CONSUMER DEMAND DRIVES GROWTH, PRIVATE BUSINESSES CONTINUE TO SEE BUYER INTEREST - OUTDOOR RECREATION & ENTHUSIASTS SECTOR UPDATE | APRIL 2022
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CONSUMER DEMAND DRIVES GROWTH, PRIVATE BUSINESSES CONTINUE TO SEE BUYER INTEREST OUTDOOR RECREATION & ENTHUSIASTS SECTOR UPDATE | APRIL 2022 3
TABLE OF CONTENTS 4 Key Sector Takeaways 5 Outdoor Products Demand Remains Elevated 6 M&A Activity and Buyer Breakdown 7 M&A Market Continues Healthy Pace in Early 2022 8 Business Valuations & Drivers 9 Notable Transactions and M&A Insights 11 Select Transactions 12 Public Company Data 15 Report Contributors 16 Firm Track Record 17 Endnotes CONTACT OUR OUTDOOR RECREATION & ENTHUSIASTS SECTOR EXPERTS Kenneth Wasik Managing Director Head of Consumer Investment Banking 917-434-6124 kwasik@capstonepartners.com Sophea Chau Managing Director 617-619-3307 schau@capstonepartners.com Peter Bailey Director 310-740-3286 pbailey@capstonepartners.com
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Outdoor Recreation & Enthusiasts Consumer Demand Drives Growth, Private Businesses Continue To See Buyer Interest KEY SECTOR TAKEAWAYS Capstone Partners Consumer Investment Banking Group is pleased to share its Outdoor Recreation & Enthusiasts report. The market has continued for privately owned brands in the sector, with strategic and financial buyers aggressively targeting quality companies. 2022 is shaping up to be another strong year for the space, with elevated outdoor participation lifting consumer demand. Several key report takeaways are outlined below. 1. Sector brands have achieved robust revenue growth, despite significant supply chain challenges and inflationary headwinds. 2. Merger and acquisition (M&A) activity reached record levels in 2021, with 2022 transaction volume continuing at a healthy pace. 3. We are seeing large strategic buyers actively seeking new brands, even in categories outside their core. Financial buyers continue to be active in supplementing platforms they have built. 4. It remains a favorable market for launching a new deal due to attractive valuations, despite some inflation and supply chain clouds hovering in the background. 5. Privately owned companies with brand strength, recurring revenue, and customer retention are attracting premium multiples in M&A processes. 6. Hunting, Fishing, Hiking, Camping, and Small Powersports remain strong segments for M&A with historically high valuations. Golf is staging a surprising comeback. 7. The market for large discretionary brands in Outdoor Recreation is starting to soften, or at least come off its recent valuation highs. This includes Boating, Motorcycles, and ATVs. This comes after an amazing growth spurt during COVID-19. Capstone Partners has developed a full suite of corporate finance solutions, including M&A advisory, debt advisory, financial advisory, and equity capital financing to help privately owned businesses and private equity firms through each stage of the lifecycle, ranging from growth to an ultimate exit transaction. To learn more about wide range of advisory services and Outdoor Recreation & Enthusiasts sector expertise, please contact Ken Wasik, Sophea Chau, or Pete Bailey. 4
Outdoor Recreation & Enthusiasts | April 2022 OUTDOOR PRODUCTS DEMAND REMAINS ELEVATED Heightened interest in outdoor pursuits has according to National Marine Manufacturers continued through early 2022, fueling what is Association.3 Amid a backdrop of elevated shaping up to be another strong year for the consumer demand, materials availability and Outdoor Recreation & Enthusiasts sector. The supply chain disruptions have challenged sector sector emerged as a standout in the Consumer participants across all subsegments in the industry during the pandemic, attracting droves of Outdoor Recreation & Enthusiasts space. new customers and repeat buyers with a newfound appetite for enthusiast activities and Rising inflation and input costs have pressured more active lifestyles. Retention of this broadened margins among sector players, however, brands customer base has been a key focus among sector with category leadership have continued to players, with effective inventory management and maintain healthy top line growth driven by strong pricing actions at the forefront of consumer spending on outdoor products. Notably, priorities amid elevated inflation and supply chain the Sporting Goods segment has experienced a challenges. Privately owned middle market surge in demand, particularly in the Golf and Biking companies with brand strength, robust direct-to- markets. Leading golf equipment provider