Q RECREATIONAL PRODUCTS CONTACTS INDUSTRY OVERVIEW. Jacob Voorhees Managing Director (617)

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1 RECREATIONAL PRODUCTS CONTACTS Jacob Voorhees Managing Director (617) Sophea Chau Director (617) INDUSTRY OVERVIEW The Recreational Products consumer base is vast and diverse, with more than 145 million people participating in outdoor recreational activities each year. According to the Outdoor Industry Association (OIA), there are more participants in recreational sports than there are total attendees to the NFL, NBA, MLB and NHL games. The OIA also found that consumers spend an estimated $887.0 billion on Recreational Products annually, outpacing personal consumption on the Education, Gas and Fuel, or Pharmaceuticals industries. Spending is slated to increase as unemployment rates drop, hourly wages rise and the Consumer Confidence Index (which measures consumer saving and spending habits) reaches pre-recession highs. The diverse range of summer activities including fishing, kayaking, camping, paddle boarding and golfing appeal to individuals of varying interests and lends itself to the market s attraction and resilience. Americans are also becoming more active, according to the Physical Activity Council (PAC). What s more, PAC noted that income and activity levels are directly correlated; meaning that the most active of the US population are also the wealthiest. These favorable macro-economic trends and socioeconomic factors indicate a growing industry and suggest a healthy outlook for mergers and acquisitions (M&A). MERGER & ACQUISITION ACTIVITY Through mid-june, 47 deals were announced or closed in the Recreational Products industry. Activity year-to-date (YTD) mirrors the impressive number of transactions seen in 2016, which was the second most active year since the recession. Strategic companies comprised 59.5% of 2017 deals as the companies sought to enter new regions, diversify their product line and acquire leading brands. The remaining 40.5% of transactions were completed by private equity groups making platform (21.4%) and add-on (19.1%) acquisitions. The heavy consolidation in the industry, improving economy, and shift towards health-conscientiousness have stimulated M&A transactions and have made the market an attractive place for buyers, sellers and investors. BOSTON CHICAGO LONDON LOS ANGELES NEW YORK ORANGE COUNTY PHILADELPHIA SAN DIEGO SILICON VALLEY TAMPA Number of Transactions M&A Transactions: Recreational Products YTD 2016 YTD 2017 YTD ended June 15 Sources: Capital IQ and Capstone Partners LLC Research

2 SEGMENT HIGHLIGHT: RUNNING & JOGGING With more than 50 million participants each year, running and jogging are the most popular outdoor activities for both youth and adults, according to the Outdoor Foundation. Footwear, wearable technology and apparel have risen in demand as consumer interest climbs. According to MarketWatch, theglobal running gear market is projected to grow at a compound annual growth rate (CAGR) of 7.4% from 2016 to With trail runners requiring different clothing styles, accessories and shoes than city runners, there are opportunities for companies to develop unique brands and establish dominance over niche markets. Transactions year-to-date in this segment have included CriticalPoint Capital s acquisition of The Running Specialty Group (January), Wiiw Wearables acquisition of esoles (February) and Coal Hill Capital s acquisition of Running Belt Max (February). SEGMENT HIGHLIGHT: CAMPING Camping is a holistic, low-cost outdoor activity that is gaining transaction both nationally and internationally. In the US and Canada alone, more than 37 million households went camping in 2016, according a Kampgrounds of America (KOA) report, with more than 14 million households camping three or more times that year. Traditionally, Baby Boomers (those aged 50 and above) have been the key demographic in this segment. This bodes well for the future of the industry as the aging population is comprising a growing share of the total population. At the same time, young adults are starting to see the appeal of camping. According to KOA, more than half of the millennials surveyed plan to camp in This interest has created a shift in the consumer camping products, as younger generations seek environmentallyfriendly gear and high-tech equipment. These campers veer away from traditional equipment such as rope and pole tents and seek more modernized gear such as backpacking tents and tent accessories. According to a global camping equipment report by Technavio, there is a significant shift towards millennials as the target audience and this young crowd prefers camping equipment which provides comfort away from home. The industry will benefit from these compounding trends and companies that can successfully market to both older and younger generation will become attractive targets. SEGMENT HIGHLIGHT: WATER SPORTS Americans spend approximately $29.0 billion each year on water sports gear, accessories and vehicles, according to the OIA. The fastest growing recreational sport is stand-up paddle boarding, which saw a three year change of 61.6%, according to the Outdoor Foundation. Another very popular sport is kayaking, which has increased from 4.1 million participants in 2006 to more than 10.0 million in According to Matt Powell, Vice President and sport industry analyst of the NPD Group, while stand-up paddle boarding has become a highly-saturated industry, kayaking is still a largely uncharted market. Retailers and manufacturers that will have the most success in this space are those who focus less on selling, and more on engaging with consumers through the experience, Powell noted in a NPD Group press release. I suspect that generational factors will play into kayak sales, especially fishing kayaks. As more Boomers who tend to be outdoor enthusiasts and favor human-powered recreation retire and free up their time, I expect that fishing kayak sales will continue to grow. Capstone Partners LLC 2

