Digby’s Report to Shareholders

Industry #C59908

Presented by Eric Willinsky, Francis Naccarati, Maite Schloesser, Clare Singley, Stephanie Radziminski, Mark Rapposelli

Promise to our Shareholders

Steady 10% annual increase in stock prices over 5 years

Industry Stock Market Summary

Previous & Future Company Drivers

1. Cost Structure and Stability

2. Market Share Dominance

3. Dividend Payout

Previous Cost Structure Strategy● Higher prices for quality products

○ Aligns customer-targeted pricing with higher R&D budget

● Early investment in TQM

○ Lowered Variable costs by 12.9% avg

○ Lowered Administrative costs by 60%

TQM Results

Digby's TQM Results

2019 2020 2021 2021 Industry Avg.

Material Cost Reduction 11.80% 11.80% 11.80% 8.85%

Labor Cost Reduction 14% 14% 14% 4.67%

Administrative Cost Reduction 60% 60% 60% 44%

Previous Cost Structure Strategy● Higher prices for quality products

○ Aligns customer-targeted pricing with higher R&D budget

● Early investment in TQM

○ Lowered Variable costs by 12.9% avg

○ Lowered Administrative costs by 60%

● Emphasis on Capacity

○ Takes advantage of competitors’ unmet demand and eliminate second shift variable costs

Average Plant Utilization

Continuing Cost Structure Stability• Due to prior success in cost management, important

profitability & efficiency ratios are growing but at a sustainable pace as compared to competitors

o Growth Rates (YoY): ROE = 10.5% CM = 1.25% Profit Margin = 7.1%

• Lower ROE compared to competitor can be attributed to lower profit margins. Innovative methodology for improvement of profit margins includes:

o Automation Investment (lower variable costs outweigh initial cap. ex)

o Inventory Management (targeted inventory levels to prevent excess inventory costs)

ROE & Profit Margins for Industry

Market Share Dominance

● Focus on high market share to offset fixed costs

● Differentiate semi-homogenous product lines in a competitive market through early promotional marketing and bolstering R&D to mitigate competitors power

● Digby’s Accessibility rate of 100% and Awareness rate of 83% ultimately resulted in Market Dominance

Average Product Awareness

Average Product Awareness (2019-2021)

  2019 2020 2021

Andrews 41.60% 51.30% 51%

Baldwin 92.30% 94.70% 96%

Chester 54.70% 54% 55%

Digby 81% 81.80% 82.60%

Market Share Moving Forward• Lower ROE also attributed to lower sales than competitor

• Opportunity to gain additional awareness and increase competitive advantage by increasing the promotional budget & reducing sales budget

• Continued adherence on R&D and increased focus on catering product lines to consumer demands mitigate customer powero Product Ageo Product Priceo Product Reliability

Dividend Payout

● Only company paying dividends at .5%

● Potential to offer increased dividends in the future to match sub-sector average at 2%

*cited from dividend.com

Why Should You Invest?● Digby’s cost structure stability, market dominance, and

dividend payouts has contributed to its positive profitability

● Historically, Digby has outperformed its competitors and holds the highest stock price coupled with the strongest EPS showcasing our current strength

● With a changing environment, Digby has prepared a strategy moving forward that includes provisioning infrastructure, revising inventory management protocols, and strategically increasing dividend payouts

Appendix

● Dupont Model● SWOT Analysis● Porter’s Model

DuPont Model

DuPont Model

SWOT Analysis

Porter’s Model