Fox Factory Holding Corp. (FOXF) Bundle
Understanding Fox Factory Holding Corp. (FOXF) Revenue Streams
Understanding Fox Factory Holding Corp.’s Revenue Streams
Fox Factory Holding Corp. generates revenue through three primary segments: Powered Vehicles Group, Aftermarket Applications Group, and Specialty Sports Group. Each segment contributes differently to the overall revenue mix.
Breakdown of Primary Revenue Sources
| Segment | Q3 2024 Net Sales (in millions) | Q3 2023 Net Sales (in millions) | Year-over-Year Change ($) | Year-over-Year Change (%) |
|---|---|---|---|---|
| Powered Vehicles Group | $109.3 | $123.1 | $(13.7) | (11.2)% |
| Aftermarket Applications Group | $100.3 | $136.0 | $(35.8) | (26.3)% |
| Specialty Sports Group | $149.5 | $72.0 | $77.5 | 107.6% |
| Total Net Sales | $359.1 | $331.1 | $28.0 | 8.5% |
In the third quarter of 2024, total net sales increased by $28.0 million, or 8.5%, compared to the same period in 2023. This growth was primarily driven by significant increases in the Specialty Sports Group, which benefited from the acquisition of Marucci, contributing $49.6 million in net sales.
Year-over-Year Revenue Growth Rate
For the nine months ended September 27, 2024, total net sales amounted to $1,041.1 million, down from $1,131.7 million in the same period in 2023, reflecting a decrease of $90.6 million or 8.0%. This decline was attributed to a combination of factors, including:
- Lower industry demand due to higher interest rates.
- Higher inventory levels at dealerships impacting Aftermarket Applications Group sales.
- A shift in product mix affecting overall sales performance.
Contribution of Different Business Segments to Overall Revenue
The following table illustrates the revenue contribution from each segment for the nine months ended September 27, 2024:
| Segment | Net Sales (in millions) | Percentage of Total Revenue |
|---|---|---|
| Powered Vehicles Group | $345.2 | 33.1% |
| Aftermarket Applications Group | $309.3 | 29.7% |
| Specialty Sports Group | $386.6 | 37.2% |
| Total | $1,041.1 | 100% |
The Specialty Sports Group has emerged as a crucial revenue driver, particularly following the acquisition of Marucci, which has positioned it to capture a larger market share.
Analysis of Significant Changes in Revenue Streams
The most notable shift occurred within the Specialty Sports Group, which experienced a remarkable increase of 107.6% year-over-year, primarily due to the acquisition of Marucci. In contrast, the Powered Vehicles Group and Aftermarket Applications Group faced declines of 11.2% and 26.3%, respectively, due to lower demand and increased interest rates affecting consumer spending.
Overall, the diversified revenue streams illustrate the company's ability to capitalize on growth opportunities while navigating challenges in certain segments.
A Deep Dive into Fox Factory Holding Corp. (FOXF) Profitability
Profitability Metrics
This section delves into the profitability metrics of the company, examining gross profit, operating profit, and net profit margins, alongside trends and comparisons within the industry.
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 27, 2024, the company reported:
- Gross Profit: $107.5 million
- Operating Profit: $18.8 million
- Net Profit: $4.8 million
In comparison, for the three months ended September 29, 2023, the figures were:
- Gross Profit: $107.2 million
- Operating Profit: $41.4 million
- Net Profit: $35.3 million
These results indicate a significant decrease in both operating profit and net profit margins year-over-year, with net income down by 86.4%.
Trends in Profitability Over Time
Over the nine months ended September 27, 2024, the trends show:
- Net Income: $6.7 million (down from $116.8 million in the prior year)
- Operating Income: $46.3 million (down from $148.8 million)
The overall profitability metrics reflect a declining trend, primarily attributed to increased costs and reduced sales volume.
Comparison of Profitability Ratios with Industry Averages
The profitability ratios compared to industry averages are as follows:
| Metric | Company Value | Industry Average |
|---|---|---|
| Gross Margin | 29.9% | 32.5% |
| Operating Margin | 5.2% | 12.0% |
| Net Profit Margin | 1.3% | 10.7% |
Analysis of Operational Efficiency
Examining operational efficiency, the total operating expenses for the three months ended September 27, 2024, were:
- General and Administrative Expenses: $32.5 million
- Sales and Marketing Expenses: $29.1 million
- Research and Development Expenses: $16.1 million
- Total Operating Expenses: $88.7 million
This marks an increase from $65.9 million in the same period of the previous year, highlighting a rise in expenses related to operations.
The gross margin decreased by 250 basis points compared to the prior year, attributed to higher costs and lower sales volume, indicating challenges in cost management and operational efficiency.
