Fox Factory Holding Corp. initiated a voluntary recall Oct. 22 of certain model year 2013 32 and 34 Evolution Series suspension forks having 120mm — 160mm of travel with certain open cartridge dampers manufactured by the company between March 1, 2012 and Nov. 30, 2012.
The company has determined that a small percentage of the forks manufactured during the period have the potential to fail under a specific set of circumstances. The forks affected by this recall were assembled in the company's Watsonville California facility. The company has initiated the recall to assure that consumers will obtain a free damper upgrade that will resolve the concern. The recall does not involve any of the company's current model year 2014 suspension forks.
Fox previously disclosed that in 2012 it increased its warranty reserve in connection with certain dampers, which dampers are the ones used in the forks that are the subject of the recall. Based on the company's current estimates, the existing warranty reserve is anticipated to be adequate to cover the repair related costs Fox expects to incur as a result of the recall. In addition, the company expects that the miscellaneous other costs which it anticipates incurring as a result of the recall and which cannot be charged against the warranty reserve will not be material.
Updated fiscal 2013 guidance
Additionally, based on its financial results to date, the company expects that its third quarter fiscal 2013 financial results will be at the high end of its previously disclosed expected range of sales of $79 to $82 million for the quarter and of its previously disclosed earnings per diluted share range of $0.23 to $0.27, based on a projected 36.9 million diluted shares outstanding.
For the full fiscal 2013 year, the company today reaffirms its prior guidance that it expects that its sales for 2013 will be in the range of $264 to $270 million and that its earnings per diluted share for the year will be in the range of $0.61 to $0.67, based on a projected 36.1 million diluted shares outstanding. Included in the company's earnings per diluted share guidance is approximately $1.4 million of non-cash expense related to unamortized loan origination costs that the company will record in the third quarter of fiscal 2013 in connection with the termination of its prior credit facility. The company does not plan to provide preliminary financial information in the future other than in unique circumstances or in the event of a material event that requires disclosure.
Headquartered in Scotts Valley, CA, Fox designs and manufactures high-performance suspension products primarily for mountain bikes, side-by-side vehicles, on-road and off-road vehicles and trucks, all-terrain vehicles, snowmobiles, specialty vehicles and applications, and motorcycles. For more than three decades, Fox's team of enthusiasts and professional athletes has been improving vehicle performance through a unique commitment to redefining ride dynamics.
