Ackrell SPAC Partners I : Investor Presentation Transcript - as filed with the SEC on Dec 23, 2021 (Downloadable PDF)

Transcript of Investor Presentation

Jonathan Leong

Thank you. I'm delighted to introduce Blackstone's management team. With us today is Blackstone's founder & CEO, Roger Dahle; CFO, James McCormick and VP of Marketing, Scott Stevenson.

A brief overview of our transaction. Ackrell SPAC is a unique blend of industry, financial and public company expertise and has $139 million cash-in-trust. We were formed to merge with a branded consumer business and there's a strong strategic fit with Blackstone Products. Blackstone is the category-defining,high-growth producer of griddles for the large and on-trend outdoor cooking industry.

Our transaction implies a pro forma enterprise value of $900 million, or 11.1x 2022 estimated adjusted EBITDA of $81 million, which is a significant discount to our closest comp, Traeger. It's a 37% discount to where Traeger IPO'd at 17.6x and a 28% discount to where it trades today at 15.3x.

The transaction will be funded by a combination of cash-in-trust,rolled-over equity, PIPE, and convertible note proceeds and existing shareholders will receive 71% of pro forma equity. The transaction is expected to result in a strong balance sheet with 2x net leverage and approximately $95 million of net proceeds (assuming no redemptions) to fund marketing efforts, new product development, and international expansion.

Before we begin, please note that as part of this presentation we may discuss forward-looking statements within the meaning of the safe harbor provisions of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, future results of operations, customer demand, and inventory and supply chain. Forward-looking statements are made based on the parties' expectations and beliefs concerning future events and therefore involve a number of risks and uncertainties. You're cautioned that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. Potential risks and uncertainties that could cause the actual results to differ materially from those expressed or implied by forward-looking statements are discussed elsewhere in this presentation, which has been concurrently filed as part of Ackrell's Current Report on Form 8-K. All forward-looking statements are based upon information available to Ackrell and/or Blackstone as of the date hereof, and speak only as of the date hereof. The parties assume no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as required by law.

With that, I'll hand it over to Roger.

Roger Dahle

Thank you for joining us today. One of the things that we want to emphasize today is: with Blackstone you can cook for breakfast, lunch, and dinner and we really unlock all three meals. This is a great advantage to us over our competition. We have a broad demographic appeal with men, women, and even children using our products outside which is revolutionary. We bring families and communities together and we create a lot of fun all based around food.

Some of our numbers at a glance, we're having another tremendous year. Our revenue is expected to be over $450 million. That's up from $300 million last year. Our adjusted EBITDA is expected to be $58 million, up from about $35 million last year. We believe the growth we have in front of us is substantial. We're planning for roughly $600 million in revenue next year. Another thing that I'm very proud of is our Net Promoter Score of 78. The closest competitor in our category is at about 68, so our customers love our products and that is reflected in our Net Promoter Score.

We have a wonderful variety of products anchored by our appliances which are about 75% of our revenue. We also have a wonderful assortment of accessories that complement the appliances. Those accessories include specific tools for griddle cooking, covers, and we've also introduced consumables, spices, and sauces that are specifically formulated to complement and enhance griddle cooking.

We enjoy a wide distribution of retailers in the United States anchored by Walmart, our largest customer and the largest retailer in the country. We also have other large national retailers like Lowe's, Ace Hardware, Dick's Sporting Goods, and Tractor Supply who love to sell the Blackstone product lines.

We are completely redefining the outdoor cooking category. This is not your grandpa's charcoal grill that we're talking about. The griddle is a flat top surface that you cook on as opposed to an open grate system like a traditional grill that has allowed us to create a brand new category in outdoor cooking. This is interesting because for the last couple of years we have absolutely increased the opportunity for sales. We are essentially making the pie bigger in the backyard cooking industry and we're capturing the griddle space like nobody else. We're adding the potential for increased sales by just expanding our SKU count with current customers and then we'll move into some other opportunities for expanded growth as well that I'll talk about later in the presentation.

As we look at our potential for future growth we really look at a couple of different things. The number of households in the United States and our market penetration. Our household penetration right now is extremely low and there are many people probably on this call today who haven't even heard of our brand but after this call, you'll learn and you'll probably go buy one as soon as you can. We have opportunity as I mentioned to increase sales by just expanding our SKU count, by continuing to educate the consumer through our TV advertising and our social media outreach, and our international potential which we are just now beginning to go after. We believe the international market combined is about as big as the US market. We have huge potential for growth over the next five years.

Some of the key investment highlights are that we own the griddle category and we were the first company to bring griddles to the backyard. Griddles have been around for a long time in the commercial markets but Blackstone was the first company to bring griddles to the patio and as a result, we dominate that space. We will continue to grow rapidly in this space as we have incredibly passionate customers. If you look at our social media pages and see the engagement of our users you'll get a flavor for that.

