Fox Factory Holding Corp. Announces Second Quarter Fiscal Year 2013 Financial Results

Fox Factory Holding Corp. Announces Second Quarter Fiscal Year 2013 Financial
Results

            Second Quarter Sales Increased 15.8% to $70.3 Million

Second Quarter Net Income Increased 32.5% to $5.7 Million and Adjusted EBITDA
                       Increased 29.0% to $12.6 Million

SCOTTS VALLEY, Calif., Sept. 19, 2013 (GLOBE NEWSWIRE) -- Fox Factory Holding
Corp. (Nasdaq:FOXF) ("FOX") today reported financial results for the second
quarter and six months ended June 30, 2013.

Second Quarter Fiscal 2013 Highlights

  *Sales increased 15.8% to $70.3 million compared to $60.7 million in the
    same period last fiscal year, driven by strong sales growth for both
    mountain bikes and powered vehicle products
  *Gross margin increased 190 basis points to 29.0% compared to 27.1% in the
    same period last fiscal year
  *Net income increased 32.5% to $5.7 million compared to $4.3 million in the
    same period last fiscal year
  *Non-GAAP adjusted net income increased 25.3% to $6.7 million compared to
    $5.3 million in the same period last fiscal year
  *Adjusted EBITDA increased 29.0% to $12.6 million compared to $9.8 million
    in the same period last fiscal year

"We are pleased to report solid second quarter financial results for FOX,"
said Larry Enterline, the Company's Chief Executive Officer. "Growing demand
for our high-performance mountain bike and powered vehicle products enabled us
to deliver double-digit growth for sales, adjusted EBITDA, and adjusted net
income. We also improved our gross margin and adjusted EBITDA margin,
underscoring our ability to leverage our operating platform and improve
efficiency. We have identified several areas in our business for future margin
improvement and expect to continue to improve our gross and operating margins
as we go forward."

Sales for the second quarter of fiscal 2013 were $70.3 million, an increase of
15.8% from sales of $60.7 million in the second quarter of fiscal 2012. Sales
of mountain bike and powered vehicle products increased 17.7% and 12.3%,
respectively, for the second quarter of fiscal 2013 compared to the prior year
period.

Gross margin was 29.0% for the second quarter of fiscal 2013, a 190 basis
point increase from gross margin of 27.1% in the second quarter of fiscal
2012. The improvement in gross margin reflects the Company's successful
execution of initiatives designed to improve operating efficiencies.

Total operating expenses were $10.2 million, or 14.5% of sales, for the second
quarter of fiscal 2013, compared to $9.6 million, or 15.8% of sales in the
second quarter of the prior year. Operating income was $10.1 million for the
second quarter of fiscal 2013, a 47.7% increase compared to operating income
of $6.9 million in the second quarter of fiscal 2012. Operating expenses for
the second quarter of fiscal 2013 include approximately $0.5 million of
expenses as described in footnote 3 to the reconciliation of non-GAAP adjusted
net income to the GAAP measure net income table provided at the end of this
press release.

Net income in the second quarter of fiscal 2013 was $5.7 million, an increase
of 32.5% compared to $4.3 million in the second quarter of the prior year.
Earnings per diluted share for the second quarter of fiscal 2013 was $0.17,
calculated on 34.7 million weighted average diluted shares outstanding,
compared to $0.14, calculated on 31.2 million weighted average diluted shares
outstanding in the second quarter of fiscal 2012.

Non-GAAP adjusted net income in the second quarter of fiscal 2013 was $6.7
million, an increase of 25.3% compared to non-GAAP adjusted net income of $5.3
million in the second quarter of the prior year. Non-GAAP adjusted earnings
per diluted share for the second quarter of fiscal 2013 was $0.19, calculated
on 34.7 million weighted average diluted shares outstanding, compared to
non-GAAP adjusted earnings per diluted share of $0.17, calculated on 31.2
million weighted average shares outstanding in the second quarter of fiscal
2012. A reconciliation of non-GAAP adjusted net income to the GAAP measure net
income and the calculation of non-GAAP adjusted earnings per share are
provided at the end of this press release.

