BAI AIRD RD GLOBAL AL CO CONSUM SUMER, ER, TECH TECHNOLOGY Y & SE & SERVIC VICES ES CO CONFE NFERENCE RENCE – JUNE JUNE 20 2019 19
& SE & SERVIC VICES ES CO CONFE NFERENCE RENCE JUNE - - PowerPoint PPT Presentation
& SE & SERVIC VICES ES CO CONFE NFERENCE RENCE JUNE - - PowerPoint PPT Presentation
BAI AIRD RD GLOBAL AL CO CONSUM SUMER, ER, TECH TECHNOLOGY Y & SE & SERVIC VICES ES CO CONFE NFERENCE RENCE JUNE JUNE 20 2019 19 SAF SAFE E HAR HARBOR BOR ST STATE TEMENT MENT This presentation does not
This presentation does not constitute an offer or invitation for the sale or purchase of securities and has been prepared solely for informational purposes. This presentation contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “might,” “will,” “would,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “likely,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by the Company and its management, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, future economic or market conditions and the other risks and uncertainties described in “Risk Factors” contained in the Company’s Annual Report on Form 10-K or Quarterly Reports on Form 10-Q or
- therwise described in the Company’s other filings with the Securities and Exchange Commission.
New risks and uncertainties emerge from time to time and it is not possible for the Company to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this presentation. Nothing in this presentation should be regarded as a representation by any person that the forward- looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Company undertakes no duty to update these forward-looking statements. This presentation contains certain non-GAAP financial measures determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). We use non-GAAP financial measures, including “Adjusted EBITDA,” as useful measures of the Company’s core operating performance and trends and period-to-period comparisons of the Company’s core business. These non-GAAP financial measures have limitations as analytical tools and should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the appendix to this presentation.
SAF SAFE E HAR HARBOR BOR ST STATE TEMENT MENT
MAN MANAGEME GEMENT NT PRE PRESE SENTE NTERS RS
Mike Dennison / President, Powered Vehicles Group / Incoming CEO
Over 25 years of manufacturing and technology experience – Joined FOX in August 2018
Zvi Glasman / CFO
Over 30 years of experience, 18 years as a CFO – 11 years with FOX
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OUR OUR PURP PURPOSE OSE
We develop purpose-built, vehicle specific, performance defining solutions that enable our customers’ vehicles to:
- Go Faster
- Go Farther
- Ride Safer
- Last Longer
- Have Better Control
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RA RACE CE PR PROVEN VEN PR PRODU ODUCTS CTS
THROUGH PERFORMANCE DEFINING TECHNOLOGIES
AARON GWIN
2011, 2012, 2015, 2016 & 2017 Downhill World Cup Series Champion
BRETT RHEEDER
2018 Red Bull Rampage Champion 2018 Red Bull Joyride Champion 2016 Crankworx Slopestyle Champion 2013 X-Games Slopestyle Gold Medal
CAMERON STEELE
2018 Baja 1000 Overall Champion
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Naturally Aspirated UTV Winner at 2019 San Felipe 250
KRISTEN MATLOCK
Forced Induction UTV Winner at 2019 San Felipe 250
WAYNE MATLOCK
ASP ASPIRA IRATION TIONAL AL BRA BRAND ND
PROFESSIONAL ATHLETES
Demand the best product for a competitive edge
WEEKEND WARRIORS & ENTHUSIASTS
Look for the same performance as the professional athletes they admire
DIEHARD BRAND EVANGELISTS
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FOX’S CORE CONSUMERS
Continue to capture a greater share of the Performance Enthusiast and General Consumer Markets
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A COMP A COMPANY ANY OF P OF PASS ASSION IONATE TE ENT ENTHUSIAST HUSIASTS
DESIGN ENGINEER ENGINEERING TECHNICIAN TECHNICAL MARKETING SPECIALIST
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DIV DIVERS ERSITY ITY OF APP OF APPLICA LICATIONS AND TIONS AND MARK MARKET ETS
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FINANCIAL HIGHLIGHTS Sales Adjusted EBITDA*
2017
$476M $476M
2018
$619M $619M +30% +30%
2017
$94M $94M
2018
$125M $125M +33% +33%
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*FOX defines adjusted EBITDA as net income adjusted for interest expense, net other expense, income taxes, amortization of purchased intangibles, depreciation, stock-based compensation, offering expense, strategic transformation costs, contingent consideration valuation adjustments, acquisition-related compensation expense, litigation-related costs, and certain other acquisition-related costs that are more fully described in the appendix.
