Professional Documents
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Executive Summary
1. Unique selling proposition with award-winning product p4
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Global ski brand entering its 5th season serving fast-growing and differentiated Freestyle and Freeride markets filling a market need left open by mainstream major brands Consistently leading-edge skis, winning awards in multiple countries Strong following and image serves as a platform for high-margin apparel and accessories launched in 2011/12 114% CAGR of ski sales to 2.8K skis in 2011/12 Company on track to generate over 10M in revenue and 3M in profit 160 Points-of-sale across 16 countries Scalable business model due to distribution model and platform yielding 100% CAGR gross profit vs. 25% CAGR Opex Inventory complete at end-August of which two-thirds are pre-sold (430 confirmed orders + 200k additional projected sales) $7B total market growing despite recession of which Factions segment is growing at 74%+ Market share shifting from snowboarding and traditional piste skis to freeskiing, touring and telemark where Faction is strong Industry changes in design, marketing, distribution and production enable Faction to grow faster than major producers Experienced co-founders with decades of retail, design, global growth & exit experience from Specialist skills in each function retail, sales, marketing, finance
Comprehensive infrastructure in Europe + North America developed over five seasons Global distribution team and partners Videos, TV shows, PR, Facebook and offer global marketing access Interactive website and store provide fan interaction and revenues Two offerings > Inventory Finance > Equity raise
6. Appendix p32
For more financial information or to further discuss investment opportunities, contact: alex@factionskis.com +44 7889 766 517 tony@factionskis.com +41 79 794 94 93
3
The Proposition
EQUIPMENT
APPAREL
ACCESSORIES 0% 20%
40%
60%
7
Company Momentum
Momentum
Tony produces first samples in France Tony & Alex found Faction SA Royale rocker ski launched Rocker on four models Agent rocker touring ski Rocker on 8 models STP technology
2003/4
04/05
05/06
06/07
07/08
08/09
09/10
10/11
11/12
12/13
4 2 CH, Canada
5 5 Norway
12 7 France
Austria
PL
Sunglasses
34,444 +69%
35000
30000
25000
10000
*The late production delivery (2010/11), addressed in 11/12 through earlier manufacturing
10
P.O.S. growth
Points Of Sale
For 2011/12 Faction opened dozens of new accounts, primarily in North America, France and Germany
180 160 140 120 100 80 60 40 20 Total 0 2008/09 2009/10 2010/11 2011/12
POS growth Faction has driven point of sale growth across 16 countries and is in the process of both extending reach and depth of SKUs in each store
160
2010/11 POS CAGR
122
France Scandinavia
43 29 14 25 29 20 160
82
36
Our POS growth reflects strong product and customer service & serves as a barrier to entry to new brands
11
The Market
12
$3.6 B
An established, inspired hardware brand offers brand extension opportunities into higher-margin products, e.g., Salomon, Ripcurl Faction helmets and glasses are in 2011/12 Equipment Accessories Accessories offer 50%+ margins and affiliation to equipment builds trust Snowboards Snowboarding built to nearly one third of snowsport hardgoods market, but is ceding market share to freeskiing Skis Ski revenues have grown for the past two years despite global recession issues
$0.8 B
$0.9 B
$2.0 B
$7.3 B
13
Source: Snowsport Industry Association reports, Amer and Jarden annual reports
North American 2010/11 revenues were up 12% for skis, equipment & apparel despite recession to $3.3B While snowfall plays an important role in each year s sales* the baseline also reflects equipment evolution Alpine skiing is stealing market share from snowboarding
3.5 3.0 2.5 2.0
2010/11 record year in North America with $3.3B in snowsports sales with Alpine taking market share from snowboarding North American Snowsport Industry
$2.7B +4% $2.8B +18% $3.3B
74%
Fat skis
134%
1.5 1.0 0.5 2008/09 2009/10 2010/11
Reverse Camber
90%
Touring
Shifting Market
From snowboards to innovative skis
600,000
56.8%
500,000
50.6%
400,000
52.2%
300,000
Parabolic / Carvers
200,000
100,000
Diversification of markets
2008/09 Skis Snowboard 443,071 431,743 2009/10 452,787 414,699 2010/11 526,553 399,926
Faction is close to the market, always a step ahead of the incumbents Slopestyle becomes an Olympic event Shorter runs of new models like Zara in fashion which produces in low-cost Spain
FACTION OPPORTUNITY
3. MANUFACTURING SHIFTS
Vertically-integrated EU giants struggling China quality issues and turnaround not fast enough Zara for Snowsports
4. DISTRIBUTION EVOLVING
Online retailers now the largest POS s, changing floorspace dynamics
Major manufacturers have not kept pace with the segment needs and factors of production and distribution opened
16
17
18
15 years in retail in North America & Europe; Ex Head team manager, product development advisor Launched Verbier franchise & managed team for Surefoot and sales representative Former guide for backcountry and heli tours Mechanical Engineer 4th Faction year Former Freeride World Tour champion Breckenridge, Colorado
19
20
GM (%) CF Days
48% 150
16% 10
Direct allows strong control over brand and higher margins but longer cashflow cycle
Increased Gross Margin by moving towards Direct model. Improved cashflow by moving towards Distributor model.
