C.L. King & Associates MARCH 20, 2018

Transcription

1 C.L. King & Associates MARCH 20, 2018

2 SAFE HARBOR STATEMENT 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, those factors identified in the Company s prospectus in the sections titled Risk factors, Special note regarding forward-looking statements and Management s discussion and analysis of financial condition and results of operations. 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. 2

3 MANAGEMENT PRESENTERS Larry Enterline CEO BSEE / MBA, 43 years in technology businesses - 7 years with FOX John Blocher Vice President Finance and Accounting Bachelors Finance, 27 years of corporate finance experience - 6 years with FOX 3

4 OUR BUSINESS FOX IS FOCUSED ON MAKING ITS CUSTOMERS VEHICLES PERFORM BETTER 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 4

5 ASPIRATIONAL BRAND 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 5

6 PERFORMANCE DEFINING PRODUCTS THROUGH INNOVATIVE TECHNOLOGIES Rachel Atherton 2015 & 2016 Downhill World Champion Rob MacCachren 2014, 2015, & 2016 BAJA 1000 Champion Mint 400 Chamapion. Innovation of the Year LiveValve Electronic Suspension Rusty Butcher Harley Ambassador/Flat Tracker 6

7 DIVERSITY OF APPLICATIONS AND MARKETS BROADENS OUR PORTFOLIO OF PRODUCTS, CUSTOMERS, AND GLOBAL REACH 7

8 FOX S CORE CONSUMERS Opportunity to capture a greater share of the Performance Enthusiast and General Consumer markets 8

9 MARQUEE CUSTOMER RELATIONSHIPS 9

10 A COMPANY OF PASSIONATE ENTHUSIASTS CODY RAHDERS EL CAJON PRODUCTION ARIEL LINDSLEY TECHNICAL MARKETING SPECIALIST BOBBY SMITH DESIGN ENGINEER RYAN GREENING POWERSPORTS RACE TECHNICIAN 10

11 GROWTH OPPORTUNITIES CONTINUE PENETRATION IN EXISTING VEHICLE CATEGORIES Round out our participation across customer product portfolios Continue to focus on growing categories Innovative new product introductions Capitalize on expanding aftermarket opportunity 11

12 GROWTH OPPORTUNITIES EXPAND BRAND INTO RELEVANT PERFORMANCE DEFINING ADJACENCIES LIFT KITS BRAKES WHEELS OTHERS Tuscany Acquisition Closed: 12/01/2017 Race Face/Easton Acquisition Closed: 12/12/2014 Sport Truck USA Acquisition Closed: 3/31/

13 GROWTH OPPORTUNITIES NEW VEHICLES NEW CUSTOMERS EXPANDED GEOGRAPHIES WHITE SPACE 13

14 PROVEN TRACK RECORD OF PERFORMANCE SALES ($ in millions) $476 $307 $367 $155 $403 $176 $230 $128 $179 $212 $227 $246 POWERED VEHICLES BIKE

15 PROVEN TRACK RECORD OF PERFORMANCE (CONT D) NON-GAAP GROSS PROFIT ($ in millions) $155 $95 $114 $ % 31.0% 31.4% 32.5% NON-GAAP GROSS MARGIN (1) (1) Non-GAAP gross margin is adjusted to exclude the effect of finished goods inventory valuation adjustments associated with the Company s acquisitions 15

16 PROVEN TRACK RECORD OF PERFORMANCE (CONT D) ADJUSTED EBITDA (1) ($ in millions) Opportunity exists to achieve a +20% Adjusted EBITDA margin through continued profit improvement $94 initiatives over the next few years $56 $64 $71 Enabling initiatives: 1. Continue to optimize bike production in Taichung, Taiwan facility % 17.3% 17.6% 19.7% ADJUSTED EBITDA MARGIN 2. Optimize powered vehicle production in North America 3. Other process related efficiency initiatives including a new ERP system (1) FOX defines adjusted EBITDA as net income adjusted for interest expense, net other expense, income taxes, amortization of purchased intangibles, depreciation, stock-based compensation, patent litigation related expenses, offering expense, contingent consideration valuation adjustments, and certain other acquisition related or non-recurring items that are more fully described in the appendix Historical EBITDA not comparable due to acquisitions 16

