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Vertical Branding OTC BB: VBDG

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Title: Vertical Branding OTC BB: VBDG


1
Vertical BrandingOTC BB VBDG
2
Safe Harbor Statements
  • Forward-looking statements
  • Certain statements in this presentation may
    contain forward-looking information within the
    meaning of Rule 175 under the Securities Act of
    1933 and Rule 3b-6 under the Securities Exchange
    Act of 1934, and are subject to the Safe Harbor
    created by those rules.  Other than statements of
    historical fact, any statements included in this
    presentation, including without limitation
    statements regarding potential future plans and
    objectives of the company, are forward-looking
    statements that involve risks and uncertainties
    that could cause actual results or events to
    differ materially from those anticipated in such
    statements.  Some of these risks, uncertainties
    and other factors are described in the Companys
    periodic filings with the Securities and Exchange
    Commission (available at www.sec.gov), such as
    the companys most recent Form 10-KSB filing and
    registration statement on Form
    S-1.  Forward-looking statements reflect present
    intentions and available information only, and
    many facts, circumstances or events could arise
    in the future that might prevent the achievement
    of any objectives, or the implementation of any
    strategically significant plan(s), outlined
    herein, or that might cause the company to
    reconsider such objectives or plans.  The company
    undertakes no obligation to publicly update or
    revise any statements in this presentation
    whether as a result of new information, future
    events or otherwise.
  • Non-GAAP financial measures
  • This presentation contains references to adjusted
    EBITDA, a non-GAAP financial measure, which
    management believes provides better insights into
    Company performance than GAAP metrics. Please
    consult the Companys SEC filings and press
    releases for reconciliations of EBITDA with GAAP
    measures.

3
Who We Are
  • Vertical Branding is a consumer products company
    selling high quality household, beauty and
    personal care products at affordable prices.
  • The Company sells directly to consumers through
    television, Internet and print advertising as
    well as wholesale to many of the countrys
    largest retailers and drugstore chains, catalogs,
    home shopping channels and international
    distributors.
  • The Companys hottest-selling products and brands
    currently include My Place, Steam Buddy, Hercules
    Hook, Zorbeez, EZ-FoldZ Step Stool and StarMaker
    Cosmetics.

4
What youre about to hear
What is Unique Compelling about Vertical
Branding ? All About Our Products ? Our Marketing
Sales Approach ? Financial Information ? Managem
ent
5
What is Unique Compelling about VBI
  • Our Track Record demonstrated ability to
    develop and/or identify quality, high margin yet
    inexpensive products that appeal to a core
    demographic and high success rate bringing those
    products to market
  • Our Products - New product introductions through
    a robust product pipeline, as well as line
    extensions on existing and future products, fuel
    growth while recurring sales from an
    ever-expanding product portfolio provides a
    stable base of revenues
  • Our Advertising Strategy - Multi-media (TV,
    Internet, Print, Radio), ROI-based transactional
    advertising strategy that creates brand awareness
    and promotes retail sell-through while
    simultaneously generating revenues through direct
    response sales
  • Continually Testing - Metric-driven testing of
    new products and marketing campaigns avoids large
    capital expenditure prior to market validation
  • Strong year over year revenue growth
  • Experienced, high caliber management.

6
Its all about the Products
  • Current Products
  • ?
  • Product Pipeline
  • ?
  • Product Development and Selection

7
Current Product Overview
Vertical Brandings products make life easier
and/or more affordable by answering unique
consumer needs in innovative ways
8
VBI Product Pipeline
Vertical Brandings track record of success
makes us attractive to inventors and license
holders as a potential home for their products
  • Develop our own proprietary products and brands
  • License products from third parties
  • Dozens of potential new product opportunities
    reviewed every month submitted by inventors,
    vendors, manufacturers, trade shows, etc.

9
Expertise in Product Development Selection
  • Unique, top-quality, compelling value proposition
  • Affordable price points (9.99 - 29.99)
  • Resonate with core demographic (women 28 55)
  • Potential to sell gt50 million households
  • Each product gets rigorous in-house evaluation
    (financial, operational, quality assurance
    legal)

10
Our Marketing and Sales Approach
  • Creating and testing the campaign
  • Transactional Marketing
  • Retail Sales
  • Deepening relationship with retailers as
    category captain and reliable source of popular
    products
  • Catalog and Home Shopping Sales
  • International Distribution
  • Future trends and focus

Transactional Marketing Media generates revenues
on the front end while creating Brand Awareness
used to drive Retail Sales
11
Creating Testing the Campaign
Transactional Marketing allows continual testing
and refinement of the marketing message and the
value proposition
  • Television commercials, Internet marketing, and
    print advertising is created and tested
  • Limited amount of media is purchased during
    testing phase
  • Results are then analyzed, gauging response and
    profitability prior to national media rollout

12
Transactional Marketing Highlights
  • Simultaneously generates revenues and builds
    brands
  • Transactional media net costs are a fraction of
    conventional brand/image advertising
  • Immediate, lasting return on marketing investment
  • Response is measurable
  • Creation of a direct, lasting customer
    relationship
  • Gives management sound basis for marketing
    tactics
  • Enables metrics-based marketing and management

