Fox Factory Holding Corp. Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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Invest better with AI
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👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
👉 Clear answers to your questions
Invest better with AI
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👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $772.11m | Revenue (TTM) = $1.46b
Market Cap = $772.11m | Estimated Revenue = $1.53b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $1.38b | Revenue (TTM) = $1.46b
Enterprise Value = $1.38b | Forward Revenue = $1.53b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF) | ex SBC
📈 What is it?
EV/FCF compares a company’s enterprise value with its free cash flow. The metric therefore shows the multiple of current free cash flow at which a company is valued. EV/FCF ex SBC additionally accounts for stock-based compensation (SBC). While SBC does not represent a direct cash outflow, issuing shares as compensation can dilute existing shareholders. Therefore, SBC is deducted from free cash flow in this adjusted version.
🧮 How is it calculated?
EV/FCF ex SBC = Enterprise Value ÷ (Free Cash Flow (TTM) − SBC)
🏛️ Why is it important?
EV/FCF provides a valuation based on free cash flow and therefore complements earnings-based valuation metrics such as the P/E ratio. The ex SBC version additionally accounts for the economic impact of stock-based compensation and provides a more conservative view from a shareholder perspective.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF means that enterprise value is low relative to current free cash flow. The reasons should always be considered in the context of the company and its industry.
- A high EV/FCF means that enterprise value is high relative to current free cash flow. This can, for example, reflect high growth expectations or temporarily weak cash generation.
- When SBC is positive and adjusted free cash flow remains positive, EV/FCF ex SBC is generally higher than the standard EV/FCF.
- The metric is particularly useful for companies with relatively stable and predictable cash flows.
- If free cash flow is negative or very low, EV/FCF has limited usefulness and should not be interpreted like a standard valuation multiple.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 SBC | in % Revenue
📈 What is it?
SBC (Stock-Based Compensation) refers to equity-based compensation granted by a company to its employees and executives. The percentage shows SBC relative to revenue.
🧮 How is it calculated?
SBC as % of Revenue = (SBC ÷ Revenue) × 100
🏛️ Why is it important?
Stock-based compensation is a real cost factor for shareholders. It can increase the number of shares outstanding and therefore dilute existing shareholders. The percentage of revenue shows how heavily a company relies on equity-based compensation and how significant this form of compensation is relative to the size of the business.
🧮 Calculation
🎯 What does this mean for investors?
- A lower figure is generally positive: Stock-based compensation is relatively small compared with the company's revenue.
- A high figure can indicate greater reliance on stock-based compensation and a higher potential risk of dilution. However, it is also important to consider whether the company offsets dilution through share buybacks.
- The trend over time should also be considered. A high but declining percentage presents a different picture from a persistently high or increasing percentage.
- A single-digit SBC-to-revenue ratio is not unusual among many growth-oriented and technology companies.
📘 SBC as % of FCF
📈 What is it?
SBC (Stock-Based Compensation) refers to equity-based compensation granted by a company to its employees and executives. The percentage shows SBC relative to free cash flow (FCF).
🧮 How is it calculated?
SBC as % of FCF = (SBC ÷ Free Cash Flow) × 100
🏛️ Why is it important?
Stock-based compensation is a real cost factor for shareholders. It can increase the number of shares outstanding and therefore dilute existing shareholders. The percentage of free cash flow shows how significant SBC is relative to the cash generated by the company. Since SBC is non-cash compensation, it is typically not deducted as a cash outflow when calculating FCF.
🧮 Calculation
🎯 What does this mean for investors?
- A lower value is generally favorable. Stock-based compensation is relatively small compared with the company's cash generation.
- A high value means that SBC represents a significant portion of the company's reported free cash flow, even though SBC itself is non-cash.
- The higher the value, the more significant SBC can be as an economic cost to shareholders, particularly when it results in share dilution.
📘 SBC Growth 1Y
📈 What is it?
SBC Growth 1Y shows how much a company's stock-based compensation has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
SBC Growth shows whether stock-based compensation is becoming more or less significant for shareholders. If SBC increases significantly, it can lead to greater shareholder dilution over time. At the same time, SBC is a non-cash expense that reduces earnings on the income statement but is added back in the cash flow statement.
🧮 Calculation
🎯 What does this mean for investors?
- A high positive value is generally negative, as rising SBC can increase the burden on shareholders, particularly through potential dilution.
- What matters is whether the development of SBC is sustainable over the long term. Some level of SBC is common among many growth and technology companies.
📘 Share Count Growth 1Y
📈 What is it?
Share Count Growth 1Y shows how much the number of shares outstanding has increased or decreased over a one-year period.
🧮 How is it calculated?
🏛️ Why is it important?
The number of shares determines how many shares the company's earnings and assets are distributed across. If the share count decreases, existing shareholders' relative ownership increases. If it increases, existing shareholders are diluted. The metric therefore makes dilution and share buybacks directly visible.
🧮 Calculation
🎯 What does this mean for investors?
- A negative value is generally positive, as the number of shares outstanding is decreasing.
- A positive value indicates dilution of existing shareholders.
- A declining share count is not automatically positive: It also matters at what price the shares are repurchased and how the buybacks are financed.
📘 Shareholder Yield
📈 What is it?
Shareholder Yield measures how much capital a company returns to shareholders or uses to reduce debt relative to its market capitalization. It goes beyond dividend yield by also including share buybacks and debt reduction.
🧮 How is it calculated?
🏛️ Why is it important?
Dividend yield only tells part of the story. Companies can also return capital through share buybacks, while reducing debt can strengthen the balance sheet. Shareholder Yield combines all three components into one metric, giving investors a broader view of how a company uses its capital.
🧮 Calculation
🎯 What does this mean for investors?
- A higher Shareholder Yield generally indicates more capital being returned to shareholders or used to reduce debt.
- The mix matters: dividends, buybacks, and debt reduction can affect shareholders in different ways.
- Share buybacks are most beneficial when shares are repurchased at attractive valuations.
- Investors should also consider whether dividends, buybacks, and debt reduction are sustainable over time.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF) | ex SBC
📈 What is it?
Free cash flow shows how much cash remains after a company has covered its operating and capital expenditures. FCF ex SBC additionally deducts stock-based compensation (SBC) to adjust the cash flow for the effect of non-cash SBC.
🧮 How is it calculated?
Free Cash Flow ex SBC = Operating Cash Flow − SBC − Capital Expenditures (CAPEX)
🏛️ Why is it important?
FCF reflects a company’s actual financial strength – independent of reported accounting earnings. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction. FCF ex SBC also deducts stock-based compensation and shows how much cash generation remains after SBC.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow indicates that a company has strong financial strength – independent of reported earnings.
- It is often a solid basis for sustainable dividends and share buybacks.
- Declining FCF can be a warning sign, even if reported earnings remain stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net Margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free Cash Flow Margin | ex SBC
📈 What is it?
The Free Cash Flow Margin shows how much free cash flow a company generates relative to its revenue. In simplified terms, free cash flow is calculated as operating cash flow minus capital expenditures. The Free Cash Flow Margin ex SBC additionally accounts for stock-based compensation (SBC). While SBC does not represent a direct cash outflow, issuing shares as compensation can dilute existing shareholders. Therefore, SBC is deducted from free cash flow in this adjusted metric.
🧮 How is it calculated?
Free Cash Flow Margin ex SBC = (Free Cash Flow − SBC) ÷ Revenue × 100
🏛️ Why is it important?
The Free Cash Flow Margin shows how efficiently a company converts its revenue into free cash flow. Strong free cash flow can provide financial flexibility for dividends, share buybacks, debt repayment, or further investments. The ex SBC version additionally accounts for the economic impact of stock-based compensation and therefore provides a more conservative view of cash generation from a shareholder perspective.
🧮 Calculation
🎯 What does this mean for investors?
- A high Free Cash Flow Margin shows that a company converts a high proportion of its revenue into free cash flow.
- This can provide greater financial flexibility for dividends, share buybacks, debt repayment, or investments.
- The Free Cash Flow Margin ex SBC additionally accounts for potential shareholder dilution from stock-based compensation.
- The long-term trend is particularly important. Declining margins can, for example, result from higher investments, changes in working capital, or weaker operating performance.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Revenue per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Fox Factory Holding Corp. Stock Analysis
Analyst Opinions
12 Analysts have issued a Fox Factory Holding Corp. forecast:
Analyst Opinions
12 Analysts have issued a Fox Factory Holding Corp. forecast:
Fox Factory Holding Corp. Events
Past Events
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AUG
6
Q2 2026 Earnings Call
about 2 months ago
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MAY
7
Q1 2026 Earnings Call
5 months ago
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FEB
26
Q4 2025 Earnings Call
7 months ago
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NOV
6
Q3 2025 Earnings Call
11 months ago
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StocksGuide Free
Fox Factory Holding Corp. — Q2 2026 Earnings Call
1. Management Discussion
Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Fox Factory Holding Corp.'s Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded.
I would now like to turn the conference over to Toby Merchant, Chief Legal Officer at Fox Factory Holding Corp. Thank you, sir. You may begin.
Thank you. Good afternoon, and welcome to Fox Factory's Second Quarter 2026 Earnings Conference Call. I'm joined today by Mike Dennison, Chief Executive Officer; and Dennis Schemm, Chief Financial Officer. First, Mike will provide business updates, and then Dennis will review the quarterly results and outlook. Mike will then provide some closing remarks before we open up the call for your questions.
By now, everyone should have access to the earnings release, which went out earlier this afternoon. If you have not had a chance to review the release, it's available on the Investor Relations portion of our website at investor.ridefox.com. Please note that throughout this call, we will refer to Fox Factory as FOX or the company.
Before we begin, I would like to remind everyone that the prepared remarks contain forward-looking statements within the meaning of federal securities laws, and management may make additional forward-looking statements in response to your questions. Such statements involve a number of known and unknown risks and uncertainties, many of which and are outside the company's control and can cause future results, performance or achievements to differ materially from the results, performance or achievements expressed or implied by such forward-looking statements.
Important factors and risks that could cause or contribute to such differences are detailed in the company's quarterly reports on Form 10-Q and the company's latest annual report on Form 10-K, each filed with the Securities and Exchange Commission. Investors should not place undue reliance on the company's forward-looking statements and except as required by law, the company undertakes no obligation to update any forward-looking or other statements herein, whether as a result of new information, future events or otherwise.
In addition, where appropriate in today's prepared remarks and within our earnings release, we will refer to certain non-GAAP financial measures to evaluate our business, including adjusted gross profit, adjusted gross margin, adjusted operating expenses, adjusted net income, adjusted earnings per diluted share, adjusted EBITDA and adjusted EBITDA margin. We believe these are useful metrics that allow investors to better understand and evaluate the company's core operating performance and trends. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are included in today's earnings release, which has also been posted on our website.
And with that, it is my pleasure to turn the call over to our CEO, Mike Dennison.
Thanks, Toby, and thanks to everyone joining the call today. We delivered second quarter revenue of $358.1 million at the high end of our guided range and adjusted EBITDA of $45.5 million, approximately $5 million above the high end of our range.
While revenue was at the high end of our expectations, it stepped down sequentially, which was expected and consistent with our guidance, reflecting portfolio optimization associated with the Phoenix operations divestiture as well as the discrete timing of shipments we flagged last quarter and lower F-150 volume tied to the aluminum supply disruption. But the takeaway is significant. Revenue growth is returning, and our outlook for the balance of the year is a continued step-up from original expectations. Our revised view of revenue for the back half will be detailed later by Dennis.
Revenue growth is critical, not just for the diversification of partnerships and the addition of new markets, but what it brings to our factories and operations with productivity. Our investment in R&D and product road maps for the last couple of years has negatively impacted results short term but has set us up for a more constructive forecast in the back half of '26 as well as meaningful growth in '27 and beyond.
In addition, our profit optimization program is on schedule. We captured more than $25 million of gross savings in the first half, and we remain confident in our expectations to deliver approximately $50 million of gross savings this year, roughly $10 million of Phase 1 carryover and approximately $40 million from Phase 2, consistent with the framework we laid out in February. Profit optimization is necessary in the current macro environment because while we do everything we can do internally, the macro issues continue to work against us.
On our last call, I flagged that steel and aluminum costs were moving higher with pressure building in the second quarter. That pressure came in ahead of what we planned. Escalating geopolitical conflict has pushed commodity prices, including fuel, ocean and inland freight rates higher and carrier surcharges as well as added expedite freight and rerouting costs drive friction in our channels. We remain focused on what we control and are pleased with the progress we've made on margin expansion through early realization of these initiatives. From a market served, we are encouraged by the stabilization emerging in powersports and bike, 2 important businesses for FOX.
On the portfolio, we continue to evaluate every business we own against the same 3 criteria that led to our decision to divest our Phoenix operations, alignment with our brands, synergy with our core competencies and an ability to deliver accretive margins and durable cash flows. Where a business or program does not meet those thresholds, we are taking action. Any cash proceeds from these activities will go directly to debt reduction.
With that, let me walk through our segments. PVG delivered net sales of $124.2 million in the second quarter, a slight increase year-over-year. Sequentially, revenue stepped down from our first quarter that as we flagged in May, benefited from shipment timing in that quarter. As expected, segment margins were down from the first quarter given our forecasted product mix in the quarter.
In Powersports, which grew 22.5% in the second quarter and 28% in the first half year-over-year, our OEM customers have worked through much of the channel inventory imbalance that weighed on the industry. We believe we remain well positioned across all of the major OEMs in the category. Although we continue to monitor the underlying retail environment in close collaboration with our customers, we have greater confidence that powersports can continue to be a stabilizing force for us through the balance of the year.
On the automotive side, our premium truck OE business performance reflects the timing of shipments against continued aluminum supply chain and production issues that our automotive OEMs are facing. While we anticipated seeing some relief during Q2, aluminum supply remains a constraint for the production of F-150 trucks. In addition, supply chain issues at Toyota also reduced our forecast for high-demand vehicles in the quarter. The most compelling commentary for PVG is not about the puts and takes of Q2. It is about the awards we have won so far this year, which begin to hit our P&L in late Q4 of 2026 and have meaningful upside in '27. As you know, we have been extremely focused on R&D within PVG. These efforts include applications ranging from our traditional light truck market to vehicles that cover rough terrain and space and plenty of applications in between.
I want to take a few seconds to talk about what we have achieved. So far this year, we have launched 12 new vehicle fitments, including expansion of our aftermarket Live Valve offerings. Our industrial business unit in PVG is also building a robust pipeline of products and services, which we expect to make public by early 2027. In the UTV sector, Kawasaki announced this week their newest vehicle, the Teryx H2, with our advanced chassis control system, which is a fully integrated electronically controlled linkage solution. The end links working together as one integrated unit in combination with our Live Valve shock package, providing, we believe, the best driving experience from both the performance and safety perspective.
