Fox Factory Completes Acquisition of Marucci Sports, Enhancing Combined Company’s Ability to Deliver Diversified Revenue and Profitable Growth
15 Novembre 2023 - 2:00PM
Fox Factory Holding Corp. (NASDAQ: FOXF) (“FOX” or the “Company”)
today announced it has closed its acquisition of Wheelhouse
Holdings, Inc., the parent company of Marucci Sports LLC
(“Marucci”), at an enterprise value of $572 million. Marucci is an
industry-leading designer, manufacturer and distributor of premium
performance baseball, softball and other sports-related products.
The acquisition advances FOX’s position as a diversified
provider of market-leading branded products with a proven ability
to win over both professional athletes and passionate consumer
bases, while positioning the combined company for future profitable
growth. Marucci will be part of FOX’s Specialty Sports Group
(“SSG”).
Additional benefits of the transaction include:
- The deal provides immediate financial benefit
– the transaction is expected to be accretive across all key
financial performance metrics for FOX, including revenue, EBITDA
margin and earnings per share.
- The significant growth power of the Marucci
business – Marucci participates in a $3M global TAM with a
market share of <5% and has generated strong revenue and
Adjusted EBITDA CAGRs of 22% and 33% respectively since 2019. There
are multiple vectors for additional growth, including a strong
pipeline of player-tested future products, the currently
underpenetrated softball market, Marucci’s unique e-commerce
platform (Locker Room), and the expansion of the Hitter’s House
offering.
- The potential for value-additive synergies –
Fox’s world-class, precision-crafted aluminum and composite
manufacturing along with the combination of highly engineered
design innovations across both companies is expected to drive
technology and sourcing synergies over time.
- The compounded value of compatible company
cultures – Marucci and its management team share FOX’s
core values, including an obsessive focus on the athlete, a
commitment to ensure innovation and product development drive every
decision, and a focus on meeting the customer where they want to be
met. Importantly, the existing Marucci management team will
continue to run the day-to-day business based out of Baton Rouge,
Louisiana.
- Builds on FOX’s history of successful diversification
through acquisitions – this transaction immediately brings
counter cyclicality and enhanced diversification to SSG and to FOX
overall. Further, it continues FOX’s track record of value-additive
acquisitions outside of its legacy core shock and suspension
business, which previously have included Custom Wheel House, SCA,
and more.
“Our acquisition of Marucci represents a major milestone for FOX
as we continue to identify ways to drive synergistic growth without
compromising the core identity and values that have been so crucial
to our success,” said Mike Dennison, FOX’s Chief Executive Officer.
“This deal is not about baseball. It’s about adding a business to
our platform that clearly meets our 1+1=3 growth criteria, given
that each company’s individual power to grow and deliver
shareholder value will be stronger together. Importantly, Marucci
and its team share our commitment to winning through superior
innovation and quality products in order to help drive leading
positions in each of the key markets where we compete.”
Dennison continued, “This transaction makes us better from day
one – not just by being immediately accretive in terms of both
revenue and profitability, but by further diversifying our
offerings and providing us additional leverage to extend the value
of our brands. With a strong balance sheet and receding headwinds,
such as the United Auto Workers strike, we are in a powerful
position to deliver sustainable shareholder value.”
FOX recently reaffirmed its 2025 target of $2.0 billion sales
and 25% adjusted EBITDA margin – which excludes Marucci.
The Marucci acquisition was financed through an incremental
facility amendment under FOX’s existing credit facility, which
includes a fully funded term loan of $400 million, with a $200
million delayed draw feature, at an interest rate that is 0.5%
higher than the previous rate of the revolver.
Separately, FOX recently announced it intends to repurchase up
to $300 million of shares (equating to approximately 8% of
outstanding shares) under a new repurchase plan that expires
November 1, 2028.
Advisors
Squire Patton Boggs (US) LLP acted as legal counsel to Fox
Factory Holding Corp. Jefferies LLC acted as exclusive financial
advisor and Ropes & Gray LLP and Jones Walker LLP acted as
legal counsel to Compass Diversified (the prior majority owner of
Wheelhouse Holdings Inc.).
Contact:
Fox Factory Holding Corp.Vivek BhakuniSr. Director of Investor
Relations and Business
Development706-471-5241vbhakuni@ridefox.com
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, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. 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 with regard to expectations related to the acquisition
of Marucci, the future performance of Fox and Marucci, as well as
statements about the impact of the global outbreak of COVID-19 on
the Company’s business and operations; 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 operating results and future growth prospects; the
Company’s expected future sales and future adjusted earnings per
diluted share; and any other statements in this press release that
are not of a 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
complete any acquisition and/or incorporate any acquired assets
into its business including, but not limited to, the possibility
that the expected synergies and value creation from the Marucci
acquisition will not be realized, or will not be realized within
the expected time period or the risk that unexpected costs will be
incurred in connection with the completion of the Marucci
acquisition; the Company’s ability to maintain its suppliers for
materials, product parts and vehicle chassis without significant
supply chain disruptions; the Company’s ability to improve
operating and supply chain efficiencies; the Company’s ability to
enforce its intellectual property rights; the Company’s future
financial performance, including its sales, cost of sales, gross
profit or gross margin, operating expenses, ability to generate
positive cash flow and ability to maintain profitability; the
Company’s ability to adapt its business model to mitigate the
impact of certain changes in tax laws; changes in the relative
proportion of profit earned in the numerous jurisdictions in which
the Company does business and in tax legislation, case law and
other authoritative guidance in those jurisdictions; 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’s exposure to exchange rate
fluctuations; the loss of key customers; strategic transformation
costs; the outcome of pending litigation; the possibility that 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 possibility that 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 loss of key personnel, management
and skilled engineers; the Company’s ability to successfully
identify, evaluate and manage potential acquisitions and to benefit
from such acquisitions; product recalls and product liability
claims; the impact of change in China-Taiwan relations on our
business, our operations or our supply chain, the impact of the
Russian invasion of Ukraine or rising tension in the Middle East on
the global economy, energy supplies and raw materials; future
economic or market conditions, including the impact of inflation or
the U.S. Federal Reserve’s interest rate increases in response
thereto; and the other risks and uncertainties described in “Risk
Factors” contained in its Annual Report on Form 10-K for the fiscal
year ended December 30, 2022 and filed with the Securities and
Exchange Commission on February 23, 2023, its Quarterly Report on
Form 10-Q for the quarter ended September 29, 2023 and filed with
the Securities and Exchange Commission on November 3, 2023 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.
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