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| EX-99.1 - EXHIBIT 99.1 PRESS RELEASE STUDENT BRANDS - Barnes & Noble Education, Inc. | exhibit991pressreleasestud.htm |
| 8-K - FORM 8-K STUDENT BRANDS - Barnes & Noble Education, Inc. | form8-kstudentbrands.htm |
Barnes & Noble Education, Inc.
Acquires Student Brands
I N VESTOR PR ESEN TAT ION: AUGUST 7 , 2017
Exhibit 99.2
CONFIDENTIAL DRAFT Not for Distribution
Forward-Looking Statements
1
This presentation contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and information
relating to us and our business that are based on the beliefs of our management as well as assumptions made by and information currently available to our
management. When used in this communication, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “will,” “forecasts,” “projections,” and
similar expressions, as they relate to us or our management, identify forward-looking statements. Moreover, we operate in a very competitive and rapidly
changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all
factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any
forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this presentation
may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Such statements
reflect our current views with respect to future events, the outcome of which is subject to certain risks, including, among others: general competitive
conditions, including actions our competitors may take to grow their businesses; a decline in college enrollment or decreased funding available for students;
decisions by colleges and universities to outsource their bookstore operations or change the operation of their bookstores; the general economic
environment and consumer spending patterns; decreased consumer demand for our products, low growth or declining sales; the anticipated benefits of the
Student Brands acquisition may not be fully realized or may take longer than expected; restructuring of our digital strategy may not result in the expected
growth in our digital sales and/or profitability; risk that digital sales growth does not exceed the rate of investment spend; the performance of our online,
digital and other initiatives, integration of and deployment of, additional products and services including new digital channels, and further enhancements to
Yuzu® and any future higher education digital products, and the inability to achieve the expected cost savings; our ability to successfully implement our
strategic initiatives including our ability to identify and execute upon additional acquisitions and strategic investments; technological changes; our
international expansion could result in additional risks; our ability to attract and retain employees; changes to payment terms, return policies, the discount or
margin on products or other terms with our suppliers; risks associated with data privacy, information security and intellectual property; trends and challenges
to our business and in the locations in which we have stores; non-renewal of contracts and higher-than-anticipated store closings; disruptions to our
computer systems, data lines, telephone systems or supply chain, including the loss of suppliers; work stoppages or increases in labor costs; possible
increases in shipping rates or interruptions in shipping service, effects of competition; obsolete or excessive inventory; product shortages; changes in law or
regulation; the amount of our indebtedness and ability to comply with covenants applicable to any future debt financing; our ability to satisfy future capital
and liquidity requirements; our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms; adverse
results from litigation, governmental investigations or tax-related proceedings or audits; changes in accounting standards; challenges to running our
company independently from Barnes & Noble, Inc. following the Spin-Off; the potential adverse impact on our business resulting from the Spin-Off; and the
other risks and uncertainties detailed in the section titled “Risk Factors” in Part I - Item 1A in our Annual Report on Form 10-K for the year ended April 29,
2017. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary
materially from those described as anticipated, believed, estimated, expected, intended or planned. Subsequent written and oral forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. We undertake no
obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of
this presentation.
CONFIDENTIAL DRAFT Not for Distribution
Introduction
1. Student Brands Acquisition
2. BNED Strategic Growth Platform
3. Key Considerations
4. Conclusion
2
CONFIDENTIAL DRAFT Not for Distribution
Student Brands Transaction Overview
3
Terms
• Total purchase price of $58.5 million in cash for Student Brands
• Structured to “step up” the tax basis of Student Brands‟ assets, expected to result in significant
future cash tax savings
Financial Benefits
• Highly visible subscription monetization model; strong and growing revenues and adjusted
EBITDA margins
– 96% subscription-based revenue, 4% advertising-based
• Accretive EBITDA; net income and cash flow in 2018
– Student Brands is expected to contribute over $10 million of EBITDA over the next twelve
months
• Operational synergies over time resulting from cross marketing digital assets to BNED‟s
existing student base
• Provides enhanced cash flow
• Nominal customer acquisition costs – driven by organic search
Financing
• Financed through cash on hand and existing amended facility with current lenders
• Over next 12 months, borrowings under the facility expected to be between $0 and $300 million
Leadership
• Thomas Swalla will remain CEO of Student Brands and his leadership team will join BNED full-
time
Note: further transaction details can be found in the 8/4/17 press release available at www.bned.com/investor.