Callaway consumer (DTC) capabilities, and efficient supply (NYSE:ELY) exceeded its own expectations in Q4, chains are poised to capture valuable revenue with revenue increasing 90% year-over-year opportunities through 2022. While the pandemic (YOY), according to its earnings call.4 Elevated accelerated outdoor activity adoption, this participation in golf, which manifested in an elevated level of participation is anticipated to additional 300,000 on-course golfers in 2021 continue, with the U.S. Outdoor Recreation (National Golf Foundation)5, has fueled product Products market forecast to reach $178.3 billion by sales and encouraged acquisition activity in the 2028, growing at a compound annual rate of 7.0%, subsegment. In addition, privately owned bike according to Verified Market Research.1 brands and manufacturers have experienced significant buyer and investor appetite through Leading sector players have achieved healthy early 2022, with the Electric Bike category rapidly revenue growth through year end 2021 and into growing in popularity. Through 2021, e-bike sales 2022, despite substantial production disruptions grew 39% YOY to $770 million, according to NPD6 that have often resulted in lost or delayed sales. potentially pointing to a large number of privately Notably, Malibu Boats (Nasdaq:MBUU) recorded a owned brands reaching scale and maturity. 35% increase in net sales in its fiscal Q2 2022, amid longer lead times for manufacturing, Healthy performance across a diverse range of according to its earnings call.2 However, supply segments in the Outdoor Recreation & Enthusiasts chain limitations resulted in production constraints sector has driven optimism for continued with Malibu estimating it could have built 20% expansion. Customers have shown that they are more boats in each of its brands. While players in willing to pay premiums for leading brands. Moving the Boating & Watercraft sector have combated forward, consolidation activity in the sector is supply and demand imbalances for nearly two expected sustain a rapid pace, especially as an years, new powerboat sales exceeded 300,000 increasing number of private equity firms develop units in 2021 for only the second time in 15 years, investment theses in the space. ac Ken Wasik Head of Consumer Investment Banking are seeing rapid changes in the M&A markets for Outdoor Recreation brands and retailers due to a wholesale shift toward outdoor lifestyles and excursions. The focus in M&A is moving toward essentials of enthusiast pursuits and away from big ticket discretionary items. This is noted by the acquisitions of Osprey Packs for 13.5x EBITDA and Dorel Sports biking division for 11.3x; while Yeti, Thule, and Clarus are all trading publicly at over 13x EBITDA. In contrast, Malibu Boats is trading at 5.8x and MasterCraft at 5.4x. This comes against a backdrop where many brands are struggling with inflationary pressure on inputs and supply chain problems. One thing is becoming apparent, higher gross margin brands will become even more valuable to buyers in this environment. Our recreation deals in the market during the first quarter have been well received and is a strong indication that the M&A markets remain very strong for outdoor goods. 5
Outdoor Recreation & Enthusiasts | April 2022 M&A ACTIVITY AND BUYER BREAKDOWN Financial Buyers Increase Acquisition Appetite, Strategic Consolidation Continues Strategic Financial Financial buyer activity 250 Number of Transactions reached record levels in 210 2021 as private equity firms 200 177 170 64 continued to target the 150 37 sector. In addition, 50 112 consumers increasingly 91 89 pursued outdoor activities, 100 39 27 35 140 146 evidenced by the 25.3% 120 50 YOY increase in national 64 54 73 park visits in 2021, 0 according to the National 2016 2017 2018 2019 2020 2021 Park Service.7 Source: Capital IQ, FactSet, PitchBook, and Capstone Research Private Equity Platform Investments Reach Highest Level Since 2017 Private Public PE Platform PE Add-on Private equity platform 100% 10.7% Percent of Transactions investments accounted for 13.2% 18.0% 18.8% 14.3% 23.2% 10.2% 16% of 2021 deal volume, 80% 16.5% 16.2% 21.3% 10.6% marking the highest level in 11.6% 20.3% 60% 14.1% four years. The increase in 26.4% 25.0% 24.8% 19.1% platform deals indicates the 40% growing presence of private 56.5% 58.8% equity in the sector, with 20% 44.0% 41.6% 40.2% 44.8% many expected to facilitate buy-and-build strategies. 0% 2016 2017 2018 2019 2020 2021 Source: Capital IQ, FactSet, PitchBook, and Capstone Research Boating & Watercraft and Outdoor Power Sports & Equipment Experience Largest Increase in M&A Volume 2021 2020 Boating & Watercraft and 80 Number of Transactions Outdoor Power Sports & Equipment segments 60 48 48 recorded the most significant YOY increases in 40 30 31 29 M&A volume in 2021. 23 26 Sporting Goods volume in 18 20 9 2021 mirrored 2020, with 7 buyers demonstrating an appetite for leading bike 0 and golf brands. Sporting Tactical & Camping & Boating & Outdoor Power Goods Hunting Hiking, Fishing Watercraft Sports & Equipment Source: Capital IQ, FactSet, PitchBook, and Capstone Research 6
