Duluth Holdings Inc. · NASDAQ:DLTH
Duluth — Investor Presentation (December 2016)
31 slides from Duluth's investor presentation, Dec 13, 2016
Slide 1: Investor Presentation 3Q 2016
Investor Presentation 3Q 2016 December 8, 2016
Slide 2: Forward-Looking Statements
Forward-Looking Statements ss Sie This presentation dated December 8, 2016 includes “forwardooking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts included in this presentation, including statements con
Slide 3: One Tough Fire Hose: Son of a Work Pants
ONE TOUGH le FIRE HOSE: SON OF A... } WORK PANTS
Slide 4: The Modern, Self-Reliant American Lifestyle
The Modern, Self-Reliant American Lifestyle Men and women who are hands-on, value a job well done and are often outdoors for work and hobbies December 8,2016
Slide 5: Company history and milestones
lnvents The Estabishes frst introduces pens firststorein Opens trtouletin Opens Ankeny, pgependence, Bucket Boss headquarters a heroicalyiough Mount Horeb, Wi Belevile, Wi Wand Oshkosh, 10 ana King of underthe refurbished dredge yetsonere Wistores MO and Kin company name _bargein Duh Hoset workwear
Slide 6: Only available at Duluth Trading - complete distribution control of our brand
Only available at Duluth Trading - complete distribution control of our brand Retail © Owned Distribution Center © 3 PL Distribution Centers December 8, 2016 Call Center Retail Stores
Slide 7: Continuous year-over-year growth every quarter, without exception
Continuous year-over-year growth every quarter, without exception = Continuous net sales ig TTM Net Sales : ul $0 sannn HHH DeantH growth and profitability: +29% Net Sales CAGR from CY2009-FY2015 +47% Operating Income CAGR from CY2009-FY2015
Slide 8: Investment Highlights
\ WITH THE ARMAGH Investment Highlights
Slide 9: Differentiated, Everyday Lifestyle Brand
. N : ‘ y, Differentiated, Everyday Lifestyle Brand Tough enoughfor work yet comfortable enough for everyday casual wear Customer Profes: = Create personal connections with our customers who lead the Modern, Self-Reliant American Lifestyle 100% = Workwear heritage is the foundation of our authentic
Slide 10: Nationwide Customer Base
Nationwide C U.S. Population aoe December 8, 2016 v Nationwide customer base aligned geographically with U.S. population v Unique ability to know where our customers are through our direct sales channel Top Three Markets #1~= California #2 Texas #3 > New York
Slide 11: Omnichannel Presence with Distribution Control
hanes Be Presence with Distrib. Direct Segment once e-Commerce (81%) Catalog (199%) Y Presentour brand in a consistent manner v Implementcontrolled pricing strategy v Own the relationship with our customers v Capture the full margin of our products v Reduce logistics complexities and costs UU LUT Ff
Slide 12: Innovative products solving customer problems
[ “Thereare a whole lotta legs, torsos, feet and crotches out there counting onus” | Buck Naked™ Underwear Crouch Gusset® Pants DuluthFlex® Fire Hose® Pants f yg IS . Soggy and restrictive Restrictive pants in sensitive Pants that constrict movement underwear areas K | Rouc ‘ Additional fabric lets
Slide 13: Distinctive Marketing
istinctive Ma | Gives our products anidentity and enhances our brand = Makes shopping for our products fun with attention-grabbing advertisements that are humorous, irreverent and quirky = National advertising campaigns feature characters such as our Giant Angry Beaver, Buck Naked™ Guy and Grab-Happ
Slide 14: Outstanding and Engaging Customer Experience
Outstanding san Engaging Customer Experience Treating our customers like next-door neighbors creates loyalty and drives repeat purchases = Seamless, consistent omnichannel brand experience that makes shopping fun and hassle-free = Content-rich, user-friendly website designed to provide an enjoyable,
Slide 15: Growth Strategy
/ DRY ON THE FLY’ PANTS & SHORT Growth Strategy
Slide 16: Growth Strategies
Growth Strategies December 8, 2016 3 Grow Women’s Business 4 Broaden Assortmentin SelectMen’s Product Categories
Slide 17: Brand awareness and customer satisfaction versus peers
