School Speciality Inc · OTC:SCOO
School Speciality — School Specialty — Q4 2016 Earnings Presentation
25 slides from School Speciality's earnings presentation, Mar 15, 2017
Slide 1: Fiscal Year 2016 Q4 and Year-End Update, 2017 Outlook
School Specialty. b Fiscal Year 2016 Q4 and Year-End Update 2017 Outlook March 15, 2017
Slide 2: Fiscal Year 2016 - CEO Commentary
Fiscal Year 2016 - CEO Commentary Le / School \” 6 Specialty “We closed out 2016 strong and Im pleased with what our team accomplished. In FY16, we grew revenues by 3%, lowered our SG&A by over 4% while continuing to invest in our business, and generated a $21.4 million improvement in operating inco
Slide 3: Fiscal Year 2016 — Fourth Quarter Financial Review
Fiscal Year 2016 — Fourth Quarter Financial Review 4 School \” 6 Specialty. Revenue of $115.2 millionvs. $105.6 million, up $9.6 million or 9.1%. 5 Both Distribution and Curriculum segment revenue grew YOY in 04, up 10.4% and 2.8% respectively. 5 Q4.2016 Revenue benefited froma53 week, which contrib
Slide 4: Fiscal Year 2016 — Fourth Quarter Revenue Review
Fiscal Year 2016 — Fourth Quarter Revenue Review School \ (| Specialty. 201640 _ 201540 supplies S$ 42,503 $ 39787 Furniture 42,570 35,302 Instructional Solutions 6730 6352 AV Tech 4343 4.846 Agendas 5811052 Freight Revenue 1542 1186 Customer Allowances / Discounts (2,043) (460) Total Distribution R
Slide 5: Fiscal Year 2016 — YTD Financial Review
Fiscal Year 2016 — YTD Financial Review (| School Specialty. Revenue of $656.3 million vs. $637.5 million, up $18.9 million or 3.0%. Both Distribution and Curriculum segment revenue grew YOY, up 1.6% and 10.8% respectively. Momentum building; back-to-back overall revenuegrowth for the first time in
Slide 6: Fiscal Year 2016 — YTD Revenue Review
Fiscal Year 2016 —- YTD Revenue Review School LY (| Specialty. cy2015 Change % Change supplies $272,861 $ 267,158 $ 5,508 2.28 Furniture 163213 169.812 3401 7.58 Instructional Solutions 32.968 32,937 32 OBE AV Tech 18023 22,702 (4,679) =. Agendas 412745612 (4,485) 9.8 Freight Revenue gsea 8,402 182
Slide 7: Consolidated Statements of Operations
‘SCHOOL SPECIALTY. INC. ‘CONSOLIDATED STATEMENTS OF OPERATIONS: (in Thousands. Exent Per Share Amounts) ‘ThreeMonths Ended Three Months Ended December 31,2016 December 26,2015 Consolidated Combined Statement of Operations \ ‘Twelve Months Ended December 31,2016 Le / School Specialty. ‘Twelve Months
Slide 8: Adjusted EBITDA Comparisons
Adjusted EBITDA Comparisons NY Spec elty ‘SCHOOL SPECIALTY, INC. ‘CONSOLIDATED STATEMENTS OF OPERATIONS (a Thousands) Three Months Ended Three Months Ended Twelve Months Ended Twelve Months Ended December 31,2016 _ _December 26,2015 _ __December 31,2016 ___ December 26,2015 amortization, bankruptey-
Slide 9: Balance Sheet Review
School Specialty. Y Balance Sheet Review
Slide 10: Consolidated Balance Sheet Comparison
Consolidated Balance Sheet Comparison ASSETS ‘Coment asses (Ceshand cash aquiaens. ‘Accounts aceivabls, lene alowance fo doubt accounts “Tosa comenseseis Popes, paatend aqupaest, coos Ietsngblestees set Develoomesr costs and other fenestrae aterm evertmentin varonsoistes eftte ‘Toa see Dscember 31,2
Slide 11: Balance Sheet Review - Working Capital
Balance Sheet Review - Working Capital ( School Specialty. Accounts ecw 5 eS HLS SDS BME S$ 7S BSS TESS mB SimEs mars iL Ss mE Invemodes 5 ma5 85 S05 ms $ Im7 S MOS ua7 S iBT S$ MES BOS 2S 7S Pandaceuerdnearetams $ 75 03 $ MS 5 Bl § MSS BSS 1855 Bs $ 2S USS Ss DB ‘Accounts Paya 5 B85 BSS Us 5 Si $ a
Slide 12: Balance Sheet Review - Debt
Balance Sheet Review - Debt 4 School Specialty. 2 lrt—“‘iéiCCOt*éststs*s*s*sCitit—CNW Cash and cash equivalents ABLFacility, maturing in 2019 Term Loan, maturing in 2019 Total 1st Lien Debt Deferred Cash Payment Obligations Total Debt Net Debt (Total Debt - Cash and CE) Equity Market Capitalization
