SCOTTS VALLEY—Thanks in part to two acquisitions last year, Fox Factory saw first quarter sales jump 20.8 percent from a year ago in the same quarter, the company reported Wednesday.
The specialty suspension maker for bicycles and motor vehicles reported sales of $67.8 million, beating its own forecast of $58 million to $64 million.
The first quarter, usually the company’s slowest of the year, included a 43.5 percent increase in powered vehicle products sales and a 5.7 percent increase in bike product sales.
The numbers reflected acquisitions last year of Sport Truck, a distributor of aftermarket suspensions, and Race Face/Easton, a mountain and road bike component company.
Larry Enterline, chief executive officer, told analysts Wednesday that a Longshoreman strike on West Coast ports had hampered transportation of parts and negatively impacted sales.
Executives reaffirmed a broad guidance for the year, saying it was unclear what impact a stronger dollar is going to have on international sales. International sales last year totaled $178.4 million, about 58 percent of the company’s total sales.
Enterline said the company is positioned well for the coming year in the bike suspension market. He noted continued momentum in the powered vehicles segment and a good result from recent acquisitions.
“Clearly we have some big unknowns,” Enterline said, “such as what could happen with the currency issues. We have put a modest [portion] of that into our guidance. We’re an optimistic lot, though.”
Ongoing company plans to move its bike suspension manufacturing operations from Watsonville to Taiwan are on schedule for completion by year-end. Currently, local employees are training their newer counterparts in quality control standards while the Watsonville facility is being retooled for new products.
“We’re going to take the Watsonville facility, reconfigure it to optimize it around the power sports part of our business,” Enterline said. “It gives us a lot of opportunity to increase efficiency in terms of layout and new equipment.”
In the company’s annual report filed in March, Fox said the conversion process would help increase manufacturing capacity for powered vehicle products, “which should help us to reduce our lead time to our powered vehicle OEMs (original equipment manufacturers).” OEMs resell another company’s products under their own name.
In February, company announced plans to expand and upgrade its El Cajon facility to support its military and automotive business by producing direct bolt-on suspension upgrades for on-road trucks with off-road capabilities.
The company is also continuing its foray into the motorcycle segment, providing aftermarket products for Harley and Indian.
“As a category, it’s one we like and hope to expand it in next few years,” Enterline said.
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. During 2014, sale of suspension products for high-end bikes made up about 58 percent of sales.
HEADQUARTERS: 915 Disc Drive, Scotts Valley. The company also has manufacturing facilities in Scotts Valley, Watsonville, El Cajon, Michigan, Taiwan and Canada.
INFORMATION: 831-274-6500; www.ridefox.com
HISTORY: Founded by Robert C. Fox Jr., an engineer and motocross racer, in 1975. The company’s public offering was in August 2013.
LEADERSHIP: Larry L. Enterline, chief executive officer, and Mario Galasso, president.
EMPLOYEES: As of Dec. 31, the company had about 1,000 full-time employees in the U.S., Canada, Europe and Taiwan, plus seasonal part-time employees at manufacturing facilities.
STOCK: Shares trading on the NASDAQ as FOXF climbed 16 cents to close at $16.28 on Wednesday. In the last year, shares have traded between $13.35 and $18.82.
FINANCIALS: First quarter sales were $67.8 million compared to sales of $56.1 million a year ago. Net income was $ 770,000, or 2 cents per share, compared to $2.94 million, or 8 cents per share, a year ago. As of March 31 the Company had cash and cash equivalents of $7.2 million. Total debt was $49.3 million.
GUIDANCE: The company expects second quarter sales to be $90 million to $94 million and earnings per diluted share to be 23-27 cents. For 2015, Fox expects sales of $333 million to $357 million and earnings per diluted share of 88 cents to $1.