On August 1, 2024, Fox Factory Holding Corp (FOXF, Financial) released its 8-K filing reporting financial results for the second fiscal quarter ended June 28, 2024. Fox Factory Holding Corp is a designer, manufacturer, and marketer of performance-defining products and systems used predominantly on bikes, Side-by-Sides, on-road vehicles with and without off-road capabilities, off-road vehicles and trucks, ATVs, snowmobiles, specialty vehicles and applications, motorcycles, and commercial trucks. Its business operates under the FOX, FOX RACING SHOX, and RACE FACE brands.
Performance and Challenges
Fox Factory Holding Corp (FOXF, Financial) reported net sales of $348.5 million for Q2 2024, a sequential increase of 4.5%, aligning with expectations. However, this represents a 13.0% decrease compared to the same quarter last year. The company faced significant challenges, including a 31.2% decrease in Aftermarket Applications Group (AAG) net sales and a 16.0% decrease in Powered Vehicles Group (PVG) net sales, partially offset by a 17.8% increase in Specialty Sports Group (SSG) net sales.
Financial Achievements
Despite the challenges, Fox Factory Holding Corp (FOXF, Financial) achieved several financial milestones. The company reported an adjusted earnings per diluted share of $0.38, below expectations, although the GAAP earnings per diluted share was $0.13. The net income margin increased by 260 basis points sequentially, and the adjusted EBITDA margin improved to 12.7% from 12.1% due to the strength of aftermarket sales.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $348.5 million | $400.7 million |
| Gross Profit | $110.9 million | $132.0 million |
| Net Income | $5.4 million | $39.7 million |
| Adjusted EBITDA | $44.1 million | $79.4 million |
Gross margin for Q2 2024 was 31.8%, a decrease from 32.9% in Q2 2023, primarily driven by shifts in product line mix and reduced operating leverage on lower volume. Total operating expenses increased to $92.4 million, or 26.5% of net sales, compared to $79.2 million, or 19.8% of net sales, in Q2 2023.
Balance Sheet and Cash Flow
As of June 28, 2024, Fox Factory Holding Corp (FOXF, Financial) had cash and cash equivalents of $82.2 million, compared to $83.6 million as of December 29, 2023. Inventory levels increased to $380.4 million from $371.8 million, driven by planned inventory builds to meet anticipated demand. Total debt stood at $758.1 million, up from $743.5 million at the end of 2023.
Management Commentary
"Second quarter results were consistent with our expectations, demonstrating continued sequential improvement in net sales and profitability in light of challenging conditions," commented Mike Dennison, FOX’s Chief Executive Officer. "Although our broader industries we address remain pressured by the challenging macro environment, we see encouraging signals of stabilization within areas of our business that have been facing disproportionate impacts resulting from industry oversupply of inventories."
Outlook and Guidance
For Q3 2024, Fox Factory Holding Corp (FOXF, Financial) expects net sales in the range of $355 million to $385 million and adjusted earnings per diluted share between $0.35 and $0.50. For the full fiscal year 2024, the company projects net sales between $1.407 billion and $1.477 billion, with adjusted earnings per diluted share ranging from $1.40 to $1.72.
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Explore the complete 8-K earnings release (here) from Fox Factory Holding Corp for further details.