The adoption of our proprietary ECU continues to grow as well with 3 distinct OEs now incorporating it into their halo models. This milestone clearly demonstrates our ability to deliver enhanced value beyond what has traditionally been a mechanical passive solution. Earlier this week, Polaris also launched their new RZR Pro R Boost, which utilizes our 3.0 Live Valve X2 series shocks. In automotive, we were awarded a new vehicle with an existing OEM that will drive meaningful volume in 2028, continuing to expand that customer portfolio with FOX in a meaningful way.
We also recently received a new award in the electric vehicle market. This is an entirely new automotive OEM for FOX and incorporates our advanced technology on an autonomous vehicle. This represents a significant step in our journey. This product should begin shipping at the tail end of '26 and drive incremental volume in 2027. All of the above supports our belief that we can continue to grow our brand in traditional markets as well as develop novel applications using our software-defined technology, delivering significant incremental revenue over the next several years in PVG.
AAG delivered net sales of $109.6 million, a decrease of 4% year-over-year, reflecting an impact of approximately $5.5 million from the divestiture of our Phoenix operations, partially offset by strength in our aftermarket products businesses. Excluding the divestiture impact, the segment grew modestly year-over-year, even with the reduction in Ford F-150 volumes in PVG. AAG adjusted EBITDA dollars were up with the segment margin improving approximately 70 basis points year-over-year and roughly 500 basis points sequentially.
Our aftermarket components business grew year-on-year with categories like Custom Wheel House, RideTech and Sport Truck continuing to benefit from product launches and consistent demand. At the current interest rate levels, we are seeing aspirational customers who can't afford to buy new trucks pivot to investing in the trucks they already have, and that plays directly to our diversified aftermarket portfolio. There is still significant work ahead to optimize our legacy upfit business in operations, supply chain, marketing and sales. However, our new OEM-driven customization programs continue to build through the second quarter.
As a reminder, this is a new market strategy in collaboration with our OEMs, which utilizes our size and scale to support their aligned objectives in premium semi-custom upfitting. We're able to leverage the OEM's marketing, sales channels and booking systems to support our dealers. This process relieves meaningful complexity and cost for FOX relative to marketing and sales and the kits are menu-driven and well defined so they flow through our production quickly and absorb overhead expenses, It also aligns FOX tightly to the innovation cycle of these large OEMs as they expand their premium vehicle road maps. Further, that program also feeds our ability to target new dealers, which remains a long-term growth opportunity as we work to rebuild this business.
Finally, on the industry-wide aluminum supply disruption affecting Ford's F-150 platforms, which is an important chassis across several of our product lines, that disruption continued to weigh on volume in the second quarter. Based on the latest OEM production schedules, we now have planned production, which should hit our factories in early to mid-September. That revised timing is reflected in the outlook Dennis will walk through.
SSG delivered net sales of $124.3 million, a decrease of 9.4% year-over-year and an increase of 12.5% sequentially. For bike, we knew this would be a tough year-over-year comp given the order pull forward the industry experienced last year and the sequential step-up reflects the normal seasonal improvement in bike that we expected. Segment margin held essentially flat year-over-year, even with revenue down 9.4%, which speaks to the cost discipline efforts. While we are pleased with the gradual improvement in channel inventory, near-term demand signals are mixed as consumers remain cautious overall, but aggressively pursue new technologies and brands.
We continue to make progress on those new customer relationships and product expansion, particularly in categories like e-bike. We're benefiting from our relationships with new players and the disruptive technologies they're bringing to market. which is a stabilizing force in an otherwise volatile market. FOX continues to maintain a leadership position in the premium bicycle suspension market as industry demand stabilizes following several years of elevated inventory and market disruption.
Looking ahead, we remain focused on investing in the technologies that we believe will drive the next phase of growth. These include the emerging 32-inch cross-country platform, where FOX has been working closely with industry partners to develop next-generation suspension solutions as well as the rapidly evolving e-mountain bike market. Continued advances in motor, battery and integrated drivetrain technologies are creating new opportunities to improve the riding experience. And we believe FOX is well positioned to capitalize through our premium suspension portfolio and our motor-agnostic integration strategy. While these initiatives are having a major business impact in the immediate term, they reinforce our technology leadership and position the business to benefit as these categories continue to develop.
On Marucci, softball continues to be a bright spot. We believe our new products are resonating and softball is becoming an increasingly important contributor to the broader Marucci business, which we believe is directly correlated to the innovation investments we've made over the last -- over the past couple of years. To the obvious question, while we review the strategic path for this business long term, we are running this business hard right now. Our team is fully engaged in our product road map, and we're excited about what's coming in the back half with new product launches.
In summary, revenue landed at the high end of our guide. Adjusted EBITDA came in above the high end and our cost programs are tracking. Our militant focus on product development and new markets and core businesses is setting up FOX for meaningful growth and increased profitability as these projects reach production. This performance as well as the operating discipline that is central to our plans gives us the conviction to increase our revenue guidance in the back half and tighten our adjusted EBITDA outlook today, even as commodity, freight and fuel costs stay elevated and step up further in the second half.
With that, I'll turn the call over to Dennis to walk through the financial details.
Thanks, Mike. I will begin by discussing our second quarter financial results, followed by our balance sheet, cash flow and capital allocation strategy before concluding with a review of our outlook.
Total consolidated net sales in the second quarter of fiscal 2026 were $358.1 million, a decrease of 2.9% sequentially and a decrease of 4.5% versus the prior year period. Gross margin was 30.6% compared to 31.2% in the second quarter last year. The decline reflects 3 drivers: shifts in our product line mix, higher external input costs, including tariffs, commodities, freight and fuel, partially offset by cost savings realization.
Non-tariff inflation is the piece that has moved since we set our framework in February. As Mike stated, we are absorbing significant distribution-related expenses to protect customer delivery schedules as well as higher steel and aluminum costs due to the Middle East conflict. In total, incremental input cost inflation is running nearly $20 million above the assumptions in our full year plan. This is not a change in our cost program. It is a change in the environment that program is operating in.
Adjusted operating expenses were $78.5 million or 21.9% of net sales, down from $83.5 million or 22.3% of net sales in the year ago period. Compared to the first quarter of this year, we drove a sequential reduction of $7 million or a 130 basis point improvement as a percentage of sales. That includes a sequential reduction in unallocated corporate expense of approximately $1.5 million. We realized significant Phase 2 savings in the quarter, which has us at more than $25 million of gross savings against our approximately $50 million goal halfway through the year.
Net realization has been compressed by costs outside of our control. We expect that compression to ease in the second half as we anniversary last year's tariffs and the second half weighting of Phase 2 savings comes through, not because we are assuming commodity, freight or fuel costs come down. Our effective tax rate was 36% in the quarter compared to the 21% federal statutory rate, primarily attributable to the impact of discrete items in proportion to lower levels of pretax income.
For the full year, we continue to expect an effective tax rate in the range of 15% to 18% as those discrete impacts normalize against a higher second half pretax income base. Adjusted net income was $15.5 million or $0.37 per diluted share compared to $16.6 million or $0.40 per diluted share in the second quarter last year. Adjusted EBITDA was $45.5 million and included approximately $2 million of IEEPA tariff refunds. Even when excluding these proceeds, which weren't factored into our plan, I'm pleased that we exceeded our guidance range. Adjusted EBITDA margin was 12.7% or approximately 12.2%, excluding the tariff refund, which compares to 9.7% in the first quarter, an improvement of approximately 250 basis points sequentially on an apples-to-apples basis ex tariff refund.
Moving to the balance sheet and cash flows. Cash and cash equivalents grew $7 million to $61.3 million compared to quarter 1 end. Total debt was $667.7 million at quarter end, down $20.5 million sequentially from the first quarter and down $5.8 million from year-end. Net debt declined by approximately $9 million year-to-date. As of July 3, our net leverage ratio as calculated under our credit agreement was 3.7x against the 5x covenant established within the amendment we completed in May.
I would note that year-to-date net debt reduction is below where we expect to finish the year. The first half reflects seasonal working capital build and the cash impacts of first half tariffs. We improved our cash conversion cycle by approximately 12 days year-over-year and days inventory on hand improved to approximately 136 days from approximately 150 days a year ago. Both metrics demonstrate our efforts to improve working capital efficiency.
We also maintained our disciplined approach to capital spending with second quarter capital expenditures of approximately $4.1 million or roughly 1.1% of revenues and the first half capital expenditures of $9.5 million or 1.3% of revenues. Combined with the EBITDA contribution expected from our cost-out programs and our continued focus on working capital, we expect meaningful progress on debt reduction as we move through the balance of the year.
Now moving on to our outlook. Based on our first half performance and the continued execution of our cost-out programs, we are raising our full year net sales guidance and narrowing our adjusted EBITDA guidance. We now expect net sales in the range of $1.42 billion to $1.47 billion and adjusted EBITDA in the range of $176 million to $196 million. The mechanics of the net sales raise are straightforward. Our first half net sales of approximately $727 million came in ahead of the plan, underlying the guidance we issued during our fourth quarter call. We are carrying that outperformance through and holding the second half roughly in line with last year's second half, excluding divested operations.
On what this does to our margin framework, we are narrowing our adjusted EBITDA dollar range to better reflect the mix and inflation dynamics we've discussed. When taken with our higher sales expectation, the implied full year margin moves to a range of approximately 12.4% to 13.3% compared with the roughly 13.1% to 14.3% implied in February. Our commitment to adjusted EBITDA dollars is essentially unchanged with our $176 million to $196 million range, representing growth of approximately 5% to 16% over fiscal 2025 on roughly flat revenue. Capital expenditures are expected to be approximately 2% of revenues, and our tax rate is expected to be in the range of 15% to 18% for the full year.
Looking ahead to the second half of the year, we expect to deliver incremental margin improvement driven by the second half weighting of our Phase 2 cost optimization initiatives, the anniversary of last year's tariff implementation and the pricing and surcharge recovery actions now in motion with our OEM and channel partners. We are reaffirming our cost savings commitment for 2026 of approximately $50 million.
On external costs, persistence at current levels is our baseline rather than our downside case. We are not underwriting relief in commodities, freight or fuel any more than we are underwriting an end market recovery. If those costs ease, that is upside to the plan rather than a requirement of it. Both our third quarter and full year ranges assume commodity, freight and fuel costs remain at or near elevated levels for the balance of the year.
On top of that, those ranges absorb nearly $20 million of incremental inflation beyond our original plan, approximately $15 million of which we anticipate in the second half. This is the quantification of the pressure we flagged in the first quarter. One related note on tariffs. We may become eligible to recover as much as $8 million of additional tariff costs previously incurred under the IEEPA framework. The timing and amount of any recovery are uncertain. A portion of any amounts recovered may be shared with our commercial counterparties, and we have not included any recovery in our outlook.
For the third quarter of fiscal 2026, we expect net sales in the range of $355 million to $380 million and adjusted EBITDA in the range of $46 million to $54 million. That range implies an adjusted EBITDA margin of approximately 13% to 14%, up from the 12.2% we delivered in the second quarter, excluding tariff refunds. Our third quarter outlook reflects the sequential timing benefit of the Marucci product launches that shifted out of the second quarter and a normalization of bike volume tied to the supplier disruption, partially offset by the continued impact of chassis supply constraints in our autos-related businesses.
I would note that the Marucci launches also fell in the third quarter last year. So this is a sequential benefit rather than a year-over-year one. On the fourth quarter, which is implied by the full year and third quarter ranges we have given, our outlook reflects the full run rate of our Phase 2 actions, a full quarter of favorable tariff comparisons and the seasonal mix of our portfolio. That build through the back half is delivering and it is what our cost program was designed to deliver.
To summarize, our cost programs are executing on plan and our balance sheet health is improving. We remain confident in our full year outlook with margin expansion weighted to the second half.
With that, Mike, back to you for closing remarks.
Thanks, Dennis. In closing, I want to leave you with 3 messages. First, the plan is working where we can control it. Two quarters in, we have taken $7 million of adjusted operating expense out sequentially, expanded adjusted EBITDA margin 300 basis points sequentially and captured more than $25 million of gross savings against a $50 million commitment. Second, we are committed to offsetting higher input costs, including commodities like aluminum, freight and fuel and supply chain issues like the F-150 chassis, which have continued to challenge us year-to-date. We have sized both, and we have absorbed them in our outlook.
Third, we are raising our revenue outlook and tightening our adjusted EBITDA commitment consistent with the view from our customers and our end markets. I want to thank our team for their execution and discipline through a demanding period. We remain focused on developing the best products across our broad portfolio to enable our enthusiasts to do what they love.
With that, operator, please open the call for questions.
Our first question today comes from Peter McGoldrick with Stifel.
2. Question Answer
Congratulations on the good results. I was hoping you could give some more airtime to the upfitting business. As we think about the change towards the new model, can you help us think about the mix of business between the legacy upfitting and the new business? And how should we think about the volumes moving through the system and your expectations as we look into the back half?
Yes, Peter, it's Mike. Good question. So when you think about the mix, it's -- our primary business model is still the core upfitting business that we've ran for a number of years. So that is still our primary go-to-market strategy. The benefit of these relationships with OEMs in a different format is what they bring to us from dealer engagement because the marketing and sales effort is actually driven by the OEM, not by FOX. It's also the absorption in our factories. So while that volume has less content typically on it versus what we would normally do in our custom upfit business, it drives a lot of absorption, a lot of productivity through the factory and allows us to unburden some of the costs associated with go-to-market that we would normally have in our custom business.
So the mix is still going to be heavily weighted towards custom and what we've always done, our traditional business, if you will. The new business provides a lot of dealer growth, a lot of dealer engagement that we would otherwise do on our own and allows us to absorb in our factories. So it's an important part of the business, even though it's a smaller part of the mix.
Okay. And then, Dennis, I've got one for you. At the midpoint of guidance, we're still looking at a steep ramp in the EBITDA margin into the fourth quarter as implied by your guidance. You pointed to some visibility to the easing cost, the Phase 2 cost-out, surcharge recovery. But can you help bucket the items that matter as we bridge to get to the fourth quarter EBITDA margin guidance?
Yes. That's a really good question, Peter, and thanks for that. Yes, as we start to step up, we're going from that 12.2% to 13.6% in Q3, and then from Q3 to Q4, it's around a 15.6% EBITDA margin where we end the year. Relative to that, I mean, clearly, one of the bigger drivers is the net release of the cost savings programs. And so as we anniversary those tariffs in the first half of the year, we get more of the fall-through. This was exactly how this was designed. And so that fall-through is a big part of that in Q3. And then including revenue contributions and margin contributions from Marucci's bat launch, which was delayed from Q2 to Q3.
So we're really excited about that, as well as we had bike timing delays on the supply chain issues that we suffered in Q2. And so then when you move from Q3 into Q4, you're really dealing now with PVG recovery in the sense of those F-150 chassis really coming in into play, further margin from Marucci as well into that hot season for Q4 and the Christmas time frame. So those would be your other drivers moving into Q4.
