Adentra Inc · TSX:ADEN
Adentra — Investor Day (December 2022)
92 slides from Adentra's investor day presentation, Dec 6, 2022
Slide 1: A Company Transformed
A COMPANY TRANSFORMED 2022 Analyst Day and Site Tour December 6, 2022 Calgary Public Library: Ceilings, wall panels, and stairs by ADENTRA
Slide 2: Forward-Looking Statements
3. Longstanding and differentiated partnership with Lowe’s FORWARD-LOOKING STATEMENTS Forward Looking Statements Certain statements in this presentation contain forward-looking information within the meaning of applicable securities laws in Canada. The words “anticipates”, “believes”, “budgets”, “co
Slide 3: Today's Agenda
3. Longstanding and differentiated partnership with Lowe’s Today’s Agenda A Company Transformed Rob Brown - CEO 8:30 am Industry Outlook Chris Fisher - Managing Principal, Ducker Research and Consulting 8:45 am Seizing the Opportunity Rob Brown 9:10 am Coffee break 9:25 am Differentiating Lance Blan
Slide 4: Today's Presenters
Today’s Presenters President & CEO ADENTRA Rob Brown President, Sr. Vice President, Vice President, Vice President Vice President, Sr. Vice President, US ProDealer and President, Corporate US Industrial Hardwoods Canada & CFO Human Resources Acquisitions Home Center Development Drew Dickinson Jason
Slide 5: Creating beautiful spaces where we live, work, and play
Creating beautiful spaces where we live, work, and play From top left: Sacramento Airport - Sacramento, CA; Signal House – Newport Beach, CA; Microsoft Canada Excellence Centre – Vancouver, B.C.; Health Sciences Innovation Building, University 5 of Arizona – Tucson, AZ; Lincolnshire House – Toronto,
Slide 6: A Company Transformed
A COMPANY TRANSFORMED Rob Brown Chief Executive Officer Decorative surfaces by ADENTRA 6
Slide 7: Transformed: By the Numbers
$ Values except market capitalization in USD 2017 2022 (TTM Q3) Sales $800M $2.5B 25% CAGR1 Adj. EBITDA2 $43M $286M +45% CAGR1 Profit per Share (basic) $1.07 $6.35 +40% CAGR TRANSFORMED: Market Capitalization $433M $570M 6% CAGR BY THE NUMBERS Customers 37,000 75,000 Employees 1,100 3,000 Barajas Ma
Slide 8: Transformed: Increased Geography 2017
2017 TRANSFORMED: INCREASED GEOGRAPHY 62 85 / 15 400+ Locations Revenue split Sales Team 8
Slide 9: Transformed: Increased Geography 2022
2022 TRANSFORMED: INCREASED GEOGRAPHY 86 90 / 10 800+ Locations Revenue split Sales Team 9
Slide 10: Transformed: Product Mix
3. Longstanding and differentiated partnership with Lowe’s TRANSFORMED Broader product participation, with more emphasis on specialty 2017 2022 14% doors 16% diversified 9% boards 33% hardwood plywood 6% 21% hardwood plywood doors $0.8B 14% mouldings $2.5B Sales 2% Sales mouldings 10% 23% hardwood l
Slide 11: Transformed: Strengthened Channels to Market
3. Longstanding and differentiated partnership with Lowe’s TRANSFORMED Strengthened channels to market 2017 2022 25% ProDealers 98% Industrial 35,000 75,000+ Customers Customers 60% 2% 15% Home Centers Industrial ProDealers Broader channels to market provide unparalleled access to our customer base
Slide 12: Transformed: Extensive Reach into End Markets
3. Longstanding and differentiated partnership with Lowe’s TRANSFORMED Extensive reach into attractive end markets 2017 2022 40% New Residential 40% Commercial 15% Commercial 62 86 locations locations 53% 7% Other 5% Residential, Repair & Remodel Diversified 40% Repair & Remodel Diversified access t
Slide 13: Valuable, Industry-Recognized Brand Portfolio
TRANSFORMED Valuable, industry-recognized brand portfolio Flagship Brands ADENTRA’s specification selling division Regional Brands ProDealer and Home Center Shared Services Brands Industrial Operating Brands Operating Brands 13
Slide 14: Key Takeaways: A Company Transformed
KEY TAKEAWAYS A COMPANY TRANSFORMED ✓ We have built a North American distributor of architectural products with world-class capabilities ✓ Our diversity by geography, channels to market, and end- markets maximizes opportunity while mitigating risk ✓ Our platform is ideally positioned to support the
Slide 15: Industry Outlook
INDUSTRY OUTLOOK Chris Fisher Managing Principal, Ducker Research and Consulting 15
Slide 16: COVID impacted residential and nonresidential spending differently