We are very pleased with our go-to-market strategy and the way we distribute our product between different types of retailers. We have great historical performance with their financials and again a lot of whitespace for growth. The other thing we have that I think is a real competitive advantage is a very passionate management team. Everybody here is fully engaged. We love the products that we sell, we all use them and we all have fun with them and we all try to outdo each other with what we cook on our Blackstones. This is a great combination of market share, product innovation, great distribution to our retailers, and an awesome management team.

So if you've never been exposed to Blackstone, take a look at this picture on slide 14 and you can get a flavor for what I'm talking about. On the left, we have a picture of a brand new product that we just introduced a year ago. Those handles underneath the control knobs for the burners are actually air fryer drawers. Air fryers are the largest selling indoor countertop appliance today in the marketplace and we combine that with an outdoor griddle and put it in the backyard. We are the first and only company that's ever done that and we have patents on it by the way. So what that means when you're cooking your hamburgers is you can now have French fries to go along with them. It's a phenomenal product development that we have. There are also pictures of some of our accessories that are all made specifically for griddle use. What I really love is on the right you see pictures of customers. These are pictures that were taken by customers who tell us how much they love their Blackstone. What you'll notice about these photos is that we're not only on the patio but we're on a lot of different places like on-the-go tailgating and camping. You'll also notice a wide variety of demographics and different styles of food being cooked on the Blackstone. With a Blackstone, you can cook breakfast, lunch, and dinner. Three meals a day, 365 days a year equals 1095 meal opportunities on a Blackstone. None of my competition can make that claim.

Moving on to slide 15. When we started we had only one 36-inch griddle model. That's a picture of the original one on the far left, but now we've expanded our product category to over 70 SKUs of griddles. We now have 17-inch,22-inch,28-inch,30-inch, and 36-inch models.

As we expanded our appliance offering, we found that the consumer really wanted specific tools for griddle cooking. You just don't need one spatula for cooking on a griddle. We have smash burger kits, crepe making kits, taco kits, and breakfast kits to make pancakes and egg rings to make breakfast sandwiches. We have very specific tools to enhance the consumer experience and unlock food variety on the griddle. Consumers are loving our tools.

We have an amazing seven-to-one attachment rate for our accessories and consumables. For every griddle we sell, we also sell seven accessories (including consumables). This blows my competition away. We have added consumables over the last 18 months, which include spices and "Sear & Serve" sauces that are specifically formulated for griddle cooking.

Looking a little bit more at our product differentiation, and how our product portfolio has grown over the years. We've studied the demographical users of our products and we have, in my opinion, the best demographics in the industry. We have so many different styles of food meaning we have so many different types of people who like to use our products. We have someone who likes to take a Blackstone to deer camp, we have a foodie that's really into high-end food, we have moms who love the Blackstone because there aren't flare-ups and she can cook a lot of food fast for her family. The different demographic personas we have for each of our product lines help with our go-to-market strategy. This enables us to sell certain lines to Walmart, certain lines to Ace, certain lines to Lowe's, and so on. This helps each retailer so they're not all selling the same thing trying to beat each other with the same product and drive the retail prices down.

So griddle cooking has absolutely exploded on social media. People started buying Blackstones and immediately started posting the food that they were cooking on it to share with their friends and family. Along the way we found five personalities that came to us through social media and they've now turned into full-time employees for the company. We have a professionally trained chef in Nathan Lippy, we have Todd Toven who is into hunting, camping, and all things adventure. Todd also does our live demonstrations and cooking for new store openings for different retailers and he does The Griddle

More Tour that we've successfully done now for three years with Walmart. It has been extremely successful in driving awareness of our brand and our style of cooking and letting people realize all the food you cook on a griddle. As a result of that, our social media, which has been 100% organically grown, has just exploded. If you go to Facebook, you will see the different types of users groups that have been created by the end-user. We didn't start any of the user groups. They started all on their own. Now TikTok has just been a phenomenal success for us. Videos with the Blackstone hashtag now have nearly 490,000,000 views and growing every day.

Another thing that's been really cool about our brand is our favorable brand positioning in the marketplace. While we offer a very affordable and value-driven product, we're still in the aspirational category as viewed by our customers and by people who've never heard of us who get exposed to it for the first time. We gain this information from a market survey that we do each year where we really look at the outdoor cooking category, the industry, our competition, and how our customer views our brand. We're proud that we're still up in the high aspirational category as compared to our competition.