SP SPECIAL ECIALTY TY SP SPOR ORTS TS GR GROUP OUP (SS (SSG) G)
CUST CUSTOMER LANDSCAPE OMER LANDSCAPE
ORIGINAL EQUIPMENT AFTERMARKET
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POR PORTF TFOLIO OLIO OF OF PE PERFORMAN RFORMANCE CE DEF DEFININ INING PR G PRODU ODUCTS CTS
GR GROWT WTH H OPP OPPOR ORTUNITIE TUNITIES S IN E IN EXIST XISTING ING CA CATE TEGOR GORIES IES
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RHYTHM SERIES WHEELS LIVE VALVE E-BIKE
GR GROWT WTH H OPP OPPOR ORTUNITIE TUNITIES S – WHITE WHITE SP SPACE CE
EXPAND BRAND INTO RELEVANT PERFORMANCE DEFINING ADJACENCIES
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2018 Growth of 15% 3 Year CAGR of 10%
Solid growth in existing premium mountain bike product lines coupled with product line expansion has enabled FOX to exceed our mid to high single digit long term growth target
SS SSG G SAL SALES ES GR GROWT WTH
$ IN MILLIONS
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2019 YTD Growth of 13%
$58 $65 Q1'18 YTD Q1'19 YTD $212 $227 $246 $282 2015 2016 2017 2018
PO POWE WERED VEHICLES RED VEHICLES GR GROUP OUP (PV (PVG) G)
PO POWE WERED VEHICLES RED VEHICLES MAR MARKET KETS
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MOTORCYCLE ATV SNOW UTV TRUCK & SUV UPFITTING OFF-ROAD DEFENSE COMMERCIAL MARINE STREET PERFORMANCE
CUST CUSTOMER LANDSCAPE OMER LANDSCAPE
ORIGINAL EQUIPMENT AFTERMARKET
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GR GROWT WTH H OPP OPPOR ORTUNITIE TUNITIES
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2018 ROW ~16%
PE PENET NETRA RATING TING NEW NEW MARK MARKET ETS
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PV PVG S G SALE ALES S GR GROWT WTH
$ IN MILLIONS
Strong growth in Off-Road capable On-Road markets further strengthened by Off-Road sport / recreational markets and acquisitions has enabled FOX to exceed our low double digit long term growth target
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2018 Growth of 47% 3 Year CAGR of 30% 2019 YTD Growth of 34%
$72 $97 Q1'18 YTD Q1'19 YTD $155 $176 $230 $337 2015 2016 2017 2018
FIN FINANC ANCIALS IALS FIN FINANC ANCIALS IALS
SSG 46% PVG 54% CON CONSIS SISTE TENT NT SAL SALES ES GR GROWT WTH H FUE FUELE LED D BY BY PR PROD ODUC UCT T LE LEAD ADERSHIP AN ERSHIP AND D NEW M NEW MAR ARKETS KETS
$ IN MILLIONS
Sales Growth – Consolidated 2018 Growth of 30% 3 Year CAGR of 19% 2019 YTD Growth of 25% SSG 3-year CAGR of 10% PVG 3-year CAGR of 30%
SALES GROWTH – MAJOR MARKETS 2018 TOTAL COMPANY SALES
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$367 $403 $476 $619 $130 $162 2015 2016 2017 2018 Q1'18 YTD Q1'19 YTD
LE LEVERA VERAGING GING ST STRENGTH RENGTH IN T IN THE HE AFT AFTERMARKET ERMARKET TO O DRI DRIVE VE OEM OEM SP SPEC EC GR GROWTH WTH AN AND D EXP EXPAN AND D CU CUST STOM OMER B ER BASE ASE
2018
- FOX typically enters new markets in the
aftermarket channel to drive end-consumer adoption and brand value, which often leads to OEM spec wins
- Focused on maintaining a healthy balance
between the two channels to sustain long- term growth and competitive advantage
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IMPR IMPROVING VING PR PROFIT OFITABI ABILIT LITY T Y THR HROUG OUGH H ST STRA RATE TEGI GIC C IN INITIA ITIATIVES TIVES
$ IN MILLIONS
2018 Adjusted EBITDA Growth of 33% 3 Year CAGR of 25% 2019 Adjusted EBITDA YTD Growth of 35% 2018 Adjusted EBITDA Margin of 20.1%
Opportunity exists to sustain a 20+% Adjusted EBITDA Margin over the next few years through continued improvement initiatives
Initiatives Include:
- Powered Vehicle manufacturing and R&D
platform expansion and supply chain
- ptimization in North America
- Other process-related efficiency initiatives
including a new ERP system
- Further optimizing bike production in
Taichung, Taiwan facility
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NOTE: See appendix for reconciliation of Adjusted EBITDA to its most comparable GAAP measure.