Adjusted EBITDA in the second quarter of fiscal 2013 was $12.6 million, a
29.0% increase compared to $9.8 million in the second quarter of the prior
year. Adjusted EBITDA margin in the second quarter of fiscal 2013 improved 190
basis points to 18.0%, compared to 16.1% in the prior year period, reflecting
the Company's ability to leverage its operating platform. A reconciliation of
adjusted EBITDA to the GAAP measure net income and the calculation of adjusted
EBITDA margin are provided at the end of this press release.

First Six Months Fiscal Year 2013 Results

Sales for the six months ended June 30, 2013, were $125.2 million, an increase
of 17.7% compared to the same period in 2012. Sales of mountain bike and
powered vehicle products increased 17.1% and 18.7%, respectively, for the
first six months of 2013 compared to the prior year period.

Gross margin was 28.8% in the first six months of fiscal 2013, a 100 basis
point improvement compared to gross margin of 27.8% in the first six months of
fiscal 2012.

Net income in the first six months of fiscal 2013 was $9.3 million, an
increase of 33.3% compared to $7.0 million in the first six months of the
prior year. Earnings per diluted share for the first six months of fiscal 2013
was $0.27, calculated on 34.7 million weighted average diluted shares
outstanding, compared to $0.23, calculated on 30.9 million weighted average
diluted shares outstanding in same period of fiscal 2012.

Non-GAAP adjusted net income in the first six months of fiscal 2013 was $11.2
million, an increase of 24.7% compared to non-GAAP adjusted net income of $9.0
million in the first six months of the prior year. Non-GAAP adjusted earnings
per diluted share for the first six months of fiscal 2013 was $0.32,
calculated on 34.7 million weighted average diluted shares outstanding,
compared to non-GAAP adjusted earnings per diluted share of $0.29, calculated
on 30.9 million weighted average shares outstanding in the first six months of
fiscal 2012.

Adjusted EBITDA increased 32.0% to $21.4 million in the first six months of
fiscal 2013, compared to $16.2 million in the first six months of fiscal 2012.
Adjusted EBITDA margin in the first six months of fiscal 2013 improved 190
basis points to 17.1% compared to 15.2% in the first six months of fiscal
2012.

"We are very excited to have completed our initial public offering and listing
on the NASDAQ Global Select Market," added Mr. Enterline. "FOX is an
established, global, premium performance-based brand and we have strong
relationships with many of the major OEMs in each of our markets. We continue
to design innovative products that enhance ride performance to help
professional athletes and enthusiasts of all skill levels to excel. We believe
there is a great opportunity for FOX to expand relationships with our existing
and new OEMs, and to enter into relevant adjacent categories. We look forward
to executing our growth strategy as we move ahead over the next few years."

Balance Sheet Highlights

As of June 30, 2013, the Company had cash and cash equivalents of $0.2
million. Total debt was $65.5 million, compared to $59.3 million as of
December 31, 2012. Following the Company's initial public offering, which
closed on August 13, 2013, the Company had cash and cash equivalents of $5.3
million, and total debt was $28.5 million. Inventory was $51.0 million as of
June 30, 2013, compared to $34.3 million as of December 31, 2012 primarily due
to the increased level of business during the period ended June 30, 2013 and
the seasonality of the Company's business. As of June 30, 2013, accounts
receivable and accounts payable were $40.4 million and $35.2 million,
respectively, compared to $25.2 million and $19.6 million as of December 31,
2012, respectively, also primarily due to the increased level of business
during the period ended June 30, 2013 and the seasonality of the Company's
business.

Recent Developments

On August 13, 2013, the Company completed its initial public offering of an
aggregate of 9,857,143 shares of common stock at an initial offering price to
the public of $15.00 per share; the shares include the exercise in full by the
underwriters of their option to purchase 1,285,714 shares of common stock from
the selling stockholders. FOX estimates that it received net proceeds of
approximately $36.2 million, after deducting underwriting discounts and
commissions and other estimated offering expenses, from its sale of 2,857,143
shares of common stock. FOX did not receive any proceeds from the sale of
shares by the selling stockholders.

