Scotts Valley’s Fox Factory posts small gain in quarterly numbers

mountainnbikeSanta Cruz Sentinel

SCOTTS VALLEY—Fox Factory Holding Corp., the Scotts Valley-based company launched 40 years ago by a mountain bike racing engineer, is pushing into an expanding powered vehicle market and has a new plan to sell aftermarket products to Harley-Davidson motorcycle part distributors, the company announced Wednesday as part of its quarterly earnings report. 

Fox Factory’s third quarter earnings of $90 million in sales were in line with expectations. Sales were up 9.5 percent from a year ago in the same quarter. Net income also rose slightly from $9.9 million a year ago to $10.3 million in the third quarter of 2014. Fourth quarter earnings per share held steady at 27 cents, year over year.

“Overall we had a positive quarter in many areas of the business,” said Larry Enterline, Fox CEO.

The company, which bought Sport Truck USA last year, saw a 50.5 percent growth in its powered vehicle business, which offset an 8 percent drop in its traditional mountain bike segment.

“The weakness (in the mountain bike arena) that we’ve seen is not huge in numbers but clearly disappointing to us,” Enterline told analysts and investors on a webcast call Wednesday. “We’re pleased with the progress.” He added that while mountain bike supply problems may linger into the fourth quarter, there were many reasons to be confident about the year ahead including strong praise for previews of 2015 products.

The new partnership with Harley-Davidson distributors will provide a rear shock for certain Harley-Davidson touring motorcycles made from 1984 to 2015. The motorcycle market “holds promise for future growth,” Enterline said.

More business development resources were added to the Asia-Pacific region to meet growing middle-class consumption, he added.

The company’s R&D department is exploring new technologies to address weight, friction, damping and spring technologies.

“We’re going after it pretty aggressively,” said Mario Galasso, Fox president of Business Divisions.

A cost-cutting move to make mountain bike parts in Taiwan rather than Watsonville and other parts of the country is continuing with about 50 percent of production now happening abroad. The company plans to complete the move by the end of 2015. There are plans to retool the domestic plants to accommodate powered vehicle parts.

The company, which became publicly owned in August 2013, also announced on Wednesday a share repurchase program for up to $40 million of its outstanding common stock.

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.

Headquarters: 915 Disc Drive, Scotts Valley.

Information: 831-274-6500; www.ridefox.com.

History: Founded by Robert C. Fox Jr., an engineer and motocross racer, in 1975. The company was first incorporated in California in 1978, and again in Delaware in 2007 before it was acquired in 2008 by Compass Group Diversified Holdings LLC.

Leadership: Larry L. Enterline, CEO, and Mario Galasso, president.

Employees: As of Sept. 30, Fox employed about 915 full-time employees worldwide, mostly in manufacturing facilities.

Stock: Shares trading on the NASDAQ as FOXF closed Wednesday at $16.28, down 13 cents. In the last year, shares have traded from $14.04 to $19.39.

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