Fox Factory Inc., also known as Fox Racing Shox, swung from a loss to nearly $3 million in profits in the first quarter on a nearly 63% gain in sales, as OEM sales to the mountain biking and motorsports industries rebounded, according to a 10Q released by its parent company.
Sales reached $32.7 million in the first quarter ended March 31, up 62.7% from the same quarter a year earlier. Operating profits at the Fox Factory, which makes suspension systems for motorsports and mountain bikes, reached $2.9 million compared to a loss of $849,000 a year earlier.
The increase in net sales is largely attributable to increases in sales in the mountain biking sector as well as increases in sales in the powered vehicles sector. Sales increases in the mountain biking sector were due to strong sales at the end of Fox’s prior model year compared to seasonably weak sales in 2009. Sales increases in the powered vehicles sector were largely due to increases in sales of suspension products to Ford Motor Company for use in its F-150 Raptor off-road pickup, and sales to ATV OEMs.
International sales were approximately $21.4 million in the first quarter of 2010 compared to $13.3 million in 2009.
Cost of sales for the three months ended March 31, 2010 increased approximately $8.4 million compared to the corresponding period in 2009. The increase in cost of sales is primarily attributable to the increase in net sales for the same period. Gross profit as a percentage of sales increased during the three months ended March 31, 2010 (28.9% at March 31, 2010 vs. 26.0% at March 31, 2009) due to efficiencies achieved due to the increase in volume. This was offset in part by increases in material costs and an unfavorable channel mix in 2010 as a larger proportion of total net sales were in the OEM category which typically carries lower margins than Aftermarket sales.
Selling, general and administrative expense for the three months ended March 31, 2010 increased $500,000 over the corresponding three month period in 2009. This increase is the result of increases in engineering, sales and marketing costs to support the sales growth.
Income from operations for the three months ended March 31, 2010 increased approximately $3.7 million compared to the corresponding period in 2009 based principally on the significant increase in net sales and other factors described above.
Headquartered in Watsonville, CA, Fox Factory sells to more than 200 OEM and over 7,600 aftermarket customers, including independent bike dealers.
The table below summarizes the income (loss) from operations data for Fox for the three-month periods ended March 31, 2010 and March 31, 2009.
| Three-months ended | ||||||||
| (in thousands) | March 31, 2010 | March 31, 2009 | ||||||
Net sales | $ | 32,732 | $ | 20,105 | ||||
Cost of sales | 23,258 | 14,879 | ||||||
Gross profit | 9,474 | 5,226 | ||||||
Selling, general and administrative expense | 5,183 | 4,646 | ||||||
Fees to manager | 125 | 125 | ||||||
Amortization of intangibles | 1,304 | 1,304 | ||||||
Income (loss) from operations | $ | 2,862 | $ | (849 | ) | |||