Outdoor Recreation & Enthusiasts | April 2022 M&A MARKET CONTINUES HEALTHY PACE IN EARLY 2022 The robust dealmaking environment in the Outdoor Recreation & Enthusiasts M&A Volume Outdoor Recreation & Enthusiasts sector has continued through early 2022, with 34 transactions 250 announced or completed in year-to-date (YTD) 210 Number of Transactions March 2022 slightly below the record setting pace 200 177 170 experienced in 2021. Healthy valuations, aggressive competition in deal processes, and significant 150 levels of private equity dry powder have created a 112 favorable backdrop for privately owned businesses 92 89 100 pursuing a liquidity event. Supply chain disruptions have challenged business owners, with many 50 39 34 unable to fulfill sales orders due to constrained production. Effective inventory management has 0 proven to be a key focus for sector players, which 2016 2017 2018 2019 2020 2021 YTD YTD is often looked upon favorably by potential buyers 2021 2022 in an M&A process. In addition, the current inflationary environment is expected to persist in the near term, placing heightened importance on proper pricing adjustments to maintain margins. 2022 Buyer Breakdown Through YTD March 2022, private strategic buyers 5.9% have comprised the majority of M&A activity, accounting for 61.8% of total deals. In addition, 17.6% large players in the Consumer space are STRATEGIC increasingly pivoting their product portfolios to Public gain more exposure to the Outdoor segment. Private 14.7% Notably, Helen of Troy (Nasdaq:HELE), which has FINANCIAL most of its holdings in the Housewares and Beauty Platform 61.8% segments, has committed to building out a robust Add-on outdoor products portfolio shown by its recent acquisition of Osprey Packs (see page nine). As the relevant buyer universe in M&A markets expands, competition in deal processes will Year-to-date (YTD) ended March 8 intensify, which bodes well for transaction Source: Capital IQ, FactSet, PitchBook, and Capstone Research valuations of privately held companies. The Golf segment has drawn strong interest from both strategic and financial buyers. Robust valuations have been awarded to category leaders, evidenced by Vista (NYSE:VSTO) acquisition of Foresight Sports for $499 million in enterprise value and 5.0x revenue (10.0x EBITDA) far exceeding the Sporting Goods median revenue multiple tracked by Capstone Partners (see next page). Private equity buyers, which have comprised 32.4% of total 2022 deals YTD, have also targeted the Golf segment. Notably, Solace Capital Partners acquired Sun Mountain Sports (March 2022, undisclosed), a leading founder owned golf equipment and apparel company. Private equity firms are expected to remain active in the sector, especially with many finally regaining capacity to evaluate more acquisition opportunities following the frenetic pace of deal activity to close 2021. Through early 2022, middle market private equity firms have demonstrated a commitment to building platforms in the space. Notably, Clearview Capital, which targets companies between $4-$20 million in EBITDA, acquired Worldwide Camping Holdings from L2 Capital in February 2022 (undisclosed). With elevated private equity activity and healthy levels of strategic consolidation, the current market has persisted for high-quality privately owned businesses in the sector. 7
Outdoor Recreation & Enthusiasts | April 2022 BUSINESS VALUATIONS & DRIVERS M&A valuations for privately owned businesses in the middle market are often not disclosed, making pricing transparency difficult. However, Capstone has deep knowledge of the sector, relevant buyers, and the key drivers of premium valuations for privately owned companies in the Outdoor Recreation & Enthusiasts sector. To learn more about the value of your company, contact Ken Wasik, Sophea Chau, or Pete Bailey. KEY VALUATION DRIVERS Brand Strength Trusted and recognized brands often posses strong pricing power, allowing them to more efficiently pass cost increases onto customers. Brand strength is a key determinant of valuations. Customer Retention & Acquisition Loyalty of a