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Fox Factory's bike-related sales up 7.1% last year; legal costs mount in suits with SRAM

Published March 1, 2017

SCOTTS VALLEY, Calif. (BRAIN) — Fox Factory Holding Corp. is reporting a 16.6 percent increase in revenue in its fourth quarter, capping a nearly 10 percent increase in sales for the company's full fiscal year, which ended Dec. 30, 2016. The company said its bicycle-related sales were up 7.8 percent in the final quarter and 7.1 percent for the full year. Fox sells bicycle products under the Fox, Race Face, Easton and Marzocchi brands. 

The company's fourth quarter sales were $111.6 million, up from $95.7 million in the fourth quarter of fiscal 2015. While bicycle-related sales were up 16.6 percent in the quarter, Fox's motorized suspension product sales were up 27.5 percent. On the bicycle side, the company attributed the increase to new product introductions and good spec' with OEMs. The company released the sales percentage increase for the two divisions, but did not break out the dollar amounts. Gross margin was 30.5 percent for the fourth quarter, a 60 basis point increase from gross margin of 29.9 percent in the fourth quarter of fiscal 2015.

For the full year, sales totaled $403.1 million, an increase of 9.9% compared to fiscal 2015. Gross margin was 31.4 percent for the year compared to 30.5 percent in fiscal year 2015. The company said the gross margin improvement was primarily due to manufacturing efficiencies along with the non-recurrence of ramp up, reconfiguration and logistics costs associated with the company's global production transition, the West Coast port slowdown during 2015, and lower acquisition-related inventory costs. Net income in fiscal year 2016 was $35.7 million, compared to $25.0 million in fiscal 2015. 

The company's legal spat with SRAM continues to be costly. The company spent $783,000 on legal costs in the fourth quarter and $2.715 million for the fiscal year. SRAM is suing Fox in an Illinois court alleging the company's Race Face brand violated its patents related to wide-narrow chainrings. Fox is suing SRAM in a California court, alleging SRAM has violated its patents on thru axles and suspension dampers. Part of Fox's suit involves a patent it acquired when Fox acquired Marzocchi's intellectual property. In a statement Wednesday, Fox said it was confident it would prevail in the litigation. 

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