The COVID pandemic impacted residential and nonresidential spending differently, leading to a shift from previous year’s performance Historical Construction Spending Recession Indexed 100 = Jan 2002 Residential Construction Spending Non-Residential Construction Spending 300 Residential spending had
Slide 17: Residential spending typically rebounds quickly after recessions
However, residential spending typically rebounds quickly after recessionary periods. Long-term averages support residential spending representing 4 - 7% of total U.S. GDP. Residential Construction Spending Recession Gross Private Domestic Investment in Residential Fixed Assets 100% Since 1950, resid
Slide 18: National Residential Housing Trends
A downward shift in economic momentum from interest rate increases and continued inflationary pressure has been reflected in the recent slowdown in new housing activity National Residential Housing Trends 9.0 250 30 YR Fixed 8.0 Mortgage Rate Res Permits, 7.0 000s, NSA Subprime COVID 200 Mortgage Cr
Slide 19: Multi-family housing alternatives are an important segment
Multi-family housing alternatives are an important segment of the industry, providing increasing supply and addressing gaps in single-family supply/affordability Multifamily Starts Three Month Moving Average Authorized Units - Thousands 1,000 800 600 400 200 0 Jul Sep Nov Jan Mar May Jul Sep Nov Jan
Slide 20: Home improvement and remodeling will remain healthy
Home improvement and remodeling will continue to be healthy in the near term given housing stock scale and a healthy consumer with home improvement experience Housing Stock Homeowner Improvement Spending Forecast (number of housing units, in thousands) ($ Millions) Homeowner Improvement Activity Per
Slide 21: Non-residential growth positive in 2022
Non-residential growth positive in 2022, increasing 6% from 2021. Mix shift away from manufacturing will be favorable for ADENTRA through 2025 Non-residential Spending Forecast Construction PIP ($ Billions) $600,000 $500,000 $400,000 2022 2023 2024 2025 Construction PIP $ Forecast Forecast Forecast
Slide 22: End-market drivers and growth indicators
End-Market drivers and growth indicate a mix of application opportunities across varied construction segments Historic/Forecasted Growth Rate Historic Forecast End Market Secondary Sources 2019 – 2021 CAGR 2022E 2023 – 2027 CAGR NAHB/Dodge/ Single-Family Residential (Starts) 11 - 13% (10 - 13%) 2 -
Slide 23: Construction trends create opportunities for scaled distributors
In addition to cycle changes, construction trends will create further opportunities for scaled distributors to offer value-added products and services Ecommerce, Digitalization Skilled Labor Quality Reduction Value-Add, Prefabrication • Online shopping, education and • Craftsman quality and process
Slide 24: Market Outlook – Key takeaways
Market Outlook – Key takeaways ▪ Overall construction spending will soften in the near term, however opportunities exist in remodeling, nonresidential construction and throughout key markets in the Southern US ▪ This economic cycle is different than previous “housing-led” recession, expect quicker r
Slide 25: Seizing the Opportunity
SEIZING THE OPPORTUNITY Rob Brown Chief Executive Officer Mouldings by ADENTRA 25
Slide 26: Vision
VISION ADENTRA is a world-class distributor of architectural products. ADENTRA is uncompromising in our commitment to be the preferred choice for our valued customers, the best partner for our vendors, and a great place to work for our valued employees. 26
Slide 27: Core Values
CORE VALUES INTEGRITY. Our organization and every employee within are accountable to the highest standard of integrity in all decisions made and actions taken. FAIRNESS. We practice open and honest communications with our stakeholders, we treat everyone with respect and dignity. PEOPLE. We attract,
Slide 28: The ADENTRA Opportunity
The ADENTRA Opportunity 1. SEIZING THE OPPORTUNITY 2. DIFFERENTIATING FOR MARKET SHARE 3. ACCRETIVE GROWTH THROUGH M&A • $43B TAM1 • Superior supply chains • Successful track record • Significant market share • Sticky customer relationships • Acquirer of choice available • Digital customer engagemen
Slide 29: The ADENTRA Opportunity
The ADENTRA Opportunity 1. SEIZING THE OPPORTUNITY 2. DIFFERENTIATING FOR MARKET SHARE 3. ACCRETIVE GROWTH THROUGH M&A • $43B TAM1 • Significant market share available • Uniquely positioned to execute 29 All dollar values are in USD. 1. TAM (Total Addressable Market) developed by Ducker Research, No