17 CAPITAL ALLOCATION STRATEGY 17

18 WRAP UP Aspirational Brand Performance Defining Products Innovative Technologies Diversity of Applications and Markets A Company of Passionate Enthusiasts SUSTAINABLE COMPETITIVE ADVANTAGE TO ENABLE FUTURE GROWTH Organic and Adjacent Growth Opportunities Proven Track Record of Success 18

19 Q&A

20 APPENDIX

21 NON-GAAP GROSS PROFIT RECONCILIATION NON-GAAP GROSS PROFIT RECONCILIATION Fiscal Year ($ in Millions) Gross Profit $94.4 $112.0 $126.4 $154.5 Acquisition Related Costs (1) Non-GAAP Gross Profit $95.4 $113.6 $126.6 $ Gross Margin 30.8% 30.5% 31.4% 32.5% Acquisition Related Costs (1) 0.3% 0.5% 0.0% 0.0% Non-GAAP Gross Margin 31.1% 31.0% 31.4% 32.5% (1) Represents the impact of finished goods inventory valuation adjustments recorded in connection with acquisitions 21

22 NON-GAAP OPEX RECONCILATION Fiscal Year ($ in Millions) Operating expense $80.8 $87.4 Amortization of purchased intangibles (3.0) (3.0) Fair value adjustment of contingent consideration and acquisition related compensation (1) (5.9) (1.4) Patent litigation-related expenses (2.7) (4.6) Other acquisition and integration related expenses (2) (0.8) (1.7) Offering expense (3) (0.6) (0.1) Non-GAAP operating expense $67.8 $76.6 Divided by Sales $403.1 $475.6 Non-GAAP operating expense as a percentage of sales 16.8% 16.1% (1) Represents $6.1M and $1.6M of the acquisitions purchase price classified as compensation expense for FY 16 and FY 17, respectively, offset by $0.2M and $0.2M related to the periodic revaluation of the Company s contingent consideration associated with the acquisition of Sport Truck based on actual and project performance for FY 16 and FY 17, respectively. (2) Represents various other acquisition related costs and expenses incurred to integrate acquired entities into the Company's operations of $0.8M and $1.7M for FY 16 and FY 17, respectively. (3) Represents costs and expenses of $0.6M and $.1M incurred related to the secondary offerings of common stock completed in FY 16 and FY 17, respectively. 22

23 ADJUSTED EBITDA RECONCILIATION Fiscal Year ($ in Millions) Net Income $27.7 $25.0 $35.7 $43.2 Provision for Income Taxes Depreciation & Amortization Stock-Based Compensation Fair Value Adjustment of Contingent Consideration and Acquisition Related Compensation (1) Patent Litigation Related Expenses Other Acquisition and Integration Related Expenses (2) Offering Expense (3) Costs Associated with tax Benefit Other Expense, Net Adjusted EBITDA $55.5 $63.5 $70.8 $93.8 Divided by Sales $307.0 $366.8 $403.1 $475.6 Adjusted EBITDA margin 18.1% 17.3% 17.6% 19.7% (1) Represents $6.1M and $1.6M of the acquisitions purchase price classified as compensation expense for FY 16 and FY 17, respectively, offset by $0.2M and $0.2M related to the periodic revaluation of the Company s contingent consideration associated with the acquisition of Sport Truck based on actual and project performance for FY 16 and FY 17, respectively. (2) Represents $0.8M and $1.7M for FY 16 and FY 17, respectively, of other acquisition related costs and expenses incurred to integrate acquired entities into the Company s operations and $0.2M and $0.2 M for FY 16 and FY 17, respectively of finished goods inventory valuation adjustment recorded in connection with acquisitions (3) Represents costs and expenses of $.6M and $.1M incurred related to the secondary offerings of common stock completed in FY 16 and FY 17, respectively. 23