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

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

             Third Quarter Sales Increased 12.9% to $82.3 Million

 Third Quarter Net Income Increased 81.5% to $9.9 Million and Adjusted EBITDA
                      Increased 29.8% to $17.3 Million 

SCOTTS VALLEY, Calif., Nov. 6, 2013 (GLOBE NEWSWIRE) -- Fox Factory Holding
Corp. (Nasdaq:FOXF) ("FOX") today reported financial results for the third
quarter and nine months ended September 30, 2013.

Third Quarter Fiscal 2013 Highlights

  *Sales increased 12.9% to $82.3 million compared to $72.9 million in the
    same period last fiscal year, driven by strong sales growth for both
    mountain bike and powered vehicle products
  *Gross margin increased 320 basis points to 30.8% compared to 27.6% in the
    same period last fiscal year
  *Net income increased 81.5% to $9.9 million compared to $5.5 million in the
    same period last fiscal year
  *Non-GAAP adjusted net income increased 94.2% to $12.1 million compared to
    $6.2 million in the same period last fiscal year
  *Adjusted EBITDA increased 29.8% to $17.3 million compared to $13.4 million
    in the same period last fiscal year

"Continued growing demand for our high-performance mountain bike and powered
vehicle products enabled us to report third quarter results at the high-end of
our expectations," said Larry Enterline, the Company's Chief Executive
Officer. "Our team continued to execute on our long-term strategy to improve
our operating efficiencies across our global infrastructure with solid gross
and operating margin improvement in the third quarter. We remain optimistic
about our future growth prospects given our established, premium brand and
strong OEM relationships along with our track record of successful
innovation."

Sales for the third quarter of fiscal 2013 were $82.3 million, an increase of
12.9% from sales of $72.9 million in the third quarter of fiscal 2012. Sales
of mountain bike and powered vehicle products increased 10.8% and 18.2%,
respectively, for the third quarter of fiscal 2013 compared to the prior year
period.

Gross margin was 30.8% for the third quarter of fiscal 2013, a 320 basis point
increase from gross margin of 27.6% in the third quarter of fiscal 2012.
Approximately 140 basis points of the improvement in gross margin relates to
the Company's successful execution of initiatives designed to improve
operating efficiencies. The remaining 180 basis points is largely due to
additional warranty and other related costs incurred in the third quarter of
2012 to upgrade certain dampers contained in the Company's suspension products
which costs did not recur in 2013.

Total operating expenses were $10.6 million, or 12.8% of sales, for the third
quarter of fiscal 2013, compared to $9.1 million, or 12.5% of sales in the
third quarter of the prior year. Operating income was $14.8 million for the
third quarter of fiscal 2013, a 34.6% increase compared to operating income of
$11.0 million in the third quarter of fiscal 2012.

Net income in the third quarter of fiscal 2013 was $9.9 million, an increase
of 81.5% compared to $5.5 million in the third quarter of the prior year.
Earnings per diluted share for the third quarter of fiscal 2013 was $0.27,
calculated on 36.4 million weighted average diluted shares outstanding,
compared to $0.16, calculated on 33.7 million weighted average diluted shares
outstanding in the third quarter of fiscal 2012.

Non-GAAP adjusted net income in the third quarter of fiscal 2013 was $12.1
million, an increase of 94.2% compared to non-GAAP adjusted net income of $6.2
million in the third quarter of the prior year. Non-GAAP adjusted earnings per
diluted share for the third quarter of fiscal 2013 was $0.33, calculated on
36.4 million weighted average diluted shares outstanding, compared to non-GAAP
adjusted earnings per diluted share of $0.18, calculated on 33.7 million
weighted average diluted shares outstanding in the third 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 third quarter of fiscal 2013 was $17.3 million, a 29.8%
increase compared to $13.4 million in the third quarter of the prior year.
Adjusted EBITDA margin in the third quarter of fiscal 2013 improved 270 basis
points to 21.0%, compared to 18.3% in the prior year period, reflecting the
Company's ability to leverage its operating platform and the aforementioned
damper warranty issue. 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 Nine Months Fiscal Year 2013 Results

Sales for the nine months ended September 30, 2013, were $207.5 million, an
increase of 15.7% compared to the same period in 2012. Sales of mountain bike
and powered vehicle products increased 14.4% and 18.6%, respectively, for the
first nine months of 2013 compared to the prior year period.

