Benchmarking Overview Delivering deeper insights into client s financial and operational performance through in-depth analysis of financial, operational and process metrics Financial KPIs 700+ KPIs drive comparison of financial and operational performance of the client with its peer group and performance group Derived from profit and loss account, cash flow and balance sheets, KPI s help develop insights into efficiency of company in managing its working capital requirements, expenses, profit margins, balance sheet strength and revenue growth Data is sourced from proprietary database built using a combination of ecosystem (currently 500 prior engagements) and some secondary sources Benchmarking Services Process KPI s 40,000+ data points to drive insights into how best-in-class companies support functions (finance, HR, IT, procurement) perform Built using proprietary data as well as standard sources such as APQC 2,000+ KPI s across 2,500 +companies, covering cost, staffing, and performance aspects Operational KPI s Top 10 KPIs for each of each of the sector, drive deeper insights into company s performance vis-à-vis its peers and the prevalent industry standards. Sector intelligence driven by data from 8 priority industries (automotive, electronics, software products services, diversified industrials, consumer products, retail and healthcare providers) Sample sector metrics include same store sales growth (retail), average length of stay (providers), % sales to big 3 OEM (automotive suppliers) 0
Sample Benchmarking Report Project Juvenile Jan, 2014
Benchmarking Methodology and Sample Set Methodology Peer Short-listing Identify companies with similar operations, revenue and geography as Target Company KPI Identification Identify a set of key performance indicators (KPI) for the industry of the Target company Data analysis Comparison of Target company data with industry benchmarks Comparator group (Latest financials) Peer Group Filters applied Gross Margin (%) EBITDA Margin (%) This benchmarking exercise involves comparing metrics of Target to those reported by Sample Entities. Global Juvenile product companies Key: Revenue Geography Nature of Business Target Bottom quartile 32.5% 49.9% 35.8% 25.2% 12.1% 9.0% Sample size = 12 Sample size = 12 Top quartile Median 4.1% 1.6% For certain profit margin KPIs, a smaller sample set was used due to the limited availability of information. Revenue and margin comparisons presented across are based on the most recent financials available for Sample Entities. The high-end and low-end of the ranges represent the average of the respective metrics of the Sample Entities comprising the highest and lowest quartiles, respectively. Target numbers for FY12 2
Benchmark results Financial performance (1/2) Target performance in comparison to Benchmarks Bottom Quartile (b) Top Quartile (a) Sample Size Gross Margin (%) FY12 25.2 32.5 35.8 49.9 10 4.1 EBITDA Margin (%) FY12 1.6 12.1 1.0 Operating Profit Margin (%) FY12 3.2 10.4 One time goodwill impairment 9.0 8.7 10 12 (26.6) (1.5) Net Profit Margin (%) FY12 (4.3) 6.5 4.2 10 Target s gross margin at 32.5% and its EBITDA margin at 4.1% are lower than the peer group median of 35.8% and 9.0% respectively. Its net margin at (26.6)% and adjusted net margin at (1.5)% is also significantly lower than the peer group median Key: Target data Median: Does not include the Target Source: (1) Engagement Data, SEC filings, Capital IQ Notes: (a) Best performing companies (Top quartile) (b) Trailing lower quartile companies 3
Benchmark results Financial performance (2/2) Target performance in comparison to Benchmarks Top Quartile (a) Bottom Quartile (b) Sample Size Operating expense (%) of revenue FY12 24.8 31.5 36.2 10 32.9 Advertising expense (%) of revenue FY12 0.8 4.0 1.1 9.1 10 0.8 Rental expense (%) of revenue FY12 1.7 6.7 10 2.0 18.5 Other SG&A (%) of revenue FY12 10.1 14.6 10 12.6 Target s operating expenditure as percentage of its revenue is marginally lower than the peer group median of 32.9%. While Target has very low rental expenditure, it incurs highest advertising expense in the peer group Key: Target data Median: Does not include the Target Source: (1) Engagement Data, SEC filings, Capital IQ Notes: (a) Best performing companies (Top quartile) (b) Trailing lower quartile companies 4
Working Capital Analysis KPIs Target Comparison Q1 Median Q3 Interpreting the dashboard 1. Base company color scheme Cash conversion cycle 135.2 113.7 117.3 118.9 Inventory days 108.9 68.5 84.9 99.8 Payable days 40.6 45.9 33.8 24.1 Receivable days 66.9 60.0 64.9 75.5 2. Definitions Base company has performed worse than median Base company s score lies between median and top 25% Base company s score lies in the top 25% Median The mid-point of all the KPI s in the study, fifty percent of the fall above and below the median when all the items in the are arranged in either ascending Targets cash conversion cycle at 135.2 days is longest in the peer group, driven by longest inventory days. While Target s payable days is longer than the peer median, its receivable days is marginally unfavorable when compared with its peers Q1 Q3 It is the breakpoint at which 25 percent of 75 percent of the are less It is the breakpoint at which 75 percent of 25 percent of the are less Source: Engagement Data, SEC filings, Capital IQ 5