Our next question comes from Anna Glaessgen with B. Riley Securities.
I'd love to start with bikes and disaggregating that within SSG. You gave a lot of helpful color on the call. But maybe could you unpack what's embedded in guidance to the back half? Should we be expecting bikes to be growing? And I know on the one hand, you talked about stabilization in the business but also talked about some mixed demand signals as we're still in the recovery phase. I guess if you could characterize what inning of recovery we're in and how far away you think we are from seeing more reliable growth within the industry?
Great question, Anna. Relative to bike, what we are absolutely pleased about is the durability of this business, it continues to perform year after year now being very stable. And so we're expecting it to be extremely stable with prior year. So not expecting growth, but we're expecting strong margins there for the entire year essentially. And so we should see a pickup in Q3 relative to the bike side of things and then just leveling off as normal seasonality would go in Q4.
Yes, this is Mike. I would -- I think that was good. And I think I would add, one of the benefits of our bike business because we're in the premium space is it creates more predictability. So as we come through the process of all the last years of volatility and inventory issues that you're well aware of, that predictability driven by the premium nature of our product offering has enabled us to really stabilize the business, as I mentioned in my prepared comments, and gives us a better view of Q3 and Q4, which we're really happy to see.
In addition, one of the things that's volatile in the business in a good way is that the new product launches, especially around e-bike and drivetrain technology, battery technology, motor technology, customers and partners that we're engaged with has enabled us to attract new consumers, new entrants into the space and drive demand. So in a lot of these cases, this product is sold out, which is something we haven't seen in bike for quite some time. So the benefit of seeing demand in some of these product offerings gives us a lot of optimism relative to where this business is going and the predictability and stability of the business helps us really understand the forecast.
Got it. And then following up on that, you've been breaking out the margins by segment for a couple of years now. And we know, obviously, bikes historically have been really high margin, but there's been some noise within the segment as Marucci has been layered on. Could you maybe help us with what the incremental margin could be if we got a little bit more sustainable growth within that segment?
Yes. It's -- as we continue to grow, I mean, clearly, bike and the combination of Marucci both is what we're expecting to see grow during the second half. When we see those 2 come together, those will start to climb and be a very strong margin profile for us going through Q3 and Q4 because we are expecting both to step up here in Q3. And then Marucci will continue to grow into Q4 as well. So we feel really good about SSG moving forward through the second half of the year.
Our next question comes from Craig Kennison with Baird.
You mentioned a new bat hitting in Q3 for Marucci. Maybe just give us an update on the latest in sporting goods in general and how order patterns are looking? I know there was a delay in Q2 orders.
Yes. The delay in Q2 was driven by us to make sure that we could launch the bat with the right level of inventory in the channels with an improved level of inventory in the channels. So we delayed that launch ourselves to really create the best opportunity to have a great bat launch with heavier volume. So as you know, sporting goods is a place where inventory is a problem. New product is your best bet against the inventory challenge. And so getting these launches out really gives us a chance to reach a consumer with a product that's inspiring and motivates them to spend money. So that's why we've pushed out the launch from Q2 to Q3. We want to give it the most airtime it can get, and we're pretty confident what it can do in Q3 and Q4.
Yes. Maybe just, I guess, help me explain if inventory is a problem, I know innovation is the answer, but you still have to let the other stuff clear. Is that not right?
Yes. And we saw a lot of that in Q1 and Q2. We saw it in our margin profiles in discounting and trying to move those bats. So we definitely have to do the hard work of the inventory cleanup while we're doing the work of innovation and driving new bat launches. So you're absolutely right, Craig. It's a blend between the 2 activities. And you got to kind of use the break and gas pedal at the same time to do them both. So it's a tricky environment. We've experienced it before in other parts of our business, and it will take us some time to work through it for sure in the merchant space.
And then maybe just add some color on the softball market, please.
Yes. I mean, softball is new for us. That was one of the things that we invested in heavily over the last couple of years to build that team and to build our abilities and product offering to support that part of the sport. It's grown significantly. At the beginning of this year, we've talked about it in prior earnings calls. It continues to grow. And then we outpaced growth in most other sectors of Marucci with what we've done in softball, both college, pre-college and even adult slow-pitch softball, which is a crazy, crazy enthusiast market for sure.
Our next question will come from Scott Stember with ROTH Capital.
Question on Marucci. I know we're talking about the bats for a while and the movement into softball to some of these other areas. But can you talk about how some of the non-baseball bat things are doing within Marucci, whether it's the Hitters Warehouse or Major League contract or maybe even like the grips business? How is that stuff doing?
Yes. So Lizard Skins, I'll start with the last one you mentioned, which is Lizard Skins. That's doing fantastic. I mean we're really proud of what that team has done. We've moved the warehousing and distribution of that business to Baton Rouge to make it more optimized. That's helping us on a cost basis and more productivity and efficiency in our warehouse. So that's good. The end market demand is really strong across Lizard Skins as that expands into lots of sports beyond baseball, of course, and it's even in our bike business. So we like that business a lot.
The rest of the business is, you look at what's working really well in Marucci around things like gloves and some of our other business verticals, if you will, quite strong. Probably more softness in some parts around shoes and some of the other things that we do in Marucci. So we're trimming those back because we really focus on the things that work the best.
Yes. The big driver is, again, it's going to be baseball, and it's going to be softball and having a lot of success internationally with Japan as well.
Yes. I think the way to think about it is if you win in bats, you win across the board. If you're not winning in bats, you're going to struggle. Our MLB relationship, by the way, you asked about that, too, very good. And through the All-Star game, the Home Run Derby, we did fantastic. It was a problem to work for the team.
Got it. And then on the tariff environment, looking past IEEPA refunds, obviously, a lot of changes have some replacement with the 232s and now the 301s. Can you just give us what the net go-forward narrative is on tariffs heading into the back half of the year and into next year?
Yes. I mean the tariff environment, clearly, we've anniversaried a lot of that, right? So I believe we talked about $80 million annual impact, direct, indirect. And then we netted this down to around $40 million just through so much work from our teams on the operations side, supply chain, et cetera. And so going forward, we are expecting those -- obviously, tariffs just continue to some degree and slightly benefiting Marucci near year-end as well just because of some of the changes that had cycled through.
If we're through the majority of the changes in tariffs, if there's not a lot of additional volatility, as you go into '27, tariffs effectively become fairly priced into our products and our markets. So tariffs become a lesser factor on a go-forward basis relative to impact to the P&L on any quarterly or annual level. So eventually, you kind of get all these things baked into your model and you get it into your pricing and you get into your customer relationships and eventually gets into the consumer pricing model. And then it's a lesser factor for us to talk about on these calls.
Got it. And then if you're taking the same talk about the $20 million of incremental input costs and your current rightsizing plan right now, how much of that is built into pricing for '27?
So very little would be built in now because that's so fresh. And right now, the teams are taking a look at that. And they'll be building their plans as we move into -- further into the back half of the year, and that's when a lot of the customer conversations will start to occur and pricing changes would have to be made. And quite frankly, we'll continue our operational prowess and look for the cost-outs as well. And so inflation is very persistent. It's tricky. And we are doing everything we can, heads down every single day trying to offset the inflation that continues to come at us.
And I think the way to think about that, too, is you want to -- you have to break it into the pieces where you're seeing inflation. If it's a temporary inflation because of a shipping channel, that's fairly transient. If you're thinking about a commodity index increase, that can be stickier. And those things are easier to price through to end customers, especially on the OEM side.
So those not so much a factor necessarily in a '27 outlook. If freight rates, if container rates, if fuel costs stayed significantly higher, you need to think about changes you can make in your supply chain structure, changes in your routing on a more permanent basis. Those things will figure out between Q3 and Q4. They tend to be a little bit less sticky over the long haul and therefore, not as time sensitive relative to those customer conversations.
We'll go next to Larry Solow with CJS Securities.
It's Pete Lukas for Larry. Just for AAG, can you update us on any progress with diversification into other platforms outside of Ford, Toyota and Ram, if there's anything we should be focused on there?
Most of our diversification -- good question, Pete. Most of our diversification is really coming through these new partnerships with predominantly Ford and Stellantis today. Those are significant. And those have been a really strong collaboration between us and the OEMs. That not only helps us with our -- like what I talked about before relative to absorption, go-to-market, but also on the vehicle set. So whereas we would have been predominantly in a few different products within, let's say, a Stellantis relationship. That's expanded now beyond that to other vehicles, the same with Ford.
So that's pretty exciting because that takes us into places into vehicles, into relationships that we didn't necessarily have before. And that diversification is really compelling, probably more so than adding additional OEM brands to the mix, if that makes sense.
Yes. And then just on bikes, you normally launched next year's models in Q2. Did that occur this time?
It did. Yes.
Thank you. At this time, there are no further questions in queue. I will now turn the meeting back to Mike Dennison for any additional or closing remarks.
Thanks, everybody. Have a good evening. Talk to you soon.
This does conclude the Fox Factory Holding Corporation's Second Quarter 2026 Earnings Call. You may now disconnect your lines, and have a great day.
Fox Factory Holding Corp. — Q2 2026 Earnings Call
Revenue landed at the high end and EBITDA beat, but commodity, freight and chassis supply pressures persist.
📊 Quarter at a Glance
- Revenue: $358.1M (-4.5% YoY), at the high end of guidance; sequential step-down due to Phoenix divestiture and shipment timing.
- Adjusted EBITDA: $45.5M, about $5M above the high end of guidance; adjusted EBITDA margin 12.7% (12.2% excluding tariff refund).
- Gross margin: 30.6% vs 31.2% YoY, pressurized by product mix and higher input costs.
- Balance sheet: Cash $61.3M, total debt $667.7M, net leverage 3.7x (under amended 5x covenant).
🎯 What Management Says
- Cost program: Profit optimization on track—>$25M gross savings in H1 and a $50M gross savings target for 2026 to expand margins.
- R&D posture: Recent R&D and product investments depressed near-term results but underpin multiple late‑2026 and 2027 vehicle awards, ECU adoption and an EV/autonomous OEM win.
- Portfolio discipline: Divested Phoenix ops and will evaluate businesses against brand fit, synergy and margin criteria; proceeds earmarked for debt reduction.
🔭 Outlook & Guidance
- Full year: Net sales $1.42B–$1.47B; adjusted EBITDA $176M–$196M; implied margin ~12.4%–13.3%.
- Q3: Net sales $355M–$380M; adjusted EBITDA $46M–$54M (≈13%–14% margin).
- Assumptions/risks: Plan assumes commodity, freight and fuel remain elevated and absorbs ≈$20M incremental inflation; potential IEEPA tariff recoveries up to $8M are uncertain and not included.
❓ Analyst Q&A
- Upfitting mix: OEM-driven upfit programs increase dealer reach and factory absorption but typically carry lower per-unit content than legacy custom upfits.
- Marucci timing: Major bat launch moved Q2→Q3 to ensure channel inventory; softball and Lizard Skins are growth bright spots.
- Bikes & pricing: Premium bike demand stabilizing with e-bike tailwinds; management has not yet built substantial inflation pass‑through into 2027 pricing and deflected on exact timing of tariff recoveries.
⚡ Bottom Line
- Conclusion: Fox showed operational traction—revenue at the high end and EBITDA beat—while executing cost saves and product rollouts that should drive 2H and 2027 growth; primary near-term risks remain persistent input inflation and auto chassis supply constraints.
Fox Factory Holding Corp. — Q1 2026 Earnings Call
1. Management Discussion
Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Fox Factory Holding Corp.'s First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.
I would now like to turn the conference over to Mr. Toby Merchant, Chief Legal Officer at Fox Factory Holding Corp. Please go ahead, sir.
Thank you. Good afternoon, and welcome to Fox Factory's First Quarter 2026 Earnings Conference Call. I'm joined today by Mike Dennison, Chief Executive Officer; and Dennis Schemm, Chief Financial Officer.
First, Mike will provide business updates, and then Dennis will review the quarterly results and outlook. Mike will then provide some closing remarks before we open up the call for your questions.
By now, everyone should have access to the earnings release, which went out earlier this afternoon. If you have not had a chance to review the release, it's available on the Investor Relations portion of our website at investor.ridefox.com. Please note that, throughout this call, we will refer to Fox Factory as Fox or the company.
Before we begin, I would like to remind everyone that the prepared remarks contain forward-looking statements within the meaning of federal securities laws, and management may make additional forward-looking statements in response to your questions. Such statements involve a number of known and unknown risks and uncertainties, many of which are outside of the company's control and can cause future results, performance or achievements to differ materially from the results, performance or achievements expressed or implied by such forward-looking statements.
Important factors and risks that could cause or contribute to such differences are detailed in the company's quarterly reports on Form 10-Q and in the company's latest annual report on Form 10-K, each filed with the Securities and Exchange Commission.
Investors should not place undue reliance on the company's forward-looking statements and except as required by law, the company undertakes no obligation to update any forward-looking or other statements herein, whether as a result of new information, future events or otherwise.
In addition, where appropriate in today's prepared remarks and within our earnings release, we will refer to certain non-GAAP financial measures to evaluate our business, including adjusted gross profit, adjusted gross margin, adjusted operating expenses, adjusted net income, adjusted earnings per diluted share, adjusted EBITDA and adjusted EBITDA margin. as we believe these are useful metrics that allow investors to better understand and evaluate the company's core operating performance and trends.
Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are included in today's earnings release, which has also been posted on our website.
And with that, it is my pleasure to turn the call over to our CEO, Mike Dennison.
Thanks, Toby, and thanks to everyone for joining today's call. We delivered first quarter revenue of $368.7 million, which was at the high end of our guidance range and adjusted EBITDA of $35.7 million, exceeding the high end of our guidance range. More importantly, the early proof points for the plan we outlined in February are landing as expected.
Phase 1 carryover is flowing through, Phase 2 is on schedule, and we closed the divestiture of our Phoenix, Arizona operations in the quarter as planned. The operating environment remains broadly consistent with the demand backdrop we built our 2026 outlook around.
As I said on our last call, we are not counting on end market recovery or tariff relief in 2026. We are focused on what we control, taking cost out, tightening the portfolio and building the foundation for operating leverage when growth returns.
On cost, we are confident in delivering approximately $50 million of savings in 2026, $10 million of Phase 1 carryover and approximately $40 million of Phase 2 actions identified and in execution. The Board's Transformation committee is engaged with us and the work is on track.
On the portfolio, the Phoenix divestiture, including the Upfit, UTV, Geiser and Shock Therapy businesses closed during the first quarter, consistent with the expectations we set on our last call and proceeds are dedicated to debt reduction.
As I have said before, we will continue to evaluate every business we own against 3 criteria: alignment with our brands, synergy with our core competencies and an ability to deliver accretive margins and durable cash flows. And where a business does not meet these thresholds, we will act.
With that, let me walk through our segments. PVG delivered net sales of $143.4 million in the first quarter, an increase of 17.4% year-over-year. This was a strong start to the year for this segment. Some of this growth reflects timing dynamics I'll cover next, though the underlying performance is consistent with the framework we laid out for the year.
