investor presentation · 2020. 10. 29. · mav beauty brands 7 01 unilever group 02 proctor &...

INVESTOR PRESENTATION

October 2020

Forward-looking statements

Certain information in this presentation, including statements relating to our growth strategies, including our ability to grow organically and make accretive acquisitions, our position in the NorthAmerican hair, our ability to leverage our operating platform to scale our business and improve gross margin, our ability to respond to shifting consumer habits, our ability to respond to global economiccircumstances, and expected industry-wide growth trends such as e-commerce sales, constitutes forward-looking information under applicable securities laws.

In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “isexpected”, “an opportunity exists”, “is positioned”, “estimates”, “intends”, “assumes”, “anticipates” or “does not anticipate” or “believes”, or variations of such words and phrases or state that certainactions, events or results “may”, “could”, “would”, “might”, “will” or “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, projections or othercharacterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’sexpectations, estimates and projections regarding future events.

Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by MAV Beauty Brands as of the date of this presentation, aresubject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from thoseexpressed or implied by such forward-looking information, including but not limited to the factors described in greater detail in the “Risk Factors” section of the Company’s Annual Information Formdated on or about March 30, 2020 for the year ended December 31, 2019, and the Company’s other periodic filings made available at www.sedar.com. These factors are not intended to represent acomplete list of the factors that could affect MAV Beauty Brands; however, these factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to becorrect. The forward-looking statements contained in this presentation are made as of the date of this presentation, and MAV Beauty Brands expressly disclaims any obligation to update or alterstatements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.

Non-IFRS Measures

This presentation makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are thereforeunlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing furtherunderstanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial informationreported under IFRS. We use non-IFRS measures including “Adjusted EBITDA”, “Adjusted Net Income”, “Adjusted Diluted EPS”, “Adjusted Free Cash Flow” and “Net debt-to-Adjusted EBITDA”. Thesenon-IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent whenrelying solely on IFRS financial measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our managementalso uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and to determine components of managementcompensation. Definitions and reconciliations of non-IFRS measures to the relevant reported measures can be found in our MD&A available at www.sedar.com.

Certain Other Matters

Unless otherwise stated herein, financial information in this presentation is presented in United States dollars.

MAV Beauty Brands 2

About MAV Beauty Brands

MAV Beauty Brands 3


01

Growth Strategy

02

FinancialOverview

03

01

Delivering robust growth in key metrics

103%Adjusted Diluted EPSCAGR (2018, 2019, LTM 2020)

21%3-Year Revenue CAGR (‘16-’19)

4MAV Beauty Brands

(1)

1) See Non-IFRS Measures

13%3-Year Adjusted EBITDA CAGR (‘16-’19)

(1)

Top-tier leadership team built to scale

MAV Beauty Brands 5

Tim BunchPresident & Chief Executive Officer

20+ years experience

Judy AdamChief Financial Officer


Tom NestorChief Sales Officer


Kimberly KonstantVP, Marketing, Brand and Innovation


Alex MillerVP, Operations


Supported by highly experienced Board of Directors

Charlene DanceVP, Multicultural


MAV Beauty Brands 6

Acquired 2018 Acquired 2018 Acquired 2019

From one iconic brand To a diversified portfolio

• 25-year history, beginning with Shoppers Drug Mart

• Pioneering brand in the Masstige category

• Stable cash flow

• Highly secure shelfspace

• Exposure to high-growth categories

• Diversification by channel, hair care segments, and consumer base

• Scale with Retailers and Manufacturers

Diversification mitigates risk & provides stability

MAV Beauty Brands 7Source: Nielsen, Total US xAOC • BC SUPER CATEGORY : HAIR CARE • Latest 52 Wks - W/E 08/08/20.

01 UNILEVER GROUP

02 PROCTOR & GAMBLE COMPANY, THE

03 L’OREAL SA

04 JOHNSON & JOHNSON

05 HENKEL KGAA

06 PARFUMS DE COEUR LTD

07 DEMERT BRANDS

08 MAV BEAUTY BRANDS INC

09 CLAYTON DUBILIER &RICE

10 CHURCH & DWIGHT COMPANY, INC.

largest hair care company in U.S. FDM channel

8th

Growing player in North American hair and body care

Delivering industry-leading growth and margins

MAV Beauty Brands 8Source: Company disclosures

27%MAV YTD 2020 ADJUSTED EBITDA MARGIN

21%AVERAGE PEER EBITDA MARGIN

1) See Non-IFRS Measures

L'Oreal

Beiersdorf

Revlon

Coty

HoT

ELFP&G

C&D

RB

KC

Colgate

Clorox

MAV ('16-'19)

(5.0%)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

(5.0%) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

EBIT

DA

CA

GR

(C

Y20

16

-C

Y20

19

)

Revenue CAGR (CY2016 - CY2019)

(1)