Liquidity and Efficiency Analysis KPIs Target Comparison Q1 Median Q3 Interpreting the dashboard 1. Base company color scheme Current ratio 2.6 2.4 1.9 1.0 Net Working Capital % of Revenue 24.6% 3.28% 14.3% 23.3% Total asset turnover ratio 1.8 2.6 2.0 1.7 Fixed asset turnover ratio 14.7 46.8 23.9 10.8 Interest Coverage Ratio 0.60 13.81 6.92 3.05 Cash & cash equivalents % of revenue 1.3% 0.2% 1.5% 4.5% Return on assets* (2.7)% 11.6% 5.7% (15.1)% 2. Definitions Base company has performed worse than median Base company s score lies between median and top 25% Base company s score lies in the top 25% Median The mid-point of all the KPI s in the study, fifty percent of the fall above and below the median when all the items in the are arranged in either ascending Despite favourable liquidity position, Target lags most of its peers on working capital requirements. Its fixed asset and total asset turnover is lower than the peer median, signifying lower asset efficiency. Additionally, Target generates lowest operating income to meet its interest obligations Q1 Q3 It is the breakpoint at which 25 percent of 75 percent of the are less It is the breakpoint at which 75 percent of 25 percent of the are less Source: Engagement Data, SEC filings, Capital IQ *Adjusted net profit 6
Capex & Depreciation Analysis Comparison KPIs Target Q1 Median Q3 D&A as % of revenue 3.1% 0.4% 1.2% 1.7% Capex as % of revenue 2.3% 1.2% 0.9% 0.7% Capex / Dep 0.7 0.9 0.6 0.55 Interpreting the dashboard 1. Base company color scheme Base company has performed worse than median Base company s score lies between median and top 25% Base company s score lies in the top 25% 2. Definitions Median The mid-point of all the KPI s in the study, fifty percent of the fall above and below the median when all the items in the are arranged in either ascending Target s capital expenditure as percent of its revenue at 2.3% is highest in peer group. While Target incurs highest depreciation expense, peer group and Target does not invests sufficiently in its assets to cover its depreciation expense. Q1 Q3 It is the breakpoint at which 25 percent of 75 percent of the are less It is the breakpoint at which 75 percent of 25 percent of the are less Source: Engagement Data, SEC filings, Capital IQ 7
Other KPI s Comparison KPIs Target Q1 Median Q3 Revenue per employee 1,043,152 520,911 227,272 124,457 EBITDA per employee 42,498 42,208 13,386 5,931 Interpreting the dashboard 1. Base company color scheme Base company has performed worse than median Base company s score lies between median and top 25% 2. Definitions Base company s score lies in the top 25% Median The mid-point of all the KPI s in the study, fifty percent of the fall above and below the median when all the items in the are arranged in either ascending Target appears to be optimally staffed, as compared to other peers in the industry Q1 Q3 It is the breakpoint at which 25 percent of 75 percent of the are less It is the breakpoint at which 75 percent of 25 percent of the are less Source: Engagement Data, SEC filings, Capital IQ 8
Support function benchmarks Finance Function Benchmarks - 2012 Top Quartile Median Bottom Sample Size Geography Revenue Range Number of FTEs that perform the Finance function per $1 billion revenue 115.8 138.2 164.3 10 US Upto $500m Total cost to perform the Finance function per $1,000 revenue($) 8.7 13.6 21.7 10 US Upto $500m *Source: Proprietary Benchmarking Database / APQC OSBC Benchmarks IT Function Benchmarks - 2012 Top Quartile Median Bottom Sample Size Geography Revenue Range Number of FTEs that perform the IT function per $1 billion revenue 45.5 79.0 113.6 10 Global $500m - $10,000m Total cost to perform the IT function per $1,000 revenue($) 12.6 31.3 41.8 10 Global $500m - $10,000m *Source: Proprietary Benchmarking Database / APQC OSBC Benchmarks Sales Function Benchmarks - 2012 Top Quartile Median Bottom Sample Size Geography Revenue Range Annual budget for sales as a percentage of revenue 1.9 3.6 6.2 13 Global $500m - $10,000m *Source: Proprietary Benchmarking Database / APQC OSBC Benchmarks Procurement Function Benchmarks - 2012 Top Quartile Median Bottom Sample Size Geography Revenue Range Number of FTEs that perform Procurement function per $1 billion revenue 8.3 15.8 30.4 10 Global $250m - $10,000m Total cost to perform the Procurement function per $1,000 revenue($) 0.5 1.0 2.0 10 Global $250m - $10,000m *Source: APQC OSBC Benchmarks and 's Power of Procurement (POP) Survey 9
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