Debt vs. Equity: How Fox Factory Holding Corp. (FOXF) Finances Its Growth
Debt vs. Equity: How Fox Factory Holding Corp. Finances Its Growth
Debt Levels: As of September 27, 2024, the company reported total long-term debt of $558.4 million and short-term debt of $210.0 million. The total debt stood at $768.4 million.
Debt-to-Equity Ratio: The debt-to-equity ratio is calculated as total debt divided by total stockholders' equity. As of September 27, 2024, total stockholders' equity was $1,197.1 million. Therefore, the debt-to-equity ratio is approximately 0.64, which is below the industry average of 0.75.
Recent Debt Issuances: In the nine months ending September 27, 2024, the company issued $200.0 million in debt under its 2022 Credit Facility. The weighted-average interest rate on outstanding borrowings was 6.30%.
Credit Ratings: The company has maintained a credit rating of B+ from Standard & Poor's, reflecting its moderate credit risk.
Balancing Debt and Equity Financing: The company utilizes a combination of debt financing and equity funding to support its growth. In 2024, it repurchased $25.0 million of common stock as part of its capital allocation strategy, while also drawing on its revolving credit facility for liquidity.
| Metric | Value |
|---|---|
| Total Long-term Debt | $558.4 million |
| Total Short-term Debt | $210.0 million |
| Total Debt | $768.4 million |
| Total Stockholders' Equity | $1,197.1 million |
| Debt-to-Equity Ratio | 0.64 |
| Recent Debt Issuance | $200.0 million |
| Weighted-Average Interest Rate | 6.30% |
| Credit Rating | B+ |
| Common Stock Repurchased | $25.0 million |
Assessing Fox Factory Holding Corp. (FOXF) Liquidity
Assessing Fox Factory Holding Corp.'s Liquidity
Current and Quick Ratios
As of September 27, 2024, the current ratio for the company is 1.5, indicating that for every dollar of current liabilities, the company has $1.50 in current assets. The quick ratio is 0.9, suggesting that the company has $0.90 in liquid assets for every dollar of current liabilities, which may raise some liquidity concerns as it is below the ideal benchmark of 1.0.
Analysis of Working Capital Trends
The working capital for the nine months ended September 27, 2024, is $195.6 million, down from $270.0 million for the same period in 2023, representing a decrease of 27.5%. This decline is primarily attributed to increased current liabilities driven by a rise in accounts payable and accrued expenses.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 27, 2024, reveals the following trends:
| Cash Flow Activity | 2024 (in millions) | 2023 (in millions) | Change ($) |
|---|---|---|---|
| Net cash provided by operating activities | $50.1 | $126.7 | ($76.6) |
| Net cash used in investing activities | ($42.5) | ($165.4) | $122.9 |
| Net cash used in financing activities | ($1.7) | ($16.2) | $14.5 |
| Change in cash and cash equivalents | $5.6 | ($54.6) | $60.2 |
Potential Liquidity Concerns or Strengths
The company has maintained a positive cash flow from operating activities of $50.1 million in 2024, although this is significantly lower than the previous year's figure of $126.7 million. The decrease in cash flow from operations, combined with a quick ratio of 0.9, indicates potential liquidity concerns that may affect the company's ability to meet short-term obligations without relying on inventory sales.
As of September 27, 2024, the company holds $89.2 million in cash and cash equivalents, with $31.0 million of that amount located in foreign subsidiaries, which may require repatriation to support domestic liquidity needs.
Is Fox Factory Holding Corp. (FOXF) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current P/E ratio for the company is 31.4. This reflects a decline from the previous year’s P/E ratio of 20.1. The earnings per share (EPS) for the trailing twelve months is $1.73.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 2.3, compared to 2.1 in the previous fiscal year. The book value per share is $23.20.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is currently 17.5. This is an increase from 13.8 reported last year.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated significantly:
- Lowest price: $25.00
- Highest price: $40.00
- Current stock price: $36.75
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, which results in a dividend yield of 0%.
Analyst Consensus on Stock Valuation
The consensus among analysts is as follows:
- Buy: 5 analysts
- Hold: 8 analysts
- Sell: 2 analysts
Financial Summary Table
| Metric | Current Value | Previous Value | Change |
|---|---|---|---|
| P/E Ratio | 31.4 | 20.1 | +56.7% |
| P/B Ratio | 2.3 | 2.1 | +9.5% |
| EV/EBITDA Ratio | 17.5 | 13.8 | +26.8% |
| Current Stock Price | $36.75 | — | — |
| Dividend Yield | 0% | 0% | — |
Key Risks Facing Fox Factory Holding Corp. (FOXF)
Key Risks Facing Fox Factory Holding Corp.
Fox Factory Holding Corp. faces a range of internal and external risks that could significantly impact its financial health. These risks include heightened industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
The competitive landscape within the powered vehicles and aftermarket applications sector has intensified. The company reported a decrease in net sales of $60.3 million, or 14.9%, in the Powered Vehicles Group due to lower industry demand stemming from higher interest rates . Additionally, the Aftermarket Applications Group experienced a net sales decline of $121.1 million, or 28.1%, driven by a product mix shift and elevated inventory levels .
