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Fox Factory plans to move headquarters from California to Georgia

Published October 31, 2018
The company also announced record sales and plans to move its bike distribution, sales and service to Reno, Nevada.

SCOTTS VALLEY, Calif. (BRAIN) — Fox Factory announced Wednesday that it plans to relocate its corporate headquarters from California to it existing offices in Georgia by the end of this year. The company also plans to relocate its aftermarket bike products distribution, sales, and service operations from Watsonville and Scotts Valley, California to Reno, Nevada.

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Fox said its existing offices in Scotts Valley will remain “an essential shared services facility housing certain corporate functions.”

Fox also will add production for some powered vehicle products at a new plant in Georgia. It plans to invest up to $50 million in capital expenditures and employ up to 800 personnel in Georgia over the next five years, dependent on market and general economic conditions.

"This is something that is additive; it's mainly focused on future growth" — Larry Enterline

Fox CEO Larry Enterline said access to a manufacturing workforce as well as office workers was the primary driver for the move. "Labor availabilty is probably number one on the list of things we look at," he said on an investor conference call Wednesday. He said Fox would continue to have operations in multiple locations in California. "This is something that is additive; it's mainly focused on future growth," he said. 

Record sales

Also on Wednesday, Fox announced third quarter revenues were up 38 percent to a record $175.8 million across all its divisions, including its powered vehicle and bicycle businesses.

“Our differentiated powered vehicle and bike market positions fueled broad-based strength across our product portfolio, resulting in record sales and profitability,” said Enterline. “We are pleased with our team’s continued execution as we further expand into new and existing end markets building upon our powered vehicle and core bike category capabilities with compelling product innovation. We believe we remain well positioned for future growth and based on these strong operational and financial results as well as our outlook for the remainder of the year, we are raising our annual guidance.”

Fox also said it has spent $5.9 million so far this year on costs related to patent litigation, up from $3.2 million spent on legal costs in the first three quarters last year.

Fox said sales in its Specialty Sports Group (formerly called its Bike Group) were up 21.1 percent in the most recent quarter to $81 million, up from $67 million in the quarter last year.  Sales in the group totaled $213 million over the nine month period, up from $184 million last year.  

The Speciality Sports Group includes the Fox Factory bike business as well as the Marzocchi, RaceFace and Easton cycling brands. The group is led by Chris Tutton, who has worked for Fox since selling RaceFace and Easton to the company in 2014.

In its SEC filing, the company said most of the sales increase came from the original equipment side. However on the conference call, company executives said the increases were "broad-based" across all its bike brands, aftermarket and OE, and in Europe and North America.

"There were a lot of small drivers coming together to give us pretty nice quarter," in the bike business, Enterline said on the call. He said that Fox was outperforming other public companies in the bike industry thanks to being primarily at the high end of the mountain bike market. "We happen to be in great segments," he said, adding that Fox's e-bike suspension offerings have also been well-received.

Regarding the name change of the bike group, Enterline said it reflects Fox's interest in expanding its offerings. "We do see opportunities to sell performance-defining products that maybe don't go directly on the bike, but that we can sell to that same passionate customer base." 

Fox also said it has spent $5.9 million so far this year on costs related to patent litigation, up from $3.2 million spent on legal costs in the first three quarters last year. Fox and SRAM are engaged in several lawsuits over suspension and drivetrain intellectual property. Fox did not say if it is involved with any other patent-related litigation.

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Topics associated with this article: Earnings/Financial Reports

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