Yahoo Finanza Fox Factory Holding Corp (FOXF) Q1 Fiscal 2024 Earnings: Mixed Results Amidst Market Challenges
Reported Revenue: $333.5 million, a decrease of 16.6% from the previous year, slightly above the estimated $327.58 million.
Adjusted Earnings Per Share (EPS): $0.29, surpassing the estimated $0.19.
Net Loss: Reported a net loss of $3.5 million, significantly below the estimated net loss of $6.40 million.
Gross Margin: Decreased to 30.9% from 33.3% year-over-year, reflecting a shift in product mix and operating leverage on lower sales volume.
Operating Expenses: Increased to $94.3 million, or 28.3% of net sales, primarily due to the inclusion of Marucci operating expenses.
Adjusted EBITDA: $40.4 million, with a margin of 12.1%, down from 19.8% in the previous year, indicating reduced profitability.
Future Outlook: Expects net sales in the range of $1.53 billion to $1.61 billion for fiscal year 2024, with adjusted EPS between $2.30 and $2.55.
On May 3, 2024, Fox Factory Holding Corp (NASDAQ:FOXF) released its 8-K filing, detailing the financial outcomes for the first quarter of fiscal year 2024, which ended on March 29, 2024. The company, a prominent player in the design, engineering, and manufacturing of performance-defining products for various vehicles, reported mixed financial results characterized by a significant revenue drop and adjusted earnings per share (EPS) that exceeded internal expectations.
Company Overview
Fox Factory Holding Corp operates primarily under the FOX, FOX RACING SHOX, and RACE FACE brands, offering innovative solutions predominantly for bikes, side-by-sides, on-road and off-road vehicles, trucks, ATVs, snowmobiles, specialty vehicles, motorcycles, and commercial trucks. With a strong market presence in North America and expanding operations in Asia and Europe, FOXF focuses on maintaining its leadership through continuous innovation and strategic market diversification.
Financial Performance Highlights
For Q1 2024, FOXF reported net sales of $333.5 million, a decrease of 16.6% from $399.9 million in the same period last year. This decline was primarily driven by reduced sales across all its business segments, notably a 26.6% decrease in Aftermarket Applications Group sales and a 17.0% decrease in Powered Vehicles Group sales, largely due to higher interest rates impacting consumer and dealer activity. Despite the sales downturn, FOXF's adjusted EPS stood at $0.29, surpassing the analyst estimate of $0.19 and reflecting effective cost management and operational efficiency.
Challenges and Strategic Adjustments
The company's gross margin contracted by 240 basis points to 30.9%, attributed to an unfavorable product mix and reduced operating leverage on lower sales volume. Operating expenses as a percentage of net sales increased to 28.3%, up from 19.7% in the prior year, influenced by the inclusion of expenses from recent acquisitions like Marucci. The net result was a swing to a net loss of $3.5 million for the quarter, compared to a net income of $41.8 million in Q1 2023.
Management's Perspective
CEO Mike Dennison emphasized the alignment of net sales with expectations and the outperformance of adjusted EPS. He noted the ongoing challenges faced by OEMs but expressed confidence in achieving long-term growth through innovation and stringent cost management. Dennison also highlighted the narrowing of the full-year fiscal 2024 outlook towards the lower end of previous estimates, anticipating delayed interest rate relief extending beyond the fiscal year.
Looking Ahead
For Q2 2024, FOXF expects net sales between $340 million and $360 million and adjusted EPS ranging from $0.30 to $0.40. The full-year forecast anticipates net sales between $1.53 billion and $1.61 billion with adjusted EPS from $2.30 to $2.55, reflecting cautious optimism amid a challenging economic landscape.
Investor Implications
While FOXF navigates through market volatilities and strategic transitions, its ability to surpass adjusted EPS estimates might appeal to investors looking for companies with effective cost control and operational resilience. However, the significant drop in revenue and the cautious outlook for the fiscal year suggest a need for potential investors to consider both the opportunities and risks associated with the current economic environment influencing consumer spending in specialty sports and vehicle markets.
For continued updates and detailed financial analysis, stakeholders and interested investors are encouraged to refer to the full 8-K filing and follow upcoming earnings calls and investor briefings.
Explore the complete 8-K earnings release (here) from Fox Factory Holding Corp for further details.
This article first appeared on GuruFocus.