Fiscal 2013 Guidance

The Company expects third quarter fiscal 2013 sales in the range of $79 to $82
million and earnings per diluted share in the range of $0.23 to $0.27 based on
36.9 million diluted shares outstanding. For the full year fiscal 2013, the
Company expects sales in the range of $264 to $270 million and earnings per
diluted share in the range of $0.61 to $0.67 based on 36.1 million diluted
shares outstanding. Included in the Company's earnings per diluted share
guidance is approximately $1.4 million of non-cash expense related to
unamortized loan origination costs that the Company expects to incur in the
third quarter of fiscal 2013 in connection with termination of its prior
credit facility. The Company terminated this prior credit facility and entered
into a new credit facility in connection with the closing of its initial
public offering.

Conference Call & Webcast

The Company will hold an investor conference call today at 1:30 p.m. Pacific
time (4:30 p.m. Eastern Time). The conference call dial-in number for North
America listeners is (877) 312-5421 and (253) 237-1121 for international
callers. Live audio of the conference call will be simultaneously webcast in
the investor relations section of the Company's website at
http://www.ridefox.com.

An audio replay will be available following the completion of the conference
call by dialing (855) 859-2056 for North America listeners or (404) 537-3406
for international listeners (conference ID 43451702). The webcast of the
teleconference will be archived and available on the Company's website.

About Fox Factory Holding Corp. (Nasdaq:FOXF)

Headquartered in Scotts Valley, CA, FOX designs and manufactures
high-performance suspension products primarily for mountain bikes,
side-by-side vehicles, on-road and off-road vehicles and trucks, all-terrain
vehicles, snowmobiles, specialty vehicles and applications, and motorcycles.
For more than three decades, FOX's team of enthusiasts and professional
athletes has been improving vehicle performance through a unique commitment to
redefining ride dynamics.

FOX is a registered trademark of Fox Factory Inc. NASDAQ Global Select Market
is a registered trademark of The NASDAQ OMX Group, Inc. All rights reserved.