3 NOTABLE TRANSACTIONS Several notable transactions have already been completed or announced through. Select transactions are outlined below, followed by a more comprehensive list on the following table. TaylorMade Golf acquired by KPS (May 2017) After owning the company for 20 years, Adidas agreed to sell TaylorMade (comprised of TaylorMade, Adams and Ashworth brands) to private equity firm KPS Capital Partners. The transaction closed for $425.0 million. Founded in 1979, TaylorMade is a leading designer of high-performance golf equipment and plays a prominent role in the PGA TOUR. KPS will work with the management team at TaylorMade to grow the company and build on its brand both organically and through strategic acquisitions. David Abeles, TaylorMade CEO, commented in a press release, The TaylorMade team is deeply committed to making the most technically advanced performance-driven golf equipment, and this mission will never change. Given their strategic vision, operational resources and significant access to capital, KPS is the ideal partner to help TaylorMade build upon its strong momentum. Eastman Outdoors acquired by FeraDyne Outdoors (March 2017) Eastman Outdoors outdoor manufacturer FeraDyne. Terms of the deal were not disclosed. In addition to Eastman s outdoor cooking equipment, its portfolio includes Carbon Express (market leader in archery equipment) and Gorilla Gear (tree stand safety harnesses and accessories). The transaction enhances FeraDyne s existing archery and bowhunting platform by building on its 2015 acquisition of archery company Field Logic. With the Eastman Outdoors acquisition, we are further executing our strategy of providing archers the most complete line of complementary, market-leading brands and products within their perspective categories, FeraDyne CEO Todd Seyfert stated. This addition will allow FeraDyne Outdoors to expand upon our commitment of offering the best new and innovative products, backed with exceptional levels of customer service, distribution scale, and sales and marketing expertise. Kwik Tek acquired by Falconhead Capital & M3 Outdoor (January 2017) Private equity firms Falconhead Capital and M3 Outdoor acquired Kwik Tech, a Colorado-based outdoor and recreational watersports company. Terms of the deal were not disclosed. Kwik Tek s products include wakeboards, pool floats, snowshoes and sleds. The items are sold through consumer brands Airhead, Sportsstuff and Yukon Charlie (which Capstone advised the sale of in 2014). Kwik Tek s leadership team has done a tremendous job growing the Airhead, Sportsstuff, and Yukon Charlie s brands all while developing a scalable multi-channel distribution footprint. Kwik Tek offers a strong platform to innovate and enhance its already exceptional brands. This will provide the foundation to accelerate growth and offer substantial upside through various paths of expansion, stated Falconhead Chairman & CEO David S. Moross. Capstone Partners LLC 3

