NEW YORK (BRAIN) — Fox Factory says "ongoing channel inventory recalibration and, to a lesser extent, lower-end consumer demand" contributed to a decline in sales of bicycle products in its fiscal first half and second quarter, announced Thursday.
Fox said sales of its bike products in the half were down $87.9 million — or 39.3% — from the same period last year. The company said its second-quarter bike sales were up 52% from the first quarter, however.
"Within bike, we are seeing positive signals that the OEM inventory destocking phase which we have been discussing over the last several quarters, is nearing its conclusion," CEO Mike Dennison said in a conference call with investors Thursday. Dennison said the U.S. market remains "in a state of transition" but the European market is returning to normal. And he said sales to e-bike makers are exceeding expectations.
The company's Speciality Sports Group saw a sales increase due to the inclusion of revenue from Marucci, the baseball/softball brand Fox bought last year. Previously the SSG division consisted of Fox's bike-related brands: Fox, Marzocchi, RaceFace, Ride Concepts and Easton.
Company-wide, net sales were down 14.8% to $682.0 million. Its Aftermarket Applications Group (AAG) saw a sales decline of 29% and its Powered Vehicle Group (PVG) sales declined 16.6%. The SSG division saw a 5.9% revenue increase in the half thanks to $101.2 million in net sales from Marucci.
“Second quarter results were consistent with our expectations, demonstrating continued sequential improvement in net sales and profitability in light of challenging conditions,” Dennison said in a release. “Although (the) broader industries we address remain pressured by the challenging macro environment, we see encouraging signals of stabilization within areas of our business that have been facing disproportionate impacts resulting from industry oversupply of inventories.”
Net income for the half was $1.9 million, compared to $81.5 million last year. Earnings per diluted share for the first six months of fiscal 2024 was $0.05, compared to $1.92 in the same period of fiscal 2023. Adjusted EBITDA decreased to $84.6 million in the first six months of fiscal 2024, compared to $158.6 million in the first six months of fiscal 2023. Adjusted EBITDA margin decrease to 12.4% in the first six months of fiscal 2024, compared to 19.8% in the first six months of fiscal 2023.
For the third quarter, Fox said it expects net sales in the range of $355 million to $385 million and adjusted earnings per diluted share in the range of $0.35 to $0.50.
For the fiscal year 2024, Fox now expects net sales in the range of $1.407 billion to $1.477 billion and adjusted earnings per diluted share in the range of $1.40 to $1.72. In 2023, Fox Factory's net sales were $1.464 billion and adjusted earnings per diluted share was $2.85.
