INVESTOR PRESENTATION – AUGUST 2019
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 otherwise 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.
SAFE HARBOR STATEMENT
MANAGEMENT PRESENTERS
Mike Dennison / CEOOver 25 years of manufacturing and technology experience – 1 year with FOX
Zvi Glasman / CFOOver 30 years of experience, 18 years as a CFO – 11 years with FOX
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Chris Tutton / President, Specialty Sports GroupOver 25 years of bicycle industry experience - 4 years with FOX
OUR PURPOSE
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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RACE PROVEN PRODUCTSTHROUGH PERFORMANCE DEFINING TECHNOLOGIES
CHLOE WOODRUFF
2019 XC Short Track World Cup Winner in Nove Mesto, Czech Republic
BRETT RHEEDER
2018 Red Bull Rampage Champion 2018 Red Bull Joyride Champion2016 Crankworx Slopestyle Champion2013 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 at2019 San Felipe 250
WAYNE MATLOCK
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
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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 COMPANY OF PASSIONATE ENTHUSIASTS
DESIGN ENGINEER
ENGINEERING TECHNICIAN TECHNICAL MARKETING SPECIALIST
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DIVERSITY OF APPLICATIONS AND MARKETS
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FINANCIAL HIGHLIGHTS
Sales Adjusted EBITDA*
2017
$476M
2018
$619M
+30%
2017
$94M
2018
$125M
+33%
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*FOX defines adjusted EBITDA as net income adjusted for interest expense, net other expense, income taxes, amortization of purchased intangibles, depreciation, stock-based compensation, offering expense, strategic
transformation costs, contingent consideration valuation adjustments, acquisition-related compensation expense, litigation-related costs, and certain other acquisition-related costs that are more fully described in the appendix.
SPECIALTY SPORTS GROUP (SSG)
CUSTOMER LANDSCAPE
ORIGINAL EQUIPMENT
AFTERMARKET
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PORTFOLIO OF PERFORMANCE DEFINING PRODUCTS
GROWTH OPPORTUNITIES IN EXISTING CATEGORIES
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RHYTHM SERIES WHEELSLIVE VALVEE-BIKE
GROWTH OPPORTUNITIES – WHITE SPACEEXPAND BRAND INTO RELEVANT PERFORMANCE DEFINING ADJACENCIES
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2018 Growth of 15%
3 Year CAGR of 10%
Solid growth in existing premium mountain bike product lines
coupled with product line expansion has enabled FOX to
exceed our mid to high single digit long term growth target
SSG SALES GROWTH$ IN MILLIONS
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2019 YTD Growth of 8%
$212 $227
$246
$282
2015 2016 2017 2018
$132
$142
Q2'18 YTD Q2'19 YTD
POWERED VEHICLES GROUP (PVG)
POWERED VEHICLES MARKETS
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MOTORCYCLE ATV SNOW UTV
TRUCK & SUV UPFITTING OFF-ROAD DEFENSE COMMERCIAL
MARINE
STREET PERFORMANCE
CUSTOMER LANDSCAPE
ORIGINAL EQUIPMENT
AFTERMARKET
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GROWTH OPPORTUNITIES
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2018 ROW ~16%
PENETRATING NEW MARKETS
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PVG SALES GROWTH$ 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 37%
$155 $176
$230
$337
2015 2016 2017 2018
$155
$212
Q2'18 YTD Q2'19 YTD
FINANCIALSFINANCIALS
SSG 46%
PVG54%
CONSISTENT SALES GROWTH FUELED BY PRODUCT LEADERSHIP AND NEW MARKETS$ IN MILLIONS
Sales Growth – Consolidated
2018 Growth of 30%
3 Year CAGR of 19%
2019 YTD Growth of 23% 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
$287
$354
2015 2016 2017 2018 Q2'18 YTD Q2'19 YTD
LEVERAGING STRENGTH IN THE AFTERMARKET TO DRIVE OEM SPEC GROWTH AND EXPAND CUSTOMER BASE
2018
• FOX typically enters new markets in the
aftermarket channel to drive end-consumer
adoption and brand value, which often leads
to OEM spec wins
• Focused on maintaining a healthy balance
between the two channels to sustain long-
term growth and competitive advantage
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IMPROVING PROFITABILITY THROUGH STRATEGIC INITIATIVES$ IN MILLIONS
2018 Adjusted EBITDA Growth of 33%
3 Year CAGR of 25%
2019 Adjusted EBITDA YTD Growth of 23%
2018 Adjusted EBITDA Margin of 20.1%
Opportunity exists to achieve sustainable
Adjusted EBITDA Margins in excess of 20%
over the next few years through continued
improvement initiatives
Initiatives Include:
• Powered Vehicle manufacturing and R&D
platform expansion and supply chain
optimization 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
$55
$68
2015 2016 2017 2018 Q2'18 YTD Q2'19 YTD
SOLID LIQUIDITY AND CASH GENERATION
POSITIVE CASH FLOW PROVIDES
ADDITIONAL FLEXIBILITY
LOW LIQUIDITY RATIOS PROVIDE
FLEXIBILITY ON CAPITAL ALLOCATION
(1) 2019 annual capex range is expected to run between 5.5% – 6.5% of sales; higher than our long term target of 3.0% – 4.0% of sales due to near term capacity expansion and strategic initiatives.