$64 $71 $94 $125 $23 $31
2015 2016 2017 2018 Q1'18 YTD Q1'19 YTD
SOL SOLID ID LIQUIDITY AND LIQUIDITY AND CASH GE CASH GENERA NERATION TION
POSITIVE CASH FLOW PROVIDES ADDITIONAL FLEXIBILITY LOW LIQUIDITY RATIOS PROVIDE FLEXIBILITY ON CAPITAL ALLOCATION
(1) 2019 annual capex range is expected to run between 5.5% – 6.5% of sales; higher than our long term target of 3.0% – 4.0% of sales due to near term capacity expansion and strategic initiatives.
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0.8 0.9 1.1 0.5 0.9 0.5
- 0.2
0.4 0.6 0.8 1.0 1.2 2015 2016 2017 2018 Q1'18 YTD Q1'19 YTD Leverage Ratio (ending)
PR PROFIT OFITABLE B ABLE BUSINES USINESS S MODEL P MODEL PROVID VIDES ES FUR FURTHE THER GR GROWTH WTH OPPOR OPPORTUNI TUNITIE TIES S OR OR LE LEVERA VERAGE R GE REDUC EDUCTION TION
INVEST FOR GROWTH SOLID CASH GENERATION OTHER USES
- Positive cash flow enables capital allocation opportunities
- Organic market growth, technology and brand
- Ongoing operational and strategic initiatives
- M&A screen for possible future acquisitions
- Debt paydown as appropriate
- Potential share repurchases depending on market conditions
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WRAP WRAP UP UP
Aspirational Brand Performance Defining Products Innovative Technologies Diversity of Applications and Markets A Company of Passionate Enthusiasts Organic and Adjacent Growth Opportunities Proven Track Record of Financial Success
SUST SUSTAIN AINAB ABLE COMP COMPET ETITIVE ITIVE AD ADVANT ANTAGE GE TO O EN ENABLE ABLE FUTURE FUTURE GR GROWTH WTH
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Q&A Q&A
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APPENDIX APPENDIX
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ADJUST ADJUSTED EBIT ED EBITDA RE A RECON CONCILIA CILIATION TION
32 ADJUSTED EBITDA RECONCILIATION ($ in Millions) 2015 2016 2017 2018 Q1'18 Q1'19 Net Income $25.0 $35.7 $43.2 $85.4 $21.5 $18.4 Provision for Income Taxes 9.3 7.4 21.1 5.5 (6.6) 2.6 Depreciation & Amortization 13.1 8.8 9.9 14.2 3.3 4.0 Stock-Based Compensation 4.9 6.2 8.7 7.3 2.0 1.7 6.9 5.9 1.4
- Patent Litigation Related Expenses
- 2.7
4.7 7.2 1.3 2.1 Strategic Transformation Costs (1)
- 0.2
Tax reform implementation costs (2)
- 0.5
0.1 0.1 Other Acquisition and Integration Related Expenses (3) 3.0 1.0 1.9 0.9 0.3 0.1 Offering Expense 0.2 0.6 0.1
- Other Expense, Net
1.1 2.5 2.8 3.6 1.1 0.9 Adjusted EBITDA $63.5 $70.8 $93.8 $124.6 $23.0 $30.1 Divided by Sales $366.8 $403.1 $475.6 $619.2 $129.8 $161.7 Adjusted EBITDA margin 17.3% 17.6% 19.7% 20.1% 17.7% 18.6% Fiscal Year Year to Date Fair Value Adjustment of Contingent Consideration and Acquisition Related Compensation
(1) Costs incurred to relocate the Specialty Sports Group’s U.S. aftermarket bike products distribution, sales and service operations and expand the Powered Vehicles Group’s manufacturing
- perations.
(2) Represents costs and expenses of $132 and $125 incurred during the three month periods ended March 29, 2019 and March 30, 2018, respectively, in connection with the Company’s implementation of tax reform legislation and related tax restructuring initiatives. (3) Represents various other acquisition-related costs and expenses incurred to integrate acquired entities into the Company’s operations.