Fox Factory has posted its second quarter earnings, within which revenue grew by 14% on a year-on-year basis, all despite a slip in sales, down 4.7% to $183.1 million, compared to $192.1 million in the same period last fiscal year.
The results saw the firm’s share price shift a gear to reach an all time high at $98.19, which isn’t an uncommon sight for the bicycle industry at present, much thanks to a widely reported spike in interest in cycling of all kinds, as well as a ramped up production to fill a gap in demand.
Indeed the power sports division actually decreased by 14.5%, primarily as a result of the Covid-19 pandemic. Speciality Sports, including cycling, grew by 10%, off setting the decline elsewhere and balancing the books.
The increase in Specialty Sports Group products is primarily driven by increased demand in both the OEM and aftermarket channels, said the statement.
“Fox’s resilient second quarter results reflect the strength of our diversified customer base and performance-defining product portfolio, as well as the commitment and dedication of our talented management team,” commented Mike Dennison, FOX’s Chief Executive Officer.
“We overcame an unprecedented shutdown of our U.S. factories and economy associated with the COVID-19 pandemic which lasted for over half of our quarter and we were able to not only effectively restart our business but support an incredibly strong surge in demand for our products across all channels. In addition, our Specialty Sports Group was a standout success in the quarter, exceeding our pre-COVID expectations and delivering 10.0% growth.”
Non-GAAP adjusted net income was $19.7 million, or $0.50 of adjusted earnings per diluted share, compared to $26.6 million, or $0.68 of adjusted earnings per diluted share in the same period last fiscal year. Adjusted EBITDA was $33.7 million, or 18.4% of sales, compared to $38.2 million, or 19.9% of sales in the same period last fiscal year.
Gross margin increased 40 basis points to 32.8%, compared to 32.4% in the same period last fiscal year; non-GAAP adjusted gross margin increased 40 basis points to 33.1% compared to the same period last fiscal year.
Net income attributable to Fox stockholders was $12.6 million, or 6.9% of sales and $0.32 of earnings per diluted share, compared to $22.9 million, or 11.9% of sales and $0.59 of earnings per diluted share in the same period last fiscal year.
“We remain optimistic and confident about the growth opportunities ahead of us, grounded in our strategic initiatives as well as the consumer loyalty and power of the Fox brand,” Dennison went on to say.
Sales for the six months ended July 3, 2020, were $367.5 million, an increase of 3.9% compared to the same period in 2019. Sales of Powered Vehicle and Specialty Sports products increased 3.3% and 4.7%, respectively, for the first six months of 2020 compared to the prior year period.
The company has declined to provide further quarterly guidance until the affects of the pandemic can be assessed with some certainty.
New CFO, Scott Humphrey joins
Fox also announced today in a separate press release that veteran strategic and financial executive Scott Humphrey was promoted to the role of Chief Financial Officer (“CFO”) effective August 4, 2020. Mr. Humphrey will succeed interim CFO, John Blocher, who will reassume the role Senior Vice-President of Finance.