Non-GAAP Financial Measures

In addition to reporting financial measures in accordance with generally
accepted accounting principles ("GAAP"), FOX is including in this press
release "Non-GAAP Adjusted net income", "Non-GAAP Adjusted earnings per
diluted share", "Adjusted EBITDA", and "Adjusted EBITDA margin", which are
non-GAAP financial measures. FOX defines Non-GAAP Adjusted net income as net
income adjusted for amortization of purchased intangibles, net of tax, and the
management fee payable to an affiliate of its majority stockholder, net of
tax, and Non-GAAP Adjusted earnings per diluted share as Non-GAAP Adjusted net
income divided by the number of diluted shares of common stock outstanding.
FOX defines Adjusted EBITDA as net income adjusted for interest expense, other
income (expense), net, provision for income taxes, amortization of purchased
intangibles, depreciation, stock-based compensation and the management fee
payable to an affiliate of its majority stockholder and Adjusted EBITDA margin
as Adjusted EBITDA divided by sales. FOX includes these non-GAAP financial
measures because it believes they allow investors to understand and evaluate
the Company's core operating performance and trends. In particular, the
exclusion of certain expenses in calculating adjusted EBITDA and Non-GAAP
Adjusted net income (and accordingly, Adjusted EBITDA margin and Non-GAAP
Adjusted earnings per diluted share) can provide a useful measure for
period-to-period comparisons of the Company's core business. These non-GAAP
financial measures have limitations as analytical tools, including the fact
that such non-GAAP financial measures may not be comparable to similarly
titled measures presented by other companies and other companies may calculate
Non-GAAP Adjusted net income, Non-GAAP Adjusted earnings per diluted share,
Adjusted EBITDA and Adjusted EBITDA margin differently than FOX does. For more
information regarding these non-GAAP financial measures, see the tables
included at the end of this press release.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this press release may be deemed to be forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. The Company intends that
all such statements be subject to the "safe-harbor" provisions contained in
those sections. Forward-looking statements generally relate to future events
or the Company's future financial or operating performance. In some cases, you
can identify forward-looking statements because they contain words such as
"may," "might," "will," "would," "should," "expect," "plan," "anticipate,"
"could," "intend," "target," "project," "contemplate," "believe," "estimate,"
"predict," "likely," "potential" or "continue" or other similar terms or
expressions and such forward-looking statements include, but are not limited
to, statements about the Company's ability to improve gross and operating
margins in the future, the Company's belief about the opportunity to expand
its relationships with its OEMs as well as with new OEMs and to enter into
adjacent categories, the Company's execution of its growth strategies, the
Company's expected future sales and future earnings per share, and any other
statements in this press release that are not of an historical nature. Many
important factors may cause the Company's actual results, events or
circumstances to differ materially from those discussed in any such
forward-looking statements, including but not limited to: the Company's
ability to improve operating and supply chain efficiencies; the Company's
future financial performance, including its sales, cost of sales, gross profit
or gross margins, operating expenses, ability to generate positive cash flow
and ability to maintain profitability; factors which impact the calculation of
the number diluted shares of common stock outstanding, including the market
price of the Company's common stock, grants of equity-based awards and the
vesting schedules of equity-based awards; the Company's ability to develop new
and innovative products in its current end-markets and to leverage its
technologies and brand to expand into new categories and end-markets; the
Company's ability to increase its aftermarket penetration; the transition of
the majority of the Company's mountain bike manufacturing operations to Taiwan
and its expectations related to such transition; the Company's ability to
accelerate international growth; the Company's ability to maintain its premium
brand image and high-performance products; the Company's ability to maintain
relationships with the professional athletes and race teams that it sponsors;
the Company's ability to selectively add additional dealers and distributors
in certain geographic markets; the overall growth of the markets in which the
Company competes, the Company's expectations regarding consumer preferences
and its ability to respond to changes in consumer preferences; changes in
demand for high-end suspension and ride dynamics products; the Company's
ability to successfully identify, evaluate and manage potential acquisitions
and to benefit from such acquisitions; future economic or market conditions;
and the other risks and uncertainties described in "Risk Factors" and "Special
Note Regarding Forward-looking Statements" in the Company's final prospectus
filed with the SEC pursuant to Rule 424(b) under the Securities Act on August
8, 2013 and in any subsequently filed Annual Report on Form 10-K or Quarterly
Reports on Form 10-Q or described in the Company's other filings with the
Securities and Exchange Commission. New risks and uncertainties emerge from
time to time and it is not possible for the Company to predict all risks and
uncertainties that could have an impact on the forward-looking statements
contained in this press release. In light of the significant uncertainties
inherent in the forward-looking information included herein, the inclusion of
such information should not be regarded as a representation by the Company or
any other person that the Company's expectations, objectives or plans will be
achieved in the timeframe anticipated or at all. Investors are cautioned not
to place undue reliance on the Company's forward-looking statements and the
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law.

                                                                
FOX FACTORY HOLDING CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

                                                     As of       As of
                                                     June 30,    December 31,
                                                     2013        2012
                                                     (Unaudited) 

Assets                                                           
Current assets                                                   
Cash and cash equivalents                            $184        $15
Accounts receivable (net of allowance for doubtful
accounts of $452 and $440 at June30, 2013 and        40,379      25,224
December31, 2012, respectively)
Inventory                                            51,015      34,255
Prepaids and other current assets                    4,517       2,242
Deferred tax assets                                  3,622       3,405
                                                                
Total current assets                                 99,717      65,141
Property and equipment, net                          12,475      11,789
Loan fees, net—related party                         1,440       1,665
Goodwill                                             31,372      31,372
Intangibles, net                                     29,471      32,153
                                                                
Total assets                                         $174,475    $142,120
                                                                
Liabilities and stockholders' equity                             
Current liabilities                                              
Accounts payable                                     $35,167     $19,551
Accrued expenses                                     10,165      10,156
Liability reserve for uncertain tax positions        8,252       7,292
Current portion of long-term debt—related party      3,000       3,000
                                                     
Total current liabilities                            56,584      39,999
Line of credit—related party                         23,758      750
Long-term debt, less current portion—related party   38,742      55,500
Deferred rent                                        1,045       1,132
Deferred tax liabilities                             14,342      15,155
                                                                
