FGX International Holdings LTD
FGX International — Investor Presentation (June 2009)
29 slides from FGX International's investor presentation, Jun 26, 2009
Slide 1: Management Presentation June 2009
Management Presentation June 2009
Slide 2: 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 uncertainties. All statements, other
Slide 3: The FGX Advantage
The FGX Advantage Leading market positions Portfolio of highly recognized brands Balanced business model Low-cost sourcing strategy Multiple growth opportunities Customer service focus #1 in readers, #1 in popular priced sunglasses, #1 in Fits-Over Competition is small and fragmented FosterGrant – 8
Slide 4: Leading Market Positions in Key Product Categories
Leading Market Positions in Key Product Categories Foster Grant + Magnivision hold #1 share in growing reading glass market Magnivision - the original reading glass brand Foster Grant - #1 in mass/popular priced sunglasses Solar Shields - #1 in Clip-On and Fits-Over categories Fragmented competitive
Slide 5: Compelling Industry Trends
Compelling Industry Trends 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; cov
Slide 6: Portfolio of Highly Recognized, Quality Eyewear Brands
Portfolio of Highly Recognized, Quality Eyewear Brands 80 year heritage Iconic “Who’s that” TV Campaign re-launched in 2009 Created mass reader category in early 1980’s Problem/Solution/Value TV campaign launched in 2009 30 Year heritage Strong medical positioning Sold at premium price points ($50 -
Slide 7: Capitalize on Existing Brand Awareness
Capitalize on Existing Brand Awareness Television advertising launched in February to raise category awareness Initial campaign ran for 15 weeks with over 6,000 total spots Strong problem/solution/value message with doctor’s endorsement Reader ad campaign began February featuring Raquel Welch from 7
Slide 8: Balanced Business Model
Balanced Business Model 2008 Sales by Product Line 2008 Sales by Channel Revenue from diverse product assortment of readers and sunglasses plus international segment Largest segment - reading glasses - is high margin, stable, non-seasonal Scalable international business Distribution through multiple
Slide 9: Efficient, Low Cost Sourcing Model
Efficient, Low Cost Sourcing Model Scale Experience Relationships Operating Efficiency 80 million units sourced annually Economies of scale drive pricing leverage Over 25 years of China sourcing experience Operates logistics office and quality control lab in Shenzhen, China Average relationship with
Slide 10: Dioptics Overview
Dioptics Overview Seller of Solar Shields - #1 in Clip-On and Fits-Over categories Specialty distribution channels in medical, mass market, multimedia, sporting goods, chain drug and grocery Significant customers include Wal-Mart, Walgreens and QVC New FGX channel in medical category Over 400 U.S. a
Slide 11: Acquisition Strategy
Acquisition Strategy Criteria Complimentary to existing optical business High gross margins with opportunity to expand Cross selling opportunities Immediate synergies Accretive to earnings Funding Expected to generate over $40 million of free cash in 2009 Favorably priced revolving credit facility w
Slide 12: New Product Development
New Product Development Renewed emphasis on new product development with goal of creating a steady pipeline of new products Ample opportunities as market leader to license technologies from inventors and smaller companies Infrastructure in place to test new products before bringing to market New pro
Slide 13: Fox Microvision
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Slide 14: Computer Readers
10. COMPUTER READERS
Slide 15: [LOGO]
[LOGO]
Slide 16: Versasight
VERSASIGHT | SO Gz
Slide 17: Green View
a Green View
Slide 18: Long-Standing Relationships with National Retailers
Long-Standing Relationships with National Retailers Length of relationship Product Assortment Customer 20+ years 20+ years 19 years 16 years 15 years 14 years 13 years 12 years 12 years Sun, Readers, Dioptics, Frames Sun, Readers Sun, Readers, Dioptics Readers, Dioptics Sun, Readers, Dioptics Sun, R
Slide 19: Selected Cross-Selling Opportunities by Channel
Selected Cross-Selling Opportunities by Channel > 50% Between 0% and 50% 0%
Slide 20: Selected New Business Opportunities by Channel
Selected New Business Opportunities by Channel Category Opportunity Category Opportunity Channel/Customer Reader Sun Dioptics Channel/Customer Reader Sun Dioptics Other Specialty Variety Sporting Goods ü ü ü ü ü ü ü ü ü ü n/a n/a ü n/a ü n/a ü n/a ü ü ü ü ü Mid Tier/Department Stores Between 0% and
Slide 21: New Business Update
New Business Update Estimated Customer New Business Pick Up Annual Revenues $3 Million $1-$2 Million Sun and Readers Readers $.3 Million $1 Million Dioptics Dioptics Dioptics $1-$2 Million
Slide 22: Strong Capital Structure to Support Growth
Strong Capital Structure to Support Growth Current loan facility includes $100 million term loan with a $75 million revolving credit facility; $30+ million available at end of Q1; expires December 2012 Interest rate swap - fixed interest rate at 3.22% plus 1.75% for approximately 50% of term loan; b
Slide 23: Disposal of Costume Jewelry Business
Disposal of Costume Jewelry Business Entered into non-binding letter of intent in April 2009 to sell substantially all of the assets of costume jewelry business for approximately $1.5 million Transaction expected to close Q2 2009, subject to execution of definitive purchase and sale agreement Record
Slide 24: Depreciation & Amortization Implications
Depreciation & Amortization Implications Other Considerations FGX supplies store fixtures to retailers at time of rollout $14 million of fixture purchases in 2006 to support WAG rollout. Fixtures – 2 year depreciation and 4 year average useful life Depreciation and amortization are expected to be in
Slide 25: Historical Financial Performance
Historical Financial Performance *As adjusted (excluding $1.8 million Loss on Goodwill Impairment) DSO improved to 66 days in the current quarter from 72 days in first quarter 2008. DOH increased 13 days in current quarter due to retailer de-stocking.
Slide 26: Guidance From Continuing Operations
Guidance From Continuing Operations* Full Year Net Sales Q2 Net Sales Full Year EPS Full Year EBITDA Q2 EPS Q2 EBITDA (in millions, except per share amounts) * Guidance issued on May 7, 2009; excluding jewelry business
Slide 27: 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
Slide 28: EBITDA Reconciliation
EBITDA Reconciliation (in thousands) The table below reconciles EBITDA to net income, the most directly comparable GAAP measure. Fiscal Period Ended April 4, 2009 March 29, 2008 (in thousands) (in thousands) The table below reconciles Free Cash flow to the EBITDA table above. April 4, 2009 March 29,
Slide 29: Notes to Consolidated Statements of Income and Other Selected Data
NOTES TO CONSOLIDATED STATEMENTS OF INCOME AND OTHER SELECTED DATA EBITDA represents net income before interest, income taxes, depreciation and amortization. Free cash flow represents EBITDA less capital expenditures. We believe that EBITDA and free cash flow are performance measures that provide se
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