FGX International Holdings LTD
FGX International — Investor Presentation (November 2009)
24 slides from FGX International's investor presentation, Nov 9, 2009
Slide 1: Investor Presentation November 2009
Investor Presentation November 2009
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995) that are based on current expectations, estimates, forecasts and projections, as the case may be, and as such involve substantial risks and uncertaint
Slide 3: Who we are
Who we are Leading marketer of non-prescription reading glasses and popular priced sunglasses #1 share in both categories Strong iconic brands – Foster Grant, Magnivision, SolarShield, Corinne McCormack Sold in over 68,000 retail locations Balanced distribution across mass merchant, drug store, groc
Slide 4: Market Leader
Market Leader Foster Grant and Magnivision - #1 brands in the domestic non-prescription reading glasses market with combined 65% share Foster Grant - 80 year heritage. #1 popular priced sunglasses with 20% share in the under $30 sunglass market Magnivision - original over the counter reading glass b
Slide 5: Balanced Business Model
Balanced Business Model Steady predictable business model Revenue growth from a diverse product mix of reading glasses and sunglasses Distribution through multiple channels dominated by higher margin mass & drug Largest category - Readers - is highest gross margin, non-seasonal and fastest growing 2
Slide 6: Strong Financial Metrics
Strong Financial Metrics Strong sales growth 11% 2009 YTD net sales growth Gross margin expansion 220 bps increase 2006 to 2009 YTD, with opportunity for further expansion Strong balance sheet Leverage ratio of 1.9x Improvement in working capital with 18 days reduction on DSO’s and 31 days in DOH’s
Slide 7: Favorable Demographics
Favorable Demographics Favorable demographics for reading glasses with aging baby boomers Increase in LASIK surgery and contact lens usage that correct nearsightedness, thus requiring reading glasses Compelling value proposition as OTC reading glasses cost a fraction of prescription glasses and are
Slide 8: Significant Barriers to Entry
Significant Barriers to Entry Industry is highly fragmented - FGX is leading player in each of its categories with competition smaller closely-held businesses Significant barriers to entry Switch out costs are prohibitive for smaller players – e.g. product buyback, fixture replacement and pipeline f
Slide 9: Strong Relationships with National Retailers
20+ years 20+ years 16 years 15 years 14 years 12 years 11 years 4 years 1 year Strong Relationships with National Retailers Penetration in over 68,000 doors worldwide Sun, Readers, Dioptics, Frames Sun, Readers Readers, Dioptics Sun, Readers, Dioptics Sun, Readers Readers Readers Sun, Readers Reade
Slide 10: New Business Update
11 New Business Update Readers Dioptics Dioptics $1-$2 Million $1 Million $1-$2 Million Sun and Readers $3-$4 Million 11 Customer New Business Estimated Annual Revenues
Slide 11: Cross-selling Opportunities by Channel
Reader Sun Dioptics Customer Chain Drug Mass Merchants Cross-selling Opportunities by Channel Grocery & Clubs Sporting Goods Variety International Customer Reader Sun Dioptics Between 0% and 50% n/a n/a > 50% 0% n/a 12
Slide 12: Opportunities in Existing Channels
Reader Customer Grocery Variety Opportunities in Existing Channels Hospitality Department Stores Sporting Goods Offer category n/a ü 13 Reader Sun Dioptics Customer Sun Dioptics
Slide 13: New Channels
New Channels Significant success in opening new channels (airport gift shops: Paradies, Hudsons; bookstores: Barnes and Noble, Borders; others: AutoZone) Targeted new channels Home improvement retailers - Home Depot, Northern Tool Health food retailers (health food stores, vitamin stores, etc.) – GN
Slide 14: International Market Opportunities
International Market Opportunities International sales represent approximately 13% of revenue United Kingdom, Canada and Mexico are only meaningful international markets Canada – significant market share similar to U.S. Latin America – new opportunities in Mexico and Venezuela Europe – leverage UK i
Slide 15: Building Brand Awareness
Building Brand Awareness Foster Grant - TV ad campaign featured Raquel Welch from the original 70’s campaign Magnivision TV campaign - raised reader category awareness, highlighted value proposition 5,000+ commercials aired during 12 week reader campaign; $4M in working media 2,300+ commercials aire
Slide 16: Product Development
Product Development Emphasis on product development with goal of creating a steady pipeline of new products License technologies from inventors and smaller companies New product ideas also come from suppliers with FGX getting first look Infrastructure in place to test new products before bringing to
Slide 17: Disciplined Acquisition Strategy
Disciplined Acquisition Strategy Add third leg to the stool Key criteria High growth and strong margin brands inside or outside of optical space Category leader - #1 or #2 Cross selling opportunities Leverage existing FGX infrastructure - supply chain management, field service and back office functi
Slide 18: Corinne McCormack Overview
Corinne McCormack Overview Designer and marketer of fashion eyewear and accessories Eyewear is sold to specialty retailers and department stores Leading retail partners include Bloomingdales, Lord & Taylor and LensCrafters Products are found in over 2,000 locations Opportunities Strengthens competit
Slide 19: Best of Class Sourcing Model
Best of Class Sourcing Model All Asian sourcing strategy Pricing leverage driven by economies of scale – over 40 million units sourced annually Over 25 years of sourcing experience in China Strong relationship with top 10 suppliers – no one represents over 16% 15 employees in China, with office in S
Slide 20: Best in class captive in-store merchandising team
Best in class captive in-store merchandising team Provide service to over 35,000 retail locations 2,400 part-time web-enabled field service team Supported by 75+ full time employees Over 10,000 in-stores visits weekly Able to efficiently handle rollouts and quickly replenish out of stocks 21 Strong
Slide 21: Strong Capital Structure to Support Growth
Strong Capital Structure to Support Growth Current loan facility includes $100M term loan with a $75M revolving credit facility; $47M available at end of Q3; expires December 2012 Interest rate swap - fixed interest rate at 3.22% plus 1.75% for approximately 50% of term loan; balance floats at LIBOR
Slide 22: Summary
Summary Leading market positions Balanced business model Portfolio of highly recognized brands Low-cost sourcing strategy Scale and experience create barriers to entry Multiple growth opportunities Experienced management team Customer service focus 23
Slide 23: EBITDA Reconciliation
EBITDA Reconciliation (in thousands) The table below reconciles EBITDA from continuing operations to income from continuing operations, the most directly comparable GAAP measure. Three months ended October 3, 2009 October 4, 2008 The table below reconciles Free Cash flow to the EBITDA table above Se
Slide 24: Notes to Consolidated Statements of Operations and Other Selected Data
NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER SELECTED DATA 1. EBITDA from continuing operations represents income from continuing operations before interest, income taxes, depreciation and amortization. Free cash flow represents EBITDA from continuing operations less capital expenditures
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