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I picked up a bike there 2 months ago and was shocked how big the place was, not quite Amazon big but way bigger than I expected. I asked if they had a bike park in the back .🤪. The 2 working there just kind of shrugged and had the "record store attitude" or "trouble" on the horizon . Guess it was the trouble look. Sad to see them go.
And me without money to snag a deal or 2..
Paging Jeff Brines
Vista Outdoor agrees to sell Revelyst to investment group for $1.125B
"....the Revelyst unit, which includes Bell, Giro, Fox Racing, CamelBak, Blackburn, QuietKat and other brands."
Simplon bikes in difficulty and filing for insolvency
https://www.krone.at/3536682
Austrian article but Google translate works
Thx Noah.
Can't believe I missed this one. Shows how closely I'm following "the markets" right now. Noah basically caught the closing act to a much longer story, which in essence can be summarized in saying Vista is going private in a two part transaction totaling $3.4B including debt. Due to Vista's holdings, which includes firearm related companies, they basically split the company into two parts to receive the maximum amount in the deal (Noah caught the "bike adjacent" transaction). On that note, this probably isn't a surprise to anyone, but there are certain private equity funds/investment groups that basically stipulate in theirbylaws they are not allowed to invest in a company that has business in the firearms industry. Hence, Vista had to split the entity into two parts (which was already done internally) to get the deal done. The board has approved the deal but shareholders still need to vote.
EDIT: There are some takeaways I can pull from this but I realized if I really want to do a good job of this I'd want to include Fox Factory and maybe even Shimano in the analyisis. Stand by. I may actually do this.
In any event - here are some follow up links:
The Reuters story from Friday https://www.reuters.com/markets/deals/vista-outdoor-strikes-deal-sell-itself-two-parts-34-billion-2024-10-05/
The company's latest earnings presentation. I feel a lot of you will appreciate this. https://s29.q4cdn.com/177147254/files/doc_financials/2025/q1/Q1-FY25-We…
There was also some backlash from REI and MEC after the Parkland shooting in 2018 regarding the connection between the firearms branch and the cycling branch in Vista Outdoors brands portfolio.
https://www.bicycleretailer.com/industry-news/2022/05/05/vista-outdoor-separate-shooting-sports-outdoor-sports-spin
A bunch of Nukeproof and Vitus parts and hardware are being sold on eBay by a bike shop in England named "Ascend Components", while the shop's Facebook page also advertises frames.
They also have a seatpost that looks like a relabelled Brand-X Ascend XL, so perhaps they were or have connections to one of WiggleCRC's former suppliers. The parts I was after were out of stock at CRC when it went down, while the frames they listed don't have shocks.
Slightly off-topic, but Brembo just bought Ohlins:
https://www.reuters.com/markets/deals/brembo-buys-suspension-maker-ohlins-racing-405-million-2024-10-11/
"The group has 500 employees across two production facilities, in Sweden and Thailand, two R&D centres and four distribution and testing branches in the U.S., Germany, Thailand and Sweden, Brembo said.
$400 million for Ohlins does'nt seem like a lot when you consider that Rad Power is valued at £1.4 billion.
is the Tenneco referenced in the article the same Tenneco that used to own Marzocchi?
Gonna leverage the ever-loving crap outta those synergies...
One in the same.
*Rad Power is way, way, way over valued at £1.4 billion
They should synergize the name: BrembÖhlins
Private company. They did raise a lot of capital at a high valuation, so you can't say it's overvalued. Just that you wouldn't pay for it at that price (me neither too).
It's got all the buzz words, commuting electric sustainable bike for marketing rounds. Not really a surprise they could hit such a valuation from funding rounds.
Best-in-class thought leadership right there!
Its like my Patagonia vest channels me to the board when there is stuff like this for me to write about
Per the usual, this post got a little long. In it, I unpack the valuation of Rad Power Bikes relative to broader economic movements and loosely tie it into the Brembo/Ohlins deal. If this isn't interesting to you, skip this!
RE; Rad Power Bikes valuation - We know how much money Rad Power has raised but we don't know how much equity they have sold hence we really don't know what the valuation is (at least as far as I can find). Linqto is the only place I see a $1.4B number (not £1.4B ) but they are hardly a definitive source of financial intelligence. They are likely guessing the company sold a total of ~20-25% so the math is $329 ÷ ~20-25% = $1.4B
Regardless, what we do know is the company has raised a total of $329M with their most recent round, their Series D, raising $154M. What is illustrative about this is they did their Series D in October of 2021. Now go look at the chart below. What this shows you is they raised right before rates started going up. Rising rates proved to be the death blow to venture capital and growth valuations. As a refresher, when rates are effectively zero the market is willing to pay significantly more, and take significantly more risk, for a given return. Hence, Rad Power raising all this money and being valued so favorably.