customer base allows for a high degree of repeat purchases. Sector players with identified customer retention and acquisition tactics have proven to capture strong growth. Recurring Revenue Subscription models and DTC channels often drive recurring revenue, which allows for more accurate forecasting of future sales for buyers in an M&A process. Acquisition fit Strategic buyers will often pay premiums for companies that provide synergies to their operations and complement or enhance existing product offerings. Consistency of Financial Performance Many outdoor products companies experienced a significant in revenues, making it difficult for buyers to value the company on a normalized basis. A track record of consistent financial performance helps to justify a strong purchase multiple. Competition in M&A Process Ultimately, the market will dictate the purchase multiple, and it is imperative to have the right set of buyers at the table to drive competition and push valuations north. M&A Valuations by Subsector (2017 Present) Median EBITDA Multiple Median Revenue Multiple 15x Valuation Multiple 10.6x 9.9x 9.9x 10x 8.0x 7.9x 5x 1.9x 1.4x 1.0x 0.7x 1.1x 0x Sporting Goods Camping & Hiking, Tactical & Hunting Outdoor Power Boating & Watercraft Fishing Sports Source: Capital IQ, FactSet, PitchBook, and Capstone Research 8
Outdoor Recreation & Enthusiasts | April 2022 NOTABLE TRANSACTIONS AND M&A INSIGHTS Several recent transactions have achieved elevated valuations, pointing to the premium buyers are willing to pay for leading outdoor products providers. Outlined on the next two pages are notable transactions in the sector, inclusive of commentary on the transaction rationale and valuation from Capstone Partners senior bankers and sector experts. Transaction Overview M&A Insight Sophea Chau Managing Director Helen of Troy has acquired leading technical pack is a great example of why brand and everyday backpack provider Osprey Packs for strength matters a company with tremendous an enterprise value of $414.7 million, equivalent to brand equity is able to command premium a pre-synergy EBITDA multiple of ~13.5x valuations. Osprey is a fast growing market (November 2021). The acquisition is expected to leader and will significantly add to Helen of be accretive to Helen of sales growth rate, Housewares portfolio, which includes Hydro Flask gross profit margin, and adjusted EBITDA margin, and OXO. Additionally, international according to a press release.8 In addition, the presence was key in driving up valuation. purchase complements Helen of existing Strategics are willing to pay up for companies brand, Hydro Flask, bolstering its product offerings that can enhance both their product and channel in the Outdoor Adventure category. Osprey Packs mix, which is what happened here with Helen of also generates approximately half of its sales Troy and Osprey. outside the U.S., strengthening Helen of international presence and brand portfolio. Pete Bailey Director Netherlands-based Pon Holdings has acquired acquisition of Dorel Sports and its iconic leading bike provider Dorel Sports for an bicycle brands builds on its prior acquisitions of enterprise value of $810 million, equivalent to 0.7x Santa Cruz (2015) and Bikes (2021) in the revenue and approximately 11.3x EBITDA (October North American market. Additionally, Dorel 2021). The acquisition aligns with strategy to ecommerce experience should benefit create a portfolio of premium and electric bike European market and online revenue. Pon companies and significantly bolsters its market has become the largest bicycle company presence in the U.S. Dorel Sports will add leading with a focus on performance brands for use in brands including Cannondale and Schwinn to urban, leisure, and sport, and 70% of sales from product suite, creating a ~$2.7 billion bike electric bicycles. M&A activity in the Bicycle company, according to a press release.9 The sector continues to be robust, as KKR transaction highlights the elevated strategic buyer subsequently announced the acquisition of appetite for complementary target companies Accell Group, the Dutch owner of Raleigh and that can expand geographic footprint and scale. Sparta bicycle brands, in January for $1.8 billion. 9
