1. Lender Presentation Kingston Decor
11/12/2018
Messing, Weiper, Rutt, Jao

2. Executive Summary Key Facts Kingston Decor
KD is a very fast growing wholesaler of home decor
KD is providing stable CFs in the past and the future
Dedicated managment team
Multiple triggers of growth
KD‘s buisness model is very resistent against major risks
Key Figures of KD
Current Revenue (2007)
$75M
Current EBITDA
$14M
11/12/2018
Messing, Weiper, Rutt, Jao

3. Key Risks and Mitigants
Volatile Housing Market
Can reduce Sales and EBITDA Growth
Future CFs and Ratios like Fixed Chare are effected
Large diversified customer base
Due to focus on lower price products the impact of a downturn in the house market would be less harmfull
High Customer Bargaining Power
Can lead to loss of customers or lower margins
Switching costs are low
Very diversified product portfolio
One Stop Shopping Center
Diversified customer base
Capital Expenditure for IT System
An ineffective IT System would be sunk cost for KD and operative processes would not be optimized
Low probabilty of failure
Effective IT System has a high upside potential
11/12/2018
Messing, Weiper, Rutt, Jao

4. Messing, Weiper, Rutt, Jao
Transaction Overview
11/12/2018
Messing, Weiper, Rutt, Jao

5. Messing, Weiper, Rutt, Jao
Business Overview
Fast growing full service importer and wholesaler of decor products
Product Portfolio of over 8,000 products consisting of home decor, wall decor, floral accessories and accent furniture
KD has 150 employees and square foot facility including warehouses, a corporate office and showrooms.
Historical Financial Performance
Key values to customers
„One stop shopping center“
Logistical support
Palletizing
Delivery choices
Deliver tracking
Low prices through sourcing in China
Big inventory represents excellent product availability
11/12/2018
Messing, Weiper, Rutt, Jao

6. Industry and Competitive Position
Market Overview
The decor industry is large and highly fragmented industry experiencing steady growth
Over the next five years: expected industry growth of 2% - 4%
Overall market size of $60 bn in retail dollars (2007)
Importers generate $25 bn of market size
Macroeconomic drivers
Real GDP
Personal Consumption Expenditure
Home Sales
Home Décor Pricing
11/12/2018
Messing, Weiper, Rutt, Jao

7. Growth Strategy Main Triggers for Growth Organic Growth
New China Facility
Showroom Expansion
IT System
Direct Import Business
Other Operational Optimization
11/12/2018
Messing, Weiper, Rutt, Jao

8. Management Bio Key Characteristics of the Management Team
Senior managment team has on average 20 years of experience in the home decor branch
Joint responsibilities in the management in order to achieve management diversity
Robert Martinez
CEO&COO
Steve Mills
Vice President of Sales
Strong customer relationships
Understanding of the market
Andy Boots and James Woods
Pricing and Financial Planning
Customer and Vendor relationship management
Warehouse expertise
23 years with the company
Effiency management
How to involve the existing management team in future business practice
As an incentive to keep up the efficient management style the senior management will receive 5% equity share after the transaction
Due to the broad experience is crucial to keep the current management team in charge
11/12/2018
Messing, Weiper, Rutt, Jao

9. Messing, Weiper, Rutt, Jao
Financial Analysis
Three Scenarios:
Upside
Base
Downside
Forecasted Balance Sheet
Forecasted Income Statement
Multiple Analysis
Debt Paydown Schedule
11/12/2018
Messing, Weiper, Rutt, Jao

10. Messing, Weiper, Rutt, Jao
Backup Slides
11/12/2018
Messing, Weiper, Rutt, Jao

11. Messing, Weiper, Rutt, Jao
Multiple Analysis
11/12/2018
Messing, Weiper, Rutt, Jao

12. Messing, Weiper, Rutt, Jao
Financial Analysis
Income Statement Assumptions
11/12/2018
Messing, Weiper, Rutt, Jao

13. Messing, Weiper, Rutt, Jao
Financial Analysis
11/12/2018
Messing, Weiper, Rutt, Jao

14. Messing, Weiper, Rutt, Jao
Financial Analysis
11/12/2018
Messing, Weiper, Rutt, Jao

15. Messing, Weiper, Rutt, Jao
Financial Analysis
11/12/2018
Messing, Weiper, Rutt, Jao

16. Messing, Weiper, Rutt, Jao
Financial Analysis
Capital Expenditure
11/12/2018
Messing, Weiper, Rutt, Jao

17. Messing, Weiper, Rutt, Jao
Financial Analysis
11/12/2018
Messing, Weiper, Rutt, Jao

18. Messing, Weiper, Rutt, Jao
Financial Analysis
Balance Sheet Assumptions (Upside)
11/12/2018
Messing, Weiper, Rutt, Jao

19. Messing, Weiper, Rutt, Jao
Financial Analysis
11/12/2018
Messing, Weiper, Rutt, Jao

20. Messing, Weiper, Rutt, Jao
Financial Analysis
Balance Sheet Assumptions (Base)
11/12/2018
Messing, Weiper, Rutt, Jao

21. Messing, Weiper, Rutt, Jao
Financial Analysis
11/12/2018
Messing, Weiper, Rutt, Jao

22. Messing, Weiper, Rutt, Jao
Financial Analysis
Balance Sheet Assumptions (Downside)
11/12/2018
Messing, Weiper, Rutt, Jao

23. Messing, Weiper, Rutt, Jao
Financial Analysis
Working Capital Requirements
11/12/2018
Messing, Weiper, Rutt, Jao

24. Messing, Weiper, Rutt, Jao
Financial Analysis
11/12/2018
Messing, Weiper, Rutt, Jao

25. Messing, Weiper, Rutt, Jao
Financial Analysis
Senior Debt Amortization
11/12/2018
Messing, Weiper, Rutt, Jao

26. Debt Assumptions Forecasted 3-Month LIBOR Year 2008 2009 2010 2011
2012
LIBOR
-0.5%
-1.4%
-1.7%
-1.6
-1.4
Senior Debt Interest Rate (LIBOR + 300bps)
Year
2008
2009
2010
2011
2012
Rate
2.5%
1.6%
1.3%
1.4%
11/12/2018
Messing, Weiper, Rutt, Jao

27. Messing, Weiper, Rutt, Jao
Financial Analysis
Mez Debt Amortization
11/12/2018
Messing, Weiper, Rutt, Jao

28. Credit Revolver Assumptions
11/12/2018
Messing, Weiper, Rutt, Jao

29. Messing, Weiper, Rutt, Jao
Exit Strategy
11/12/2018
Messing, Weiper, Rutt, Jao