Fox Factory Holding Corp. reported earnings more than doubled in the first quarter ended April 2 as sales jumped 52.5 percent.

First Quarter Fiscal 2021 Highlights

  • Sales increased 52.5 percent to $281.1 million, compared to $184.4 million in the same period last fiscal year;
  • Gross margin increased 410 basis points to 34.8 percent, compared to 30.7 percent in the same period last fiscal year; non-GAAP adjusted gross margin increased 410 basis points to 35.0 percent compared to 30.9 percent in the same period last fiscal year;
  • Net income attributable to FOX stockholders was $38.0 million, or 13.5 percent of sales and $0.90 of earnings per diluted share, compared to $8.3 million, or 4.5 percent of sales and $0.21 of earnings per diluted share in the same period last fiscal year;
  • Non-GAAP adjusted net income was $44.5 million, or $1.05 of adjusted earnings per diluted share, compared to $20.5 million, or $0.52 of adjusted earnings per diluted share in the same period last fiscal year; and
  • Adjusted EBITDA was $60.4 million, or 21.5 percent of sales, compared to $31.3 million, or 17.0 percent of sales in the same period last fiscal year.

“Fox Factory delivered a third consecutive quarter of record sales. Our team continues to execute at the highest level, despite the meaningful supply chain challenges which exist across our business. Our performance in the first quarter displays the tenacity and adaptability of the superb team we are building at FOX,” commented Mike Dennison, Fox, CEO. “I remain optimistic about our prospects in 2021 and beyond as we expect to continue to deliver impressive growth in a dynamic business environment.”

Sales for the first quarter of fiscal 2021 were $281.1 million, an increase of 52.5 percent as compared to sales of $184.4 million in the first quarter of fiscal 2020. This increase in sales reflects an 85.5 percent increase in Specialty Sports Group sales and a 35.0 percent increase in Powered Vehicles Group sales. The increase in Specialty Sports Group products is primarily driven by increased demand in both the original equipment manufacturer (“OEM”) and aftermarket channels. The increase in Powered Vehicles Group sales is primarily due to the aftermarket channel, including SCA, which was acquired in March 2020.

Gross margin was 34.8 percent for the first quarter of fiscal 2021, a 410 basis point increase from a gross margin of 30.7 percent in the first quarter of fiscal 2020. Non-GAAP adjusted gross margin increased 410 basis points to 35.0 percent from the same prior fiscal year period, excluding the effects of strategic transformation and acquisition-related costs. The increase in gross margin was primarily driven by favorable product and channel mix, including the impact of the SCA acquisition and higher volume sales in its Specialty Sports Group offset by duplicative costs due to the Georgia facility transition. Also, approximately $1.8 million of additional factory costs were incurred during the three months ended April 3, 2020, as compared to the three months ended April 2, 2021, due to mandated closures in response to COVID-19. A reconciliation of gross profit to non-GAAP adjusted gross profit and the resulting non-GAAP adjusted gross margin is provided at the end of this press release.

Total operating expenses were $52.1 million for the first quarter of fiscal 2021, compared to $45.0 million in the first quarter of fiscal 2020. Operating expenses increased by $7.1 million primarily due to the inclusion of a full quarter of SCA’s operating expenses and higher employee-related costs including incentive compensation. These increases were partially offset by lower acquisition-related costs. As a percentage of sales, operating expenses were 18.5 percent for the first quarter of fiscal 2021, compared to 24.4 percent in the first quarter of fiscal 2020. Non-GAAP operating expenses were $45.4 million, or 16.1 percent of sales, in the first quarter of fiscal 2021, compared to $30.9 million, or 16.7 percent of sales, in the first quarter of the prior fiscal year. Reconciliations of operating expense to non-GAAP operating expense are provided at the end of this press release.

The company’s effective tax rate remained consistent with the prior year at 9.5 percent in the first quarter of fiscal 2021.

Net income attributable to FOX stockholders in the first quarter of fiscal 2021 was $38.0 million, compared to $8.3 million in the first quarter of the prior fiscal year. Earnings per diluted share for the first quarter of fiscal 2021 were $0.90, compared to earnings per diluted share of $0.21 for the first quarter of fiscal 2020.

Non-GAAP adjusted net income was $44.5 million, or $1.05 of adjusted earnings per diluted share, compared to adjusted net income of $20.5 million, or $0.52 of adjusted earnings per diluted share, in the same period of the prior fiscal year. Reconciliations of net income attributable to Fox stockholders as compared to non-GAAP adjusted net income and the calculation of non-GAAP adjusted earnings per diluted share are provided at the end of this press release.

Adjusted EBITDA in the first quarter of fiscal 2021 was $60.4 million, compared to $31.3 million in the first quarter of fiscal 2020. The adjusted EBITDA margin in the first quarter of fiscal 2021 was 21.5 percent, compared to 17.0 percent in the first quarter of fiscal 2020. Reconciliations of net income to adjusted EBITDA and the calculation of adjusted EBITDA margin are provided at the end of this press release.

Balance Sheet Highlights
As of April 2, 2021, the company had cash and cash equivalents of $291.5 million compared to $245.8 million as of January 1, 2021. Inventory was $166.5 million as of April 2, 2021, compared to $127.1 million as of January 1, 2021. As of April 2, 2021, accounts receivable and accounts payable were $137.0 million and $121.7 million, respectively, compared to $121.2 million and $92.4 million, respectively, as of January 1, 2021. The changes in inventory, accounts receivable and accounts payable reflect business growth as well as the timing of vendor payments. Prepaids and other current assets decreased to $55.8 million as of April 2, 2021, compared to $87.9 million as of January 1, 2021, primarily due to a decrease in vehicle chassis deposits in its SCA and Tuscany subsidiaries.

Fiscal 2021 Guidance
For the second quarter of fiscal 2021, the company expects sales in the range of $275 million to $295 million and non-GAAP adjusted earnings per diluted share in the range of $0.95 to $1.05.

For the fiscal year 2021, the company expects sales in the range of $1,110 million to $1,160 million and non-GAAP adjusted earnings per diluted share in the range of $3.70 to $4.00. Fox expects its full-year effective tax rate to be on the lower end of its previously guided range of 15.0 percent to 19.0 percent.

Photo courtesy Fox Factory