Slide 30: A world-class platform of architectural products
Our unique customer-centric A world-class 5,000 insights inform leading product 75,000 solutions platform of SUPPLIERS CUSTOMERS Includes branded products, architectural Access to small & medium sized end markets exclusive rights and Access to our extensive 150,000+ SKU products. demonstrated buying
Slide 31: Demonstrated benefits of scale
GLOBAL SOURCING SALES & MARKETING SPECIFICATION Demonstrated VENDOR RELATIONSHIP TECHNOLOGY STRATEGY & benefits MANAGEMENT SOLUTIONS GOVERNANCE of scale. Our shared core capabilities & support We create ‘sticky’ customer relationships and brand loyalty with 75,000+ home centers, ProDealers and indus
Slide 32: Financial performance has strengthened
Sales Growth Consistent Earnings As we have built 22% 38% Five-year Sales CAGR1 Five-year Profit per Share1,2 CAGR our capabilities, our financial Strong Balance Sheet Dividend Growth performance has 2.6 13% strengthened. Net Debt to Adj. EBITDA after rents1.3 Five-year dividend CAGR (Current quarte
Slide 33: Market Potential for our Transformed Business
Market Potential for our Transformed Business Future Addressable Market Value Future Addressable Market (more products, more value chain exposure, regional expansion) • All building material product categories across all channels and North American regions at the manufacturer level $43B Total Addres
Slide 34: TAM by Customer Channel
TAM by Customer Channel $43B Industrial • Segment includes OEM manufacturers, commercial Home Center millwork shops, specialty dealers/fabricator, and $10B lumber yards Pro Dealer $16B Pro Dealer • Segment includes one/two-step distributors and Industrial millwork wholesalers $17B Thousands of small
Slide 35: TAM by Product Category
TAM by Product Category $43B1 $1,868 Hardwood $3,603 Boards • Strong share position in key $2,206 Hardwood Plywood $946 Composites building materials - plywood, $6,535 Decorative Surfaces composites, lumber • Significant runway for growth in $14,276 Doors value-add categories such as decorative surf
Slide 36: TAM by Region
TAM by Region CANADA ~$5.2B ‘17-’27 CAGR: 1.6% $43B1 ADENTRA Total Addressable Market Sales: $262M Locations: 8 • ADENTRA has multiple brands and business locations in each key region MIDWEST N. EAST ~$7.4B ~$5.5B • Strong market presence, position and ‘17-’27 CAGR: 3.6% ADENTRA ‘17-’27 CAGR: 2.8% A
Slide 37: 'Destination 2026' Sales Target
$800M $3.5B $400M $2.5 B1 $200M ‘Destination 2026’ Sales Target TTM 2022 Sales Market Outlook Organic Growth Acquisitions e2026 Run Rate Sales Strategic initiatives driving above market growth 37 All dollar values are in USD. Please see slide 81 in the “Building Shareholder Value” section for some o
Slide 38: Our ESG Journey & Priorities
OUR ESG JOURNEY & PRIORITIES OUR ESG JOURNEY ADENTRA’s ESG PRIORITIES Engaged external ESG advisor to: • Build environmental and materials stewardship • Conduct market review of ESG • Cultivate healthy workplaces reporting practices • Champion ethics and transparency • Interview internal stakeholder
Slide 39: Key Takeaways: Seizing the Opportunity
KEY TAKEAWAYS SEIZING THE OPPORTUNITY ✓ We have built a world-class, full-scale distribution platform in our industry • Strengthened channels, deep product portfolio, expanded regional presence ✓ Financial capabilities continue to strengthen as we build the business • Consistent sales and earnings g
Slide 40: Operational Excellence
Operational Excellence Lance Blanco SVP Corporate Development Drew Dickinson President – US Industrial Jeff Leys President – US ProDealer and Home Center Decorative surfaces by ADENTRA 40
Slide 41: The ADENTRA Opportunity
The ADENTRA Opportunity 1. SEIZING THE OPPORTUNITY 2. DIFFERENTIATING FOR MARKET SHARE 3. ACCRETIVE GROWTH THROUGH M&A • Superior supply chains • Sticky customer relationships • Digital customer engagement • Home Center advantage 41
Slide 42: Full-Cycle Supply Chain Collaboration
FULL-CYCLE SUPPLY CHAIN COLLABORATION From Global Sourcing to Specification, ADENTRA’s size, scale, and services are our competitive advantages Lance Blanco SVP Corporate Development 42
Slide 43: Our Supply Chain Advantage
Our Supply Chain Advantage Multiple centers of excellence across our supply chain Global Sourcing & Technical Training Vendor Marketing Specification Compliance & Expertise Management In a fragmented industry, ADENTRA’s world-class supply chain management capacity represents a sustainable competitiv
