Vista Outdoor Agrees to Buy Fox Racing for $540M
Vista Outdoor Inc. announced today that it will acquire clothing and lifestyle brand Fox Racing for $540 million, with the possibility of another $50 million earnout based on the brand's achievement of financial targets.
The deal is expected to close in the second quarter of 2023, and current Fox CEO Jeffrey McGuane is expected to lead the company through the acquisition alongside the rest of the existing leadership within the California-based brand, which specializes in clothing and protective gear for mountain biking and motorsports.
Fox Racing says it grew net sales by a compound annual growth rate of roughly 20% from 2019 to 2021, and it expects to exceed that growth in calendar year 2022. The company expects an annual net sales and adjusted EBITDA of about $350 million and $55 million, respectively, for the 2022 calendar year.
The purchase will be financed using a combination of Vista Outdoor's existing asset-based revolving credit facility and a new $350 million secured term loan.
Vista Outdoor currently owns 39 brands throughout the outdoor industry including Giro, Blackburn, QuietKat, and a number of shooting brands. Earlier this year, the company announced plans to split into two distinct companies to separate its shooting and non-shooting categories. In that announcement, Vista Outdoors said it would redistribute stock from its non-shooting so-called Outdoor Products brand to shareholders in 2023 as the company moves into its next phase.
In the release, the company did not mention the controversy that surrounded it in 2018, when the outdoor industry reckoned with its relationship to gun violence and several major retailers boycotted the company.
Still, like the rest of the outdoor industry, Vista Outdoor has grown substantially in the last few years and in the 2021 fiscal year reported a 37% sales growth.
 | Over the last four years, we have built a diversified portfolio of iconic outdoor brands led by a proven leadership team that continues to execute well and drive strong results for our shareholders. With the acquisition of Fox Racing, we are continuing the successful implementation of our strategy to use accretive acquisitions to expand our leadership position and ability to capitalize on long-term growth opportunities in outdoor recreation. The Fox Racing acquisition meets all of our financial and strategic acquisition criteria, even before taking into account potential benefits from combining Fox Racing with our existing business. I am pleased that we have been able to continue to add category-leading brands like Fox Racing to our portfolio while maintaining a strong balance sheet and reinvesting in our existing business to drive organic growth." |
| We're excited to join the Vista Outdoor family. Together we can leverage the heritage of our leading brands, enjoy new supply chain synergies, expand our deep and established channels, and target an expanded customer base. Combined with enhanced access to capital for innovation and scale, we believe this transaction is a win-win for all involved. Vista Outdoor's leadership team has proven they have an effective, repeatable acquisition model, making Vista Outdoor the clear acquirer of choice for Fox Racing. It is not often that an acquired company can remain true to its culture and customer base, while also tapping into the benefits of Vista Outdoor's Centers of Excellence, vast retail partnerships, innovation engines, and a leadership team that enables a founder's mentality and results-driven culture. Needless to say, we are thrilled about this next chapter for Fox Racing. |
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Sorry, feeling grump today.
My catch phrase of the post was "asset-based revolving credit facility"
Someone other than the Assistant to the Regional Manager on here that can tell me what that means?
Fox is selling at the peak so good for them. It would be shocking not to see a major contraction in the cycling market over the next 24 months.
For those questioning the wording of these press releases, we are not the intended market. They do not care about the riders or users of anything they sell. They are talking to investors and banks. That's it, nothing more and nothing less, it is all about dollars, growth and profitability.
It is very interesting to see Vista pay such a large price for a company that is growing SLOWER than their current overall growth. Fox will act as a drag on their growth going forward so I assume they are expecting to see a major deceleration in their business over the next few years and an opportunity to grow Fox.
I agree with you re growth dragging them down but I would guess a) Fox's revenue isn't material enough to be a real drag and b) investors are valuing profitability over growth a lot more these days.
Owning those rights allows them to pursue retail partners across the entire clothing industry.
Man...makes me cringe thinking about the first time I saw a pair of Airwalks in Target. It's always a sad day when a brand hits the mainstream. R.I.P. if they do.
“Explain it to me like I’m a 5 year old”
My sons have recently gotten some of the bike pants/trousers, and jerseys, and they are nicely fitted and good enough quality, but I still have that “Sellout Stigma” attached to wearing Fox gear.
Am I the only person whi is blown away by the fact that clif bars was worth almost 4 or 5 times what fox is worrth?
Lick my loam off my tires please
They are completely different companies.
handupgloves.com/collections/most-days-gloves-mountain-bike-gloves
I've been using 100% and Dainese, they seem to be doing okay.
also they are made by Mechanix, so there is a reason they are tough as f*ck....they are basically just leather palmed work gloves
I’ve tried Giro (ok, too thin for my liking), Fox (absolute trash that split apart in 4 rides, plus their knee pads and elbow pads aren’t worth anything either), Specialized (split fingers after a month), but Fuse has been my favorite.
I was a Fox fanboy ( and have a friend that reps them) but I've given up on their gloves.
Fox and TLD have been disposable last couple of years
I have sockguy socks that have lasted longer than any of the fox gloves I have owned.
I now use sherrilltree.com/notch-arborlast-gloves
Also great if you are into digging or trail maintenance. They are bomber
I have been happily fox free since the mid 90s.