Gross margin was 29.6% in the first nine months of fiscal 2013, a 190 basis
point improvement compared to gross margin of 27.7% in the first nine months
of fiscal 2012. Approximately 120 basis points of the improvement in gross
margin relates to the Company's successful execution of initiatives designed
to improve operating efficiencies and the remaining 70 basis points is largely
due to the aforementioned damper warranty issue.

Net income in the first nine months of fiscal 2013 was $19.2 million, an
increase of 54.5% compared to $12.4 million in the first nine months of the
prior year. Earnings per diluted share for the first nine months of fiscal
2013 was $0.55, calculated on 35.1 million weighted average diluted shares
outstanding, compared to $0.39, calculated on 31.9 million weighted average
diluted shares outstanding in same period of fiscal 2012.

Non-GAAP adjusted net income in the first nine months of fiscal 2013 was $23.3
million, an increase of 53.2% compared to non-GAAP adjusted net income of
$15.2 million in the first nine months of the prior year. Non-GAAP adjusted
earnings per diluted share for the first nine months of fiscal 2013 was $0.66,
calculated on 35.1 million weighted average diluted shares outstanding,
compared to non-GAAP adjusted earnings per diluted share of $0.48, calculated
on 31.9 million weighted average shares outstanding in the first nine months
of fiscal 2012.

Adjusted EBITDA increased 31.0% to $38.7 million in the first nine months of
fiscal 2013, compared to $29.6 million in the first nine months of fiscal
2012. Adjusted EBITDA margin in the first nine months of fiscal 2013 improved
220 basis points to 18.7% compared to 16.5% in the first nine months of fiscal
2012.

Balance Sheet Highlights

As of September 30, 2013, the Company had cash and cash equivalents of $3.5
million. Total debt was $24.5 million, compared to $59.3 million as of
December 31, 2012. Inventory was $46.4 million as of September 30, 2013,
compared to $34.3 million as of December 31, 2012 primarily due to the
increased level of business during the period ended September 30, 2013 and the
normal seasonality of the Company's business. As of September 30, 2013,
accounts receivable and accounts payable were $39.3 million and $22.4 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 September 30, 2013 and the seasonality of the
Company's business.

Company Acquisition

On October 31, 2013, the Company completed the acquisition of certain assets
of its third party Germany-based distributor and service center, Toxoholics
GmbH. The Company believes that this acquisition provides it with a proven
understanding of the European market for FOX products, offers the Company an
accelerated path for improving customer service and customer relations in
Europe, and provides opportunities for future expansion of FOX European
operations and infrastructure.Under the terms of the acquisition agreement
the Company will pay the seller approximately $2.3 million in cash and assume
certain liabilities. The acquisition is not expected to materially impact the
Company's financial results.

Fiscal 2013 Guidance

The Company expects fourth quarter fiscal 2013 sales in the range of $58 to
$62 million and earnings per diluted share in the range of $0.08 to $0.12
based on 37.6 million weighted average diluted shares outstanding. For the
full year fiscal 2013, the Company expects sales in the range of $266 to $270
million and earnings per diluted share in the range of $0.63 to $0.67 based on
35.9 million weighted average diluted shares outstanding.