21
Global marketing
Centralised, cost-effective international marketing via:
Regular press releases used by international snowsport media as well as mainstream lifestyle magazines and broadsheets Advertising in key media to secure inclusion in annual Buyers Guides Dedicated test fleets for ski magazines in Europe and North America Partnership with film company Voleurz with 10 stop film premiere-tour; poster signing sessions with athletes and product giveaways Involvement in International Freeski Film Festival annually in Montreal, CAN and FRA Short viral ads released quarterly Team riders placed into Norwegian television adventure series
http://www.factionskis.com/en/blog/?p=2342
High visibility through content generation & frequent dialogue. Exposure in film, TV, viral media and competitions taking off
22
Social Media
Community management
Community Manager collects, focuses and mediates all online brand touchpoints factionskis.com blog, Facebook, YouTube, forums Content supplied by athletes and photographers output through www.factionskis.com Interactive community section of website will be launched using Facebook Connect, with forum, rider and visitor profiles, etc. 8,000 person core market database growing weekly regular newsletter communication and strong clickthroughs to our website Extensive use of snowsport specific forums worldwide Online competitions to generate user content and promote online sales
Additional leverage
Co-founder Alex Hoye has years of experience on the leading edge of digital marketing Tony working with a team to develop games to expand reach and impact
Strong emphasis on digital media and viral marketing build brand awareness more planned for 2011/12
23
Attractive investment
24
Skis Produced
JunSept
25
Example EBITDA multiples 8x 10x 14x Nixon sold for 21x including earnout in year 8 Logic
Precedence: Action sport brands are able to become $B plays, like $400M revenue Ripcurl, $500M revenue Burton Timing: Vertiginous growth of adventure sports and growth in markets means a range of areas with limited incumbent advantage Experience: The team has experience across countries and including M&A
Logic
Precedence: Eight brands generating over 65% of total sales were acquired in the past two decades* Scarce Asset: Innovation, design, and loyal fans are hard to manufacture Synergy: Scale can generate extensive cost (production) and revenue (distribution) synergies overnight
Amer bought Atomic ( 93), Salomon ( 95), & Volant ( 03); Rossignol bought Dynastar; K2 bought Vlkl ( 04), & Line ( 06, Jarden bought K2 ( 07), a major share of Rossignol ( 08)
26
Europe-based US-based
Jarden
NYSE Rev: $4.7B
Head NV
Viena Stock Ex Rev: 330M
Fischer Sports
Viena Stock Ex Rev: 132M
Elan
Slovenia
K2
Acquired 07 CHF1.2B
Atomic
Acquired 93
Head Tyrolia
Bindings
Fischer
Elan
Rossignol
Rev: CHF450M
Volkl
Acquired 04
Salomon
Acquired 05
Dynastar Look
bindings Acquired 93
Line
Acquired 06
Volant
Acquired 03
BLAX
Snowboards Acquired 99
Blizzard
Acquired 10/06
Marker
bindings
Lange
boots Acquired 89
Scott
Stoeckli
Market is extremely acquisitive and only K2 has a brand comparable to Faction (Line)
27
Close
Recap of key immediate operational and financial points
Pre-sold 66% of skis, 65% of helmets and 69% of poles before manufacturing each a 50100% sales increase from Prior Year All skis, poles, helmets and bindings complete by end August and partially pre-paid Company achieving margin improvement due to wholesale distribution in four key markets USA, France, Canada, Germany and the UK and so can achieve breakeven in one more season
Appendix
29
Growing participation
Snowsport participation is growing and diversifying 000 s of snowsport participants (North America)
2008/09 Alpine / Downhill Freestyle Snowboarding Telemarking Cross Country Total 10,346 2,711 7,159 1,435 3,848 21,651
Faction is strong in double-digit growth segments & largest segment alpine hyper-growth niches
30
Product positioning
The model lineup has 12 of multiple lengths, each specifically designed for a particular segment of the market
For more financial information or to further discuss investment opportunities, contact: alex@factionskis.com +44 7889 766 517 tony@factionskis.com +41 79 794 94 93