Rates go up, what happens? The market is no longer willing to take this kind of risk (because it doesn't have to) and the multiple ascribed to a company like Rad Power plummets. Big point, if Rad Power were to go sell equity in 2024, its highly unlikely to be nearly as expensive as it was in 2021 (unless the company's business has gone bananas, which we can safely assume from this thread it hasn't). A copmany raising at a lower valuation is what is known as a "down round", and it can be very difficult for a company to dig itself out of this situation when it comes to next steps in the equity markets. When this happens, a company usually needs to right the ship fast and operate sustainably (no longer operate at a loss) or they'll implode.
- https://www.geekwire.com/2024/more-layoffs-at-rad-power-bikes-as-seattle-e-bike-maker-aims-to-ensure-brands-longevity/ as they are doing what they need to operate as a sustainable business, not a "fast growing tech company".
Ironically, here is the latest story I can find on them - looks like they are heeding the advice in this thread
What I really want this to illustrate to those following this thread is what happens when interest rates are on the floor and there is excessive amounts of capital deployed into an economy (COVID stimulus stuff). While either one of those things can create wonky economic side effects, in tandem it can really distort all sorts of things, where the fun-house style mirror effect pushes people well past the point of common sense and the madness of crowds takes over.
As to the Brembo/Ohilins deal, I'd love to see their financials over the last few years so we could understand what the market is paying. My guess is Fox was a great benchmark, being its public, and there was a healthy premium paid by Brembo to get the deal done - unless there were balance sheet troubles, which I doubt considering the type of buyer.
Wild times in the outdoor industry. Question for everyone following along, do you all see M&A potentially coming back as a good thing or a bad thing?
https://proff.se/foretag/%C3%B6hlins-racing-aktiebolag/upplands-v%C3%A4sby/bilar/2JYR4WMI5YCZW
Here you can see the Öhlins financial statements from the later years. Its swedish language, and with swedish money /SEK, but most of the info should be interesting for you in this case.
I think the M&A is good overall.
There are too many large bike manufacturers and not enough small manufacturers (imo). The consolidating of the large manufacturers should alloy more efficient investment and improvement in technology and materials construction, which is really where MTB is heading.
Geometry is cheap to engineer, scaling 3D printed yokes, new carbon technology etc isn't, and requires big players with big investment.
Having said that, the growth in boutique offerings is the necessary part to offset this, and we've seen the trickle down in materials tech benefit this micro brands. I.e frameworks design, Privateer, Airdrop etc etc. As providing viable niche alternatives is essential so all bikes don't end up a) expensive and b) a session.
As mentioned, steel is by far the most sustainable bike material: https://www.reynoldstechnology.biz/company-butted-steel-tubing/our-environmental-impact-study/
Almost all my bikes are steel now, not necessarily for that reason, but it's just a side benefit.
KTM's umbrella company cancelled their 2024 guidance citing "market development in the second half of the year below expectations" due to "difficult macroeconomic conditions (that) are lasting longer than expected".
I can tell you from an analyst perspective, anytime a company pulls guidance its bad.
While this is just one data point, and the demographic crossover is most certainly not 1:1, this would suggest we are not out of the woods just yet and companies will likely continue to struggle. Worth noting, KTM does have a bicycle unit which is primarily e-bike (and if I'm honest, they could certainly use someone from the Vital audience to improve their offerings). Pretty sure they also own Felt.
EDIT: KTM legitimately might be in trouble. Also, I would not be surprised to hear Felt is being shopped around at a significant discount. They need cash and they need to focus on core operating activities. Oh, and their CFO should be fired.
Here is the press release
---------
Guidance 2024 canceled
Market development in the second half of the year below expectations
The difficult macroeconomic conditions are lasting longer than expected. The European economy is stagnating, with the important German market in particular in recession. In the USA, consumer purchasing power remains low due to the high cost of living and the long period of expensive consumer credit.
Motorcycle segment: US market as a whole declining, Europe losing momentum
Bicycle segment: restructuring is in full swing, destocking continues
As a result of these circumstances, PIERER Mobility will fall short of expectations in terms of revenue and earnings, as well as with regard to the reduction in working capital and net debt in the current financial year, and is revoking its guidance for the 2024 financial year. A new review of non-cash value adjustments will also be carried out by the end of the year.
Guidance 2024 canceled - The ad hoc announcement was published on 21 October, 2024.
The adjustment of the guidance for the 2024 financial year were published on June 14, 2024 (Ad hoc). For more information, see the press release, June 14, 2024.
In my digging around through KTMs stuff, I found this in their H1 presentation. Mind you, this is many months old, but felt too good to not post...