On the automotive side, our premium truck OE business performance was balanced by the timing of shipments against continued supply chain and production issues within our automotive OEMs. Keep in mind that, while demand continues to be more resilient at the high end of the market, the broader consumer is exercising restraint given ongoing macro pressures, including the unforeseen rise in gas prices.
Our powersports business produced a solid quarter as OEM partners have largely overcome channel inventory imbalances. Our broad portfolio of customers and products should help insulate us from the OEM and tariff issues still impacting this market. We remain cautious in our near-term outlook for this business given continuing pressure on consumer discretionary spending. That said, powersports is structurally healthier than it was a year ago, and we believe we are well positioned as growth accelerates.
AAG delivered net sales of $114.8 million, an increase of 2.6% year-over-year. Growth came from our upfitting product lines and solid aftermarket demand, partially offset by the Phoenix operations that exited the segment during the quarter.
In PVD, our portfolio continues to evolve across OEM relationships and dealership expansion. As you recall, in the second half of last year, we announced a new program with an OEM partner to execute their performance upgrades.
In Q1, we announced a similar strategic relationship with another major automotive OEM. This partnership model where our innovation tied to OEM-driven marketing and sales is a differentiated and defendable go-to-market strategy, which should drive long-term growth in upfitted trucks.
We started shipping meaningful volume towards the end of Q1 as our supply chain normalized, and we are making good progress on that program in Q2. These are the kinds of programs that give us more predictable, sustainable revenue over time.
We have significant operational supply chain, product, process and capacity work to be done in PVD. We have made strides in people and structure in Q1, which should enable many of the other work streams to drive top and bottom line improvements towards the end of this year.
One final note. In the actions we have taken so far, we have reorganized sales forces internally and externally and refocused our efforts on dealership expansion, which is a critical long-term growth driver.
In the last 60 days, we have added over 135 new dealers, and we are averaging over 60 new dealers a month as we go forward. Our aftermarket components business held up well in the quarter. Categories like custom wheelhouse, RideTech and Sport Truck continued to show consistent demand and delivered on or above expectations in the quarter, which is a proof point for resilient aftermarket demand where higher interest rates and elevated gas prices are weighing on consumers more broadly.
When consumers can't afford to buy new trucks, they tend to invest in the trucks they already have, and this value-seeking behavior plays to our portfolio. Our product is hitting the right consumer at the right price point, and our channel strategy is helping us stay visible to this consumer as they are making purchase decisions.
AAG margins were down year-over-year due to a combination of factors. The biggest drivers are volume, mix and operational challenges in upfit, as mentioned earlier. The volume and mix issue is directly related to the industry-wide aluminum supply disruption affecting Ford's production, which has constrained availability of the F-150 Lariat and XLT platforms, a predominant upfit chassis across several of our product lines.
The Q1 and Q2 volume tied to that disruption is not expected to be recovered in 2026. However, we do believe back half volumes remain intact. The impact extends into our second quarter and is reflected in the outlook Dennis will walk through.
Margins were also pressured by the delayed deliveries of finished vehicles and OEM outfit program I just mentioned, where shipments were weighted toward the end of Q1. And finally, by the dilutive impact of 2 months of Phoenix operations within the segment before the divestiture closed.
SSG delivered net sales of $110.5 million, a decrease of 8.7% year-over-year. This performance is consistent with what we flagged in our last call. We knew Q1 would be a tough comp for SSG, particularly in bike, given the strength we saw in the first half of the prior year as the industry pulled forward orders in 2025.
The bike environment feels much like last year. Channel inventory has improved but remains volatile and demand signals remain muted as consumers stay cautious. The good news is that we continue to make progress on new customer relationships and product expansion, particularly in categories like e-bikes where we see long-term opportunity.
The changing landscape in OEMs who are winning and losing is both a challenge and an opportunity for POX. We are establishing and winning new relationships and the growth we are seeing from these OEMs is a stabilizing force in our business where the rest of the industry is challenged.
We would expect bike to revert to seasonal norms and improve sequentially in Q2, though we are working through a temporary disruption tied to challenges in the Middle East affecting some of our suppliers and customers. The financial impact of that disruption is largely confined to Q2, and we expect the associated volume to flow through Q3 as conditions normalize.
As I said on our last call, we are not chasing revenue here. We have the financial strength to lead with our brands and the innovation pipeline with new products and customers to protect our margin structure while the industry works through its cycle.
Turning to Marzocchi. Bat industry volumes have continued to trend softly, which supports a deliberate decision in alignment with our retail partners to shift our planned Q2 product launches into Q3. Softball continues to be a bright spot. Our new products are resonating, and we are picking up meaningful share in that category.
Softball has become an increasingly important contributor within the broader Marzocchi business, and it's a place where we continue to see a runway for growth. To provide perspective, our softball business has grown over 500% since 2024, which supports our innovation investments over the last 2 years.
Stepping back across the segments, Q1 came in at the high end of our revenue guide and above the high end of our EBITDA guide. Our cost programs are tracking and the Phoenix divestiture is closed. This performance as well as the operating discipline that is central to our plans gives us the conviction to reaffirm our 2026 outlook today even as the macro environment remains challenging.
With that, I will turn it over to Dennis to walk through our financial details.
Thanks, Mike. I will begin by discussing our first quarter financial results, followed by our balance sheet, cash flow and capital allocation strategy before concluding with a review of our outlook for fiscal 2026.
Total consolidated net sales in the first quarter of fiscal 2026 were $368.7 million, an increase of 3.9% versus the same quarter last year. Gross margin was 28.9% for the first quarter of fiscal 2026 compared to 30.9% in the first quarter last year, with the decrease primarily driven by the unmitigated impact of tariffs and shifts in our product line mix.
While the focus over the past year has been on tariff mitigation, we are also seeing higher steel and aluminum costs across our segments with some pressure building into the second quarter. Our profit optimization initiative is sized and pacing to absorb this impact within the framework we laid out in February.
Adjusted operating expenses, which exclude the impact of amortization of purchased intangibles, restructuring and other discrete expenses were $85.5 million or 23.2% of net sales in the first quarter of 2026 compared to $84.4 million or 23.8% of net sales in the prior year quarter, reflecting the early benefits of our cost optimization actions.
The company's tax benefit was $0.6 million in the first quarter of fiscal 2026 compared to $3.6 million in the first quarter of 2025. Adjusted net income was $7.4 million or $0.18 per diluted share compared to $9.8 million or $0.23 per diluted share in the first quarter last year. Adjusted EBITDA in the first quarter of fiscal 2026 was $35.7 million, exceeding the high end of our guidance range and reflecting the early benefits of our cost optimization work compared to $39.6 million in the prior year period.
Adjusted EBITDA margin was 9.7% in the first quarter of 2026, stable sequentially with the fourth quarter of 2025. Importantly, we expect margin expansion to unfold as we move through the year with the bulk of our Phase 2 benefits and the anniversary of last year's tariff implementation, both falling into the second half.
Moving to the balance sheet and cash flows. Our debt balance increased by approximately $15 million sequentially to $688.2 million at the end of the first quarter. The primary driver is timing related to working capital.
As a reminder, Q1 is seasonally our most demanding quarter from a working capital standpoint with this year reflecting incentive compensation payouts and the cash impact of first half 2026 tariffs.
Deleveraging remains a clear priority, and we are taking action on multiple fronts to strengthen our financial position. Recently, we proactively amended our credit agreement to provide additional financial flexibility and expanded covenant headroom. This step was taken from a position of strength. At quarter end, we remained comfortably within the prior threshold and gives us additional runway as we execute the plan.
We also maintained our disciplined approach to capital spending with the first quarter capital expenditures of $5.4 million or approximately 1.5% of revenues. tracking below our full year target of approximately 2%.
Combined with the EBITDA contribution expected from our cost-out programs and our continued focus on working capital, we expect meaningful progress on debt reduction as we move through the balance of the year.
Now moving on to our outlook. Based on our first quarter performance and the continued execution of our cost-out programs, we are reaffirming our full year guide for 2026. For the full year 2026, we continue to expect net sales in the range of $1.328 billion to $1.416 billion and adjusted EBITDA in the range of $174 million to $203 million. At the midpoint, this represents approximately 200 basis points of adjusted EBITDA margin improvement relative to full year 2025.
Capital expenditures are expected to be approximately 2% of revenues and our tax rate is expected to be in the range of 15% to 18%. On tariffs, when we laid out our 2026 framework in February, we anticipated approximately $15 million of incremental net tariff impact for the full year, with this headwind concentrated in the first half before we anniversary the prior year implementation in the second quarter.
Since that time, the tariff dynamics have shifted with IEPA being replaced by Section 232 framework. Importantly, the Section 232 methodology applies to the value of the aluminum input rather than the full FOB value of the finished product, which results in a meaningfully smaller exposure base for our businesses than we faced under IEPA.
Combined with the pricing pass-through and operational mitigation work we've completed across our segments over the past year, we believe the aggregate impact of Section 232 framework is approximately neutral to our businesses in 2026, excluding Marzocchi.
At Marzocchi, the applicable tariff rate on imported bath has decreased from 22% under the prior framework to 10% under Section 232, a structural improvement going forward. In 2026, however, that benefit is being absorbed by the soft category demand and inventory dynamics that Mike spoke to.
With respect to potential recoveries of tariff costs previously incurred under the IEPA framework, any such recoveries are subject to uncertainty regarding timing, amount and the appropriate allocation across our customer, distributor and supply chain relationships. We have not included any potential recovery in our guidance and will recognize amounts only upon receipt.
For the second quarter, we expect net sales in the range of $343 million to $365 million and adjusted EBITDA in the range of $32 million to $40 million. Our Q2 outlook reflects 2 dynamics. The first and largest is the impact of discrete items shifting from Q2 into Q3, most notably the delayed product launch at Marzocchi and the bike supplier disruption that Mike mentioned.
The second item is lower F-150 unit volume in our upfit business due to the industry-wide aluminum supply disruption. Unlike the timing items, the Q2 volume tied to this disruption is not expected to be recovered, though, as Mike noted, back half F-150 volumes are expected to remain intact. This impact is reflected in our Q2 outlook. Setting these discrete dynamics aside, the underlying demand environment across our businesses remains consistent with the full year plan we laid out in February.
To summarize, Q1 came in at the high end of our revenue guide and above the high end of our EBITDA guide. Our cost programs are executing on plan. Our financial flexibility is stronger after the credit amendment, and we remain confident in our full year 2026 outlook today with margin expansion weighted to the second half, consistent with the framework we laid out in February.
With that, Mike, back to you for closing remarks.
Thanks, Dennis.
In closing, I want to leave you with three key messages. The plan we laid out in February is landing. Phase 1 cost benefits are carrying over and Phase 2 is delivering. And we pushed the Phoenix divestiture across the finish line. We're not waiting for the macro to give us anything.
We're reaffirming our 2026 guidance, remain committed to delivering the approximately $50 million in cost savings this year and the path to approximately 200 basis points of margin improvement at the midpoint is on track. The work we are doing is disciplined and it's a deliberate focus on fundamentals to ensure we continue to win.
Q1 demonstrates the plan is working. We have meaningful work ahead of us in 2026, continuing to execute on profit optimization, advancing our portfolio work and strengthening the balance sheet. And we are doing it against an environment we plan for as much as any company can plan. The team is executing, and we are confident in the path we are on.
I want to thank our team for their hard work and dedication during this period. The level of external distractions seems to grow constantly. Through it all, we remain focused and committed to developing the best products across a broad portfolio to enable our enthusiasts to do what they love, continuing our legacy as the best-in-class enthusiast-driven product company across all of the markets we play.
With that, operator, please open the call for questions.
Certainly, Mr. Dennison. [Operator Instructions] We'll go first this afternoon to Anna Klaskin with B. Riley.
2. Question Answer
I'd like to start with some of the commentary you gave around fuel prices and how you're positioned to capture the consumer. The auto OEMs appeared at a recent conference and GM talked about how their rule of thumb is that they usually don't see people considering trading down within fuel -- or trade up in fuel economy until fuel prices have stayed up higher for 4 to 6 months. It sounds like you're maybe seeing some shift in consumer behavior, but just wanted to clarify maybe some of that fuel commentary and what you're seeing boots on the ground.
Yes, Anna, this is Mike. So our commentary on fuel prices is really just around the general macro. When we talk about our automotive OEM business, again, it's fairly well aligned to high-end premium vehicles, which tend to attract a more affluent buyer who isn't as focused on what the gas price is on any given day.
So we haven't seen that relative to our volume or demand in the automotive sector. Where it could start to apply is really a benefit to us in the aftermarket sector where people may not be trading in a lower-end vehicle for a higher-end vehicle because of that higher interest rate and gas price. And in those cases, if they're being more conservative, they tend to lend themselves to our businesses with CWH and Sport Truck and RideTech and others where they're going to upgrade, even PVG, where they're going to upgrade in the aftermarket with our products on their current vehicle. That was really where I was going with those prepared remarks, not that we were experiencing any kind of headwind relative to consumer demand on the premium side.
Got it. That's super helpful. And I wanted to follow up on powersports. It sounds like feeling a bit more positive there, though, of course, staying cautious within the overall outlook. One of the OEMs went out and noted that there could be a material increase in their tariff exposure. Maybe talk about the extent to which that could potentially impact order flow as they'd be facing a pretty significant shift in their P&L?
Yes, we're well aware of that, Anna. And it's a challenge that company is working through, and we're working through it with them. That said, we are pretty confident in what we saw in Q1 and what we're seeing in the rest of the year relative to powersports.
The destocking or inventory rebalancing has really taken shape. And the benefit we have is being diversified across all of the major OEMs in that category with several different product sets allows us to kind of pivot from one OEM to another. And we're seeing that shift happen to some degree in Q2 with a shift between where our mix would have been more higher on one OEM and maybe a little bit higher on another. So we're seeing that balance out pretty well for us and gives us some confidence that, that will continue to be strong for the balance of the year.
We'll go next now to Larry Solow with CJS Securities.
I guess first question, just on the implied margin improvement, pretty significant, I guess, right? I think if we kind of take the midpoint of your guidance, it will imply like an exit EBITDA margin like in the high teens. Is that right? 18 -- you can do about 10% in H1, right, and to get to the midpoint, which is about 14%, right, Dennis. So I think you have to have like pretty -- at least exit rate, if not average margin in the back half, about 18%. Is that -- am I doing that math right? And I guess it seems a little aggressive, but maybe just any thoughts on that?
Yes. So great question. And first of all, really strong start to the year, right? Our first quarter exceeded our expectations. We're up about $4 million versus the midpoint. And that's something that we expect to stick. But you're asking a great question along the way, how do we have to ramp up. And that's going to really depend on a couple of things.