On the next slide, we can highlight some things to you as to what makes the griddle so different. If you haven't ever cooked on a griddle you may not really understand this, but how it started was I wanted to have a product that I could cook breakfast on. Cooking bacon in the house is just too stinky. Even though it tastes delicious, my wife doesn't really like me doing it so I wanted to cook outside and I wanted to cook for a lot of people. You can do that on a griddle. As you'll see, griddle cooking is fast, it's easy, it's fun, and it's not intimidating to use. You can cook everything on the griddle that you can cook on a traditional grill and a thousand things you can't. You can cook eggs, bacon, pancakes, smash burgers, teppanyaki stir fry, fish, steak, and even desserts on the griddle. You just can't cook that variety on a traditional grill and that's why this thing is just exploding because people are understanding how much fun and how much food you can cook on the griddle.

When we came into the market our competition looked at us as this cute little niche item that we were selling. Our retail customers looked at it as maybe the second or third item that could be sold to their customers because they thought all we were going to do was unlock breakfast on the patio. What we quickly discovered is that people started cooking smash burgers, and then they started cooking stir fry and street tacos and all of those kinds of things you can't cook on a regular grill. As a result, we've been experiencing explosive growth. Really, we're following the same trajectory as Traeger. We're a couple of years behind them but we believe we'll catch up and pass them and the rest of the gas industry too. By the way, for years, the industry was only charcoal grills and then gas was invented, and that took over as the number one selling unit but that whole industry has been so stagnant for the last ten years without much product innovation. It was a boring industry and nobody really wanted to sell anything into it. The innovation was going from red to blue, big deal. We have exploded and created a whole new category with new, exciting innovation because of the variety of food you can cook on a griddle.

On the next slide, we want to tell you that there's more to a griddle than just a flat piece of steel with some burners underneath. There is a lot of technology and a lot of experience that goes into making a griddle work properly. You need to have the burner spaced just so, you need to have a certain distance from the griddle plate, the griddle plate needs to be a certain thickness, all of these different things make a big difference in the overall cooking experience. Along the way, we have patented over 24 innovations and we have about 30 that are pending and we aggressively defend our intellectual property.

This picture here shows our AirFryer Combo Griddle. Again, with rear grease technology that we've already defended successfully against some of our competitors who just copied us. It shows some of the other innovations that are really critical to making this work well. There's a lot of work that is behind the scenes in making our griddles work just right.

I get really excited talking about current innovation and what we have in the pipeline. We don't have enough time today or tomorrow to cover everything that's coming out because there's so much innovation coming. It's really awesome and exciting. Just to touch on two points. We update the current designs we have every two to three years for our retail customers. We show many new upgraded features and color combinations and then we work with our customers on a two to three-year rolling program for the current product. We're also developing an app that will go with some of our future products. The other thing that's really cool is we're the first company that's introduced an electric griddle that goes outside and can be used inside. That's a huge deal because that's unlocked a whole new demographic of customers. Apartment owners, smaller households, and people who want to use electricity versus gas for environmental reasons. That is the category we're going to continue to expand and grow in. We also have a revised pizza oven that we're introducing next year that has phenomenal technology in it along with four issued patents for it. We will continue to innovate our accessories and develop and drive new items to market as we work with end-users and see what they're using as well as expanding our consumable lines because of the high margin, high volume, and high turnover. As a quick note, it is interesting, if you want to buy our consumables right now you have to go to the lawn and garden department at Walmart. Eventually, we'll get that placed in the grocery department where we believe it will really sell. Lastly, we think we have a huge potential for market expansion in the commercial area as we get our product to caterers who will buy our big griddles and use them for events and other catering opportunities.

Next, I want to talk a little bit about our relationship with our customers. We have a couple of customers that we do a huge amount of business with. Walmart is our biggest customer by far. Walmart really jumped in early with griddles and was a market innovator and an early adopter growing the space. They recognized it early and jumped in with us and collaborated together from the beginning to really develop an incredible program with Walmart. They now sell more than 14 different griddle models. Think about that. When I first started selling this I thought I could sell one 36-inch griddle and now Walmart sells 14 different versions of it. Right now that's anything from a 17-inch all the way up to the AirFryer Combo that you saw earlier and everything in between.

Lowe's is new. They just got back into the griddle business and they have four SKUs of griddles, so as we deepen our relationships with these customers we're helping them realize that you need to go really wide with your griddle offering and go really deep with accessories. For instance, Walmart has eight feet of shelf space right to left dedicated to Blackstone accessories. There are almost 70 SKUs of accessories at Walmart. Unheard of right? It's an unbelievable amount. So, as you look at our customer concentration, the reason that it is that way is that Walmart has a huge number of griddles for sale. Blackstone needs to be where our customers want to buy our products. We will continue to teach our other retail customers how successful griddle sales can be. Walmart sales may continue to grow while being a smaller percentage of the total pie over the next five years but, I love our retail distribution strategy.

As we look at where we're going to grow over the next couple of years, those areas where we can have more success, some of the easy things are further market penetration in the United States. We aim to do that by continuing to increase our advertising and driving customers to retail sales.