Fox Factory Holding Corp (FOXF) Reports Q3 2023 Financial Results and Announces Acquisition of ...
Fox Factory Holding Corp (NASDAQ:FOXF) reported Q3 2023 financial results with net income of $35 million, earnings per diluted share of $0.83, and a net income margin of 10.7%.
The company announced an agreement to acquire Marucci Sports, LLC, a leading manufacturer and distributor of premium performance baseball, softball, and other sports equipment.
FOXF also announced a share repurchase plan for up to $300 million of common stock.
The company reaffirmed its 2025 vision of $2 billion sales and 25.0% adjusted EBITDA margin.
On November 2, 2023, Fox Factory Holding Corp (NASDAQ:FOXF) released its third-quarter fiscal 2023 financial results. The company reported a net income of $35 million, earnings per diluted share of $0.83, and a net income margin of 10.7%. Despite a 17.4% sequential decline in sales due to the United Auto Workers strike and a slower bicycle channel inventory destock, the company delivered an adjusted EBITDA margin of 19.2%.
Financial Performance
Net sales for the third quarter of fiscal 2023 were $331.1 million, a decrease of 19.1% compared to net sales of $409.2 million in the third quarter of fiscal 2022. This decrease reflects a $102.0 million or 58.6% decrease in Specialty Sports Group (SSG) net sales, partially offset by a $13.6 million or 12.4% and a $10.3 million or 8.2% increase in Powered Vehicles Group (PVG) and Aftermarket Applications Group (AAG) net sales, respectively.
Gross margin was 32.4% for the third quarter of fiscal 2023, a 110 basis point decrease from gross margin of 33.5% in the third quarter of fiscal 2022. The decrease in gross margin was primarily driven by a shift in the company's product line mix and costs associated with keeping its skilled workforce as production slowed due to the UAW strike, offset by increased efficiencies at its North American facilities.
Acquisition of Marucci Sports
The company announced the signing of a definitive agreement to acquire Marucci Sports, LLC. The acquisition combines two high-performance cultures, industry-leading brands, and product portfolios that expand FOXFs enthusiast offering. The purchase price for the transaction, which is subject to customary adjustments, is based on an enterprise value of $572.0 million and will be financed through an additional term loan under FOXFs existing credit facility.
Share Repurchase Plan
FOXF also announced a share repurchase plan for up to $300 million of common stock. The primary objective of the plan is to manage the impact of dilution from future employee equity grants and to allow for opportunistic share repurchases.
Outlook
For the fourth quarter of fiscal 2023, the company expects net sales in the range of $300 million to $340 million and adjusted earnings per diluted share in the range of $0.75 to $1.00. For the fiscal year 2023, the company expects net sales at the low end of $1,430 million to $1,470 million, adjusted earnings per diluted share at the low end of the range of $4.20 to $4.45, and a full-year effective tax rate in the range of 15%.
Explore the complete 8-K earnings release (here) from Fox Factory Holding Corp for further details.
This article first appeared on GuruFocus.