One, we're going to see more improvement in AAG. So Mike talked about the improvements that we need to be delivering on in PVD we need to see more improvement, too, within Marzocchi as well. And so we fully expect that with the product launches that we have lined up.
In addition to that, the cost improvement plan is underway. We're seeing the benefits of that already, and we would expect that to be performing in the mid-teens in the Q3s and Q4s. So the back half will be pretty strong there.
So final point, though, we're looking for a 200 basis point improvement year-on-year. I think we did 11% for the full year 2025. So it would be 13% is where we're looking -- come into. Okay?
Got you. No, that's fair. Just second question, just on the Specialty Sports. And yes, you can parse that out a little better. I guess, was Marzocchi down in the quarter? What's your outlook for the year on that one? And I guess, is that still part of kind of the potential strategic alternatives you're exploring?
Yes. So great question. Yes, no problem. So great question. Marzocchi was down in the first quarter, and we talked about that. Again, there's inventory in the channel, and we were having to deal with that overflow in the channel right now. So it slowed things up a bit.
Relative to strategic alternatives, I want to be very, very clear we are running that business hard. We are working with the leadership team there. That leadership team and our teams are fully engaged in making sure that we have the best product launches to the market. And we could not be more excited about what we're seeing, for instance, in softball and these Q2 -- sorry, the Q3 launches that the team has set up. Does that help?
Yes, very much so. I appreciate the color.
We'll go next now to Peter McGoldrick with Stifel.
I was hoping you could talk more about the bike business. Can you give us some guidelines for your expectations around OE orders, market share for model year '27 changeover spec? And then any sizing of the contribution of these newer customers you pointed out?
Yes. Good question. So bike is a very interesting industry. As you know, right now, there's a lot of volatility. A lot of the players in the space are down, down significantly. We're forecasting stable to slightly up, which is a reflection of really 2 things, which will lead to the additional answers in your questions.
One is product diversification. So continue to expand our portfolio to make sure we're getting on as many products that meet our premium category at the different levels between e-bike and normal mountain bikes, as well as expansion into new customers. For the first time, we looked at the charts the other day and saw that in the top 20 we have a fairly significant rotation of new players versus our traditional players.
So it's showing you that, there's disruption happening in that industry, and we're benefiting from our relationship with those new players and the new products that they're creating. So that's giving us a lot of that stability. That gives us a lot of the confidence in the long-term spec.
To your second question, how much share do we get. Share is going to be a function of not only the current or traditional players in the space, but how well do you do with the new players. And in our case, we're doing quite well. So we're pretty excited about it. We're investing in that business and innovation. We're adding engineers in that space as we speak to make sure that we've got the right product and that we're delivering to those new customers.
And then I was hoping you could tell us more about the PVD upfitting partnership model. Is that net new business or a new channel for distribution? And if so, what are the economics of that?
And then unrelated on tariffs, I just want to make sure that I have this clear. Relative to the $15 million net impact embedded in the prior outlook, the core business is a wash and Marzocchi got better. Is that correct? And if so, by how much more -- or what's the current embedded impact from tariffs?
Yes.
Peter, I'll take the first one and Dennis the second one. So on PVD, those relationships with the large OEMs that's an entirely new channel, new partnership structure. We've been with those OEMs in the past for our bailment programs. So that's always been there. This is an entirely new way to go to market, where we're leveraging their marketing, their sales channels, their booking systems to order those vehicles and those vehicles are drop shipped to us for upfit and then sent to the dealer.
So it does a couple of things. One, it relieves us a little bit on the SG&A side relative to marketing and sales pretty significantly actually. And it allows us to actually enter new dealers and create a new relationship that we then can include the rest of our portfolio as we sell into those dealers with our products as well.
The products that we're supporting the OEMs with are really constructive to us on the bottom line level because they don't have that SG&A implication that the rest of our business does. They're also more menu-driven -- the kits that we're providing on those solutions, fairly well defined. They flow through production very quickly.
So from a factory optimization perspective, they work really well. The forecasting process by which we get them, manage them, push them through is much more elegant than maybe a normal structure. So we really like that business, and it also aligns us very tightly to the innovation cycle of these large OEMs who are trying to create these premium custom trucks.
So the doors that opens for us in those conversations all the way up to the executive level in those companies is a huge step forward for us, and the team is very excited about it. So new customer relationship, albeit we already had that relationship just a different way, and therefore, also new channels new ways to go to market and new dealers. Dennis, I'll turn over the tariff question to you.
Relative to the tariff, so yes, we do have that $15 million net impact still in the first half. We felt it clearly in Q1, and we're seeing that in Q2 as well. Relative to the tariff changes, they are largely net neutral to the PVG business and to the AAG business. It's Marzocchi that definitely gets the benefit of that. That rate fell by like 54%.
So as we look out to the year, that full P&L benefit will phase in as the previous tariffied inventory works through what works through the P&L and should become more visible, we should expect to see some sort of tariff relief maybe in the back half of the year, very late in the year, and it would be low single digits at best.
We have now to Scott Stember with ROTH Capital.
I wanted to dig into the PVG a little bit more on the 17% increase. Mike, when you started talking about it, I think you first said that there was some timing benefits that took place. I believe it was a benefit. Could you maybe talk about that a little bit?
It was. And that was expected on our part relative to Q4 to Q1 timing, Q4 of last year to Q1 of this year. So that did help us. But across the board, just to kind of give you a better picture on PVG in general, overall, aftermarket was a very good story for us in Q1. Powersports was a good story for us in Q1. And automotive really held up to its expectations in Q1.
So most of the upside was contemplated and thought about relative to where we thought that business could go in Q1, again, getting some benefit from timing in Q4 to Q1.
Got it. And then -- as far as the $40 million of incremental savings in Phase 2 of the plan, how much of that did we see in the first quarter? Did you mention that already?
Yes. We -- I didn't mention it. So fair question. And again, just to be clear on that, we have a $50 million contribution coming through the year, $10 million of carryover and then $40 million net new. And so we probably saw mid-single digits come through in the first quarter. So we're feeling good about the start of the year, and that will progressively layer up as we move through the year.
Okay. And then on the balance sheet, it looks like you guys have a good plan for delevering. But what was the leverage ratio at the end of the quarter?
I think we're right around 3.77, if I'm not mistaken. So plenty of headroom against the covenant. And then we recently amended our banking agreement to just provide us with more headroom, more flexibility as we move through the year.
And gentlemen, it appears we have no further questions this afternoon. Mr. Dennison, back to you, sir, for any closing comments.
Thanks for everybody's time today, and have a good evening.
Thank you very much, Mr. Dennison, and thank you, Mr. Schemm. Again, ladies and gentlemen, this will conclude the Fox Factory Holding Corporation's first quarter 2026 earnings call. You may disconnect your line at this time, and have a great day. Goodbye.
Fox Factory Holding Corp. — Q1 2026 Earnings Call
Fox Factory's Q1 2026 shows progress on cost cuts and portfolio actions underpinning 2026 guidance.
📊 Quarter at a Glance
- Net sales $368.7M (+3.9% YoY)
- Adjusted EBITDA $35.7M (above high end of guidance)
- Gross margin 28.9% vs 30.9% prior year
- Divestiture Phoenix operations closed; proceeds directed to debt reduction
- Guidance 2026 reaffirmed; cost-out target about $50M; ~200 bps EBITDA margin lift; capex ~2% of revenue
🎯 What Management Says
- Plan execution The February plan is landing: Phase 1 carryover is flowing and Phase 2 is delivering; Phoenix divestiture closed as planned.
- Guidance stance We are not counting on end‑market recovery or tariff relief in 2026; focus remains on cost reduction, portfolio discipline, and operating leverage.
- Outlook objective Reaffirming 2026 targets: about $50M in annual cost savings and roughly 200 basis points of midpoint EBITDA margin expansion.
🔭 Outlook & Guidance
- Full-year targets Net sales $1.328B–$1.416B; Adjusted EBITDA $174M–$203M; capex ~2% of revenue; tax rate 15–18%.
- Q2 view Net sales $343M–$365M; Adjusted EBITDA $32M–$40M.
- Tariffs Section 232 neutral to core businesses; Marzocchi benefits; no tariff recoveries included in guidance.
❓ Analyst Q&A
- Margin ramp Management cites back-half strength from AAG/Marzocchi and Phase 2 cost benefits; 200 bps improvement targeted for the year.
- Tariffs & PVD 232 exposure largely neutral to PVG/AAG; Marzocchi benefits; potential recoveries not included; timing uncertain.
- PVD model OEM-driven upfit partnerships create a new channel, reduce SG&A, expand dealer reach, and align to innovation cycles.
⚡ Bottom Line
Q1 confirms the plan is on track: cost-out, portfolio discipline, and the Phoenix divestiture support a reaffirmed 2026 path with margin expansion and debt reduction ahead, though macro hurdles remain. Investors should expect progress to hinge on H2 execution and market dynamics.
Fox Factory Holding Corp. — Q4 2025 Earnings Call
1. Management Discussion
Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Fox Factory Holding Corp.'s Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.
I'd now like to turn the conference over to Toby Merchant, Chief Legal Officer at Fox Factory Holding Corp. Thank you, sir. You may begin.
Thank you. Good afternoon, and welcome to Fox Factory's fourth quarter 2025 earnings conference call. I'm joined today by Mike Dennison, Chief Executive Officer; and Dennis Schemm, Chief Financial Officer. First, Mike will provide business updates, and then Dennis will review the quarterly results and outlook. Mike will then provide some closing remarks before we open up the call for your questions.
By now, everyone should have access to the earnings release, which went out earlier this afternoon. If you have not had a chance to review the release, it's available on the Investor Relations portion of our website at investor.ridefox.com. Please note that throughout this call, we will refer to Fox Factory as FOX or the company.
Before we begin, I would like to remind everyone that the prepared remarks contain forward-looking statements within the meaning of federal securities laws, and management may make additional forward-looking statements in response to your questions. Such statements involve a number of known and unknown risks, uncertainties, many of which are outside of the company's control and can cause future results, performance or achievements to differ materially from the results, performance or achievements expressed or implied by such forward-looking statements.
Important factors and risks that could cause or contribute to such differences are detailed in the company's quarterly reports on Form 10-Q and in the company's latest annual report on Form 10-K, each filed with the Securities and Exchange Commission. Investors should not place undue reliance on the company's forward-looking statements and except as required by law, the company undertakes no obligation to update any forward-looking statement or other statements herein, whether as a result of new information, future events or otherwise.
In addition, where appropriate in today's prepared remarks and within our earnings release, we will refer to certain non-GAAP financial measures to evaluate our business, including adjusted gross profit, adjusted gross margin, adjusted operating expenses, adjusted net income, adjusted earnings per diluted share, adjusted EBITDA and adjusted EBITDA margin. As we believe these are useful metrics that allow investors to better understand and evaluate the company's core operating performance and trends. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are included in today's earnings release, which has also been posted on our website.
And with that, it is my pleasure to turn the call over to our CEO, Mike Dennison.
Thanks, Toby, and thanks to everyone for joining our fourth quarter call today. I want to use our time today to do something beyond a traditional quarter recap. While we'll cover our fourth quarter results, the more important conversation is about where this business is headed and the specific actions we are taking to improve profitability. We have a comprehensive plan. We're executing against it, and we want to make sure you leave with a clear understanding of the building blocks and how they translate into meaningful improved margins.
To this end, we've shifted our guidance approach to lead with adjusted EBITDA to better align with the goals we will outline today and importantly, so you can more easily measure our results. Full year sales were $1.47 billion, which was an increase of 5.3% and fourth quarter sales were $361.1 million, which was an increase of 2.3%. While we demonstrated the relevance of our brands and products across our end markets, our margin performance was not where it needs to be.
Revenue growth alone is not the objective. Profitable growth is. And the actions we're laying out today are designed to close that gap with urgency. Ultimately, we are a growth company, and our product pipeline is focused on sustainable long-term growth. However, in the near term and specifically 2026, we must rebuild profitability to establish the appropriate foundation for future growth. We began our initial cost reduction program at the beginning of 2025 with a goal of setting the company on a path to restore our historical adjusted EBITDA margins to the mid- to high teens and accelerate our path to balance sheet improvement.
I'm pleased that we successfully delivered our Phase 1 $25 million profit optimization plan on target and on time. This was a comprehensive effort focused on footprint optimization and continuous improvement across all 3 of our operating segments. We consolidated facilities in our AAG and SSG businesses and completed warehouse consolidation work that has positioned us with a more efficient distribution footprint going forward. We improved our supply chains and utilized our machine shops more effectively. While the unforeseen tariffs masked the underlying savings we've achieved, these proactive actions proved to be a valuable tool to help us accelerate countermeasures and tighten our operations.
We recognize that there are significant savings to capture and that our work must continue. And we are accelerating our efforts to position the business to achieve best-in-class EBITDA margins when cyclical forces abate and our end markets return to growth, which brings me to Phase 2 of our profit optimization strategy. Where Phase 1 was about consolidation and efficiency, Phase 2 represents a fundamental shift in how we are thinking about the business. Focusing on our core high-margin businesses and products to have elevated FOX and its portfolio of brands to be the leaders in their respective industries. We will continue to operate with a continuous improvement mindset. And as part of our Phase 2 efforts, our leadership team has identified specific cost improvement actions to materially improve profitability while strengthening our core and enabling long-term growth.
We have identified critical opportunities across the business, some larger than others and some more complex than others, but all of them lead us to a simpler, more focused and more durable business profile. Dennis will walk you through the financial details around this in his remarks, but I want to take a moment to provide a clear view of the targeted areas of work in 2026.
First, business line rationalization. We're exiting businesses within segments that are not accretive from a margin perspective today. The footprint work in Phase 1 gave us better visibility into true profitability by product line and by business. Now we're acting on that visibility. For example, by the end of the quarter, we expect to have divested our Phoenix, Arizona operations, which were dilutive in our AAG segment margins. The exit of Shock Therapy, Upfit UTV and Geiser is expected to reduce working capital and SG&A, improve margins in both percent and dollar terms and simplify our model. The changes are reflected in our 2026 guidance and are the first examples of our rationalization plans. We are not done.
We are aggressively evaluating all noncore businesses and all product lines across the entire FOX portfolio and we'll pursue appropriate action where the return profile does not meet our expectations. We will look at strategic alternatives for any business that doesn't deliver 3 key elements: aligned with our core brands, synergistic to our vertical offering and has a durable ability to achieve sustainably accretive profit to the enterprise.
Second, supply chain and material cost productivity. We are continuing to evaluate our operations to determine where we have the opportunity for further productivity either through better utilization, reduction of footprint, make or buy optimization efforts and supply chain improvements. Additionally, we are working aggressively to reduce material costs through redesign or actions with suppliers. This work is critical to achieving our margin expectations. However, some of these efforts will necessitate some short-term expense to deliver.
And third, a significant reduction in operating expenses. We have opportunities to reduce spending across sales, marketing and G&A functions. We will address marketing and R&D spend that is not aligned with growth and our profitability expectations. These are difficult decisions. We don't take them lightly, but they are necessary to rightsize our cost structure for the business we are running today.