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0.8
0.9
1.1
0.5 0.5 0.5
-
0.2
0.4
0.6
0.8
1.0
1.2
2015 2016 2017 2018 Q2'18 YTD Q2'19 YTD
Leverage Ratio (ending)
PROFITABLE BUSINESS MODEL PROVIDES FURTHERGROWTH OPPORTUNITIES OR LEVERAGE REDUCTION
INVEST FOR GROWTH
SOLID CASH GENERATION
OTHER USES
• Positive cash flow enables capital allocation opportunities
• Organic market growth, technology and brand
• Ongoing operational and strategic initiatives
• M&A screen for possible future acquisitions
• Debt paydown as appropriate
• Potential share repurchases depending on market conditions
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WRAP UP
Aspirational Brand
Performance Defining Products
Innovative Technologies
Diversity of Applications and Markets
A Company of Passionate Enthusiasts
Organic and Adjacent Growth
Opportunities
Proven Track Record of Financial Success
SUSTAINABLE
COMPETITIVE ADVANTAGE
TO ENABLE FUTURE GROWTH
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Q&A
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APPENDIX
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ADJUSTED EBITDA RECONCILIATION
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ADJUSTED EBITDA RECONCILIATION
($ in Millions) 2015 2016 2017 2018 Q2'18 Q2'19
Net Income $25.0 $35.7 $43.2 $85.4 $40.3 $41.8
Provision for Income Taxes 9.3 7.4 21.1 5.5 (1.9) 7.1
Depreciation & Amortization 13.1 8.8 9.9 14.2 6.8 8.1
Stock-Based Compensation 4.9 6.2 8.7 7.3 3.8 3.4
6.9 5.9 1.4 - - -
Patent Litigation Related Expenses - 2.7 4.7 7.2 3.9 3.2
Strategic Transformation Costs (1) - - - - - 0.9
Other Acquisition and Integration Related Expenses (2) 3.0 1.0 1.9 0.9 0.5 1.1
Tax reform implementation costs (3) - - - 0.5 0.2 0.2
Offering Expense 0.2 0.6 0.1 - - -
Other Expense, Net 1.1 2.5 2.8 3.6 1.8 2.4
Adjusted EBITDA $63.5 $70.8 $93.8 $124.6 $55.4 $68.2
Divided by Sales $366.8 $403.1 $475.6 $619.2 $286.6 $353.8
Adjusted EBITDA margin 17.3% 17.6% 19.7% 20.1% 19.3% 19.3%
Fiscal Year Year to Date
Fair Value Adjustment of Contingent Consideration and Acquisition
Related Compensation
(1) Represents costs incurred to relocate the Specialty Sports Group’s U.S. aftermarket b ike products distribution, sales and service operations and expand the Powered Vehicles Group’s
manufacturing operations. For the six month period ended June 28, 2019, $496 is classified as cost of sales and $420 is classified as operating expenses.
(2) Represents various other acquisition-related costs and expenses of $1,113 and $463, incurred during the six month periods ended June 28, 2019 and June 29, 2018, respectively, to integrate
acquired entities into the Company’s operations and the impact of the finished goods inventory valuation adjustment recorded in connection with the purchase of acquired assets.
(3) Represents costs and expenses of $186 and $215 incurred during the six month periods ended June 28, 2019 and June 29, 2018, respectively, in connection with the Company’s
implementation of tax reform legislation and related tax restructuring initiatives.