Total liabilities                                    134,471     112,536
                                                     
                                                                
Commitments and contingencies                                    
                                                                
Stockholders' equity                                             
Common stock, $0.001 par value—69,675,000 authorized
as of June 30, 2013 and December31, 2012; 33,459,944 33          33
shares issued and outstanding as of June 30, 2013 and
December31, 2012;
Additional paid-in capital                           50,297      49,169
Accumulated other comprehensive income               22          1
Accumulated deficit                                  (10,348)    (19,619)
                                                                
Total stockholders' equity                           40,004      29,584
                                                                
Total liabilities and stockholders' equity           $174,475    $142,120



FOX FACTORY HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)

                                      Forthethree months Forthesix months
                                      ended June30,       ended June30,
                                      2013       2012      2013      2012

Sales                                 $70,316    $60,721   $125,194  $106,392
Cost of sales                         49,951     44,275    89,114    76,847
                                                                  
Gross profit                          20,365     16,446    36,080    29,545
                                                                  
Operating expenses:                                                
Sales and marketing                   3,478      2,961     6,762     6,137
Research and development              2,588      2,393     4,942     4,769
General and administrative            2,815      2,895     5,489     4,847
Amortization of purchased intangibles 1,341      1,329     2,682     2,633
                                                                  
Total operating expenses              10,222     9,578     19,875    18,386
                                                                  
Income from operations                10,143     6,868     16,205    11,159
                                                                  
Other expense, net:                                                
Interest expense                      (997)      (637)     (1,953)   (870)
Other income (expense), net           (52)       (255)     (19)      (301)
                                                                  
Other expense, net                    (1,049)    (892)     (1,972)   (1,171)
                                                                  
Income before income taxes            9,094      5,976     14,233    9,988
Provision for income taxes            3,373      1,659     4,962     3,031
                                                                  
Net income                            $5,721     $4,317    $9,271    $6,957
                                                                  
                                                                  
Earnings per share:                                                
Basic                                 $0.17      $0.14     $0.28     $0.23
Diluted                               $0.17      $0.14     $0.27     $0.23
                                                                  
Weighted average shares used to                                    
compute earnings per share:
Basic                                 33,460     30,946    33,460    30,640
Diluted                               34,667     31,153    34,670    30,918
                                                                  


FOX FACTORY HOLDING CORP.
NET INCOME TO NON-GAAP ADJUSTED NET INCOME AND NON-GAAP ADJUSTED EARNINGS PER
SHARE RECONCILIATION
(In thousands, except per share data)
(Unaudited)

The following table provides a reconciliation of Non-GAAP Adjusted Net Income,
a non-GAAP financial measure, to net income, the most directly comparable
financial measure calculated and presented in accordance with GAAP, and the
calculation of Non-GAAP Adjusted Earnings per Share for the three-months and
six-months ended June 30, 2013 and 2012. These non-GAAP financial measures are
provided in addition to, and not as alternatives for, the Company's reported
GAAP results.


                                                                    
                                                 For the three For the six
                                                 months ended  months ended
                                                 June 30,      June 30,

                                                                    
                                                 2013   2012   2013    2012
Net Income                                        $5,721 $4,317 $9,271  $6,957
Amortization of purchased intangibles (net of     873    926    1,747   1,834
tax^(1))
Management Fee ^(1)(2) (net of tax)               81     87     163     174
Non-GAAP Adjusted Net Income ^(3)                 $6,676 $5,330 $11,181 $8,965
                                                                    
Non-GAAP Adjusted EPS                                                
Basic                                             $0.20  $0.17  $0.33   $0.29
Diluted                                           $0.19  $0.17  $0.32   $0.29
                                                                    
Weighted average shares used to compute                              
Non-GAAP Adjusted EPS                                                
Basic                                             33,460 30,946 33,460  30,640
Diluted                                           34,667 31,153 34,670  30,918

(1) The amounts of the adjustments for amortization of purchased intangibles,
net of tax, and for management fee, net of tax, were calculated using the
respective year to date effective tax rates. The effective tax rates used for
year to date 2013 and 2012 were 34.9% and 30.3%, respectively. The net of tax
adjustments were determined by taking the amount of such expense as originally
determined in accordance with GAAP and subtracting from such amount the
product of such, expense times the then applicable effective tax rate.

