Fox Factory reports Q3 adjusted EPS $1.05, consensus $1.10

Reports Q3 revenue $331.12M, consensus $398.28M. “We delivered adjusted EBITDA margin of 19.2% even with a 17.4% sequential decline in sales as the business was impacted by the UAW strike and a slower bicycle channel inventory destock. At the onset of the strike, we took decisive action to reduce costs and improve cash flows. Our laser focus on cost control and swift execution of cost reduction initiatives allowed us to sequentially maintain EBITDA margins, protect our balance sheet and cash flows and operate from a position of strength to further our capital allocation priorities,” commented Mike Dennison, FOX’s CEO. “Not only did our Board of Directors authorize a share repurchase plan of up to 8% of our outstanding shares, but we also signed a definitive agreement to acquire Marucci, an industry-leading manufacturer and distributor of premium performance baseball, softball, and other sports equipment.” The acquisition of Marucci combines two high performance cultures, industry-leading brands and product portfolios that expand FOX’s enthusiast offering. The purchase price for the transaction, which is subject to customary adjustments, is based on an enterprise value of $572.0 million and will be financed through an additional term loan under FOX’s existing credit facility. We expect Marucci to be accretive to both growth and EBITDA Margins helping us to achieve our 2025 target of $2.0 billion sales and 25% adjusted EBITDA margin. The transaction is expected to close in November of 2023, subject to customary closing conditions.”