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; the conference ID is 86971140. 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; the conference ID is 86971140. 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 which was previously payable to an affiliate of its majority
stockholder, net of tax, and the write-off of unamortized loan origination
fees in connection with the August 2013 termination of the Company's prior
credit facility, 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 which was previously 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 continued growing demand for its products,
the Company's execution on its strategy to improve operating efficiencies, the
Company's optimism about its future growth prospects, Company's belief that
its acquisition of Toxoholics GmbH provides FOX with a proven understanding of
the European market for FOX products and offers it an accelerated path for
improving customer service and customer relations in Europe as well as
opportunities for future expansion ofFOX's European operations and
infrastructure; the Company'sexpected future sales and futureearnings 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 weighted average number of 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 Company could experience a disruption in its
planned transition of the majority of the Company's mountain bike
manufacturing operations to Taiwan or unexpected difficulties in connection
with such transition; the Company may not be able to accelerate its
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 may not be able 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"
contained in Item 1A of Part II of the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 2013 and filed with the SEC on September 19,
2013 and in any subsequently filed Annual Report on Form 10-K or Quarterly
Reports on Form 10-Q or otherwise 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
                                                    September 30, December31,
                                                   2013          2012
                                                   (unaudited)   
Assets                                                           
Current assets:                                                  
Cash and cash equivalents                           $3,496       $15
Accounts receivable (net of allowance for doubtful
accounts of $352 and $440 at September30, 2013 and 39,246       25,224
December31, 2012, respectively)
Inventory                                           46,393       34,255
Prepaids and other current assets                   2,506        2,242
Deferred tax assets                                 3,350        3,405
Total current assets                                94,991       65,141
Property and equipment, net                         12,540       11,789
Loan fees, net                                      755          —
Loan fees, net—related party                        —           1,665
Goodwill                                            31,372       31,372
Intangibles, net                                    28,130       32,153
Total assets                                        $ 167,788     $142,120
Liabilities and stockholders' equity                             
Current liabilities:                                             
Accounts payable                                    $22,429      $19,551
Accrued expenses                                    12,052       10,156
Liability reserve for uncertain tax positions       7,320        7,292
Current portion of long-term debt—related party     —           3,000
Total current liabilities                           41,801       39,999
Line of credit                                      24,500      —
Line of credit—related party                        —           750
Long-term debt, less current portion—related party  —           55,500
Deferred rent                                       1,010        1,132
Deferred tax liabilities                            13,890       15,155
Total liabilities                                   81,201       112,536
Commitments and contingencies (Note 9)                           
Stockholders' equity                                             
Common stock, $0.001 par value—69,675,000
authorized as of September30, 2013 and
December31, 2012; 36,317,087 and 33,459,944 shares 36           33
issued and outstanding as of September30, 2013 and
December31, 2012, respectively;
Additional paid-in capital                          86,963       49,169
Accumulated other comprehensive income              12           1
Accumulated deficit                                 (424)        (19,619)
Total stockholders' equity                          86,587       29,584
Total liabilities and stockholders' equity          $ 167,788     $142,120



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

                                     Forthethree months Forthenine months
                                      ended September30,  ended September30,
                                     2013       2012      2013      2012
Sales                                 $ 82,293   $ 72,864  $ 207,487 $ 179,256
Cost of sales                         56,960    52,745   146,074  129,592
Gross profit                          25,333    20,119   61,413   49,664
Operating expenses:                                               
Sales and marketing                   3,621     3,150    10,382   9,288
Research and development              2,500     2,427    7,442    7,196
General and administrative            3,098     2,223    8,588    7,069
Amortization of purchased intangibles 1,341     1,341    4,023    3,974
Total operating expenses              10,560    9,141    30,435   27,527
Income from operations                14,773    10,978   30,978   22,137
Other expense, net:                                               
Interest expense                      (2,015)   (1,424)  (3,968)  (2,294)
Other income (expense), net           38        14       19       (287)
Other expense, net                    (1,977)   (1,410)  (3,949)  (2,581)
Income before income taxes            12,796    9,568    27,029   19,556
Provision for income taxes            2,872     4,099    7,834    7,131
Net income                            $9,924    $5,469   $19,195  $12,425
Earnings per share:                                               
Basic                                 $0.28     $0.16    $0.56    $0.39
Diluted                               $0.27     $0.16    $0.55    $0.39
Weighted average shares used to                                   
compute earnings per share:
Basic                                 35,013    33,465   33,983   31,588
Diluted                               36,423    33,718   35,108   31,906
                                                                 