"tapping into the benefits of Vista Outdoor's Centers of Excellence", this guy just vomited a bunch of corporate-speak and they passed it off as a press release.
Thanks for continuing to post these articles PB.
Also for that matter...Camelbak's #1 customer since the second gulf war has been the Military. US troops brought their personal camelbak thermalbaks with them to Saudi Arabia and Kuwait during the first gulf war and they then proved a popular item at american base PX stores around the world afterwards. By the time of 2003 war, the pentagon was ordering camelbaks directly from the company as part of a soldiers standard equipment for the deployment. By 2012 the military sales accounted for 40% of camelbak's sales alone and the reason camelbak can now have such an extensive model collection for their civilian sales side is because the lucrative military sales alone underwrites all their R&D costs. Several of their military models are compatible with the chemical warfare gear worn by soldiers, with hoses that'll interface with gas masks so the wearers of the REALLY hot suits can stay hydrated without needing to remove the masks to drink.
Camelbak was bought in 2015 by Vista for $412.5 million, but that was the fourth time its ownership had changed in twenty years.
The previous parent company to Vista, was Orbital ATK, one of the largest defence manufacturers in the USA at the time, who were acquired by Northrop Grumman in 2018. The majority of Vista's stockholders were, and still are people who held stock in the original company when the outdoor sporting product lines were spun off from the defence product lines (people who held stock in the parent company got 2 shares of vista for every 1 share they held). If the sporting world alone wasn't so unprofitable once a company grows to a certain size...then many brands would have gone bankrupt and closed up years ago without being bought out by someone with more money from other industries. Orbital ATk's themselves were bought for $7.8 BILLION USD in cash and assumption of $1.4 billion in debt.
As to Fox Racing now being bought out... do remember that Fox Racing and Fox Racing Shox are seperate companies, each founded by a different brother. Bob Fox for the suspension components and Geoff Fox for the clothing and protective gear. Fox Racing shox is a brandname of Fox Factory Holdings Corp.
Here in Canada...we have no SBR regulation... we have three principal categories... unrestricted (which is what you have to have for hunting), restricted (which is all semi-auto rifles/shotguns below a particular barrel and overall length, all handguns, and any other long guns deemed by the government to be restricted largely on cosmetic appearance), and prohibited (which includes a whole lot of semi-auto rifles now which were formerly restricted, anything full auto, and handguns in specific calibers or short barrel lengths). We also have prohibited devices related to firearms... any magazine over 10 capacity for semi-auto handguns, or 5 for semi-auto long guns which aren't a rimfire cartridge for example are prohibited. Suppressors are prohibited. Hell regular civilian ownership of body armor is prohibited without a license. Basically anyone who isn't a police officer or security guard (including bank guards, and armored truck crews) cannot possess it unless they have the correct license for their province.
But yeah...tell me I know nothing about firearms...
Additionally, I know at this point we'll never be able to have a meaningful debate on this, but I think we should absolutely discuss what firearms are protected. When the constitution was written you could fire 1-2 rounds a minute if you were an expert. Now any joker can go pick up a gun and be able to fire off 30 rounds in 10 seconds or less with zero training.
Also... being acquired by a holdco isn't always a net-negative for consumers. They'll have a lot more capital to put behind innovative stuff if they choose. Vista seems like they know what they're doing.
I imagine quality and innovation/creativity will go straight down the shitter, while prices continue to increase.
Maybe we need more not for profit companies who are focused on its people/customers and the planet more than a bank.
It just means that as a consumer you think you're making more choices between companies, but really those different price points and names on the helmet are all paying the same parent company. I dunno if that's inherently bad or anything, but it's certainly weird and I don't think most shoppers realize it when they're choosing stuff.
I need to rethink some of my life choices.
Fox head logo - clothing. Fox tail - suspension.
Do you have a better way of getting a valuation for a company?
Interest is added back because when computing cash available to service debt, you want to see what the company actually has available to pay their interest expense. Taxes are added back because (generally) all peers have to pay the same amount of taxes so you add it back to compare peers like-for-like. Depreciation - see above. Amortization - see depreciation.
There are performance indicators that are seen by many as being more pragmatic, such as Economic Value Added (EVA)
I’m sure that heaps of people could give you more info than me though.
Bob ran the suspension side for many years (moving from San Jose, CA to Watsonville, CA), becoming a major player in the bike business in 2002 when they released the Fox 32 fork, up until then, they were only doing shocks if I remember correctly. Compass Diversified Holdings bought a majority of Fox Shox in 2008. They then IPO'd in 2013. New HQ was in Scotts Valley, CA (now in Georgia).
Geoff and his kids ran the apparel business for a long time, with their HQ and distribution center in Morgan Hill, CA (down the street from Specialized). Sponsoring the world's best motocross, mountain bike, surf, wakeboard...etc athletes in the world! Arguably the most iconic logo in ALL of action sports. At one time, the name changed to Fox Head, Inc, because they realized a majority of their customer base doesn't "race." However that had changed a number of years later and they wanted to get back to their roots. New HQ opened in Irvine, CA in 2013, then Altamont Capital Partners bought a majority stake in 2014. Now they are selling to Vista Outdoors. Not uncommon for a holdings company to hang on for 5+ years to then flip it for a profit. Definitely wish them the best!
Yawn.