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WESTPORT, CT (BRAIN)—Sales at Fox Racing Shox jumped 47.5 percent in the first quarter of 2008, although the company posted an operation loss of $198,000.
Compass Diversified Holdings, a Connecticut investment company, purchased the Watsonville, California-based Fox on Jan. 4. Compass reported sales of $23.4 million from that date until the quarter ended on March 31, according to numbers released during a May 12 earnings conference call.
That’s compared to net sales of $15.8 million during the first quarter of 2007.
Compass attributed the majority of the jump to increased sales in Fox’s bicycle division, largely in Europe. Another factor was a temporary plant shutdown during the first quarter of 2007.
Fox designs and manufactures suspension products for motor sports equipment such as all-terrain vehicles and snowmobile, as well as mountain bikes.
Fox’s profit dipped slightly due to costs associated with the acquisition, including a $1.6 million amortization expense that Fox did not incur in 2007. Cost of sales was up $5.2 million.
Selling, general and administrative expenses increased by $900,000 over the first quarter of 2007, $400,000 of which was spent on marketing efforts to drive sales growth. Another $300,000 went toward engineering as part of Compass’ investment in product development.
Jim Bottiglieri, chief financial officer for Compass, said the company had expected to see significant growth from Fox in the first quarter, and was pleased with the performance.
“We’re looking forward to a successful launch of the company’s new product line for 2008/2009 in May and expect business to continue to grow throughout the year,” Bottiglieri said.
As a company, Compass reported a loss of $795,000, though net sales were up from $40.8 million in the first quarter of 2007 to $136.7 million during the same period in 2008.
Compass was formed to acquire and manage a group of middle market businesses in North America. On May 8, the company entered into an agreement to sell one of its eight companies, Silvue Technologies Group, to Mitsui Chemicals, Inc. for a net gain of up to $40 million for its shareholders. Compass acquired Silvue on May 16, 2006.
—Nicole Formosa
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