74% 66% 60% 59% 58% L L | i i DBESEH | cerpart® Gombe LLBean TERRY Cobalt -axns ene Cate ABoue TY aS 94% 92% LLBean Licata GB VANPSENDO = Purchased = Aware but Never Purchased Chol carnartt ‘Source: Ri Clothing / Apparel Survey and Duluth Internal Panel, July 2016. (1) As demonstrated by a score 016
Slide 18: Existing stores profitable in both metropolitan and rural locations
Existing stores profitable in both metropolitan and rural locations across muttiple markets Identified markets with ~100 locations that have attractive customer and population density metrics High concentration of existing Duluth Trading customers and potential customers that fit our brand demograph
Slide 19: Flexible Store Development Strategy
Flexible Store Development Strategy
Slide 20: Expanding Retail Footprint
Expanding Retail Footprint Retail stores designedto bring our brand to life with engaging and entertaining elements oat December 8, 2016 Mt. Horeb, Wi (2010) Belleville, WI (Outlet) (2012) Port Washington, Wi (2012) Bloomington, MN (2013) Duluth, MN (2014) Fridley, MN (2014) ‘Ankeny, IA (2015) Oshko
Slide 21: Upcoming store openings
Noblesville, IN (1QFY17) Burlington, MA (1QFY17) Warwick, RI (1QFY17) West Chester, OH (1QFY17) a
Slide 22: Grow Women's Business
= 50% CAGR from CY2012-FY2015 to 20% of Net Sales = Women have lower awareness of our brand relative to men but report high levels of satisfaction once they have tried our products = Continue to grow through customer acquisition = Continue to leverage all media channels and increase marketing spend
Slide 23: Broaden assortment in high potential categories
Broaden assortment in categories that exhibit high potential with our Modern, Self-Reliant American Lifestyle = Extend core products through color, fabric and size = Increase penetration in spring and transitional product (rain, mid-weight jackets, etc.) = Continue to introduce products that expand
Slide 24: Financial Review
Financial Review
Slide 25: Financials: net sales, adjusted EBITDA, gross profit, net income
(Sh miles) im Direct 236.67 Rel gsc . $231.9 $266.3 2013 2015 Adjusted EBITDA (Sh miles) $17.6 2013 Margin 10.8% ULUT YY (sissies onstrates mets omenoyee sock avarsanstockcmoensain ners (2) Adjusted fore 40% taxrate for comparabiy purposes. Excudesnetincome trbutable to noncontoing terest TRADING Fi
Slide 26: Nine-month financial results
(Sin mtions) 4 ___ 3% 3, 5 wea raat $1658 Ferre ce | see | 9 mos. 2015 9 mos. 2016 razors) frais Adjusted EBITDA” (Sin milions) 48. 8h 9 mos. 2015 9 mos. 2016 (117112015) (10/30/2016) Margin 8.5% 8.2% Gross Profit (Sin mitions) ir $04.7 9 mos. 2015 9 mos. 2016 (11712018) (10/30/2016) Margin 57.8% 58
Slide 27: Balance Sheet and Liquidity
Sheet and Liqui As of Commentary (S in millions) 30-Oct-16 Cash $ 02 = Strong free cash flow generation with ability to fund organic growth Debt Line of Credit 13.2 = High conversion of EBITDAto cash flow Term Loan 07 other Dest 3 + = Fiscal 2016 expected capital expenditures of $25 million to $26 T
Slide 28: Large, Addressable Market Opportunity and investment highlights
Large, Addressable Market Opportunity Differentiated, Everyday Lifestyle Brand with Attractive, Loyal Customer Base Omnichannel Presence with Complete Distribution Control Demonstrated Track Record of Growth and Profitability Proven Strategy for Long-Term Growth Seasoned Management Team Driving an I
Slide 29: For down-and-dirty work
FOR DOWN-AND-DIRTY WORK AN OVERALL IMPROVEMENT
Slide 30: Adjusted EBITDA reconciliation
9 months ended (Sin millions) 2013 ©2014. =: 2015 November 1, October 30, 2015 2016 Net income CG ee 10.0 $ 75 (#) Depreciation & Amoritization 12 18 28 20 32 (+) Interest Expense, net 02 03 03 02 04 (+) Income Tax Expense 13 - 47 EBITDA Ce ron ee igs sss Adjustments (+) Non-Cash Stock Based Compens
Slide 31: Pro forma net income reconciliation
9months ($in millions) 2013 2014 2015 ended November 1, 2015 Income Attributable to Controlling | Before Provision for Income Taxes _ (Q Provision for Income Taxes © 95 4. Fe a Net In ‘The pro forma net income information gives effectto the conversion ofthe Company to a °C” corporation on November 2
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