Fox Factory Holding Corp., the parent of Marucci Sports, Fox, Method Race Wheels, and more, saw net sales for the fiscal 2024 fourth quarter come in at $352.8 million, an increase of 6.1 percent from net sales of $332.5 million in the fourth quarter of fiscal 2023. The company said the increase reflects a $31.1 million, or 33.3 percent, increase in Specialty Sports Group (SSG), partially offset by a $8.6 million, or 7.1 percent, decrease in Aftermarket Applications Group (AAG) and a $2.2 million, or 1.8 percent, decrease in Powered Vehicles Group (PVG).

Specialty Sports Group (SSG)
The increase in Specialty Sports Group net sales from $93.4 million to $124.5 million was said to be primarily related to the inclusion of a full-quarter net sales of $41.5 million from Marucci, which the company acquired in November 2023, compared to net sales of $16.8 million included in prior-year comparative quarter, and a $6.4 million increase in Bike sales. Although Bike sales improved compared to the prior-year quarter, the ongoing channel inventory recalibration and, to a lesser extent, lower end consumer demand remain headwinds.

Aftermarket Applications Group (AAG)
The decrease in AAG net sales from $120.8 million in the 2023 fourth quarter to $112.2 million in the 2024 Q4 period was reportedly driven by lower upfitting sales due to product mix, chassis availability, higher interest rates impacting dealers and consumers, and higher inventory levels at dealerships. Still, the company highlighted that the segment generated growth of 11.9 percent on a sequential basis from the 2024 third quarter reflecting the company’s strategic initiatives to improve performance.

Powered Vehicles Group (PVG)
The decrease in PVG net sales from $118.3 million in Q4 2023 to $116.2 million in Q4 2024 was said to be primarily due to lower industry demand in power sports and automotive because of higher interest rates and higher inventory levels.

Income Statement Summary
Gross margin was 28.9 percent of net sales for Q4 2024, a 120-basis point increase from gross margin of 27.7 percent in the fourth quarter of fiscal 2023. The increase in gross margin was said to be primarily due to amortization of acquired inventory valuation markup from the Marucci acquisition in prior year, which was fully recognized by the end of the first quarter of fiscal 2024 and did not impact the current year’s fourth quarter.

Adjusted gross margin, which excludes the effects of amortization of acquired inventory valuation markup and organizational restructuring expenses, increased 20 basis points to 29.2 percent from the same prior fiscal year period.

Total operating expenses were $90.6 million, or 25.7 percent of net sales, for Q4 2024, compared to $81.0 million, or 24.4 percent of net sales, in the fourth quarter of fiscal 2023. Operating expenses increased by $9.6 million year-over-year, said to be primarily driven by the recognition of a full quarter of Marucci operating expenses following the November 2023 acquisition, partially offset by a decrease in other acquisition and integration-related expenses.

Adjusted operating expenses were $76.4 million, or 21.7 percent of net sales, in Q4 2024, compared to $68.5 million, or 20.6 percent of net sales, in the fourth quarter of the prior fiscal year.

Tax benefit was $4.1 million in Q4 2024, compared to tax benefit of $3.1 million in the fourth quarter of fiscal 2023. The decrease in the Company’s income tax expense was primarily due to a decrease in pre-tax income.

Net loss attributable to Fox stockholders in Q4 2024 was $0.1 million, compared to net income attributable to Fox stockholders of $4.1 million in the fourth quarter of fiscal 2023. Loss per diluted share for Q4 2024 was $0.00, compared to earnings per diluted share of 10 cents for the fourth quarter of fiscal 2023.

Adjusted net income in Q4 2024 was $12.8 million, or 31 cents of Adjusted earnings per diluted share, compared to Adjusted net income of $20.3 million, or 48 cents of Adjusted earnings per diluted share, in the 2023 fourth quarter.

Adjusted EBITDA in Q4 2024 was $40.4 million, compared to $38.8 million in the fourth quarter of fiscal 2023.

Adjusted EBITDA margin in Q4 2024 was 11.5 percent of net sales, compared to 11.7 percent in the fourth quarter of fiscal 2023.

Balance Sheet Summary
As of January 3, 2025, the company had cash and cash equivalents of $71.7 million, compared to $83.6 million as of December 29, 2023. The decrease in cash and cash equivalents was driven by the Marucci acquisition, debt payments, and capital expenditures, partially offset by a decrease in pre-paids and other current assets driven by lower chassis deposits due to inventory optimization efforts.

Inventory was $404.7 million as of January 3, 2025, compared to $371.8 million as of December 29, 2023. Inventory increased by $32.9 million driven by higher raw materials and finished goods due to an imbalance in expected versus fulfilled orders and an intentional build of high moving stocking units in the company’s aftermarket businesses to fulfill demand during the holiday selling period.

As of January 3, 2025, accounts receivable and accounts payable were $165.8 million and $144.1 million, respectively, compared to $171.1 million and $104.2 million, respectively, as of December 29, 2023. The change in accounts receivable is due to higher sales in fiscal quarter ended January 3, 2025 compared to fiscal quarter ended December 29, 2023. The change in accounts payable reflects the timing of vendor payments.

Pre-paids and other current assets were $85.4 million as of January 3, 2025, compared to $141.5 million as of December 29, 2023.

Total debt was $705.1 million as of January 3, 2025, an improvement of $38.4 million compared to $743.5 million in the prior-year period ended December 29, 2023, and a $63.3 million improvement versus third quarter ended September 27, 2024.

Working capital improvements, especially the reduction in chassis prepayments, drove debt pay-down as we continue to focus on generating free cash flow to reduce debt and interest expense.

Fiscal 2025 Guidance
For the first quarter of fiscal 2025, the company expects net sales in the range of $320 million to $350 million and adjusted earnings per diluted share in the range of 12 cents to 32 cents per share.

For the fiscal year 2025, the company expects net sales in the range of $1.385 billion to $1.485 billion, Adjusted earnings per diluted share in the range of $1.60 to $2.60, and a full year Adjusted tax rate in the range of 15 percent to 18 percent.

The company said guidance does not include any effects from the ongoing tariff developments. Adjusted earnings per diluted share exclude the following items net of applicable tax: amortization of purchased intangibles, litigation and settlement-related expenses, acquisition and integration-related expenses, organizational restructuring expenses, and strategic transformation costs.

A quantitative reconciliation of adjusted earnings per diluted share for the first quarter and full fiscal year 2025 is not available without unreasonable efforts because management cannot predict, with sufficient certainty, all of the elements necessary to provide such a reconciliation. For the same reasons, the company is unable to address the probable significance of the unavailable information, which could be material to future results.

Image courtesy Marucci Sports