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Fox Factory to buy baseball-softball brand Marucci for $572 million

Published November 3, 2023
Marucci also owns the grip brand Lizard Skins. Fox announced that sales in the bike division were down 58% in the most recent quarter.

WESTPORT, Conn. (BRAIN) — Fox Factory is striking out in a new direction with the acquisition of Marucci Sports, a baseball and softball equipment brand. Marucci also owns Lizard Skins, which started as a bar tape company in Utah 30 years ago and has found new growth selling grip tape for bats and racquets. 

Fox is buying Marucci’s parent company, Wheelhouse Holdings, Inc., from Compass Diversified for $572 million. 

Fox also announced a sharp decline in sales in its bicycle-related businesses in the most recent fiscal quarter, which it blames on high inventory in the channel. Sales in the division were forecast to hit a "low water mark" in the third quarter, but the results were $25 million lower than the company expected. 

Fox has made many acquisitions related to its powered-vehicle business in recent years, but this is the first acquisition in sports since it bought Marzocchi in 2015. In addition to being a new sports category, the Marucci purchase diversifies Fox in offering more sales to the consumer market, rather than to original equipment manufacturers. In the most recent quarter, about 47% of Fox's revenue, across all its divisions, was to OEMs. 

Compass — a holding company that frequently takes short-term investments and ownership of sports brands — bought Marucci, based in Baton Rouge, Louisiana, for $200 million in April 2020. Marucci's primary business is selling baseball and softball equipment, including wooden and metal bats, under the Marucci and Victus brands.  It acquired Lizard Skins in October 2021 for an undisclosed amount (Lizard Skins also owns the Oury Grips brand.)

Compass and Fox Factory have a long history — Compass owned Fox for several years and spun it off in an IPO in 2013. Compass also is the former owner of CamelBak, which it sold to Vista Outdoor in 2015

Compass’ current holdings include BOA Technology, whose dial lacing system is used on many cycling shoes and other sports products, and PrimaLoft, a textile brand whose material is used in outdoor apparel. 

Keeping things straight

For those keeping score at home: in addition to CamelBak, Vista Outdoor (soon to be renamed Revelyst) owns Fox Racing, the apparel and safety equipment brand that is a separate company from Fox Factory, the suspension brand (both companies were founded by brothers Bob and Geoff Fox in the 1970s).

And it might be worth mentioning that while Fox Factory owns the Easton cycling brand, it does not have the Easton brand for baseball and softball — that business has been owned by Rawlings Sporting Goods since 2020. There's another baseball bat brand with corporate ties to cycling: Louisville Slugger is owned by Amer Sports — which also owns Enve and which previously owned Mavic. Make of that what you will. 

Earnings report 

Fox Factory also announced its third-quarter earnings report on Thursday.

Company-wide, revenues in the quarter were down 19% in the quarter, from $409 million last year to $331 million this year. Net income for the quarter was down 30%, from $50.8 million last year to $35.3 million this year.  

In Fox’s Specialty Sports Group, which includes Fox Factory, Marzucchi, Easton cycling, and Race Face, sales in the quarter were $72 million, down 58% from $173.9 million last year. 

The company said the decrease in SSG sales was driven by “higher levels of inventory across various channels.”

In an investor conference call, CEO Mike Dennison said the company had recently met with its largest and most important bike manufacturer customers, who he said remain optimistic about the long-term strength of the bike market, especially as e-bike technology is brought to more product categories. But he said the manufacturers told Fox that introductions of new models and technology will be "modestly delayed," which would directly affect Fox's sales to bike factories. Dennison also said the bike makers told Fox that consumers are "grappling with a higher-cost environment" while distributors are scaling back inventory buys due to higher interest rates. 

Topics associated with this article: Mergers, Acquisitions & Investments, Earnings/Financial Reports

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