(2) Represents management fees paid to an affiliate of the Company's majority
stockholder pursuant to a management services agreement that terminated upon
the consummation of the Company's initial public offering. Fees under the
management services agreement were payable by the Company quarterly in arrears
and other than paying the accrued but unpaid fees for the quarter during which
the offering closed, no separate termination fee was due under this agreement
when it was terminated.

(3) Included in the Company's results for the three and six months ended June
30, 2013 were a total of approximately $449,000 of expenses incurred by the
Company in the three months ended June 30, 2013 which relate to (i) the
payment by the Company in April 2013 of a bonus to an executive officer in the
amount of approximately $251,000, the after tax net proceeds of which were
used by such officer to repay in full a loan from the Company prior to the
Company's filing of its registration statement in connection with its initial
public offering, and (ii) legal and other costs of approximately $198,000
incurred in connection with business transactions and the defense and
settlement of an employment related matter.These expenses have not been added
back to Non-GAAP Adjusted Net Income.


FOX FACTORY HOLDING CORP.
ADJUSTED EBITDA TO NET INCOME RECONCILIATION
(In thousands)
(Unaudited)

The following table provides a reconciliation of Adjusted EBITDA, a non-GAAP
financial measure, to net income, the most directly comparable financial
measure calculated and presented in accordance with GAAP, and the calculation
of Adjusted EBITDA Margin for the three-months and six-months ended June 30,
2013 and 2012. These non-GAAP financial measures are provided in addition to,
and not as alternatives for, the Company's reported GAAP results.


                                                         
                                     For the three  For the six
                                     months ended   months ended
                                     June 30,       June 30,

                                                         
                                     2013    2012   2013    2012
Net Income                            $5,721  $4,317 $9,271  $6,957
Interest Expense                      997     637    1,953   870
Other (income) expense, net ^(1)      52      255    19      301
Provision for Income Taxes            3,373   1,659  4,962   3,031
Amortization of purchased intangibles 1,341   1,329  2,682   2,633
Depreciation                          587     413    1,131   822
Stock-based compensation ^(2)         426     1,048  1,128   1,351
Management Fee ^(3)                   125     125    250     250
Adjusted EBITDA ^(4)                  $12,622 $9,783 $21,396 $16,215

(1) Other (income) expense, net includes gain or loss on the disposal of fixed
assets, foreign currency transaction gain or loss, and other miscellaneous
items

(2) Represents non-cash, stock-based compensation

(3) Represents management fees paid to an affiliate of the Company's majority
stockholder pursuant to a management services agreement that terminated upon
the consummation of the Company's initial public offering. Fees under the
management services agreement were payable by the Company quarterly in arrears
and other than paying the accrued but unpaid fees for the quarter during which
the offering closed, no separate termination fee was due under this agreement
when it was terminated.

(4) Included in the Company's results for the three and six months ended June
30, 2013 were a total of approximately $449,000 of expenses incurred by the
Company in the three months ended June 30, 2013 which relate to (i) the
payment by the Company in April 2013 of a bonus to an executive officer in the
amount of approximately $251,000, the after tax net proceeds of which were
used by such officer to repay in full a loan from the Company prior to the
Company's filing of its registration statement in connection with its initial
public offering, and (ii) legal and other costs of approximately $198,000
incurred in connection with business transactions and the defense and
settlement of an employment related matter.These expenses have not been added
back to Adjusted EBITDA. 

The calculation of Adjusted EBITDA margin is as follows:

                      (In thousands)
                      (Unaudited)

                                          
                      For the three  For the six
                      months ended   months ended
                      June 30,       June 30,

                                          
                      2013    2012   2013    2012
Adjusted EBITDA        $12,622 $9,783 $21,396 $16,215
Divided by Sales       70,316  60,721 125,194 106,392
Adjusted EBITDA margin 18.0%   16.1%  17.1%   15.2%
                                          

CONTACT: ICR
         Katie Turner
         646-277-1228
         Katie.Turner@icrinc.com
 
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