Slide 44: Global Sourcing from over 30 Countries
3. Longstanding and differentiated partnership with Lowe’s Global Sourcing from over 30 Countries Global sourcing is a core competency and a sustainable advantage for ADENTRA Global Sourcing & Technical Training Vendor Marketing Specification Compliance & Expertise Management • One-stop importer tha
Slide 45: Industry-Leading Compliance Program
3. Longstanding and differentiated partnership with Lowe’s Industry-Leading Compliance Program ADENTRA is committed to 100% legally-sourced products Global Sourcing & Technical Training Vendor Marketing Specification Compliance & Expertise Management Environmental Assurance Quality Control Assurance
Slide 46: ADENTRA University
3. Longstanding and differentiated partnership with Lowe’s ADENTRA University Industry-best training program, product and market knowledge development Global Sourcing & Technical Training Vendor Marketing Specification Compliance & Expertise Management +25 Programs In-person & online: • • Manufactur
Slide 47: Our Sales & Marketing Platform Drives Business
3. Longstanding and differentiated partnership with Lowe’s Our Sales & Marketing Platform Drives Business We are directly engaged with our vendors every day with multiple touchpoints Global Sourcing & Technical Training Vendor Marketing Specification Compliance & Expertise Management 75K Customers N
Slide 48: Consistent Vendor Management
Consistent Vendor Management We connect vendors to customers while minimizing vendor-related risks & supply chain disruptions Global Sourcing & Technical Training Vendor Marketing Specification Compliance & Expertise Management Unique, progressive vendor Technical visits to vendors Preferential pric
Slide 49: Echo Wood Reconstituted Veneers
Echo Wood Reconstituted Veneers A strong example of ADENTRA’s supply chain optimization Value-engineered 40% to compete on a global scale Margin Direct technical In-house expertise with our selected marketing & manufacturers specification team An ADENTRA exclusive brand ADENTRA creates vendors, prod
Slide 50: Dedicated Specification Team Connects Portfolio to Architects
Dedicated Specification Team Connects ADENTRA’s Product Portfolio to North American Architects & Designers Global Sourcing & Technical Training Vendor Marketing Specification Compliance & Expertise Management ADENTRA Disrupts the Construction Cycle Schematic Design GC GC Award & Schedule & Construct
Slide 51: Collaboration between specification and sales
Close collaboration between specification and sales to target our largest market opportunities Forecasted commercial and multi-family starts 2022 - 2027 $167B Tracking over $2T of future spend $406B Specification Rep $187B Regional Specification $160B $178B Manager Identified $1B in our $195B $611B
Slide 52: DesignOneSource Targets Architects & Interior Designers
DesignOneSource Directly Targets North American Architects & Interior Designers • Projects are assigned and tracked in our CRM • Specification reps are working early in the development phase of a project • Specification reps present product alternatives and color palettes to architects & designers •
Slide 53: Full Cycle Collaboration
Full Cycle Collaboration Technical Training & Expertise We value engineer the entire supply chain • Key insights match customer needs to global supply options Global Marketing Sourcing & • Specification reps are the eye Compliance forward on trends and product needs. ADENTRA’s integrated supply chai
Slide 54: Key Takeaways: Full-Cycle Supply Chain Collaboration
KEY TAKEAWAYS FULL-CYCLE SUPPLY CHAIN COLLABORATION ✓ ADENTRA has constructed a durable, closed-ended supply chain solution ✓ In a fragmented distribution industry, large capital-intensive suppliers want simplified distribution options ✓ The ADENTRA offering to both customers and vendors is a soluti
Slide 55: Leading the Digital Customer Experience
LEADING THE DIGITAL CUSTOMER EXPERIENCE Drew Dickinson President, US Industrial 55
Slide 56: The Digital Connection Begins
The Digital Connection Begins • Website and landing page is no longer enough • Customers want to do research • Use of Ecommerce sites for research now the standard The Digital • Product / project planning begins here • “Eye Candy” – descriptions, images, examples Customer • Pricing comparisons and i