BICYCLE MARKET
"During the coronavirus pandemic, the demand for bicycles rose rapidly, leading to overheating in the bicycle market and disruption throughout the supply chain. Stock levels peaked as a result. The return of these stocks to normal levels continues, while at the same time there is massive pressure on sales prices. On the customer side, the increased cost of living in the core market of Europe led to a loss of purchasing power. This caused a decline in demand for premium e-bicycles and bicycles. All relevant markets have seen a decline in sales figures, with the decline having a particularly strong impact on KTM’s domestic market in Europe. Around 44% of motorcycles were sold in Europe (+4 percentage points year-on-year), 21% in North America including Mexico (-5 percentage points year-on-year) and 22% in India and Indonesia via partner Bajaj (+4 percentage points year-on-year). Another 13% were sold in the rest of the world (-3 percentage points on the previous year)."
In case anyone wants to look at the whole thing. Pretty good read. https://www.pierermobility.com/api/assets/17633357?type=attachment
EDIT: The more I look into KTM the more I'm legitimately concerned about their ability to operate into the future. Will probably come back with a longer post here. Woah.
KTM and KTM Bike are not the same company.
I didn't say they were. I did say Pierer Mobility has an e-bike business, which they do. They own Husqvarna and GASGAS e-bike lines. You can find more information by quickly going through their H1 report.
https://www.pierermobility.com/api/assets/17633357?type=attachment
Interesting KTM is doing roughly $2B a year. I had no idea what size company they were.
Also 300,000 motorcycle sales per year, 70,000 e-bikes… that’s more e bikes than I thought they would sell.
planet cyclery is back through cambria - press release
Press Release 10.23.24
Planet Cyclery is back online. The mission remains unchanged: Bring together the World’s finest cycling brands with expert staff to help and inspire.
Now part of the Cambria Bike Group based in California, with expanding locations in Colorado and North Carolina, we combine the best of Planet Cyclery with an even larger pool of products and resources.
Independently owned. Run by riders for riders.
Today, we have over 500 brands to choose from, in stock and dispatched on the same day. Our buying team have individually chosen every product, with a customer service team ready to help you find the perfect ride.
Cambria Bike has attained 4.8 on Trustpilot and has been recognised as a "Top Quality Store" by Google. Planet Cyclery will build on these foundations with an expanded team poised to respond.
Bought your bike from Planet Cyclery and need help with a warranty claim? We’re here for you. A new customer needing help to choose the best e-bike for your next adventure? Pour a coffee. Let’s talk.
Our story has always been rooted in a pure love for cycling. It’s time for the next chapter. Let’s pedal the planet some more…
#PedalThePlanet
Contacts:
PR & Marketing: Dave Flynn / davidf@cambriabike.com
CEO: Matt Yeo / matt@cambriabike.com
I thought KTM already sold off felt, or is this some sort of shell game?
https://www.bicycleretailer.com/international/2023/12/06/pierer-announc…
Is not that the same individual entered into this Agreement in '23?
Things take a settle, because - things.
Funny, I thought the exact same thing. The brand is not listed on the website but is in their October 2024 Investor Presentation. Digging around further, it appears they own 70% of the company and sold 20% to "equity with management". Maybe that explains it? The sale everyone posted ~a year ago was in fact just a minority sale of equity to a "consortium of managers"? I'm not as familiar with European exchange regulations but I can tell you if this was the NYSE/Nasdaq, there would be far more detailed disclosures around anything deemed "material" (unless you are Tesla - who put out an 8K saying "anything Musk tweets is considered possibly material so go follow musk on twitter" - LOL)
Digressions aside, you all will probably love spending 5-10 minutes on the presentation. Check out their "assembly network". Supply chain chills.
Also - check this slide out...
Final point - the banks that cover the stock have them at a "hold" recommendation with one "buy". Say what you will about sell side research, but if there is a massive balance sheet issue, they are usually good at noting these types of things in their research notes. MBAs may not be good for much, but they are killer for analyzing a company's financial health
. Again, take it with a grain of salt but they are probably going to be fine. (or someone buys them!)
RE: Felt & Pierer, this is from a bike-eu.com article behind a paywall but helps to explain some things.
"The first indication of a change in the bicycle and e-bike business at Pierer Industrie came with the report on the disinvestment of R Raymon in September 2023, quickly followed by the announcement on the reorganisation of Felt Bicycles. Felt Bicycles managing director Florian Burguet explains what happened since then.
Bike Europe: After Pierer Mobility took over Felt Bicycles from the Rossignol Group at the end of 2011, the US sport brand was sold to an unnamed consortium centered around you at the end of 2023. At the same time, it became known that Pierer Mobility parent company Pierer Industrie AG remained on board via another subsidiary or subsidiaries. Who are these?
Florian Burguet: The shareholding structure of Felt Bicycles is actually fairly simple and clear. The major shareholder is Pierer Mobility, a subsidiary of the Pierer Industrie. Both Cesar Rojo of Cero Design Studio and me are equal but minor shareholders. Cero Design Studio is also part of Pierer Mobility."
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