Slide 13: Free Cash Flow Analysis
Free Cash Flow Analysis ( School Specialty. ee 2016 Comments FY16 Adjusted EBITDA improvement of $6.1 million or 13.5%. Adjusted EBITDA $ 51109 S. 45,037 O_ FY16 capex increased YOY by $3.0 million whilePD investment Capex (11,816) (8.829) decreased by $2.7 million. FY16 capex and product developmen
Slide 14: 2016 Income Taxes
Fiscal 2016 - Te School sea axes LY A Speckaity © Fiscal2016 tax bene! ‘of $36k resulted inan effecti \come taxrate of -0.2% 5 Theeffective income tax rate is lower than the statutory rate due to the utilization of deferred tax assets in the period, which sheltered all of the Companys financial stat
Slide 15: 2016 Results Versus Recent Guidance
Fiscal 2016 Results Versus Recent Guidance ( School Specialty. Revenue $637.5 Growth of 2.1% - 2.3% expected . Up 3%, above expectations Gross Margin % 36.4% Anticipated to show 20-40 bps improvement . Up 20 bps, within range of expectations SG&A (excl. D&A) $218.8 Expected to be down 2.5% Down 1.1%
Slide 16: Fiscal 2017 Key Objectives
yy School Specialty. Fiscal 2017 Key Objectives
Slide 17: FY17 Key Objectives: Refinance Term Debt, Build Momentum
Refinance Term Debt and Address Shareholder Liqui Build Momentum FY17 Key Objectives N ( Spec elty ity Based on improved financial performance and favorable market conditions, we are working to refinance LT debt and lower cost of capital. Goal isto structure new debt ina manner that provides flexibi
Slide 18: FY17 Key Objectives (cont.)
FY17 Key Objectives (cont.) \ ( Spec elty = Continue to Focus on Achieving Balanced Growth ‘Supplies category strengthened in FY16 due to new sales leadership and execution, and increased emphasis on domain expertise. Within Distribution segment, continued emphasis on Early Learning, Art, Physical E
Slide 19: Team-Based Selling — Our Vision for the Future
Team-Based Selling— Our Vision for the Future Ny achoot pecialty. Team Sell Safety Early Asymbiotic relationship across categories & 2 sales teams to leverage brand and product Learning solution strengths and success to increase ‘account penetration and overall market OneForce (CRM) share as One com
Slide 20: Leverage and Promote our Proprietary Brands
Leverage and Promote our Proprietary Brands Le / School MB Snecialty Abilitations}ie- <Jpmnrme cuasnnon ‘CLASSROOM iSelect ae HialRowl A ay > | SO PGS ion cpo) PREMIER Educational @ Technology | Powerful and innovative industry brands that our customers know and trust
Slide 21: Fiscal 2017 Guidance
Y, School Specialty. Fiscal 2017 Guidance
Slide 22: 2017 Fiscal Guidance
Fiscal 2017 Guid acho! isca uldance \ b gpeciaity FY 16 Actual FY 2017 Guidance Revenue $656.3 Revenue growth expected to be in the range of 2.1% - 2.8% approximately $670M - $675M |G (Excl. PD Amort.) % 37.7% —_GM% (excl. PD amortization) anticipated to decline 110-140 bps based on mix and higher e
Slide 23: 2017 Outlook Reconciliation to Non-GAAP
Fiscal 2017 Outlook Reconciliation to Non-GAAP NY School \” 6 Specialty. The Company’s adjusted EBITDA and free cash outlook for FY17 are non-GAAP measures. Reconciliations of these non-GAAP measures to the nearest GAAP financial measures are presented in the following tables: Low End of High End of
Slide 24: Safe Harbor Statement / Non-GAAP Financial Information
Safe Harbor Statement/ i ‘ . School Non-GAAP Financial Information ry 4 Specialty. 24 Safe Harbor Statement ‘This presentation contains statements about School Specialty’s fulure financial condition, results of operations, expectations, plans, or prospects, including the Information underthe heading
Slide 25: Investor Contacts
OF scroa1. Investor Contacts: Ryan M. Bohr EVP & Chief Financial Officer 920-882-5868 [email protected] Glenn Wiener Investor Relations 212-786-6011 [email protected]