Slide 57: The Digital Connection Continues
The Digital Connection Continues 24/7 access for full self-service The Digital • Pay invoices (with check or credit card) • Print invoices and account statements Customer • Returns and credit requests Experience • Verify price and cost • Review historical purchases and shipments • Verify shipments a
Slide 58: Digital Customer Experience
DIGITAL CUSTOMER EXPERIENCE Perfect timing to strengthen customer relationships ✓ Early innings – Building products as an industry has been slow to adopt Ecommerce ✓ COVID impact – Pandemic highlighted what is possible, encouraged adoption ✓ Generational shift – All generations now comfortable with
Slide 59: Brand Digital Engagement
Brand Status: ✓ Novo complete ✓ Mid-Am complete ✓ Hardwoods Canada Brand Digital complete ❑ Rugby complete in Engagement 2023 ❑ Hardwoods US built, launching in 2023 Most of ADENTRA’s customers are digitally engaged 59
Slide 60: Our Customers Love Our Ecommerce
Year-to-date 2022: Average Order Size ~+54% Our Gross margin over traditional channels Customers Love Our +5% Ecommerce +70% of customers that transacted online have re-ordered Significant opportunity to capitalize on Ecommerce and differentiate from competitors 60
Slide 61: Ecommerce drives mutual benefits
Clients benefit from: • 24/7 access • Full product visibility • Easy re-order, fast quoting Ecommerce ONLINE ORDERING TRACKING & DELIVERY drives mutual benefits • Omni-channel notification • Same or next-day delivery • Full tracking capabilities Ecommerce increases customer engagement and drives mor
Slide 62: Key Takeaways: Digital Customer Experience
KEY TAKEAWAYS DIGITAL CUSTOMER EXPERIENCE ✓ Customer stickiness – loyalty created through the use of digital tools ✓ Drives efficiencies – for ADENTRA and for our customers ✓ Improved wallet share – Customer visibility of full product basket shown to increase order size ✓ Increases margins – Digital
Slide 63: The Home Center Advantage
THE HOME CENTER ADVANTAGE Embedded partner and turnkey category manager to Lowe’s creates significant barrier to entry Jeff Leys President, US ProDealer and Home Center 63
Slide 64: Turnkey Category Management
Turnkey Category Management + Turnkey category management Individual store Store Marketing & Supply chain, logistics planning service Ecommerce & demand planning Total Customer Performance Management System By managing the ‘store within a store’, we improve the metrics that matter most: Increasing ✓
Slide 65: Individual Store Planning for Lowe's Stores
Individual Store Planning for 670 Lowe’s Stores: based on local market research and store data + Individual store Store Marketing & Supply chain, logistics planning service Ecommerce & demand planning Product selection: Deciding what products are stocked in what stores, including new product introdu
Slide 66: Proprietary Technology Applications Provide Tools
Proprietary Technology Applications Provide Tools Differentiated, best-in-class store service across Lowe’s footprint + Individual store Store Marketing & Supply chain, logistics planning service Ecommerce & demand planning Order process: In-store support: Images: • Utilizes daily transaction • Novo
Slide 67: Complete Management of Lowes.com Virtual Aisle
Complete Management of Lowes.com Virtual Aisle + Individual store Store Marketing & Supply chain, logistics planning service Ecommerce & demand planning Novo’s capabilities: Customer engagement Specifications “A+” content Maintain product content Respond to questions & reviews Create premium marketi
Slide 68: Supply Chain, Logistics, & Demand Planning
Sophisticated Supply Chain, Logistics, & Demand Planning guarantees Lowe’s shelves are stocked and bins are full + Individual store Store Marketing & Supply chain, logistics planning service Ecommerce & demand planning POS data Historical sales trends New market trends Lowe’s job lot quantity Delive
Slide 69: The Home Center Advantage
The Home Center Advantage The right mix of product, just-in-time delivery, with in-store support Shoe Cove mould moulding Colonial MDF casing boards Outside Door corner jambs Shiplap Closet rods Base Treads Newels Wide casing Order Shipping Preparation Shipment Just-in-time In-store Shelf Picking &
Slide 70: What About the ProDealer?