In aggregate, our actions are targeting approximately $50 million of incremental realized savings in fiscal 2026. These actions will drive meaningful bottom line improvement in our 2026 results and more importantly, return us to the appropriate foundation to build revenue growth in 2027. In conjunction with our Phase 2 profit optimization initiative and towards our ongoing prioritization of balance sheet improvement, we are also reducing our CapEx spending.
We have been in an elevated CapEx cycle where we are spending 3% plus of revenue. In 2026, we're targeting a step down to approximately 2% of revenue. With several years of investment having been made in product capacity and innovation, we have the assets in place to achieve our near- to intermediate-term goals. This shift isn't compromising our ability to grow, but rather is better characterized as a militancy around ROIC metrics and focus, which is driving improved free cash flow generation to help accelerate debt paydown and strengthen our balance sheet. Beyond these management-driven actions, we announced earlier this month that our Board of Directors will be establishing a Transformation Committee focused on operational excellence and margin improvement. The committee will begin its work in the coming month and is expected to advise on the existing Phase 2 actions we have already established as well as unlock additional opportunities that would be incremental to the $50 million target for 2026.
Taken together, this is a comprehensive effort with management and Board aligned that will move with urgency. We're not simply managing through a cycle. We're fundamentally repositioning this company to deliver greater operating leverage as we deliver growth over the next several years. Before I get into our segment performance, I want to address an organizational change.
As we initiate our Phase 2 cost actions and support the Board's Transformation Committee, Dennis will be dedicating his full attention to these efforts alongside his responsibilities as CFO. To that end, I assumed responsibility for AAG earlier this month to drive critical actions. This is a short-term need to execute the critical actions within AAG, such as the expected divestiture of Phoenix operations I mentioned earlier and overhaul our PVD business as well as meaningful actions within the rest of the portfolio. We will revisit the leadership of this segment later this year once this work has been completed.
I want to take a moment to thank Dennis for the work he has done leading AAG. Dennis laid the groundwork for the decisions and actions that are necessary going forward, and I appreciate his time and focus over the last year. While there is much work still to be done in AAG, I believe it will be more efficient and productive short term for me to drive the product line decisions and optimize the operations to support our near-term goals. It's the right time for Dennis to redeploy the same intensity he showed with AAG toward the next phase of our broader cost transformation that will benefit the entire enterprise. Now with that, let me turn to review our segment performance for the fourth quarter.
The PVG segment delivered as expected in Q4, overcoming extraneous challenges with net sales of $116.7 million, with our automotive OE business remaining reasonably stable and predictable throughout the quarter. We benefited from our position on premium vehicle SKUs, which continued to outperform the broader automotive market even in challenging conditions. Importantly, PVG delivered margin improvement in fiscal 2025, demonstrating the benefit of our Phase 1 cost actions flowing through to the segment level. This is the type of execution we expect to see across all segments as our Phase 2 actions take hold.
The aluminum supplier disruption at our OEM customers impacted our volumes as expected in Q4, creating some timing challenges for both our OEM partners and our business. We estimate the disruption impacted our Q4 revenue by approximately $8 million as compared to historical norms. However, I want to emphasize that this is a temporary issue that will be resolved. Despite this headwind, the underlying business momentum remains strong as our customers expand the product platforms that we support.
Our Power Sports business continues to stabilize and improve. We're seeing encouraging signs from our expansion into the motorized 2-wheel space, where growth from new customers is helping offset sluggishness as well as increased content with some of our leading OEM partners, which provides confidence in our ability to drive long-term growth in this space. This diversification strategy is allowing us to navigate through the varying stages of industry and macro cycles across our end markets.
On the product development front, our Live Valve aftermarket launch at SEMA in November was exceptional. Previously, enthusiasts could only access our best technology through new vehicle purchases. Now we're expanding access to our dealer and installer network. This is the most advanced technology available in the off-road aftermarket and early indications suggest strong demand from our enthusiasts.
In addition, our product development work with OEMs has landed us new platforms with Ducati in motorcycle, Airstream across several premium RV models as well as early revenue from 2 large well-known EV brands in both autonomous mobility and performance off-road. These programs are designed to deliver early revenue now while full production will provide real growth in '27 and beyond.
Turning to AAG. As I mentioned, we are taking portfolio actions across the business, and AAG is an area where these actions will have a particularly visible impact in the near term as we divest our operations that were dilutive to the segment's margin profile. These exits will be immediately accretive to AAG's profitability after close. We will continue to evaluate all businesses within the segment against our go-forward return expectations.
With that preface, AAG delivered net sales of $126.2 million, up 12.5% year-over-year and 7.1% sequentially, driven by strong demand across our CWH, Sport Truck and RideTech businesses. Importantly, AAG margins would have been meaningfully stronger when excluding the dilutive operations I just described. As I previously mentioned, additional work in PVD and other areas will enable us to fully capture margins in that business necessary to drive a sustainable margin profile necessary across AAG.
On the OE side, the programs we've been cultivating will underpin AAG's long-term profitable growth. The performance truck program we launched in Q3 with a major OE partner has been an immediate success. Our initial units are sold out, and we have a strong backlog building into 2026. We did encounter temporary supply chain complexities associated with this pivot to a more OEM aligned strategy, which has been identified and is getting the attention it needs for improvement.
During the quarter, these supply chain issues delayed shipments of approximately 300 units to late Q1 and Q2 of 2026. These aren't just one-off builds. They represent a deepening relationship with OEMs who see us as an innovation partner, not just an upfitter. And in Q1, we secured a second similar program with Ford, which was announced at the NADA show earlier this month and is activated for their dealer relationships across the country. These investments further validate our strategy of creating differentiated high-performance vehicles that command premium pricing and provide more predictable and sustainable revenue and profit streams over time.
SSG performed largely as expected in what continues to be a challenging environment across both bike and Marzocchi, with Q4 net sales of $118.2 million, down 5% year-over-year. The bike industry as a whole continues to slowly stabilize amid what remains a complex environment. Tariffs are adding pressure to OEMs and driving inventory levels below historical norms. And we're seeing the rise of disruptive market entrants create new competitive dynamics that have forced some legacy bike brands to reconsider their offerings, consolidate or cease operations.
Against this challenging backdrop, our bike business ended fiscal 2025 slightly above 2024 in an industry experiencing turbulence and challenges across many of our OEM customers. We believe our stability is a meaningful proof point for the strength of our brand and our competitive positioning. And consistent with our broader messaging today, we're not chasing revenue. We have the financial strength to lead with our brands and a discipline to protect our margin structure while the industry works through its cycle.
Our strategy focuses on 3 critical objectives. First, product expansion to leverage the changing mix toward e-bikes and new categories; second, customer expansion to build long-term growth partnerships with the new companies aggressively redefining the sport; and third, continued cost optimization to maintain best-in-class margins even in a flat revenue environment.
Turning to Marzocchi. As expected, Q4 was stronger than Q3. The sequential improvement reflects the shift in our distribution channels toward retail that we discussed last quarter as retailers took inventory of our new products ahead of the holiday shopping period. Nevertheless, this was a departure from the plan we had forecasted at the beginning of the year, and we recognize that profitability remains below historical rates in our recent expectations. This margin compression reflects our long-term strategic growth investments in new categories like softball, in-house engineering capabilities, go-to-market improvements and the impact of tariffs. While we maintain our conviction that Marzocchi is the best business in baseball with the best team in baseball, our strategic review of this business will unlock alternative options for consideration as we drive the focus on our core business mentioned previously.
Before I turn the call over to Dennis, I would like to recap 2026. In the near term, we are focusing our efforts on meaningful margin improvement. As part of our Phase 2 optimization efforts, we're evaluating all businesses within our portfolio to ensure they meet our profitability standards and strategic objectives. In summary, we're not counting on market recovery or tariff relief. Given these macro realities of elevated interest rates, soft labor markets and channel partners' tightening inventory levels, we remain focused on what we can control in 2026.
And with that, I'll turn the call over to Dennis.
Thanks, Mike. I'll begin by discussing our fourth quarter financial results, followed by our balance sheet, cash flow and capital allocation strategy before concluding with a review of our outlook for fiscal 2026.
Total consolidated net sales in the fourth quarter of fiscal 2025 were $361.1 million, an increase of 2.3% versus the same quarter last year. Gross margin was 28.3% for the fourth quarter of fiscal 2025 compared to 28.9% in the fourth quarter last year, with the decrease primarily driven by shifts in our product line mix and impact of tariffs. Total operating expense for the quarter included a noncash goodwill impairment charge of $295.2 million related to our share price. Adjusted operating expenses, which excludes the impact of the goodwill impairment charge, restructuring and other discrete expenses as well as the amortization of purchased intangibles were $82.6 million or 22.9% of net sales in the fourth quarter of 2025 compared to $76.4 million or 21.7% in the prior year quarter, with the increase primarily attributed to the reinstatement of incentive compensation payouts for the current year compared to no bonus payouts for the prior year period.
The company's tax benefit was $33 million in the fourth quarter of fiscal 2025 compared to a tax benefit of $4.1 million in the same period last year with the difference being driven by the impairment of nondeductible goodwill recognized this year. Adjusted net income normalizing for the goodwill impairment was $8.3 million or $0.20 per diluted share compared to $12.8 million or $0.31 per diluted share in the fourth quarter last year. Adjusted EBITDA in the fourth quarter of fiscal 2025 was $35 million compared to $40.4 million in the prior year period. Adjusted EBITDA margin was 9.7% in the fourth quarter of 2025 versus 11.5% in the prior year period.
Moving to the balance sheet and cash flows. We continue to execute on working capital management with improved inventory positions supporting our cash flow generation. We also made progress on balance sheet deleveraging, which remains a key priority, which will also be impacted by our progress with the Phase 2 actions that we laid out today. We paid down $13 million of debt during the fourth quarter for a total reduction of $33 million for the year, bringing fiscal year-end debt to $673.5 million. Looking ahead, the combination of our Phase 2 cost actions, CapEx discipline at approximately 2% of revenues and working capital improvements, they are designed to accelerate free cash flow generation and drive meaningful balance sheet deleveraging in fiscal 2026.
Now moving on to our outlook. We are introducing full year 2026 guidance that reflects a decline in our top line expectation, which is largely a combination of the business divestitures, product line rationalization and a slightly down market while driving meaningful margin expansion through a comprehensive set of actions that span every part of our cost structure. There are a number of moving parts, so I want to walk you through how they come together because we think it's important that you appreciate both the building blocks and how they roll up into our outlook.
We entered fiscal 2026 with momentum from the achievement of our Phase 1 cost program, which delivered $25 million in realized savings in fiscal 2025. We expect approximately $10 million of those actions to carry over as incremental year-on-year benefit in fiscal 2026 as we annualize a full year of footprint and network consolidation savings. Building on that foundation, the Phase 2 elements Mike introduced related to business line rationalization, supply chain and material productivity and a reduction in operating expenses will target our SG&A structure and the complexion of our business portfolio. These actions are expected to deliver approximately $40 million of incremental savings this year in 2026.
In total, Phase 1 plus Phase 2 is expected to generate approximately $50 million in cost reductions this year, supporting the approximate 200 basis points of adjusted EBITDA margin improvement that's implied in our guidance. In the near term, we expect margin pressure to remain visible as we work through our supply chain improvement efforts within the AAG segment. We will also continue to feel the impact from the dilutive Phoenix operations through its divestiture toward the end of the first quarter as well as the ongoing effects of tariffs that won't anniversary until later in the second quarter and represent an approximately $15 million of headwind in the first half of the year.
Looking toward the balance of the year, we expect a material improvement in EBITDA margin and dollars. To summarize clearly, we are taking comprehensive actions that will provide measurable benefits in 2026. This translates into a material positive step change of approximately 200 basis points improvement in adjusted EBITDA margin from our 2025 rate of 11.5%. The collective focus around these initiatives is strong. This is something we are driving at every level of the organization from the Board and executive team through every operating segment.
And as Mike mentioned, the Board's Transformation Committee will begin its work in the coming months, partnering with external advisers to identify further opportunities. Any additional savings that come from that process will be incremental to the approximately $50 million of incremental cost saves from our Phase 1 and Phase 2 profit optimization efforts. Bringing this all together, for the first quarter of fiscal 2026, we expect net sales in the range of $343 million to $369 million and adjusted EBITDA of $27 million to $34 million.
To reiterate my earlier comments, we expect the first quarter to be more challenged due to multiple headwinds that aren't fully offset by last year's Phase 1 carryover benefits, including the full year-on-year tariff impact before we anniversary the Liberation Day implementation and difficult comparisons in SSG Bike given the strength of the first half of 2025. As we move into the second quarter and especially the second half of the year, we expect to improve meaningfully. Tariff comparisons normalize, aluminum supply is expected to be fully normalized and the benefits of our Phase 2 actions should materialize.
With that context, we expect full year 2026 net sales in the range of $1.328 billion to $1.416 billion, which at the midpoint represents a year-over-year decline of approximately 6.5% and is largely a combination of the divestitures, product line rationalization and a slightly down market that we mentioned. We are guiding to adjusted EBITDA in the range of $174 million to $203 million, which represents a margin of 13.7% at the midpoint or approximately 200 basis points of improvement relative to full year 2025. Capital expenditures are expected to be approximately 2% of revenues, and our tax rate is expected to be 15% to 18%.
That wraps up my commentary. Mike, back to you for closing remarks.
In closing, I want to leave you with 3 key messages. First, we're not waiting for markets to improve. The actions we are taking now around Phase 2 objectives as well as capital discipline and working capital improvements are within our control, and our team is executing them with precision and urgency. Second, our fiscal 2026 targets are achievable through self-help. Our outlook calls for material margin expansion on flattish organic revenues. That's our commitment. When markets do recover, we'll be positioned to deliver even stronger results. Third, our business is built to deliver long-term growth, and we will ensure that growth comes with the right margin and leverage by taking aggressive action to optimize the system end to end.
Our performance-defining products continue to resonate with customers. Our operational foundation is stronger following a significant cycle of investment, and our Board and management team are fully aligned on creating value for our shareholders. I'm confident in our ability to demonstrate progress this year toward our goals. I want to thank our employees for their incredible focus and resilience during this time. The decisions we're making today, while difficult, are necessary to position FOX for sustainable profitable growth.
With that, operator, please open the call for questions.
[Operator Instructions] We'll move first to Peter McGoldrick with Stifel.
2. Question Answer
I appreciate all the detail today. I'd like to dive in on the moving parts on guidance. So I was thinking -- I wanted to ask if -- as we think about the underlying growth profile of your ongoing business, can you talk about the revenue and profitability related to those that are expected to be sold at the end of the quarter and what that means for the organic business?