Outdoor Recreation & Enthusiasts | April 2022 NOTABLE TRANSACTIONS AND M&A INSIGHTS (CONTINUED) Ken Wasik Head of Consumer Investment Banking Dometic Group (OM:DOM) has acquired Igloo is an important acquisition not only as a Products for an enterprise value of $900 million, valuation datapoint but also as an indication of a equivalent to 2.2x revenue and ~22.2x EBITDA strong shift in consumer behavior. The 22x (September 2021). Igloo is a global provider of EBITDA multiple rivals some of the most cooling boxes and drinkware products in the important deals we have seen historically in the Outdoor industry with over $400 million in annual sector. The reason such a valuation was achieved revenues, according to a press release.10 The is Igloo represents a brand that will acquisition significantly bolsters disproportionately benefit from the consumer product offerings and distribution network in the shift in lifestyles to easy outdoor adventures. North American Outdoor market. Dometic expects Consumers are filling their increased free time deal synergies to generate annual improvements from the shift to at-home work by undertaking of $50 million in EBITDA within five years. short outdoor excursions with a fury. Consumer-focused private equity firm L Catterton Vista Outdoor (NYSE:VSTO) has acquired Stone has acquired leading manufacturer of lightweight Glacier, a premier brand specializing in mobile habitats for outdoor pursuits, Taxa performance hunting gear for backcountry use for Outdoors (March 2022). Terms of the transaction an undisclosed sum (December 2021). Montana- were not disclosed. RX3 also invested alongside L based Stone Glacier manufactures lightweight and Catterton. Taxa provides high performance and durable gear used by backcountry hunters, durable multifunctional camping habitats using outfitters, and guides. The acquisition allows Vista premium, eco-friendly materials. L Catterton will to penetrate the Packs, Camping Equipment, and help expand distribution and product Technical Apparel categories. Stone Glacier is the offerings, leveraging its deep consumer expertise latest deal in an active M&A streak for Vista, and track record of investing in outdoor brands. marking its seventh acquisition in less than 18 months, according to its earnings call.11 Subsegment Tracker 2021 Deal Volume vs 2020 Deal Volume BOATING & WATERCRAFT TACTICAL & HUNTING OUTDOOR POWER SPORTS +188% -3.2% +157% 26 deals vs. 9 deals 30 deals vs. 31 deals 18 deals vs. 7 deals CAMPING & HIKING, FISHING SPORTING GOODS GAMING & ENTERTAINMENT +26.1% 0.0% -1.9% 29 deals vs. 23 deals 48 deals vs. 48 deals 51 deals vs. 52 deals 10
Outdoor Recreation & Enthusiasts | April 2022 SELECT TRANSACTIONS Enterprise EV / LTM Date Target Acquirer Target Business Description Value (mm) Revenue EBITDA Taxa Manufactures and markets adventure campers and 03/08/22 L Catterton; RX3 - - - Outdoors travel trailers. Sun Mountain Solace Capital 03/07/22 Provides bags, carts outwear, and accessories for golf. - - - Sports Partners 02/14/22 SIK Golf LA Golf Partners Manufactures premium golf putters. - - - Cascadia Vehicle Provides rooftop vehicle tents, offroad trailers, and car 01/24/22 Gathr Outdoors camping equipment. - - - Tents Accell Group KKR (NYSE:KKR); Designs, develops, produces, and markets bicycles, 01/24/22* $2,007.4 1.3x 13.6x (ENXTAM:ACCEL) Teslin Capital parts, and accessories. Western Power Arrowhead 01/06/22 Provides power sports parts and accessories. - - - Sports Engineered 12/28/21 Stone Glacier Vista (NYSE:VSTO) Manufactures outdoor and mountaineering equipment. - - - U-Neek RV 12/16/21 RV Country Retails new and used recreational vehicles. - - - Center L2, Salem Designs and manufactures paddle sport and 12/08/21 YakAttack marine accessories. - - - Investment, Oxer Helen of Troy 11/29/21 Osprey Packs Offers backpacking and hiking products. $414.7 - ~13.5x (Nasdaq:HELE) Planet Resource 11/26/21 MAX ATV Provides all-terrain vehicles. - - - (PINX:PRRY) MacNeill Pride Manufacture car top carrier bags, car back 11/08/21 Rightline Gear - - - Group carriers, and truck and SUV tents. Provides performance sports footwear, apparel, 11/05/21 Running Specialty Fleet Feet - - - and accessories. Develops and distributes cycling products including bar 10/25/21 Lizard Skins Marucci Sports - - - tape and grips. Manufactures and sells mountain, urban, recreational, 10/11/21 Dorel Sports Pon $810.0 0.7x ~11.3x and road bicycles. MarineMax 10/05/21 Intrepid Powerboats Offers custom powerboats for boating enthusiasts. - - - (NYSE:HZO) Dometic Designs, manufactures, and markets coolers and 09/17/21 Igloo Products $900.0 2.2x ~22.2x (OM:DOM) other outdoor products. Foresight Vista Manufactures golf performance analysis and 09/10/21 $499.0 5.0x 10.0x Sports (NYSE:VSTO) entertainment technologies. Stanley Black & Manufactures and distributes outdoor power 08/17/21 MTD Holdings $1,600.0 0.8x 8.0x Decker (NYSE:SWK) equipment including garden tractors and mowers. Full-Swing Bruin Capital Provides golf simulators for golf professionals, 07/26/21 - - - Golf Investors enthusiasts, and businesses. Designs, manufactures, and sells camping gear 07/16/21 Argon Technologies MacNeill Pride Group and outdoor rugged products. - - - Provides branded camping hammocks and 05/17/21 Wise Owl Outfitters Thrasio related accessories sold on Amazon and DTC. CF CF CF * = International transaction Blue shade indicates Capstone-advised transaction; CF = confidential Source: Capital IQ, PitchBook, FactSet, and Capstone Research 11