4 RECREATIONAL PRODUCTS: SELECT M&A TRANSACTIONS Enterprise EV / LTM Ann. Date Target Acquirer Target Business Description Value (mm) Revenue EBITDA 05/22/17 Seattle's Hydro Spot GrowGeneration Operates an online retail store for indoor and outdoor hydroponic gardening products. 05/15/17 ShareShed Leavetown.com Vacations Operates online communities that connect people to local outdoor guides. 05/10/17 Bike World Bikes Plus Retails cycling products for customers in the Mid- South area. 05/10/17 05/08/17 TaylorMade Golf Supreme Brands KPS Manufactures golf products. $ Roustan Manufactures hockey equipment. 05/01/17 Gander Mountain Camping World Operates outdoor specialty stores for shooting sports, hunting, fishing, camping and lifestyle products. $ /20/17 Vanhawks Warren Industries Develops Vanhawks Valour, a commuter bicycle with sensor integration, GPS navigation and Wi-Fi. 03/29/17 Armada Skis Amer Sports Manufactures and markets skiing equipment and poles. $ x - 03/29/17 Running Belt Max Coal Hill Manufactures running and jogging belts /18/17 Wabash Valley Manufacturing PlayPower Manufactures outdoor furniture and accessories /16/17 Eastman Outdoors Ares, Feradyne & Snow Phipps Manufactures hunting and related cooking equipment. 03/09/17 Wild Things Mission Ready Provides apparel and gear for mountain climbing, camping, hiking, cycling and military applications. $ /09/17 Aquafly FlyDive Provides water sports equipment. 03/08/17 Eagle One Golf P&W Golf Manufacturers golf products. 02/28/17 Performance Sports Antares, Fairfax Financial & Sagard Produces equipment for ice hockey, roller hockey, baseball, softball and lacrosse. $ x 02/16/17 Victus Sports Envisage & Marucci Manufacturers customized baseball bats. 02/15/17 New Moosejaw Wal-Mart.com Offers hiking, camping, climbing, fitness, water sports, travel and snow products. $ /10/17 Eastern Outfitters SportsDirect.com Retail Offers online retail of outerwear and outdoor gear. $ /08/17 esoles Wiivv Wearables Manufactures custom insoles for cycling, running, walking, skiing, hiking, and golf and dress shoes. 02/02/17 Revolution Cycles Trek Bicycle Sells and services bicycles and related products. 01/26/17 The Running Specialty CriticalPoint Operates retail stores for running products which include apparels and shoes. 01/25/17 Arctic Cat Textron Specialized Vehicles Manufactures snowmobiles, all-terrain vehicles and recreational off-highway vehicles. $ x NM 01/19/17 Kwik Tek 01/13/17 SPECD-OUT Falconhead Capital & M3 Outdoor Brothers In Arms Firearms Manufactures water sports products. Retails outdoor gear and survival kit supplies. 01/10/17 Gared Gen Cap America Manufactures sporting goods equipment for athletes of all ages. Capstone Partners LLC 4

5 PUBLIC COMPANY TRADING & OPERATING DATA Price % 52 Wk Market Enterprise LTM EV / LTM Company 06/28/17 High Cap Value Revenue EBITDA Margin Revenue EBITDA Amer Sports Corp. $ % $2,677.0 $3,246.5 $2,831.7 $ % 1.1x 10.9x Black Diamond, Inc. $ % $162.1 $89.2 $151.5 $ % 0.6x NM Brunswick Corporation $ % $5,010.7 $4,994.7 $4,578.5 $ % 1.1x 8.4x Callaway Golf Co. $ % $1,086.7 $982.9 $906.1 $ % 1.1x 15.9x Dorel Industries Inc. $ % $773.2 $1,201.1 $2,604.0 $ % 0.5x 8.2x Escalade Inc. $ % $183.6 $208.0 $163.9 $ % 1.3x 10.3x Johnson Outdoors Inc. $ % $327.4 $288.6 $457.8 $ % 0.6x 6.2x Lafuma SA $ % $173.7 $165.6 $176.4 $ % 0.9x 18.8x EV = enterprise value; LTM = last twelve months $ in millions, except per share data NM = Not Meaningful; NA = Not Available Mean 7.9% 0.9x 11.3x Median 8.5% 1.0x 10.3x Harmonic Mean 0.3% 0.8x 9.9x Last Twelve Month Margin Performance 50% 40% 30% 20% 10% 0% 45.8% 10.5% 29.7% N/A 27.2% 11.3% 44.2% 6.1% 23.8% 25.3% 5.6% 41.4% 41.2% 10.6% 10.1% Amer Sports Black Diamond Brunswick Callaway Golf Dorel Industries Escalade Johnson Outdoors 11.5% Lafuma Gross Margin % EBITDA Margin % Last Twelve Month 1-Year Revenue Growth 10.0% 8.0% 9.3% 8.7% 6.0% 4.0% 2.0% 2.1% 4.6% 2.6% 2.6% 0.0% -2.0% -4.0% 0.0% -2.2% Amer Sports Black Diamond Brunswick Callaway Golf Dorel Industries Escalade Johnson Outdoors Lafuma Source: Capital IQ as of June 8, 2017 Capstone Partners LLC 5