Well, what we've been doing is taking a look at the overall complexion of the business, looking at those businesses that are dilutive to our overall profile that we've been expecting. So at the end of the day, after we take out Geiser, Upfit UTV and Shock Therapy, which should happen later on this quarter, that's going to result in a couple hundred basis points of improvement there. And then we're going to continue just to look at other businesses along the way. Marzocchi has not been included in any of this as well.
And to be clear, Peter, when we talk about 200 basis points of improvement relative to the Phoenix, Arizona operations, that's for AAG specifically.
It's a great point.
Okay. I appreciate that. And then as we think about the size and the shape of the go-forward business, can you talk about how much of your current portfolio is -- makes up the sort of the core synergistic and accretive criteria that you pointed to that would be a part of your core business and not related to any potential divestitures or changes in the portfolio?
Yes. I think overall, when I think about core and Mike thinks about core, we're thinking SSG Bike is core to our operations. When you look at AAG, core to those operations there are going to be PVD and then your Sport Truck, RideTech, Custom Wheel House and then on PVG, obviously, that is core to who we are as well. Again, though, we're going to be taking a look at everything as we move forward, making sure that it is lining up with the 3 aspects that Mike talked about during his prepared remarks, and that is alignment with our brands and then it's going to be the synergistic nature of that. We've talked about 1 plus 1 equals 3. That needs to continue as well. And then it's got to have the durability of profit generation over the long haul.
We'll move next to Anna Glaessgen with B. Riley Securities.
I'd like -- I'm curious on the thought process behind divesting the Phoenix business, which is focused mostly on Power Sports. I'm curious the extent to which this is a margin play. I don't know the degree to which that was more dilutive than maybe other businesses within the line, maybe a function of the outlook for Power Sports, at least near to medium term. Just any help there as we contemplate maybe what else could be contemplated within the broader portfolio, as you noted, assessing other noncore assets?
Yes, Anna, it's a good question. When we think about that business and the lens that Dennis just described, which I talked about in the earlier remarks, we have to use a lens of these are good businesses. However, at their current size and scale, to get them to be at the scale we need them to be, to be a productive and durable value component of our enterprise, there is heavy investment, and there has been heavy investment and heavy working capital utilization to support that growth curve. And as we look at the next several years, while they're great businesses, they are hard to own in our portfolio because of the draw on capital, the draw on SG&A and the dilution in the margin for that time frame.
So we actually will continue to partner with these companies in product development and innovation in a lot of ways. This is not about us just exiting them in a way that we will never work with them again. That's not the point. The point is in our current portfolio, they just don't fit and the dilution effect over the next 2 years is significant enough that we need to do something different. So this is a well thought out process that we've started in Q4 and, as we've mentioned, executing in Q1.
And then on the guidance, you referenced 3 separate points that are being contemplated in sales, the business divestment, some product rationalization and then thirdly, a down market. Would it be possible to frame up roughly your expectations across the end markets in 2026?
In general here, when we talk about the top line, I mean, essentially, what we're getting at is we are going to scale down the business through thoughtful divestitures and product line rationalization. That will be the bulk of that decrease of about 6.5% at the midpoint. In addition, as we look at SG&A and those expenses, we would be -- we need to consider that if we're going to reduce some of those expenses, they're going to have some impact on the top line. So that's another aspect of it.
And then in general, we're just hedging against a macro environment that's a little weaker. And so while we always expect our products to outperform, we're trying to put a hedge on the overall market there as well. And so I'd leave you in summary with its divestitures, product line rationalization result in the bulk of the decrease, then it would be the impact of the cost-outs on the SG&A line that deliver that 6.5% decrease.
We'll move next to Scott Stember with ROTH Capital.
Can you talk about tariffs? What was the net impact to the business? I don't know if you mentioned it or not in '25? And what is baked into guidance at this point, assuming no material changes with all the happenings as of late?
Yes. So that's a great question. Thanks for that. And so essentially, what we experienced in 2025 was $50 million of gross tariff impact. We were able to offset $25 million of that through cost-out initiatives, et cetera, with supply chain, passing on cost to suppliers and customers, et cetera. And then going forward into 2026, we're estimating an additional $30 million of gross tariff impact, and we expect to mitigate about 50% of that. So leaving a net tariff impact in the first half of 2026 of $15 million.
And we have not [indiscernible] or input from the most recent noise you mentioned. We -- I think it's too early to try to input some sort of benefit from those -- from the statements and from the Supreme Court.
Got it. And then last question on the balance sheet and cash flow. What was the net leverage ratio at the end of the quarter -- at the end of the year? And what are you targeting as far as free cash flow and the leverage ratio by the end of '26?
Yes. So another great question. Balance sheet is obviously a key priority for us moving into 2026 as it was in 2025 as well. We finished comfortably in Q4. We are at 3.74 versus a covenant ratio of 4.5. So we are well within the range there. And as we move forward, cash flow is really going to be primarily a function of the EBITDA contribution that we'll be driving in 2026, along with extreme focus on working capital reductions as well and a reduction in our CapEx. So those are going to be some of the big drivers as we move forward into 2026.
We'll take our next question from Craig Kennison with Baird.
A lot of information to process. I wanted to follow up on Scott's question with respect to tariffs. Do you plan to pursue a refund of your tariff payments?
We will do everything possible to get a refund for sure. Now how that works and how that plays out and when that actually arrives, we are not going to put in the guide because that is a crystal ball we cannot see through.
And then as we look at the businesses that you plan to divest, the way you're speaking about them suggests you have a buyer in place. Can you confirm that's true? And then how would you plan to use the proceeds from any sale?
That's true and debt reduction.
100% debt reduction.
It's pretty simple, pretty straightforward.
And this does conclude the Q&A portion of today's program. I would now like to turn the call back to Mike Dennison for any closing remarks.
Thanks for your time today, everybody, and we will talk to you soon. Have a good evening.
This does conclude the Fox Factory Holding Corporation's fourth quarter 2025 earnings call. You may now disconnect your line and have a great day.
Fox Factory Holding Corp. — Q3 2025 Earnings Call
1. Management Discussion
Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Fox Factory Holding Corp.'s Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded.
I'd now like to turn the conference over to Toby Merchant, Chief Legal Officer at Fox Factory Holding Corp. Thank you, sir. You may begin.
Thank you. Good afternoon, and welcome to Fox Factory's Third Quarter 2025 Earnings Conference Call. I'm joined today by Mike Dennison, Chief Executive Officer; and Dennis Schemm, Chief Financial Officer and President of the Aftermarket Applications Group. First, Mike will provide business updates, and then Dennis will review the quarterly results and outlook. Mike will then provide some closing remarks before we open up the call for your questions.
By now, everyone should have access to the earnings release, which went out earlier this afternoon. If you have not had a chance to review the release, it's available on the Investor Relations portion of our website at investor.ridefox.com. Please note that throughout this call, we will refer to Fox Factory as FOX or the company.
Before we begin, I would like to remind everyone that the prepared remarks contain forward-looking statements within the meaning of federal securities laws, and management may make additional forward-looking statements in response to your questions. Such statements involve a number of known and unknown risks and uncertainties, many of which are outside the company's control and can cause future results, performance or achievements to differ materially from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors and risks that could cause or contribute to such differences are detailed in the company's quarterly reports on Form 10-Q and in the company's latest annual report on Form 10-K, each filed with the Securities and Exchange Commission. Investors should not place undue reliance on the company's forward-looking statements, and except as required by law, the company undertakes no obligation to update any forward-looking or other statements herein, whether as a result of new information, future events or otherwise.
In addition, where appropriate in today's prepared remarks and within our earnings release, we will refer to certain non-GAAP financial measures to evaluate our business, including adjusted gross profit, adjusted gross margin, adjusted operating expenses, adjusted net income, adjusted earnings per diluted share, adjusted EBITDA and adjusted EBITDA margin as we believe these are useful metrics that allow investors to better understand and evaluate the company's core operating performance and trends.
Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are included in today's earnings release, which has also been posted on our website.
And with that, it is my pleasure to turn the call over to our CEO, Mike Dennison.
Thanks, Toby, and thanks to everyone for joining our Q3 call. In the quarter, we delivered net sales of $376.4 million, up 5% year-over-year and adjusted EBITDA of $44.4 million, up 6% year-over-year, led by growth in both AAG and PVG.
Our SSG segment underperformed expectations during the quarter, particularly within Marucci. While we made the right investments in product innovation, including successful new bat launches and category expansion, the impact of those actions were outweighed by a softening of the consumer environment throughout the quarter as our channel partners responded by significantly reduced inventory ahead of year-end. This underperformance is reflected in our updated full year outlook, which we will cover.
Our overall third quarter results demonstrate the power of our strategy even in challenging environments like this. We're executing our product road map with strong innovation across all 3 segments, and we're seeing strategic customer engagement reach new levels. Whether deeper integration with truck manufacturers, expanded platform adoptions in powersports or new bike partnerships, we're becoming more embedded in our OEMs product strategies. These wins reflect years of relationship building and validate our focus on performance-defining innovation.
Our third quarter margins, while improved, continue to reflect investment in product launches with strategic customers. These launches required us to accelerate certain investments and delayed the execution of footprint consolidation activities that were originally timed for early in the third quarter. Those consolidations have since been completed early in the fourth quarter with anticipated benefits to follow.
Despite these timing impacts, our $25 million cost reduction target remains on track for the fiscal year. The strategic investments we're making from new bike platforms to expanding our bat portfolio into adjacent categories like softball are setting the foundation for future revenue and margin expansion. We remain focused on delivering innovation our customers demand while executing the operational improvements that will restore industry-leading profitability.
Let me remind you of the 4 key initiatives that are driving our performance and positioning us for sustainable growth. First, footprint consolidation. This quarter, our efforts were focused within the AAG and SSG segments. We accelerated certain consolidation activities in our AAG upfitting operations and SSG during Q3, creating approximately $2.5 million in onetime costs as we moved equipment and realign production. While this impacted Q3 margins, we made this decision deliberately to position ourselves for upcoming product launches, including significant new OEM strategic moment and to capture long-term margin expansion opportunities as we scale these programs in 2026. Within SSG, we executed warehouse consolidation work in our Marucci business during the quarter that positions us with a more efficient distribution footprint going forward.
Second, portfolio optimization. Our focus on highest performing SKUs and strategic growth categories is showing up in market share gains in AAG aftermarket components, strong performance of new product launches in bike in the first half of the year and operational efficiency improvements in PVG.
Third, working capital management. We've maintained improved inventory positions in PVG and SSG through disciplined supply chain practices, translating into cash flow generation that supports our efforts to improve balance sheet leverage. We've demonstrated this by reducing debt by $17.4 million year-to-date and expect to make additional progress in the fourth quarter.
Lastly, our cost reduction program. As I mentioned, we remain on track for full fiscal year delivery of our $25 million target with footprint consolidation activities now complete and benefits flowing through in Q4. The underlying cost structure improvements we're making are expected to provide operational leverage as we navigate this cycle as consistent revenue growth returns to our businesses.
The progress we're making across all of these priorities demonstrates that where we can control outcomes, whether that be through operational excellence, product innovation or strategic execution, we are delivering results, and I'm pleased to see consolidated revenue grow by 6.3% in the year-to-date period.
However, let me be clear, our work is not done. As we look ahead to 2026, we're preparing to take action on the second phase of our optimization strategy. With the major components of our network consolidation now complete, our work is shifting towards maximizing efficiencies across our global footprint, simplifying our business and focusing on our core products. We are developing further actions to enhance our cost positions toward margin recovery and accelerating our efforts to improve our balance sheet leverage, which will include extracting working capital through targeted inventory reductions, maximizing previous period CapEx investments, which allow us to further reduce near-term CapEx in the future, and driving increased near-term free cash flow. We are in the midst of our budgeting process now and expect to share additional details surrounding this second phase of activity and its impact on 2026 guidance during our fourth quarter call.
Now let me walk through our segment performance in detail. PVG delivered another quarter of strong execution with net sales of $125.9 million, representing 15% growth year-over-year and 2% growth sequentially. The automotive OE business remained reasonably stable and predictable in Q3 as we benefited from our position on premium vehicle SKUs. However, we are seeing some timing of shipment impact associated with the supply chain disruption following the fire at a major aluminum supplier within our automotive customer base. While this is a temporary issue, it is having an impact on our business in the fourth quarter and is captured in our fourth quarter guidance.
Our powersports business continues to stabilize as the industry's dealer inventories improve. Our expansion into the motorized 2-wheel space continues to deliver results. Growth from new customers is offsetting the ongoing softness, albeit stabilized in the off-road powersports products. On the operational front, PVG is executing well, and we expect the improvement to continue through 2026. Our in-sourcing initiatives are reducing costs and helping offset some of the tariff exposure. For example, in conjunction with our OEM partners, we've been working hard to get components in-sourced to our own factory and limiting the amount of tariff expense for both FOX and our partners.
On the product development front, the PVG team continues to deliver above expectations with recent product launches. In Q3, we firmly entered the street performance sector with Stratton Shock solutions tuned for the American sports car market. These new products signal our commitment to improve the driving and overall performance through our aftermarket channels for tens of thousands of enthusiasts. In addition, earlier this week at the SEMA Show, we launched our advanced software-controlled live valve suspension for the aftermarket. Previously, the only way our enthusiasts were able to buy these products was through a new vehicle purchase. Now they can do it through the network of dealers and installers who partner with FOX. Our initial launch includes products for truck, SUV and Jeep customers. This is the most advanced technology available in the off-road aftermarket from any company.
In AAG, we delivered improved top line performance with net sales of $117.8 million, up 17.4% year-over-year and 3.2% sequentially. This was driven by growth in both aftermarket components and upfitting. Our aftermarket components business continues to gain market share. RideTech, Custom Wheel House and Sport Truck are proving resilient, driving double-digit growth in suspension and lift kits even in a challenging consumer environment.
One product highlight worth mentioning is our recent launch of a performance truck program with a major OEM partner. This is a 702-horsepower supercharge V8 enhanced with our complete performance package, FOX shocks, RideTech lowering suspension and wheel solutions. Car and Driver recently featured the vehicle, calling it best-in-class high-performance street truck. This was an immediate success with early units selling out immediately and our backlog growing for 2026.
More importantly, this represents the first time our upfitting team has worked directly with an OEM to build a custom vehicle that is sold through their website as part of their specialty vehicle operation. This approach has allowed us to maximize reach and expand our dealership network rapidly. We launched this program in Q3 and incurred the associated setup costs, but revenue begins flowing in Q4 and is expected to scale through 2026.
To support this and other strategic launches, we made the deliberate decision to delay certain footprint consolidation activities in AAG and accelerate development investments, prioritizing these longer-term growth opportunities. Those consolidation activities have since been completed here early in the fourth quarter.
In our Specialty Sports Group, we delivered net sales of $132.7 million, which was down 11% year-over-year and 3% sequentially. Our bike business continues to perform well in an industry that's working through an assortment of challenges, including recent labor issues causing block shipments and bankruptcies for OEMs and distributors. As we expected, OEM customers moderated purchases in the back half after maximizing the first half to support model year launches. This reflects appropriate conservatism about year-end inventory levels, a discipline we actually view positively even if it creates near-term growth constraints.
