Mattress Firm — Merger or Acquisition (September 2014)
15 slides from Mattress Firm's merger presentation, Sep 4, 2014
Slide 1: Pending Acquisition of Sleep Train
Pending Acquisition of Sleep Train September 4, 2014
Slide 2: Forward Looking Statements and Non-GAAP Information
Forward Looking Statements and Non-GAAP Information This presentation contains forward-looking statements within the meaning of federal securities laws, that are subject to risks and uncertainties. All statements other than statements of historical fact included in this presentation are forward-look
Slide 3: Strategic Rationale
Strategic Rationale National scale synergy opportunities Expand into West Coast strategic markets Fortify Leading Position Acquire high-volume stores and leadership team Enhance financial growth prospects Adding 311 locations from a leading market share retailer with limited overlap Presence in Cali
Slide 4: Transaction Overview
Transaction Overview 3 Key Items Description Purchase Price Total purchase price of approximately $425 million, subject to working capital and other customary adjustments. Mattress Firm will assume certain additional liabilities totaling approximately $15 million o Approximately 90% funded by cash a
Slide 5: Mattress Firm Overview
2010 LTM 14H1 2010 LTM 14H1 2010 LTM 14H1 Mattress Firm Overview 1. Includes franchise locations; as of July 29, 2014. 2. Per internal study completed in August 2014; does not include markets open less than one year or franchise locations. 3. Reflects Adjusted EBITDA; EBITDA for LTM 14Q1 excludes $1
Slide 6: Sleep Train Overview
Sleep Train Overview Diversified Brands 5 #1 West Coast Retailer Market Share Store Unit Growth Sales Growth 2010 2013 #1 >90% of stores in markets with #1 market share(1) 311 Stores 233 300 2010 2013 $313mm $471mm 1. Per internal study completed in August 2014. 77 35 7 5 9 178
Slide 7: Complementary Acquisitions to Expand National Footprint
Complementary Acquisitions to Expand National Footprint 1. Includes franchise locations; as of July 29, 2014. 2. Back to Bed also includes Bedding Experts and Mattress Barn. 3. 6
Slide 8: Market Leading Position as the #1 Mattress Specialty Retailer
Current Pro Forma 3 Top Mattress Specialty Retailers 1 as the #1 Mattress Specialty Retailer in the fragmented retail bedding environment Market Leading Position 7 1. Source: Furniture Today Top 100, May 2014. 2. Reflects sales of the respective retailers divided by the estimated size of the U.S. ma
Slide 9: Pro Forma Company
Pro Forma Company Note: Store count includes franchise locations; as of July 2014. Sales for Mattress Firm as of July 29, 2014. Sales for Back to Bed per Furniture Today and as of December 31, 2013. Sales for Sleep Train per Furniture Today and as of December 31, 2013. 8 + = Stores Sales 1,587 311 2
Slide 10: Significant Synergy Potential
Significant Synergy Potential . 9 Estimated Potential Synergies Cost Revenue Sourcing & Procurement Distribution & Logistics Advertising SG&A Professional Services Other Approximately $20 million of estimated synergies by Year 3 Exclusive and Tertiary Products Multi-Channel / Omni-Channel Sales Stra
Slide 11: Relative Market Share Model: Case Study Houston
Relative Market Share Model 2009 2013 2009 2013 2009 2013 2009 2013 2009 2013 Driving Profitability Model Market Penetration Relative Market Share Incremental Advertising Market Profitability Comp Sales ADV Spend ADV per Capita Store Count Stores per Capita Sales per Store Adj. EBITDA Adj. EBITDA Ma
Slide 12: Market Penetration Highly Correlated to Profitability
Market Penetration Highly Correlated to Profitability $0.41 $0.75 $1.33 $1.58 $0.9mm $1.0mm $1.0mm $1.3mm 4.8% 13.2% 13.7% 19.8% Developmental Leadership Fortress - Recent Acq. Fortress Market Level Adjusted EBITDA1 Sales per Store1 Advertising $ Per Capita1 Note: Based on fiscal year 2013 results,
Slide 13: Proven Track Record of Acquisitions
Proven Track Record of Acquisitions 1 1. Does not include acquisitions prior to 2006. Does not include acquisitions of less than 10 stores. Mattress of Hawaii and Got Sleep?. 40 stores Atlanta, Miami, SW Florida, Tampa 2012 Austin, Dallas, Houston, San Antonio, Las Vegas 36 stores 2007 27 stores Cha
Slide 14: Experienced and Deep Management Team
Years at Sleep Train Years of Relevant Experience Experience Dale Carlsen CEO and President 29 34 Rob Killgore Chief Operating Officer 28 28 Pete DiCorti Chief Financial Officer 6 41 Mike Combest EVP of Operations 24 24 John Haitz EVP of Finance 12 30 Mike Wilson EVP of Marketing 7 30 Paul Grimm Gen
Slide 15: Investment Thesis
Investment Thesis Proven Track Record of Driving Profitability Compelling Industry Dynamics Best-in-Class Specialty Retailer Highly Achievable Growth Plan Experienced and Invested Management Team Long term stability and consistent growth Fragmented industry with no national chain Pent-up demand with
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