Delivering industry-leading growth

MAV Beauty Brands 9Source: Company disclosures

L'Oreal

Beiersdorf

Revlon

Coty

HoT

ELF

BWX

P&G

C&D

RB

KC

Colgate

Clorox

MAV ('16-'19)

(30.0%)

(20.0%)

(10.0%)

0.0%

10.0%

20.0%

30.0%

40.0%

(10.0%) (5.0%) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

EPS

CA

GR

(C

Y20

16

-C

Y20

19

)

Revenue CAGR (CY2016 - CY2019)

MAV (’16-’19)

Growth Strategy


01

Financial Overview

03

Growth Strategy

02

02MAV Beauty Brands 10

Above-category organic growth

Accretive acquisitions

13%

Building shareholder value

MAV Beauty Brands 111) See Non-IFRS Measures

3-Year Adjusted EBITDA CAGR (‘16-’19)

• Consistent revenue growth

• Drive scale & efficiencies

(1)

37%3-Year EPSCAGR (‘16-’19)

Delivering on strategy

MAV Beauty Brands 12

Above-category organic growth Accretive acquisitions

6.0%MAV YTD Q2 2020 ORGANIC GROWTH (NORTH AMERICA)

1.3%YTD2020 CATEGORY POS GROWTH ($)

41%

0.13

0.18

YTD 2019 YTD 2020

AD

JU

ST

ED

DI

LU

TE

D E

PS

(3

)

Gross Revenue increase since acquired= ~7x3-YR Gross Revenue CAGR= 28%

1) Does not include The Mane Choice acquisition (Nov 2019)2) Source: Nielsen - CYTD Wks - 32 W/E 09/05/203) See Non-IFRS Measures

(2)

(1)

Our organic growth strategy

Expand footprint


01

Innovate

02

Amplify brand

03

100+ retailers

Longstanding relationships

Be early on trends

Act on retailer feedback

Dedicated brand management

Multiple channels

Build strong standalone brands on our platform

Drive efficiencies

04

COGS improvements

Operational synergies


01

03

Expand footprint Innovate

Hair care only

Body care expansion

Skin care expansion

M A V B R A N D I M P R E S S I O N S ( 1 )

2018 2019

12BSept 2020

Drive efficiencies

G R O S S M A R G I N E X P A N S I O N

50%LTM

48%2018

SDM Canada2019: U.S. Drug 2020: Ulta, Across Canada

U.S. Mass 2019: Canada2020: U.S. Drug, Mexico

U.S. 2020: Canada, Ulta

2019 COGS reduction initiatives

• Renegotiated manufacturing contracts

• Redesigned Renpure formulas• Rebalanced across manufacturers

for optimal scale2017 2018 2019 Sept YTD 2020

Amplify brand

02

04

1) Various sources including CreatorIQ, Facebook, Instagram, Iconosquare, MNI, Meltwater

Clear acquisition criteria


MAV becoming an active acquiror of choice

Large and resilient Personal Care categories

Growing brands in on-trend segments

Adds strategic capabilities to platform

Asset-light, high-margin models

Must be EPS accretive

Established platform

Culture

Great brand stewards

Embrace people contribution

Why founders choose MAV

Active M&A environment


Reported Analyst Estimates/Other Sources


Leverage our operating platform to scale independent brands

Top-tier leadership team

Established distribution channels

Scalable infrastructure

Flexible supply chain

Social-first marketing model

Trusted partners

Scalable Efficient channels

IT, Finance, OpsRigour & Resources

Platform built for $500mm+ in revenue and multiple brands

Innovation engineSpeed to market135+ years of experience on

leadership team

MAV Beauty Brands 18MAV Beauty Brands 18

100+ retailers

60k+ doors

We have a powerful North American distribution platform

Majority of sales from essential channels: food, drug, mass

Supported by a growing e-commerce presence

• Amazon• Direct-to-consumer• Retailer.com• E-commerce now

double-digit percentage of MAV’s sales

Investments have positioned MAV to capitalize on shifting consumer habits


Significant e-commerce sales growth

2017 2018 2019 LTM 2020

1,000%CAGR

Note: Results only include acquisitions of Renpure, Cake, and The Mane Choice as of their respective acquisition dates


Attractive model: strong free cash flow

Asset-light model

Outsourced supply chain

Low CAPEX (1% of sales)

High cash conversion

(1)

1) % of Revenue for trailing 12 months from June 30, 20202) See Non-IFRS Measures

$19.0mmLTM Q2 2020 Cash Flow from

Operations

$12.6mmLTM Q2 2020 Adjusted Free

Cash Flow (2)

BODY CARE36.0%

HAIR CARE15.8%

COLOUR COSMETICS14.3%

MEN'S GROOMING

10.4%

FRAGRANCES10.4%

ORAL CARE9.5%

BABY PRODUCTS3.6%

Attractive model: large and recession-resistant markets


1) Euromonitor International, Beauty and Personal Care 2019 Edition2) Euromonitor International, Beauty and Personal Care 2019 Edition3) Nielsen - CYTD Wks - 32 W/E 09/05/20

