Fox Q4 sales leap 16.6% YOY, predicts growth to continue into 2017

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Fox Factory’s Q4 sales saw a 16.6% increase against the same period in 2015, while earnings rose 25%, the firm has reported.

“We were pleased to end the year with continued business momentum. Our global team continued to execute at a high-level and our innovation has helped fuel the consistent success of product lineups across bike and powered vehicles,” commented Larry L. Enterline, FOX’s Chief Executive Officer. “This positive momentum in our business has continued into fiscal 2017, and we believe we are well positioned to generate future growth and enhance shareholder value.”

Gross margin was 30.5% for the fourth quarter of fiscal 2016, a 60 basis point increase from gross margin of 29.9% in the fourth quarter of fiscal 2015. The increase in gross margin was primarily due to lower acquisition related inventory costs as compared to the prior fiscal year period. On a non-GAAP adjusted basis, excluding acquisition related costs, gross margin decreased 10 basis points as compared to the fourth quarter of fiscal 2015.

Net income was $9.8 million, or 8.8% of sales and $0.26 per diluted share, compared to $6.8 million, or 7.1% of sales and $0.18 per diluted share in the same period last fiscal year.

Non-GAAP adjusted net income was $12.0 million, or $0.32 adjusted earnings per diluted share, compared to $9.6 million, or $0.25 adjusted earnings per diluted share in the same period last fiscal year.

Adjusted EBITDA in the fourth quarter of fiscal 2016 was $19.8 million, compared to $16.1 million in the fourth quarter of fiscal 2015. Adjusted EBITDA margin in the fourth quarter of fiscal 2016 was 17.7%, compared to 16.9% in the fourth quarter of fiscal 2015.

Fiscal Year 2016 Results

Sales for the year ended December 30, 2016 were $403.1 million, an increase of 9.9% compared to the same period in 2015. Sales of powered vehicle and bike products increased 13.7% and 7.1%, respectively, for 2016 compared to the prior year period.

Gross margin was 31.4% for the fiscal year ended December 30, 2016, a 90 basis point increase compared to gross margin of 30.5% in fiscal year 2015. The gross margin improvement was primarily due to manufacturing efficiencies along with the non-recurrence of ramp up, reconfiguration and logistics costs associated with the Company’s global production transition, the West Coast port slowdown during 2015, and lower acquisition related inventory costs.  On a non-GAAP adjusted basis, excluding acquisition related costs, gross margin increased 40 basis points as compared to the prior fiscal year.

Net income in fiscal year 2016 was $35.7 million, compared to $25.0 million in fiscal 2015.  Earnings per diluted share for fiscal year 2016 was $0.94, compared to $0.66 in fiscal 2015.  Non-GAAP adjusted net income was $46.4 million, or $1.23 adjusted earnings per diluted share in fiscal 2016, compared to $38.3 million, or $1.01 adjusted earnings per diluted share, in fiscal 2015.

Fiscal 2017 Guidance

For the first quarter of fiscal 2017, the Company expects sales in the range of $96 million to $100 million and non-GAAP adjusted earnings per diluted share in the range of $0.24 to $0.28.

For the fiscal year 2017, the Company expects sales in the range of $430 million to $450 million and non-GAAP adjusted earnings per diluted share in the range of $1.31 to $1.41.