Fox Factory Holding Corp (FOXF) Q3 2024 Earnings Call Highlights: Navigating Growth Amidst ...

GuruFocus News
4 min read

In This Article:

  • Revenue: $359.1 million, an 8.5% increase from the prior year.

  • Gross Margin: 29.9%, down from 32.4% last year.

  • Net Income: $4.8 million, or $0.11 per diluted share, compared to $35.3 million, or $0.83 per diluted share, last year.

  • Adjusted Net Income: $14.8 million, or $0.35 per diluted share, compared to $44.8 million, or $1.05 per diluted share, last year.

  • Adjusted EBITDA: $42 million, compared to $63.7 million last year.

  • Adjusted EBITDA Margin: 11.7%, down from 19.2% last year.

  • Operating Expenses: $88.7 million, or 24.7% of net sales, compared to $65.9 million, or 19.9% of net sales, last year.

  • Inventory: Increased by $29.5 million or 7.9% compared to year-end 2023.

  • Debt: Revolver balance of $210 million, term loan balance of approximately $558 million.

  • Guidance for Q4 2024: Sales expected between $300 million to $340 million, adjusted earnings per diluted share of $0.25 to $0.40.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Fox Factory Holding Corp (NASDAQ:FOXF) reported a sequential revenue increase of 3.1% from the second quarter and an 8.5% increase compared to the prior year.

  • The bike business showed strong performance with a 22% sequential growth, following a 52% increase in the previous quarter.

  • The acquisition of Marucci contributed positively to the company's growth, with Marucci achieving another record quarter.

  • Fox Factory Holding Corp (NASDAQ:FOXF) is implementing strategic initiatives to optimize costs, including plant closures and efficiency improvements.

  • The company is focusing on diversification and expansion within the aftermarket, which has shown resilience and growth potential.

Negative Points

  • Fox Factory Holding Corp (NASDAQ:FOXF) faced challenges with OEM partners reducing their demand forecasts, impacting revenue.

  • Ongoing quality issues and model year changeovers at automotive OEM partners affected chassis mix and availability.

  • The company's gross margin decreased to 29.9% from 32.4% in the same quarter last year, driven by shifts in product line mix and reduced operating leverage.

  • Net income significantly decreased to $4.8 million from $35.3 million in the same quarter last year.

  • The company anticipates continued pressure on demand in 2025, with a challenging retail environment expected to persist.

Q & A Highlights

Q: Mike, it seems like demand and quality issues are the main obstacles. Is demand the greater issue that might persist into 2025? A: Yes, demand is the primary concern. The quality issues are at the automotive OEMs, not within Fox. We're seeing improvements with model year '25 vehicles, but consumer demand is crucial for a rebound.

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