What About the ProDealer? Home center advantage creates opportunity to grow with the pro Less than Container Full Unit Unit Direct Warehouse Orders 70
Slide 71: Key Takeaways: Home Center Advantage
KEY TAKEAWAYS HOME CENTER ADVANTAGE ✓ High retention / stickiness • Novo doesn’t just sell Lowe’s; we are a fully integrated partner charged with running the most profitable aisles in the store • Providing solution-oriented services over a wide product line drives loyalty with Novo’s ProDealer custo
Slide 72: Accretive Growth Through M&A
ACCRETIVE GROWTH THROUGH M&A Dave Hughes SVP Acquisitions Door, mouldings and ceiling panels by ADENTRA 72
Slide 73: The ADENTRA Opportunity
The ADENTRA Opportunity 1. SEIZING THE OPPORTUNITY 2. DIFFERENTIATING FOR MARKET SHARE 3. ACCRETIVE GROWTH THROUGH M&A • Successful track record • Acquirer of choice • Significant synergy capture 73
Slide 74: 'Destination 2026' Financial Targets
$800M $3.5B $400M $2.5B1 $200M ‘Destination 2026’ Financial Targets M&A strategy supports our sales growth TTM 2022 Sales Market Outlook Organic Growth Acquisitions e2026 Run Rate Sales Strategic initiatives driving above market growth All dollar values are in USD. Please see slide 81 in the “Buildi
Slide 75: Demonstrated Growth Through Acquisition
Demonstrated Growth Through Acquisition Track Record – Sales Acquired (US$ millions) EAGLE PLY 670 282 270 74 30 13 70 73 2010 - 2015 2016 2017 2018 2019 2020 August-21 January-22 +$1.4 billion of sales from acquired companies +$750 million of capital deployed ADENTRA’s acquisitions strategy has str
Slide 76: Proven Approach to Building Value through M&A
Proven Approach to Building Value through M&A RESULTS $586 ✓ Growth in key product categories 17% ✓ +300% growth in D&M Sales CAGR ✓ +25% growth in decorative surfaces Mid- term Synergies ✓ +100% growth in hardwood lumber $272 • Bolt-on acquisitions Quick wins” • Cross-selling new products ✓ +75% gr
Slide 77: The ADENTRA M&A Advantage
The ADENTRA M&A Advantage 1. THE SUITOR OF CHOICE 2. INDUSTRY PARTICIPANT WITH SCALE AND BREADTH 3. RISK MITIGATION • Reputation as an acquirer of • Uniquely positioned to • Operations and due diligence choice: permanent owner, understand a seller's business teams draw on deep industry similarities
Slide 78: Acquisition candidates must support strategic objectives
Acquisition candidates must support our strategic objectives OUR CRITERIA Architectural products in adjacent / complimentary categories Primary focus on distribution Accretive, with annual EBITDA between $5M to $100M Complimentary geographic / product fit, capital structure $ Opportunities that meet
Slide 79: Key Takeaways: Accretive Growth Through M&A
KEY TAKEAWAYS ACCRETIVE GROWTH THROUGH M&A ✓ M&A is a core competency supported by an experienced team ✓ We are an acquirer of choice: • Proven track record – transaction execution and post-sale integration • As a permanent owner, favored over private equity • As a growth-focused buyer, favored over
Slide 80: Creating Shareholder Value
CREATING SHAREHOLDER VALUE Faiz Karmally Vice President and CFO Boards and decorative surfaces by ADENTRA 80
Slide 81: 'Destination 2026' Sales Target
$800M $3.5B $400M $2.5 B1 $200M “Destination 2026” Sales Target TTM 2022 Sales Market Outlook Organic Growth Acquisitions e2026 Run Rate Sales • “Market Outlook” impact expected to be near term Key • Market growth and strategic initiatives driving mid single-digit “Organic Growth” assumptions • “Acq
