Fox Factory Holding Corp. reported sales of bike products increased 16.3 percent in the third quarter, but executives declined to break out how much its legacy mountain bike (MTB) business grew.
FOXF attributed the growth primarily to the inclusion of results at Race
Face Performance Products Inc and Easton Cycling. FOXF acquired the companies in December 2014, a little over a year after its initial public offering, as part of a long range plan to sustain mid-single-digit growth in its bicycle business. Race Face added MTB cranks, bars, stems, and seat posts and a full line of MTB apparel, accessories and protective gear to FOXF's product portfolio, while Easton Cycle added wheels for both mountain and road bikes.
When pressed for organic growth rates during the company's third quarter earnings call Nov. 5, CEO Larry Enterline would only say sales of MTB suspension products are on track to meet expectations after a tough 2014, when they declined 1 percent.
“We believe we will be up in the model year over last year and we feel pretty good about that,” said Enterline in reference to the company's mountain biking forks and shocks.
Enterline said he expects the success of the 2015 Factory Series 36 fork will enable FOXF to increase its sales of forks to OEMs as they speck bikes they will build next year for Model Year 2017.
He said FOXF remains on track to transfer most of its MTB product manufacturing from California to Taichung, Taiwan by the end of the year. The move, which will greatly increase inventory turns by placing production near the world's largest bicycle manufacturers, contributed to a 110 basis point improvement in the company's consolidated gross margin in the third quarter. FOXF also sells suspension and other performance enhancing products to the motorsports and automotive industry through its Powered Vehicle segment.
The Taichung plant is on track to begin manufacturing a new suspension fork for lower prices points by mid-2016. Entering those lower price points will also help FOXF meet its long-term growth target.
Enterline said management is evaluating how to fold the Marzocchi brand into those plans. FOXF agreed last month to acquire certain assets of the Italian company's mountain biking business. In new guidance issued Thursday, FOXF said it expects the Marzocchi acquisition to trim non-GAAP adjusted earnings per diluted share by about a penny to 21 to 25 cents in the fourth quarter.
FOXF also pushed up its minimum revenue and earnings per diluted share guidance for the full fiscal year by 3.2 and 6.6 percent respectively. The company now expects fiscal 2015 sales to reach $358-to-$364 million versus prior guidance of $347-to-$363 million. It expects non-GAAP adjusted earnings per diluted share in the range of 97 cents to $1.01 in sales, up from previous guidance of 91 cents to $1.00.