                                                                 

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
nine-months ended September 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 nine
                              months ended            months ended
                              Sept 30,                Sept 30,
                              2013         2012       2013        2012
Net income                     $9,924       $5,469     $19,195     $12,425
Amortization of purchased      1,110        691        2,857       2,525
intangibles (net of tax ^(1))
Management fee ^(1) (2) (net   56           64         219         238
of tax)
Non cash expense for
un-amortized loan origination  $997         $0         $997        $0
fees (net of tax) ^(3)
Non-GAAP adjusted net income   $12,087      $6,224     $23,268     $15,188
^(4)
                                                               
Non-GAAP adjusted EPS                                           
Basic                          $0.35        $0.19      $0.68       $0.48
Diluted                        $0.33        $0.18      $0.66       $0.48
                                                               
Weighted average shares used
to computeNon-GAAP adjusted                                    
EPS
Basic                          35,013       33,465     33,983      31,588
Diluted                        36,423       33,718     35,108      31,906

(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.

(2) Represents management fees paid to an affiliate of the Company's majority
stockholder pursuant to a management services agreement that terminated in
August 2013 upon the consummation of the Company's initial public
offering.The Company discontinued paying management fees in August 2013.

(3) Represents a $1.4 million non-cash expense, net of tax, for the write-off
of unamortized loan origination fees in connection with the August 2013
termination of the Company's prior credit facility.

(4) Included in the Company's results for the nine months ended Sept 30, 2013
were a total of approximately $449,000 of expenses incurred by the Company
which relates to the (i) payment by the Company in April 2013 of a bonus to an
executive officer in the amount of approximately $251,000, the after tax
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 the acquisition of certain
assets of Toxoholics GmbH and defense and settlement of an employee 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 nine-months ended September
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 nine
                          months ended              months ended
                          Sept 30,                  Sept 30,
                          2013         2012         2013         2012
Net income                 $9,924       $5,469       $19,195      $12,425
Interest expense           2,015        1,424        3,968        2,294
Other (income) expense,    (38)         (14)         (19)         287
net ^(1)
Provision for income taxes 2,872        4,099        7,834        7,131
Amortization of purchased  1,341        1,341        4,023        3,974
intangibles
Depreciation               603          525          1,734        1,346
Stock based compensation ^ 547          381          1,675        1,733
(2)
Management fee ^ (3)       58           125          308          375
Adjusted EBITDA ^ (4)      $17,322      $13,350      $38,718      $29,565

(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 in
August 2013 upon the consummation of the Company's initial public
offering.The Company discontinued paying management fees in August 2013.

(4) Included in the Company's results for the nine months ended Sept 30, 2013
were a total of approximately $449,000 of expenses incurred by the Company
which relates to the (i) payment by the Company in April 2013 of a bonus to an
executive officer in the amount of approximately $251,000, the after tax
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 the acquisition of certain
assets of Toxoholics GmbH and defense and settlement of an employee related
matter. These expenses have not been added back to Non-GAAP Adjusted Net
Income.


FOX FACTORY HOLDING CORP.
(In thousands)
(Unaudited)

The calculation of Adjusted EBITDA margin is as follows:


                       For the three    For the nine
                       months ended     months ended
                       Sept 30,         Sept 30,
                       2013     2012    2013    2012
Adjusted EBITDA         $17,322  $13,350 $38,718 $29,565
Divided by Sales        82,293   72,864  207,487 179,256
Adjusted EBITDA Margin  21.0%    18.3%   18.7%   16.5%

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