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SCOTTS VALLEY — First quarter sales were slightly up for high-end shock maker Fox Factory but buying another company and shutting down a factory cut into the bottom line, the company reported Wednesday.
First quarter sales were $56.1 million, compared to $54.9 million in the first quarter of fiscal 2013. Net income was $2.94 million, compared to $3.55 million a year ago.
FOX CEO Larry Enterline described the quarterly financial results as a “solid start” to the fiscal year and said the company was “well positioned” to capitalize on a strong consumer demand for premium shocks in mountain bikes and powered vehicles.
“We are encouraged by the positive customer response and enthusiasm for our model year 2015 mountain bike suspension lineup and continue to expect that mountain bikes will perform well in coming quarters and over the longer term,” Enterline said on a conference call with investors and industry analysts after the market closed Tuesday.
The company’s stock closed down 8 cents Wednesday.
The company had expected to see a some drop in mountain bike sales because it had shipped products ahead of schedule in anticipation of a year-end facility shutdown. The market for premium shocks for powered vehicles grew by more than 14 percent, which offset the anticipated 4.4 percent drop in mountain bike product sales, Enterline said.
The bottom line was also affected by the completion of a nearly $41 million deal during the quarter to buy Sport Truck USA. The Michigan-based suspension distributor is now a wholly owned subsidiary and broadens Fox’s offerings in the rapidly growing power vehicle market.
Finally, it is the company’s first year as a public company, which added some new expenses compared to last year in the first quarter.
Executives affirmed their earlier guidance for the company. The overall strategy is to continue releasing new products, increase the company’s international presence, explore new categories of products and improve operating efficiencies.
The company’s first meeting of stockholders as a public company is scheduled for 9 a.m. on June 5. For information on the proxy statement, visit http://tinyurl.com/ok7894q.
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
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, which he began producing in 1975. The company 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.
Leadership: Larry L. Enterline, chief executive officer.
Employees: As of Dec. 31, Fox had about 670 full-time employees in the U.S., Europe and Taiwan, plus part-time employees at its manufacturing facilities to meet seasonal demands, according to documents Securities and Exchange Commission documents.
Stock: Shares trading on the NASDAQ as FOXF closed Wednesday at $16.85, down 8 cents. Since the company’s IPO on Aug. 7, shares have traded from $14.33 and $20.75.
Financials: First quarter sales were $56.1 million, compared to $54.9 million in the first quarter of fiscal 2013. Net income was $2.94 million, or 8 cents per diluted share, compared to $3.55 million, or 10 cents per diluted share, a year ago. As of March 31, the company had $2 million in cash and cash equivalents and a $50 million debt compared to $8 million of debt at the end of the previous quarter.
Guidance: For the fiscal 2014 second quarter the company expects second fiscal quarter sales of $81 million to $85 million and earnings per diluted share of 23-28 cents. Fox reaffirmed its earlier guidance for the year of $300 million to $320 million in net sales and earnings per diluted share of 85-95 cents.