Outdoor Recreation & Enthusiasts | April 2022 PUBLIC COMPANY DATA BOATING & WATERCRAFT Price % 52 Wk Market Enterprise LTM EV / LTM Company 04/21/22 High Cap Value Revenue EBITDA Margin Revenue EBITDA Bénéteau S.A. $14.42 81.8% $1,175.8 $1,061.0 $1,233.5 $39.1 3.2% 0.9x 27.2x Brunswick Corporation $77.90 66.2% $5,968.2 $7,530.6 $5,846.2 $1,074.5 18.4% 1.3x 7.0x Malibu Boats, Inc. $52.04 58.3% $1,087.7 $1,187.8 $1,067.3 $204.0 19.1% 1.1x 5.8x Marine Products Corporation $12.46 66.5% $425.5 $411.4 $298.0 $38.3 12.8% 1.4x 10.8x MasterCraft Boat Holdings, Inc. $24.62 73.2% $455.4 $515.7 $606.9 $96.1 15.8% 0.8x 5.4x Mean 13.9% 1.1x 11.2x EV = enterprise value; LTM = last twelve months Median 15.8% 1.1x 7.0x $ in millions, except per share data NM = Not Meaningful Harmonic Mean 8.9% 1.1x 7.9x CAMPING & HIKING, FISHING Price % 52 Wk Market Enterprise LTM EV / LTM Company 04/21/22 High Cap Value Revenue EBITDA Margin Revenue EBITDA Camping World Holdings, Inc. $25.99 52.8% $1,095.9 $4,247.0 $6,913.8 $1,052.1 15.2% 0.6x 4.0x Clarus Corporation $21.56 66.6% $802.0 $942.0 $375.8 $47.3 12.6% 2.5x 19.9x Dorel Industries Inc. $7.23 31.8% $236.7 $739.6 $1,758.7 $43.3 2.5% 0.4x 17.1x Johnson Outdoors Inc. $79.80 52.6% $803.9 $684.9 $739.5 $111.4 15.1% 0.9x 6.2x Thule Group AB (publ) $40.43 68.8% $4,227.7 $4,385.0 $1,148.6 $273.8 23.8% 3.8x 16.0x YETI Holdings, Inc. $53.00 48.7% $4,613.7 $4,488.0 $1,411.0 $322.8 22.9% 3.2x 13.9x Mean 15.3% 1.9x 12.9x Median 15.1% 1.7x 15.0x Harmonic Mean 8.5% 1.0x 9.2x GAMING & ENTERTAINMENT Price % 52 Wk Market Enterprise LTM EV / LTM Company 04/21/22 High Cap Value Revenue EBITDA Margin Revenue EBITDA Activision Blizzard, Inc. $78.90 79.3% $61,614.8 $54,908.8 $8,803.0 $3,548.0 40.3% NM 15.5x DraftKings Inc. $14.36 22.2% $5,868.5 $5,034.2 $1,296.0 NM NA 3.9x NM Electronic Arts Inc. $123.74 83.1% $34,798.4 $34,025.4 $6,512.0 $1,472.8 22.6% NM 23.1x Enthusiast Gaming Holdings Inc. $2.01 23.1% $268.2 $260.2 $132.3 NM NA 2.0x NM Flutter Entertainment plc $109.17 53.1% $19,198.8 $23,084.1 $8,173.4 $1,355.4 16.6% 2.8x 17.0x Penn National Gaming, Inc. $37.04 38.5% $6,150.5 $15,916.8 $5,905.0 $2,029.7 34.4% 2.7x 7.8x PointsBet Holdings Limited $2.30 21.2% $610.4 $199.0 $188.1 NM NA 1.1x NM Super League Gaming, Inc. $1.58 25.0% $58.2 $43.6 $11.7 NM NA 3.7x NM Mean 28.5% 2.7x 15.9x Median 28.5% 2.8x 16.3x Source: Capital IQ as of April 21, 2022 Harmonic Mean 25.2% 2.2x 13.6x 12
Outdoor Recreation & Enthusiasts | April 2022 PUBLIC COMPANY DATA SPORTING GOODS Price % 52 Wk Market Enterprise LTM EV / LTM Company 04/21/22 High Cap Value Revenue EBITDA Margin Revenue EBITDA Academy Sports and Outdoors, $40.99 80.2% $3,572.1 $4,933.4 $6,773.1 $1,218.0 18.0% 0.7x 4.1x Inc. Acushnet Holdings Corp. $42.59 73.6% $3,081.8 $3,205.8 $2,147.9 $308.1 14.3% 1.5x 10.4x Big 5 Sporting Goods Corporation $16.05 33.7% $349.9 $543.5 $1,161.8 $252.2 21.7% 0.5x 2.2x Callaway Golf Company $23.02 61.0% $4,251.4 $7,014.8 $3,133.4 $540.5 17.2% 2.2x 13.0x DICK'S Sporting Goods, Inc. $103.62 70.3% $8,274.0 $10,141.0 $12,293.4 $3,061.5 24.9% 0.8x 3.3x Escalade, Incorporated $13.40 52.1% $180.8 $276.3 $326.8 $44.0 13.4% 0.8x 6.3x Frasers Group plc $9.14 84.7% $4,317.9 $5,271.7 $5,605.0 $882.9 15.8% 0.9x 6.0x Hibbett, Inc. $46.87 46.1% $608.0 $874.1 $1,691.2 $339.9 20.1% 0.5x 2.6x Mean 18.2% 1.0x 6.0x Median 17.6% 0.8x 5.0x Harmonic Mean 17.5% 0.8x 4.2x OUTDOOR POWER SPORTS & EQUIPMENT Price % 52 Wk Market Enterprise LTM EV / LTM Company 04/21/22 High Cap Value Revenue EBITDA Margin Revenue EBITDA Alamo Group Inc. $137.85 83.1% $1,645.5 $1,889.8 $1,334.2 $168.4 12.6% 1.4x 11.2x Bombardier Inc. $1.13 62.0% $2,706.1 $8,761.5 $6,085.0 $364.0 6.0% 1.4x 24.1x Bosch Limited $190.75 75.5% $5,626.0 $5,216.5 $1,551.1 $223.4 14.4% 3.4x 23.3x Brunswick Corporation $77.90 66.2% $5,968.2 $7,530.6 $5,846.2 $1,074.5 18.4% 1.3x 7.0x Deere & Company $424.36 95.0% $130,187.0 $174,174.0 $44,413.0 $8,466.0 19.1% 3.9x 20.6x Honda Motor Co., Ltd. $26.31 90.7% $45,006.3 $84,503.6 $124,205.9 $20,803.3 16.7% 0.7x 4.1x Husqvarna AB (publ) $10.18 66.1% $5,831.7 $6,930.8 $5,216.3 $803.2 15.4% 1.3x 8.6x Kubota Corporation $17.67 83.0% $21,205.6 $28,520.9 $19,079.4 $2,653.1 13.9% 1.5x 10.8x Lowe's Companies, Inc. $205.03 77.9% $135,549.6 $163,484.6 $96,250.0 $15,104.0 15.7% 1.7x 10.8x Polaris Inc. $106.80 72.3% $6,352.1 $7,821.2 $8,252.0 $997.0 12.1% 0.9x 7.8x Stanley Black & Decker, Inc. $144.25 64.1% $22,020.4 $29,543.5 $15,617.2 $2,844.0 18.2% 1.9x 10.4x Techtronic Industries Company $14.38 62.7% $26,378.7 $28,169.2 $13,203.2 $1,488.0 11.3% 2.1x 18.9x Limited Textron Inc. $69.11 87.0% $14,950.5 $17,176.5 $12,382.0 $1,337.0 10.8% 1.4x 12.8x The Toro Company $84.98 71.9% $8,883.6 $9,863.6 $4,019.2 $605.7 15.1% 2.5x 16.3x Tractor Supply Company $219.18 90.7% $24,580.2 $28,091.8 $12,962.9 $2,157.1 16.6% 2.2x 13.0x Mean 14.4% 1.8x 13.3x Median 15.1% 1.5x 11.2x Source: Capital IQ as of April 21, 2022 Harmonic Mean 13.3% 1.5x 10.7x 13
Outdoor Recreation & Enthusiasts | April 2022 PUBLIC COMPANY DATA TACTICAL & HUNTING Price % 52 Wk Market Enterprise LTM EV / LTM Company 04/21/22 High Cap Value Revenue EBITDA Margin Revenue EBITDA American Outdoor Brands, Inc. $13.31 36.3% $177.7 $180.3 $266.1 $36.5 13.7% 0.7x 4.9x AMMO, Inc. $4.24 40.9% $489.8 $470.9 $182.5 $49.1 26.9% 2.6x 9.6x Axon Enterprise, Inc. $120.65 57.7% $8,565.6 $8,149.5 $863.4 NM NA NM NM CZG - Ceská zbrojovka Group SE $25.93 91.5% $874.9 $1,044.1 $494.9 $83.5 16.9% 2.1x 12.5x Smith & Wesson Brands, Inc. $14.55 36.7% $662.2 $598.1 $1,005.8 $360.3 35.8% 0.6x 1.7x Sturm, Ruger & Company, Inc. $72.32 78.2% $1,272.6 $1,053.3 $730.7 $229.2 31.4% 1.4x 4.6x V.F. Corporation $56.49 62.2% $21,969.1 $26,981.5 $11,599.8 $2,378.4 20.5% 2.3x 11.3x Vista Outdoor Inc. $36.09 68.5% $2,030.4 $2,801.0 $2,832.6 $668.1 23.6% 1.0x 4.2x Mean 24.1% 1.5x 7.0x Median 23.6% 1.4x 4.9x Harmonic Mean 21.9% 1.1x 4.6x Average Public Company Trading Multiples by Segment (Last Twelve Months) EV/Revenue EV/EBITDA 20.0x 15.9x 15.0x 13.3x Valuation Multiple 12.9x 11.2x 10.0x 7.0x 6.0x 5.0x 2.7x 1.9x 1.8x 1.5x 1.1x 1.0x 0.0x Boating & Camping & Hiking, Gaming & Sporting Goods Outdoor Power Tactical & Hunting Watercraft Fishing Entertainment Sports & Equipment Source: Capital IQ as of April 21, 2022 14
Outdoor Recreation & Enthusiasts | April 2022 OUTDOOR RECREATION & ENTHUSIASTS REPORT CONTRIBUTORS Kenneth Wasik Managing Director, Head of Consumer Investment Banking kwasik@capstonepartners.com | 917-434-6124 Ken joined Capstone to lead the Consumer Investment Banking practice. He brings nearly 25 years of investment banking experience including domestic and international mergers & acquisitions, initial and secondary offerings of public companies, debt raises and private placements for his clients. He has helped raise over $10 billion in capital for clients during his career. Ken regularly presents at consumer industry conferences and has testified twice as an expert witness on consumer brands. He joins Capstone Partners from Stephens Investment Bank, where he started and led the Consumer Products Group. Ken is a Series 79 Registered Investment Banking Representative and holds an MBA in Finance from Columbia University and a BS in Accounting from St. University. Sophea Chau Managing Director schau@capstonepartners.com | 617-619-3307 Sophea has 15 years of experience in mergers & acquisitions, private placements and financial advisory services. Her responsibilities include asset positioning and strategy articulation, providing financial and valuation analysis, and performing due diligence. Prior to joining Capstone Partners, Sophea was an analyst at FTN Midwest Securities, a full- service investment banking firm based in Cleveland. While working in their New York office, she focused on M&A advisory for middle-market companies in a variety of industries, including consumer products, healthcare, and marketing & advertising. The M&A Advisor named Sophea to its prestigious (previously, 40- UNDER-40 deal makers list in 2018. Sophea is on the Board of the Columbia Alumni Association of Boston and holds a BA in Economics from Columbia University. Peter Bailey Director pbailey@capstonepartners.com | 310-740-3286 Pete has 16 years of experience executing M&A and capital markets transactions in a variety of industries including consumer. His investment banking coverage includes the tactical & outdoor products and sports technology sectors. Prior to joining Capstone Partners, Pete worked as an investment banker at Stephens Inc., Wells Fargo & Company, and Citigroup, Inc. He also served over five years as a U.S. Army intelligence officer, which included two tours to Bosnia-Herzegovina in support of peacekeeping and counter-terrorism operations, and deployment to Kuwait and Iraq in support of Operation Iraqi Freedom. He holds a BS in General Management from the U.S Military Academy and an MBA from Harvard Business School. Connor McLeod Research Manager cmcleod@capstonepartners.com | 617-619-3319 Connor currently serves as Research Manager at Capstone Partners. Connor provides M&A insights, capital markets analysis, and macroeconomic trends for C-suite middle market executives. He specializes in the coverage of the Consumer and Healthcare industries. Connor holds a BA in Economics from Bates College and is Series 7 Registered Securities Representative. 15