6 CAPSTONE PARTNERS: RECREATIONAL PRODUCTS TRANSACTIONS has merged with a portfolio company of a portfolio company of has divested strategic joint venture a portfolio company of financial advisory financial advisory THE AMERICAN BICYCLE GROUP, LLC Capstone Partners LLC 6

7 THE RECREATIONAL PRODUCTS TEAM Jacob Voorhees, Managing Director (617) Jacob is a founding member of Capstone Partners. He focuses on asset positioning, strategy articulation, due diligence and negotiations coordination. Formerly, Jacob was with Andersen Corporate Finance LLC, where he focused his efforts on the software and direct marketing industries. He started his career in New York City with Rabobank International, a multi-national Dutch investment bank headquartered in Utrecht, the Netherlands. While at Rabobank International, Jacob worked in the mergers and acquisitions group focusing on cross-border transactions in the consumer products, food and beverage industries. The M&A Advisor named Jacob to its prestigious 40-UNDER-40 deal makers list in Jacob received an MBA from the Sloan School of Management at Massachusetts Institute of Technology (MIT) and a BS from Cornell University. Jacob is qualified as a General Securities Representative. Sophea Chau, Director schau@capstonellc.com (617) Sophea specializes in mergers & acquisitions, private placements and financial advisory services. Her responsibilities include providing financial and valuation analysis, performing due diligence and drafting all marketing materials. Prior to joining Capstone, Sophea was an analyst at FTN Midwest Securities, a full-service investment banking firm based in Cleveland. While working intheir New York office, she focused on M&A advisory for middle-market companies in a variety of industries, including healthcare, pharmaceutical services and marketing & advertising. Sophea is Vice President of the Columbia Alumni Association of Boston and holds a Bachelor of Arts in Economics from Columbia University BOUTIQUE RESTRUCTURING INVESTMENT BANK OF THE YEAR 2016 MIDDLE MARKET INVESTMENT BANKING FIRM OF THE YEAR 2015 MERGERS & ACQUISITIONS DEAL OF THE YEAR TURNAROUND AWARDS Capstone Partners LLC 7

8 CAPSTONE S OFFICE LOCATIONS BOSTON 176 Federal Street 3rd Floor Boston, MA (617) CHICAGO 200 South Wacker Drive Suite 3100 Chicago, IL (312) LONDON 42 Brook Street London W1K 5DB United Kingdom +44 (0) LOS ANGELES 401 Wilshire Suite 1200 Santa Monica, CA (858) NEW YORK 340 Madison Avenue 10 th Floor New York, NY (212) ORANGE COUNTY Avenida de la Carlota Suite 600 Laguna Hills, CA (949) PHILADELPHIA 1515 Market Street 12th Floor Philadelphia, PA (215) SAN DIEGO High Bluff Drive Suite 200 San Diego, CA (858) SILICON VALLEY 228 Hamilton Avenue 3rd Floor Palo Alto, CA (650) TAMPA 1550 W Cleveland Street Suite 10 Tampa, FL (813) ABOUT CAPSTONE PARTNERS Capstone Partners LLC is an award-winning investment banking firm dedicated to serving the corporate finance needs of middle market business owners, investors and creditors. Over the past 15 years, Capstone has earned a reputation as one of the most innovative firms in the industry, offering corporate sale & divestiture, merger & acquisition, private placement, corporate restructuring, valuation and financial advisory services. The firm maintains seven industry practices, including: Business Services, Consumer Products, Education & Training, Government & Defense Services, Health & Medical, Industrial & Manufacturing, and Technology & Telecom. Headquartered in Boston, Capstone has offices in Chicago, London, Los Angeles, New York, Orange County, Philadelphia, San Diego, Silicon Valley and Tampa with an international presence that spans 450+ professionals in 70 offices across 31 countries. For more information about our expertise, please visit World Class Wall Street Expertise. Built for the Middle Market Capstone Partners LLC. All rights reserved.