SRAM LLC

Overview Key strengths Key risks Significant expected cushion compared to our 4x leverage downgrade threshold. Financial policy that tolerates leverage of up to 3x to fund periodic distributions. Strong underlying bicycle ridership trends across SRAM's major markets in Europe and the U.S. Ongoing innovation and research and development (R&D) spending to remain competitive and maintain market share. Just-in-time manufacturing increases operational flexibility. High profit volatility and vulnerability of operating performance to weather and recalls. Second place position in the highly competitive bicycle component market. Bicycle components manufacturers saw a surge in orders in 2022 well in advance of typical lead times by original equipment manufacturers (OEMs) in an effort to mitigate persistent supply chain issues that were prevalent during the

...We expect high volatility during 2023 as the bicycle components industry experiences an order flow and inventory correction. Bicycle components manufacturers saw a surge in orders in 2022 well in advance of typical lead times by original equipment manufacturers (OEMs) in an effort to mitigate persistent supply chain issues that were prevalent during the pandemic. This resulted in record revenue in 2022, with SRAM reporting an increase in top line growth of about 34%. This has in turn led to an influx of inventory in the OEM segment. In 2023, we expect this cycle to correct itself as supply chain issues ease and order flows return to a normalized...

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