748 USA 0 0 0 0 1,444 2,103 1,161 650 Revenue 9,304 12,943 34,
Slide 32: Proforma Adjustments
Proforma Adjustments For personal use only FY20 FY21 FY22 FY23 $’000 1H20 2H20 1H21 2H21 1H22 2H22 1H23 2H23 COMMENTARY Statutory NPAT / (NLAT) 1,948 1,650 4,564 (4,682) (3,816) 813 5,275 3,341 • No proforma adjustments Less Costs made in FY23 - share based payments 0 133 2,967 4,900 6,076 0 0 0 - I
Slide 33: Retained Earnings and Dividends
Retained Earnings and Dividends For personal use only $'000 Pre-IPO Post-IPO Total Proforma COMMENTARY Proforma Retained Earnings 13,360 13,360 • The dividend will be paid Proforma adjustment for PSU which did not (13,770) from post IPO retained Share-based payments treatment earnings Proforma adjus
Slide 34: Important Notice
Important Notice For personal use only The material in this presentation has been prepared by Step One Clothing Limited (ASX: STP) (“Step One” or the “Company") and is general background information about Step One’s activities current as at the date of this presentation. The information is given in