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Fox: Q4 sales up 9% overall; bike products up 7.5%

Published February 27, 2018
On earnings call, company notes it's "cautiously optimistic" about its bike sales in 2018 and that inventory levels at OEs and aftermarket sales channels are "comfortable."

SCOTTS VALLEY, Calif. (BRAIN) — Fox Factory Holding Corp. reported Tuesday that overall sales increased 8.6 percent to $121.1 million in the final quarter of 2017. That's up from $111.6 million for the same period the year before. 

The increase reflects a 9.6 percent increase in sales of powered vehicle products and a 7.5 percent increase in sales of bike products, the company noted. 

Sales of powered vehicle products were up thanks to high demand for on- and off-road suspension products including aftermarket accessory packages. The increase in sales of bike products primarily reflects new product introductions, favorable model year spec placements, and strong sell-through with certain higher-growth OEMs, Fox Factory said in a press release. 

"We are pleased with our finish to fiscal 2017. The strength of our product lineups for both bike and powered vehicles fueled our financial results for the year," said Larry L. Enterline, Fox's CEO. 

Enterline told analysts during an earnings call Tuesday afternoon that Fox was comfortable with overall inventory levels for products in both bike OEM and aftermarket sales channels. 

Gross margin was 32.3 percent for the fourth quarter of fiscal 2017, a 180 basis point increase from gross margin of 30.5 percent in the fourth quarter of fiscal 2016. The improvement was primarily due to improved manufacturing efficiencies as well as favorable product and customer mix. 

Meanwhile, operating expenses were up, reaching $23.1 million for the quarter, compared with $20.6 million in the fourth quarter of fiscal 2016. 

Net income in the fourth quarter was $2.9 million, compared with net income of $9.8 million in the fourth quarter of the prior fiscal year. Earnings per diluted share for the fourth quarter of fiscal 2017 was 7 cents, compared with earnings per diluted share of 26 cents for the fourth quarter of fiscal 2016.

Full-year performance and 2018 forecast

Sales for the year ended Dec. 29, 2017, were $475.6 million, an increase of 18 percent compared with 2016. Sales of powered vehicle and bike products increased 30.5 and 8.2 percent, respectively.

Gross margin was 32.5 percent for the full year, a 110 basis point increase compared with gross margin of 31.4 percent in fiscal year 2016. The improvement in gross margin was primarily due to improved manufacturing efficiencies as well as favorable product and customer mix, the company said. Net income was $43.2 million, compared with $35.7 million in fiscal 2016. Earnings per diluted share for fiscal year 2017 was $1.11, compared with 94 cents in fiscal 2016. 

Fox expects sales in the first quarter of this year to be in the range of $121 million to $127 million and non-GAAP adjusted earnings per diluted share in the range of 30 to 35 cents. For the fiscal year 2018, Fox Factory expects sales in the range of $542 million to $570 million and non-GAAP adjusted earnings per diluted share in the range of $1.66 to $1.84. 

Mario Galasso, executive vice president and chief technology officer, noted during the Q&A portion of the earnings call that Fox was "cautiously optimistic" about its bike business this year. 

"For our segment, the premium performance mountain bike, the sentiment is pretty good," he said. "It's in general better than the overall bike market. We're excited about the reception of model year 2019 products, which so far have been received well. We're happy about sell-in with spec. We're still waiting to see how that sells through. ... In our category, I think inventory at retail and for the OEs and diferent points in the channel is probably teed up well to accept model year '19. Fill-in orders will depend on the strength of how sell-through goes."

 

Topics associated with this article: Earnings/Financial Reports

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