Outdoor Recreation & Enthusiasts | April 2022 FIRM TRACK RECORD Capstone has represented numerous companies in the Consumer industry, with the Outdoor Recreation & Enthusiasts sector serving as a key area of focus. A sampling of closed and ongoing transactions are included below. For more information about Consumer track record, visit here. CONFIDENTIAL CONFIDENTIAL CORPORATE SALE CORPORATE SALE HAS BEEN ACQUIRED BY HAS BEEN ACQUIRED BY MANUFACTURER OF LEADING A U.S. SUBSIDIARY OF BIKES AND PROVIDER OF ACCESSORIES ELECTRIC BIKES HAS BEEN ACQUIRED BY HAS MERGED WITH HAS BEEN ACQUIRED BY HAS BEEN ACQUIRED BY a portfolio company of HAS BEEN ACQUIRED BY HAS BEEN ACQUIRED BY HAS BEEN ACQUIRED BY HAS BEEN ACQUIRED BY a portfolio company of a portfolio company of 16
Outdoor Recreation & Enthusiasts | April 2022 ENDNOTES 1. https://www.verifiedmarketresearch.com/product/us-outdoor-recreation-products-market/, accessed March 8, 2022. 2. https://investors.malibuboats.com/events-and-presentations/default.aspx, accessed March 7, 2022. 3. https://www.nmma.org/statistics/article/23889#:~:text=NMMA%20shared%20the%20latest%20industry,highs%20i n%202020%20and%207, accessed March 8, 2022. 4. https://ir.callawaygolf.com/static-files/6be96c57-3f79-471b-8a5e-8dbb5bffde89, accessed March 9, 2022. 5. https://www.ngf.org/participation-and- engagement-rise-again/, accessed March 9, 2022. 6. https://www.npd.com/news/blog/2022/four- ways-the-cycling-industry-can-set-its-sights-on-success/, accessed March 9, 2022. 7. https://www.nps.gov/subjects/socialscience/annual-visitation- highlights.htm., accessed April 20, 2022. 8. https://www.businesswire.com/news/home/20211129005699/en/Helen-of-Troy-Announces-Agreement-to- Acquire-Osprey%C2%AE-Packs-Inc., accessed March 9, 2022. 9. https://www.betamtb.com/news-issues/pon- holdings-to-acquire-dorel-sports-in-810-million-deal/, accessed March 9, 2022. 10. Dometic https://www.dometic.com/en-se/outdoor/se/news/global/dometic-acquires-igloo-with-more-than-usd-400- million-in-annual-revenues, accessed March 7, 2022. 11. https://s24.q4cdn.com/982007713/files/doc_financials/2022/q3/VSTO- Webslides-Q3-FY22.pdf, accessed March 6, 2022., accessed March 9, 2022. Common Goals. Uncommon Results. Disclosure This report is a periodic compilation of certain economic and corporate information, as well as completed and announced merger and acquisition activity. Information contained in this report should not be construed as a recommendation to sell or buy any security. Any reference to or omission of any reference to any company in this report should not be construed as a recommendation to buy, sell or take any other action with respect to any security of any such company. We are not soliciting any action with respect to any security or company based on this report. The report is published solely for the general information of clients and friends of Capstone Partners. It does not take into account the particular investment objectives, financial situation or needs of individual recipients. Certain transactions, including those involving early-stage companies, give rise to substantial risk and are not suitable for all investors. This report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Prediction of future events is inherently subject to both known and unknown risks and other factors that may cause actual results to vary materially. We are under no obligation to update the information contained in this report. Opinions expressed are our present opinions only and are subject to change without notice. Additional information is available upon request. The companies mentioned in this report may be clients of Capstone Partners. The decisions to include any company in this report is unrelated in all respects to any service that Capstone Partners may provide to such company. This report may not be copied or reproduced in any form or redistributed without the prior written consent of Capstone Partners. The information contained herein should not be construed as legal advice. 17
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