R E S I L I E N T & R E C E S S I O N - R E S I S TA N T M A S S I V E G L O B A L M A R K E T

(US$ Billions)

$488B

3.7%15-YEAR CAGR RETAIL SALES GROWTH (2004-2018)

1.3%2020 YTD POS GROWTH WITH COVID-19

(1)

(2)

(3)


Financial Overview



01

Financial Overview

03

Growth Strategy

02

03

Strong financial track record


(US$ Millions)

R E V E N U E

13.0%CAGR

94.0

108.5

120.2

2018 2019 LTM Q2 2020

G R O S S P R O F I T

$42.8

$51.8

$56.4

2018 2019 LTM Q2 2020

A D J U S T E D E B I T D A

$26.2

$29.5

$33.4

2018 2019 LTM Q2 2020

1) See Non-IFRS Measures Note: Results only include acquisitions of Renpure, Cake, and The Mane Choice as of their respective acquisition dates

14.8%CAGR

12.8%CAGR

A D J U S T E D D I L U T E D E P S

$0.08

$0.28

$0.33

2018 2019 LTM Q2 2020

103.1%CAGR

(1) (1)

Reported Net Income ($10.4) $4.2 $4.6

Reported Diluted EPS ($0.43) $0.10 $0.14

Steadily improving gross margins


(US$ Millions)

48.0%49.0%

50.0%

2018 2019 LTM Q2 2020

G R O S S M A R G I N ( a s % o f r e v e n u e )

1) Excluding purchase accounting adjustments

(1)

• Cost reduction program implemented in 2019 showing results through 2020

• Continued scale through efficient integration of acquired businesses


(US$ Millions)

A D J U S T E D F R E E C A S H F L O W ( 1 )

N E T D E B T /A D J U S T E D E B I T D A ( 1 , 2 )

4.5x

4.0x

December 31-19 June 30-20

Free Cash Flow & Debt

1) See Non-IFRS Measures2) Based on reported results; does not include results of The Mane Choice for trailing 12 months

• Solid free cash flow YTD 2020

–Used to satisfy $4.5mm earnout payments in respect of FY2019

• Ample and sufficient liquidity

–Cash of $14.9mm and undrawn balance of $10.0mm on revolver (at June 30, 2020)

• Headroom under primary covenant (Total Net Leverage Ratio)

$2.8

$9.8

$12.6

2018 2019 LTM Q2 2020

26Source: Company filings, Bloomberg, FactSet, and analyst research.

Attractive relative valuation

Source: Company filings, Bloomberg, FactSet, and analyst research

Valuation

Share Price (Local) EV / EBITDA P / EPS Revenue CAGR

23-Oct-20 23-Oct-20 23-Oct-20

(EV / LTM EBITDA) (P / LTM EPS) 2018A - 2019A

$4.00 8.0x 8.0x 15.4%

US$235.23 32.8x nmf 11.4%

€ 288.60 23.3x 40.2x 10.9%

US$3.39 22.0x nmf (7.4%)

US$41.30 18.6x 36.5x 5.6%

US$21.62 18.6x 32.8x 9.6%

€ 99.32 18.3x 37.9x 5.8%

Average 22.3x 36.9x 6.0%

$98.61 17.6x 39.5x 6.2%

$39.77 17.4x 38.6x 22.8%

$30.52 16.0x nmf (7.0%)

$46.61 14.6x nmf 33.5%

Average 16.4x 39.1x 13.9%

Company

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MAV Beauty Brands

Investment highlights


01 Growing player in North American hair care market – #8 in U.S. FDM channel

02 Operating in large, valuable and recession-resistant categories

03 Established operating platform unlocks value from independent brands

04 Highly attractive financial model and fundamentals

05 Attractive relative valuation

Additional financial highlights & market facts


Total Debt (June 30, 2020) $148.5 mm

Cash (at June 30, 2020) $14.9 mm

Net Debt (at June 30, 2020) $133.6 mm

Shares o/s (Basic)(1) 36.8 mm

Shares o/s (Fully Diluted)(1)(2) 42.4 mm

Insider Ownership ~58%

TA Associates 31.2%

Marc Anthony Venere Group 25.9%

Ticker Symbol MAV (TSX)

52-week High/Low CAD$6.37 /CAD $1.78

Market Cap (at 28/10/20) (1) ~CAD$144 mm

1) Assumes conversion of 3,178 proportionate shares to 3,178,000 common shares2) Calculated using treasury method. Does not include the impact of 2,463,963 shares issuable upon the exchange of the units issued as part of The Mane Choice acquisition3) Assumes results for The Mane Choice for the trailing 12 months ended June 30, 2020

ANALYST COVERAGE

Canaccord Genuity

CIBC World Markets

Jefferies

National Bank Financial

Raymond James

RBC Capital Markets

investor presentation · 2020. 10. 29. · mav beauty brands 7 01 unilever group 02 proctor &...

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