CONFIDENTIAL DRAFT Not for Distribution
Subscription
Model
Low Cost
Customer
Acquisition
Expense
Structure
Enables
Leverage
Operational
Model
Technology
Content
Digital
B2C
Content Brain
Unique User-Generated
Content Library across
English, Spanish,
Portuguese and French
Student Brands
Overview
Growing direct-to-consumer
digital company with 20M
monthly unique visitors
23M+ unique user-generated
content library in 4 languages
provides help to students with
research & writing assignments
Advanced technology „Content
Brain‟ provides defensibility and
scale by ensuring content quality
Subscription business with
predictable, high-margin
revenue
49 employees in Los Angeles and
India bolsters digital talent
Strategic View
PLATFORM & DIGITAL PROPERTIES
4
CONFIDENTIAL DRAFT Not for Distribution
A Growth Strategy Combining Digital + Brand/Relationships
More
Students
More
Data
Smarter
Algorithms
Better
Product
Digital Student
Monetization Engine
High Margin & Attractive
Unit Economics
Growing Online Market
Unique High Quality
Content
Advanced Technology
Platform to Expand
Vertical Offerings
Experienced Digital Team
Notable Brand
Large Campus Footprint
& Relationships
Over 6M Students
Textbook Sales Data
Student Data/Profiles
Ecommerce Transactions
Higher Ed Focus
5
CONFIDENTIAL DRAFT Not for Distribution
CONTINUE TO STRENGTHEN CORE BUSINESS
• Barnes & Noble College (BNC) provides solid platform for growth
• Annual revenue of $1.9 billion* in Fiscal 2017, increase of 3.7%
• Adjusted EBITDA of $82.5 million in Fiscal 2017, increase of $2.0 million
• BNC new business wins in 2017 of $118 million
• BNC new business wins in 2018 of $52 million to date
• BNC serves more than 5 million students and their faculty through more than 760
bookstores
BNED Strategic Growth Platform
6
Student Brands
Acquired August 4, 2017
MBS
Acquired February 28, 2017
EPEG Publisher Agreement
Announced July 30, 2017
STRATEGIC AGREEMENTS AND ACQUISITIONS
*includes revenue from LoudCloud and Promoversity, acquired in March
and June 2016, respectively
CONFIDENTIAL DRAFT Not for Distribution
BNED Strategic Growth Platform – Key Considerations
BARNES & NOBLE COLLEGE
• Continues to compete and win in the marketplace for core business – adds platform
• Continues to grow digital offerings and services (e.g. LoudCloud, Student Brands) to
complement core book business and provide full suite of solutions for students and
faculty
• Continued strategic partnerships with publishers and others to drive physical and digital
distribution
• Student Brands adds technology, skills and customer information to BNC and MBS
• Student Brands will leverage BNC and MBS relationships and distribution platform
MBS
• Proving out acquisition model
• Foundational building block in BNED‟s growth platform
• Essential virtual capabilities, with 712 virtual bookstores, including approximately 300 in
higher ed
• Expands BNED footprint, which now includes 6 million students at more than 1,400
physical and virtual locations
• Realized synergies such as supply cost management
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Q1 2018 operating results are in line with guidance and will be discussed in further
detail on our earnings call scheduled for August 30, 2017 at 10:00 AM EST.
CONFIDENTIAL DRAFT Not for Distribution
Conclusion
The acquisition of Student Brands is another pivotal step in our strategy to grow
and enhance our platform as a leading aggregator and distributor of educational
content.
All of our acquisitions, coupled with our strong core business, position us to be a
leader in this industry as it transforms.
We are confident in the value proposition of our products and services, the
relevance of our offerings to schools, students, and faculty, and our ability to
compete and win in the marketplace.
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