Slide 82: Our Target Financial KPIs
Revenue CAGR Gross Margin1 EBITDA Margin1,2 +8% +20% +10% Our Target Financial KPIs Leverage3 Range Operating Cash flow before changes in working capital Average ROIC4 2-3X $+800 +12% Focused on delivering profitable growth and creating shareholder value 1. “Gross Margin” and “Adj. EBITDA Margin” ar
Slide 83: Responsible Leverage and Significant Liquidity
Responsible Leverage and Significant Liquidity Net Debt / Adj. EBITDA after Rents1 3.0 Major Major Acquisitions Acquisition 2.5 2.6 $200 M 2.0 Q3 2022 Unused borrowing capacity Net Debt/Adjusted EBITDA & cash on hand 1.5 after rents1,2 as at September 30, 2022 1.0 Responsibly managed balance sheet,
Slide 84: 'Destination 2026' Capital Allocation
$800M in Operating Cash Flow before changes in Working Capital $100M Investments in the Business • Maintenance capex & working capital $200M Rent payments • Includes leased facilities “Destination 2026” Acquisitions Capital Allocation • Financed from cash flows and strength of balance sheet • Equity
Slide 85: A Compelling Investment Opportunity
A Compelling Investment Opportunity December TTM In USD$, Millions 2020 Q3 20221 Change • Diversified by product, geography, and customer channel Sales $1,245 $2,520 102% • Significant TAM available Adj. EBITDA1 $98 $286 192% • Superior supply chain Profit Per Share2 $1.32 $6.35 381% • Platform of o
Slide 86: Key Takeaways: Creating Shareholder Value
KEY TAKEAWAYS CREATING SHAREHOLDER VALUE ✓ Strong organic growth combined with an attractive M&A opportunity ✓ Responsibly-managed balance sheet, while generating significant cash flows ✓ Proven ability to allocate capital to generate returns for investors 86
Slide 87: Concluding Remarks
CONCLUDING REMARKS Rob Brown Chief Executive Officer Hardwood lumber provided by ADENTRA 87
Slide 88: Transformed Business is Fully Equipped
✓ SUCCESSFUL BUSINESS ✓ SIGNIFICANT POTENTIAL TO TRANSFORMATON EXPAND OUR MARKET SHARE TRANSFORMED BUSINESS is Fully Equipped ✓ WE HAVE THE CAPABILITIES ✓ OUR FINANCIAL STRENGTHS to Build Value NEEDED TO DRIVE GROWTH BOTH PROVIDE THE RESOURCES ORGANICALLY AND THROUGH M&A WE NEED TO SUCCEED 88
Slide 89: Appendix
APPENDIX 2022 Analyst Day and Site Tour December 6, 2022 Decorative surfaces by ADENTRA 89
Slide 90: Leadership Biographies
Leadership Biographies Lance R. Blanco Robert J. Brown Drew Dickinson David Hughes Senior Vice President, President and President, Senior Vice President, Corporate Development Chief Executive Officer US industrial Acquisitions Lance joined us in July 2010 as Rob joined us in August 2004 as Vice Drew
Slide 91: Leadership Biographies
Leadership Biographies Faiz Karmally Jeff Leys Chris Fisher Vice President & Chief President, Managing Principal & CMO Financial Officer US ProDealer and Home Center Faiz joined us in October 2014 as Jeff serves as President of US Chris serves as managing principal at Ducker, Corporate Controller an
Slide 92: Reconciliations
Reconciliations Reconciliations of Non-IFRS Measures On pages 7, 32, and 85 of this presentation, we refer to certain non-IFRS measures for which a reconciliation has not been previously-provided in the Company’s previous disclosures. Reconciliation for these non-IFRS values are shown below: Reconci