SCOTTS VALLEY — Sales for the first nine months of the year were up more than 15 percent from a year ago, according to executives for Fox Factory Holding Co., the public entity selling high performance shocks for bicycles and power vehicles to a growing international market.
“In the third quarter Fox continued to benefit from demand for our high performance mountain bike and powered vehicle products,” said Larry Enterline, chief executive officer of Fox, during the company’s public webcast reporting financial results for the third quarter Wednesday.
Third quarter net income for the company, which went public in August, was $9.9 million, an 81.5 percent spike from the same period a year ago.
The numbers, which came in on the high end of the company’s earlier guidance, included a 12.9 percent jump in sales from a year ago. Sales for the quarter were $82.3 million, compared to $72.9 million a year ago. The company, which started more than 30 years ago in Santa Cruz as a motocross shock maker, focuses on mountain bike and powered vehicle products. Sales in both segments increased 10.8 percent and 18.2 percent, respectively.
“Importantly we believe our business continues to benefit from positive industry dynamics,” Enterline said. “Over the past several years we have seen consistent and steady growth for retail units sold for premium mountain bikes and powered vehicles. We have been and will continue to be in a position to capture our share of this growth.”
An ongoing shift to higher performance products as well as new opportunities in Asia and South America are just some of the drivers for confidence, he said.
The company also announced Wednesday that a German acquisition completed last week, strengthens Fox’s position in Europe. Fox paid $2.3 million in cash for the assets of Toxoholics GmbH, a third party German-based distributor and service center. Fox also assumed about $190,000 in existing liabilities as part of the deal. It will not materially impact the company’s financial results, Enterline said.
The deal is about strengthening its European base, said Mario Galasso, executive vice president of the Fox Bicycle Division and Corporate Engineering. Germany is “a cornerstone market for the mountain bike segment,” Galasso said. It “is very influential. We expect we will be able to get a lot closer to the market and influence the market by working more closely with Toxoholics.”
Enterline said the deal was all about customer service and customer relations.
The company’s migration of bike part production from Watsonville to Taiwan continues to progress and is expected to be complete by the end of 2015, according to Enterline who characterized the move as way to put Fox in the geographic heart of the bike production. It will, he said, reduce production time overall.
Most of the company’s business is in North America and Europe but emerging markets include China, South Korea, Australia and Argentina, according to Enterline.
Sales for the nine months of the year were $207.5 million, a 15.7 percent jump from the previous year. Mountain bike and powered vehicle product sales increased 14.4 and 18.6 percent compared to the prior year in the same period.
In other company news, last month Fox was added to the Russell 2000 Index, a small-cap stock market index used to measure performance. Enterline said he expected it to help increase the company’s visibility in the investment community.
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Fox Factory Holding Corp.
WHAT: Fox Factory Holding Corp. is the holding company of Fox Factory Inc., a designer, manufacturer and marketer of high-performance suspension products for mountain bikes, all terrain vehicles, snowmobiles and other off-road vehicles. Fox sells to other manufacturers as well as retailers and distributors.
HEADQUARTERS: 915 Disc Drive, Scotts Valley, CA 95066
INFORMATION: 831-274-6500; www.ridefox.com
HISTORY: Robert C. Fox Jr., an engineer and motocross racer, developed a new kind of high-end suspension product and began producing them in 1975. The company was incorporated in California in 1978. In 2007, the company, under a new holding company, incorporated in Delaware. It was acquired the following year by Compass Group Diversified Holdings LLC., which remains a majority owner. The company’s public offering closed in August.
LEADERSHIP: Larry L. Enterline, chief executive officer.
EMPLOYEES: The company did not update its current headcount. Last reported, in August, Fox reported about 1,000 employees worldwide, including more than 120 in the Scotts Valley headquarters.
STOCK: Shares trading on the NASDAQ as FOXF closed Wednesday at $18.25, up 65 cents. Since the company’s IPO on Aug. 7, shares have traded between $15.65 and $20.75.
FINANCIALS: Sales for the third quarter of the year were about $82.29 million compared to about $72.86 million a year ago in the same quarter. Net income was $9.92 million, with earnings per diluted share of 27 cents, compared to $5.47 million, or 16 cents per share, a year ago.
As of Sept. 30, the company reported cash and cash equivalents of $3.5 million with total debt of $24.5 million, compared to $59.3 million as of Dec. 31, 2012.
GUIDANCE: The company forecasts sales of $58 million to $62 million, with earnings per diluted share of 8-12 cents for the fourth quarter. For the full 2013, Fox expects sales of $266 million to $270 million and earnings per diluted share of 63-67 cents.
This Fox Shox article first appeared here.