Regulatory Changes
Changes in regulations related to environmental standards and safety requirements could impose additional costs on operations. The company has ongoing costs associated with research and development to meet these standards, which increased by 80.9% year-over-year, amounting to $16.1 million for the most recent quarter .
Market Conditions
The company is also vulnerable to adverse market conditions. For the nine months ended September 27, 2024, net income plummeted to $6.7 million, a decrease of 94.3% compared to $116.8 million in the same period the previous year . This decline was influenced by reduced consumer demand and increased operating costs.
Operational Risks
Operational risks include supply chain disruptions and increased production costs. The total operating expenses rose by $51.6 million, or 23.1%, for the nine months ended September 27, 2024 . This increase is primarily attributed to heightened general and administrative expenses, which rose by $17.1 million .
Financial Risks
Financial risks include increased debt levels and rising interest rates. Interest expense surged to $41.4 million for the nine months ended September 27, 2024, a staggering increase of 263.2% compared to the previous year . This increase in debt servicing costs could strain cash flows and limit financial flexibility.
Mitigation Strategies
To mitigate these risks, the company has focused on enhancing its operational efficiencies and diversifying its product offerings. The recent acquisition of Marucci contributed $150.8 million in net sales, which helped offset declines in other segments . Furthermore, maintaining liquidity through cash reserves and credit facilities is crucial; as of September 27, 2024, the company held $31.0 million in cash and cash equivalents .
| Risk Factor | Description | Impact ($ millions) | Change (%) |
|---|---|---|---|
| Industry Competition | Decrease in net sales due to higher interest rates | -60.3 | -14.9 |
| Regulatory Changes | Increased R&D expenses to meet environmental standards | +16.1 | +80.9 |
| Market Conditions | Net income decline due to reduced consumer demand | -110.1 | -94.3 |
| Operational Risks | Increased operational costs affecting profitability | +51.6 | +23.1 |
| Financial Risks | Surge in interest expenses due to increased debt | +30.0 | +263.2 |
Future Growth Prospects for Fox Factory Holding Corp. (FOXF)
Future Growth Prospects for Fox Factory Holding Corp.
Analysis of Key Growth Drivers
The company is poised for growth through several key drivers:
- Product Innovations: The company has increased its research and development spending to $45.3 million in the nine months ended September 27, 2024, up from $39.4 million in the same period of 2023, reflecting a 15.0% increase aimed at enhancing product offerings.
- Market Expansions: The acquisition of Marucci in November 2023 contributed $150.8 million in net sales in the nine months ended September 27, 2024, showcasing the potential of market expansions through strategic acquisitions.
- Acquisitions: The company spent $5.0 million on cash consideration for acquisitions in the nine months ended September 27, 2024, signaling ongoing investment in growth.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth projections suggest a potential rebound as the market stabilizes. Despite a 8.0% decline in net sales to $1,041.1 million for the nine months ended September 27, 2024, compared to $1,131.7 million in 2023, the inclusion of acquired sales from Marucci and improved product lines are expected to drive recovery.
Earnings estimates show a significant decline in net income to $6.7 million in the nine months ended September 27, 2024, down 94.3% from $116.8 million in the prior year.
Strategic Initiatives or Partnerships That May Drive Future Growth
Strategic partnerships and initiatives are crucial for future growth:
- Collaboration in R&D: Increased collaborations with industry players to enhance product development and innovation.
- Supply Chain Optimization: Efforts to streamline supply chains are expected to reduce costs and improve margins amid fluctuating market demands.
Competitive Advantages That Position the Company for Growth
The company holds several competitive advantages:
- Brand Recognition: Strong brand presence in the powered vehicle and sports equipment markets enhances customer loyalty.
- Diverse Product Portfolio: A wide range of products across different segments allows for cross-selling opportunities and market penetration.
- Operational Efficiency: Enhanced operational efficiencies have reduced unallocated corporate expenses by 10.6% to $42.3 million.
| Metrics | 2024 (9 Months) | 2023 (9 Months) | Change (%) |
|---|---|---|---|
| Net Sales | $1,041.1 million | $1,131.7 million | -8.0% |
| Net Income | $6.7 million | $116.8 million | -94.3% |
| Research and Development Expense | $45.3 million | $39.4 million | +15.0% |
| Acquisitions Cash Consideration | $5.0 million | N/A | N/A |
| Unallocated Corporate Expenses | $42.3 million | $47.3 million | -10.6% |
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Article updated on 8 Nov 2024
Resources:
- Fox Factory Holding Corp. (FOXF) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Fox Factory Holding Corp. (FOXF)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Fox Factory Holding Corp. (FOXF)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.