Brand advertisers now engaged in direct
marketing on TV and online PG GM Ford
TiVo Kodak Discover
13
Retail Distribution Highlights
  • Currently in 30,000 traditional retail outlets,
    growing to 40,000 by 2008
  • Wal-Mart, Target, Costco, CVS, Bed, Bath
    Beyond, GNC, Kohls, Home Depot, Rite-Aid, Best
    Buy, Staples
  • Net margins range from 30 to 34

As we continue to develop new products, our base
of retailer customers continues to grownew
retail accounts in 2008 include Staples, Office
Depot, Best Buy and Albertsons
My Place units prominently displayed at Bed Bath
Beyond
14
Transactional/Retail Synergies
  • Retail channel leverages prior investments in
    transactional and continuity marketing
  • Retailers grant more and better display space for
    products that generate additional customer
    traffic
  • Unit sales at retail are 3x - 5x better for
    products with strong transactional marketing
    track records

15
Deepening Relationship with Retailers
  • The acceptance of our products and our
    responsiveness has led to deepening relationships
    with many of our retail customers
  • We have been named Category Captain by several
    major retail chains which gives us an opportunity
    to greatly expand our distribution to those
    stores with both our own products and third party
    products
  • New product opportunities have arisen directly
    from retail buyers

The EZ-FoldZ Step Stool was brought to Vertical
Branding by a Wal-Mart buyer due to the retail
success of Hercules Hook and other products
16
Category Captain VBI Partners with its Own
Retailer Customers
As category captain, VBI controls high-traffic
As Seen on TV end-cap shelf sections for
leading retailers, gains direct PoP data and new
product ideas, selects and merchandises its own
products and other manufacturers items
  • Currently in 30,000 traditional retail outlets,
    growing to 40,000 in 2008
  • Net margins 30 to 34 --
  • Retail chains are bringing VBI new product
    opportunities
  • New products gain entrée with new retailers
    (e.g., MyPlace made VBI category captain with
    Staples)


17
Other Wholesale Channels
Vertical Brandings media exposure creates
tremendous appeal among transactional marketers
having multiple distribution channels helps fuel
our growth
Catalog ? Home Shopping Channels ? International
Distribution
18
  • Financial Information

19
Financial Highlights
  • FY 2007 revenues up 57 year over year, to 36.3
    million
  • FY 07 adjusted EBITDA swung to 1.8 million from
    FY 06 equivalently calculated loss of (1.2
    million)
  • Annual revenue run rate per employee approx.
    1.25 million
  • Revenue guidance for 2008 47 million to 50
    million, 29 to 38 Y-o-Y growth

Since acquiring retail division in August 2006,
revenues, margins and profitability have shown
dramatic, sustained improvement
20
Financial Highlights, continued
M I L L I O N S
Achieving the mid-point of 2008 revenue guidance
would result in a CAGR since 2005 of 81.6
2005
2006
2007
2008 E (midrange)
Revenues
21
Selected Income Statement Data
Year-over-year gross margin decline reflects
2007 strategic shift into retail 2007 figures
include other charges of 1.1 million stemming
from Q2-Q3 non-performance by third-party
order fulfillment vendor may result in
restitution to VBI by bankruptcy court in
2008-2009
22
Selected Balance Sheet Items
November, 2007 RENN Capital made a 4 million
equity investment in Vertical Branding, allowing
favorable restructuring of long-term debt
Excludes legacy commercial real estate
operations
23
Corporate Snapshot
One possible thumbnail description of Vertical
Branding A mini- Procter Gamble
24
Peer Company Comparisons
Vertical Branding is trading at
approximatelyone-third of its sales per share, a
significant discount to peer companies
  • Vertical Brandings price-to-sales ratio is 0.34
    (4/25/08),
  • low relative to other transactional marketing
    companies
  • NutriSystem (NTRI) 0.83x
  • More limited consumer base than Vertical
    Branding
  • (specializes in diet products)
  • Bare Escentuals (BARE) 4.03x
  • Specializes exclusively in beauty products,
  • less diversified than Vertical in distribution
    channels
  • AeroGrow (AERO) 1.18x
  • Highly specialized in indoor gardening
    products/supplies
  • only two years of operations

25
Management Team
The Companys management team has over 75 years
of combined experience, cumulative lifetime track
record of billions of dollars in sales
  • Nancy Duitch Founder, Chief Executive Officer
    and Director
  • Dan McCleerey Chief Financial Officer
  • John Cammarano President, Retail Sales
  • Chris Lipp Vice President and Corporate Counsel
  • Evan Warshawsky Vice President, Strategic
    Development

26
Investment Highlights
Vertical Branding has a rare combination of
track record, sustainable and scalable business
model and deep management expertise
  • Strong track record of successfully selecting
    popular products and mass-marketing them through
    multiple sales channels
  • Transactional marketing strategy road-tests
    products, builds brands, optimizes retail channel
    sell-through
  • Margins and profitability trends improving
  • Scalable business model leverages profits from
    successful mature products to support robust new
    product pipeline

27
Vertical BrandingOTC BB VBDG
28
Appendix GAAP Reconciliation
EBITDA is a non-GAAP financial measure which
management believes provides better insights into
Company performance than GAAP metrics. Please
consult the Companys SEC filings and press
releases for further discussion of Company
results as reflected by both EBITDA and GAAP
measures.
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