FGX International Holdings LTD
FGX International — Investor Presentation (September 2009)
24 slides from FGX International's investor presentation, Sep 22, 2009
Slide 1: Investor Presentation September 2009
Investor Presentation September 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 • Sold in over 66,000 retail locations • Balanced distribution across mass merchant, drug store, grocery and v
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 g
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 g
Slide 6: Strong Financial Metrics
Strong Financial Metrics • Strong sales growth – 10% 2009 YTD net sales growth • Gross margin expansion – 190 bps increase 2006 to 2009 YTD, with opportunity for further expansion • Strong balance sheet – Leverage ratio of 2.3x – Improvement in working capital due to with 11 days reduction on DSO’s
Slide 7: Steady Growth
Steady Growth Sales Diluted EPS* • Blend of organic and acquisition growth are driving 3 year revenue CAGR to 13% • Earnings growing faster than sales due to rapid deleveraging and realization of operating efficiencies • Company goal is for earnings to grow 2x sales growth (ex acquisitions) • Compan
Slide 8: 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 an
Slide 9: 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 pipe
Slide 10: Strong Relationships with National Retailers
20+ years 20+ years 16 years 15 years 14 years 12 years 4 years 2 years 1 year Strong Relationships with National Retailers Penetration in over 66,000 doors worldwide Sun, Readers, Dioptics, Frames Sun, Readers Readers, Dioptics Sun, Readers, Dioptics Sun, Readers Readers Sun, Readers Sun, Readers S
Slide 11: New Business Update
11 New Business Update Readers Dioptics Dioptics $1-$2 Million $1 Million $1-$2 Million Sun and Readers $3-$4 Million Customer New Business Estimated Annual Revenues
Slide 12: Cross-selling Opportunities by Channel
Reader Sun Dioptics Customer Chain Drug Grocery Mass Merchants Cross-selling Opportunities by Channel Grocery & Clubs Sporting Goods Variety International Reader Dioptics Customer Reader Sun Dioptics Between 0% and 50% n/a n/a > 50% 0% n/a 12 Reader Sun Dioptics Customer Reader Sun Dioptics Customer
Slide 13: Opportunities in Existing Channels
Reader Sun Dioptics Customer Grocery Grocery Variety Opportunities in Existing Channels Hospitality Department Stores Sporting Goods n/a Reader Sun Dioptics Channel Customer Offer category n/a 13
Slide 14: 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 – Health food retailers (health food stores, vitamin stores, etc.) – GNC – Ind
Slide 15: 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 – lev
Slide 16: 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 11 week reader campaign; $4M in working media • 2,300+ commerci
Slide 17: 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 bri
Slide 18: 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 o
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 o
Slide 20: Strong Field Service
• 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 stock
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; $37M available at end of Q2; 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 22
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 July 4, 2009 June 28, 2008 The table below reconciles Free Cash flow to the EBITDA table above. Credit
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 less capital expenditures. We believe that EBITDA an
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