New bike products are performing well, and we believe our market share position remains best-in-class. While we're still awaiting signals that would suggest a return to sustained industry growth, we continue to see signs of stabilization and the enduring competitiveness of the FOX brand within the higher-end categories that we play in.
Turning to Marucci and Victus. Our new product launches that debuted late this summer, including both our Victus aluminum bats and premium Marucci RCKLESS line continue to receive strong reviews and positive response in direct-to-consumer channels. However, the broader macro concerns surrounding consumer remain a challenge, which is being compounded by our distribution channel shifting toward retail ahead of the holiday shopping period where retailers have become much more sensitive to their inventory positions.
Further, our warehouse consolidation created some near-term fulfillment friction that is creating temporarily higher costs. The margin impact was compounded by our ongoing investment spending in new categories like softball and footwear as well as accelerating our product development and engineering capabilities. I want to emphasize that while Q3 was disappointing and the near-term consumer outlook is challenged, even our revised guide reflects strong revenue growth at Marucci in Q4. So while it isn't where we would like it to be, the business is still finding ways to deliver growth.
In addition, we believe the investments we've made will continue to strengthen our competitive position over time. We've added world-class product development talent. We've entered fast pitch and slow pitch softball with market-leading products. We now hold the top 1, 2 and often 3 bat positions in key baseball and softball categories.
We've expanded into footwear, and our MLB partnership continues to gain momentum with exceptional visibility during major events, including the World Series. These investments are expanding our addressable market and setting up multiple years of growth opportunity.
Finally, I'll turn to our near-term outlook. For Q4, we are continuing to see an increasingly challenging macro environment, especially where large OEMs and channel partners are taking a more conservative approach to inventories as we head into the holiday season. In PVG and AAG, the fire at that aluminum supplier supporting truck production is expected to impact volumes for at least the balance of Q4 and likely Q1. As a result, we are reducing our Q4 guidance, and Dennis will provide the details.
Looking ahead to 2026, we believe the macroeconomic environment is setting up to be increasingly challenging. Interest rates, while declining, remain elevated and continue to constrain consumer spending and business investment. The labor market has softened considerably with job growth slowing significantly and unemployment rising. These factors, combined with extended decision-making cycles within the various industries we serve are creating headwinds across our businesses.
Given these conditions, we are redoubling our focus on margin enhancement and prudent capital spending through concentrating on our core products and businesses as the primary means of driving free cash flow towards our goal of reducing our balance sheet leverage. As we look ahead, we remain convinced of our strategy to deliver premium performance products and the dedication of our teams to execute our long-term vision.
Our ability to expand revenue and EBITDA year-on-year is evidence that even in difficult times, we can outpace our competition. And our operational foundation is stronger than it was a year ago, highlighted by the great work within our PVG team. As an organization, we're executing with discipline on the things we can control while navigating the external factors we can't.
And with that, I'll turn the call over to Dennis.
Thanks, Mike. I'll begin by discussing our third quarter financial results, followed by our balance sheet, cash flow and capital allocation strategy before concluding with a review of our guidance for the fourth quarter and full year.
Total consolidated net sales in the third quarter of fiscal 2025 were $376.4 million, an increase of 4.8% versus the same quarter last year, reflecting growth in AAG and PVG, partially offset by a decline in SSG.
Our gross margin was 30.4% for the third quarter of 2025 compared to 29.9% in the third quarter last year, primarily driven by favorable shifts in our product line mix. Third quarter margins include the impact of intentional timing shifts related to accelerated strategic customer launches in AAG and facility consolidation activities that have since been completed.
Total operating expenses were $99.4 million or 26.4% of net sales in the third quarter of fiscal 2025 compared to $88.7 million or 24.7% of sales in the same quarter last year. The increase in operating expense on a dollar basis was driven by investments to support strategic customer launches and product innovation that Mike spoke to and ongoing organizational restructuring initiatives. Adjusted operating expenses, which exclude restructuring and other discrete expenses as well as amortization of purchased intangibles, were $85.7 million or 22.8% of net sales in the third quarter of 2025 compared to $75.8 million or 21.1% in the prior year quarter.
The company's tax expense was $2.3 million in the third quarter of fiscal 2025 compared to $0.3 million in the same period last year. Net loss for the third quarter of fiscal 2025 was $0.6 million or $0.02 loss per diluted share compared to net income of $4.8 million or $0.11 per diluted share in the same period last year. Adjusted net income was $9.9 million or $0.23 per diluted share compared to $14.8 million or $0.35 per diluted share in the third quarter last year.
Adjusted EBITDA in the third quarter of fiscal 2025 was $44.4 million, up $2.4 million year-over-year, demonstrating our underlying earnings power despite investments into product and innovation and the impact of tariffs. Adjusted EBITDA margin was 11.8% in the third quarter of 2025, an increase of 10 basis points versus the prior year period.
Moving to the balance sheet and cash flows. We continue to execute on working capital management with improved inventory positions supporting our cash flow generation. Total debt declined to $687.7 million, down $17.4 million from fiscal year-end while maintaining a strong liquidity position. We recently amended our credit agreement with our banking group, extending our maturity through October 2030, which provides us with enhanced financial flexibility as we execute our strategic initiatives.
I'd like to reemphasize that paying down debt remains our top priority for capital allocation, and we remain focused on generating strong free cash flow to continue reducing leverage. Our $25 million cost reduction program remains on track as we expect to deliver that target in full this fiscal year.
Now, moving on to our outlook for the fourth quarter and the full year 2025. For the fourth quarter of fiscal 2025, we expect net sales in the range of $340 million to $370 million, which in approximate terms represents a revision to the bottom half of the implied guidance we provided last quarter. Adjusted earnings per diluted share is similarly being revised down as well to the range of $0.05 to $0.25. The primary thrust of these revisions is the lower-than-expected performance within our SSG segment, where our OEMs, distributors, dealers and retailers are actively managing toward leaner inventories ahead of year-end.
For the fiscal year 2025, we are updating our net sales guidance to the range of $1.445 billion to $1.475 billion from our full year guidance of $1.45 billion to $1.51 billion. We are updating our adjusted earnings per diluted share guidance to a range of $0.92 to $1.12 from $1.60 to $2. We expect a full year adjusted tax rate in the range of 15% to 18%.
We continue to expect a full year 2025 pre-mitigated tariff expense of approximately $50 million. However, we have identified countermeasures to offset 50% of these impacts and believe we can absorb this unmitigated component in our updated guidance for full year 2025. Our strategic focus remains on profitable growth while improving margins and enhancing free cash flow generation through operational excellence initiatives.
As Mike shared, our organization is preparing to advance our efforts with the second phase of actions that will build on work we completed this year. This multi-phased approach is necessary to capture further efficiencies toward our goal of positioning our consolidated business for accelerated margin recovery as our end markets improve as well as further strengthen our balance sheet and create long-term value for our shareholders.
Mike, back to you for closing remarks.
In closing, our third quarter demonstrates the power of strategic customer engagement and performance-defining innovation. We're more embedded in our customer product strategies than ever before. From truck manufacturers to powersports OEMs and bike brands, these deepening partnerships are creating sustainable competitive advantages.
The intentional investments we made in Q3 to accelerate high-value product launches have positioned us to capture significant opportunities and mitigate some of the intensified near-term macroeconomic impacts that we are seeing as we move through Q4 and into 2026.
With our facility consolidations complete, our $25 million cost reduction program on track and additional optimization actions to come, we believe we have the operational foundation to deliver both innovation and profitability. I'm confident in our team's execution, our product road map and our ability to translate this to value creation for our stakeholders.
With that, operator, please open the call for questions.
[Operator Instructions] And our first question will come from Pete McGoldrick with Stifel.
2. Question Answer
SSG on the bike side, you pointed to moderating orders on the mountain bike side in line with expectations. Can you quantify the year-over-year revenue progression? And then what the outlook for leaner inventory positioning in the channel means as we look into the fourth quarter?
Yes, Pete, this is Mike. Good question. So when you think about the year-on-year compare, it's a little bit tough in bike because the first half of '25 was higher relative to new product launches that you and I have talked about in the past. So a lot more weight towards the front half, a lot less weight in revenue towards the back half.
On the whole, though, think about it, as I've said before, as kind of the stability year. So '24, '25 looking very much the same from a stability perspective, which sets us up for kind of the new baseline into '26. When we think about Q4, really, we're focused on kind of SSG in total, but I'll talk about bike specifically, it's really a retail story.
As we think about the inventory levels associated with a lot of these dealers, distributors and even OEMs, as they go to the end of the year, they don't want to get overburdened with inventory so they can have another robust '26 first half relative to new product launches.
So we're seeing a fairly significant change in the way they order, and that's reflected back again through mainly retail and distribution. So that's why we think about Q4 as really not a product story, but a retail story and how they're thinking about the macro. Does that make sense?
Yes, that's helpful. I also wanted to change gears and talk about the budgeting process as you look to align your cost structure and achieve your free cash flow vision. Can you help us think about what that means, whether in magnitude of cost realignment or the areas of opportunity that we might be considering as we turn the page into 2026?
Yes, it's great because I'm really focused on '26. We have a lot of work to do in Q4, but the work we do in Q4 is really a function of what we deliver in '26, as you know. When I think about '26, I'm really thinking about the investments made in '24 and '25, which were significant relative to product, relative to capacity and innovation. That CapEx story, as you probably remember, was kind of a 3% of revenue story. And while we're not -- it's too early to guide '26, so this is not a guide. But when you think about things like investment in CapEx, think about '25 was kind of a 3%-ish of revenue story. We're built for what we need. So when you think about CapEx in '26, Pete, think about something kind of sub-1. That's a good example of kind of how we think about investments in '26 and what we can do with what we've built versus what we need to go build. I think there's a lot more work to be done.
One thing that I would tell you is hope is not a plan. When we think about '26 and the actions we need to take in Q4 and Q1 to deliver the '26 that we all expect, including yourself, it's a function of not just cost reduction, but true optimization and making these businesses, helping these businesses perform at a profitability level that is commensurate with what we expect.
Our next question will come from Larry Solow with CJS Securities.
It's actually Lee Jagoda for Larry.
We knew it wasn't Larry. So you don't sound like Larry either, but that's okay. Go ahead.
I do my best. Mike, starting on the PVG side, I think you made some comments that the aluminum supplier fire was impacting supply chains and your sales in both Q4 and likely in Q1. Is there any way to quantify that relative to the sort of the miss versus consensus in the guide for revenue in Q4?
Well, I think the best way to quantify it because, again, that's a bit of a moving target. We actually think that resolves itself sometime mid-Q1. Pretty hard to depict exactly where that lands just yet, but it's for sure, a significant issue across Q4. But when you think of Q4, it's really a tale of 2 cities. One is that fire, which not only impacts the PVG OEM automotive business, but AAG relative to chassis. So you have to think about it in both of those camps, and it's not insignificant in either one.
The other half of that change in guide is purely a reflection of the retail environment that I talked about earlier with Pete. So those are really the 2 buckets within the change for Q4. Outside of that, we believe the businesses will perform as they did in Q3 and continue.
Got it. And I guess I'll follow up, Pete, and ask some questions about 2026. I think in your prepared remarks, you made the comment that the macro is increasingly challenging. Can you talk about the various end markets that you're selling and the expectations for growth in 2026? Or -- and if not, kind of why not?
And then on the things that you can control in terms of new product development, new product launches, how should we think about the stuff in your control leading to growth in 2026 outside of whatever the end markets are going to do?
That's a big question. There's a couple of pieces to that. One, think about it from the standpoint of where we have control over the channel in which we sell, think about AAG and upfitted trucks or our relationship with our big OEMs in automotive and powersports. Those are fairly intact. And our ability to drive growth in those markets is easier than it is in retail environments where we need to work within the confines of a major retailer or even a smaller bike retailer who is trying to deal with the implications of the macro and government shutdowns and all the stuff you're aware of.
So when I think about growth, what we can control is ensuring as we did in Q3 and as we'll continue to do to make sure we deliver that premium performance product. We still believe, and I think it's showing itself in terms of Q3 revenue growth, that if we develop the best premium performance product, we will still have an enthusiast who is willing to get -- to spend money to buy our products. So we are very -- we continue to be very fixated on delivering those product launches per our plan.
That aside, when we think about '26, just to kind of give you an early view, I'm focused on profitability, ensuring that we deliver the product launches to make sure our product resonates with those enthusiasts, that's job 1. But job 1.1 is ensuring that we optimize this business to get to the profitability regardless of that top line in 2026. So that's really where the focus is. Again, too early to guide, but you're getting kind of a sense of where I'm going to spend my time and energy.
[Operator Instructions] And our next question will come from Anna Glaessgen with B. Riley.
I think you alluded to it in the prepared remarks talking about labor issues with a key OEM in SSG. We saw reports of an import ban on Giant hitting late in September. To what extent is that being contemplated in the 4Q guide down?
Yes. I mean the labor issues continue to be a challenge for our OEM customers, some specifically that have been reported on. So it doesn't -- it's not a tailwind. It's a headwind. How much of a headwind, I think, is still fairly fluid. We assume it's not going to be insignificant in Q4. I think those OEMs will work through it. However, as one of many extraneous events that causes challenges for that business on a near-term basis. So we'll keep working through it.
The upside of all of it could be defined as -- you've seen the reports, Anna, from a lot of those companies who do report kind of what their industry, what their business is doing relative to the current macro and bike. Being flat year-on-year is predominantly a really strong positive when you look at kind of what everybody else is going through.
So while we don't expect significant growth this year or potentially even next year in bike, the fact that we can remain healthy relative to our product, I think, is what we have to focus on and ensuring that we just continue to optimize that business as best we can.
Got it. And then turning to auto. One of the things on some of the OEM earnings calls a couple of weeks ago, the potential ramifications or tailwinds from listed environmental compliance rules. So potentially suggesting that some of the heavier hitters like Raptor, Tremor, et cetera, might have supply unlocked as they don't have to constrain them as much. Is there any way to think through the possible tailwind as volume is unlocked there?
I think the tailwind is what we've talked about in the past, which is the profitability for these vehicles in the premium sector of automotive tend to outrun the general pace of automotive typically. And so while we play in that space and continue to grow in that space, I think the unlock for us is significant, which is why we're so positive on PVG. The growth rate in Q3 was a significant step up for them. And while it's a little bit lumpy because we're defining and developing product for 2, 3, 4 years out. So it's not always incredibly completely linear. In total is a good growth story for us. So I actually agree with you. I think those products tend to do better in a tough macro, and we're on the right products.
Got it. And then just one more, if I could, kind of trying to tackle the macro question in a different way. In the past, you've talked about how the premium trucks within upfitting are selling a lot better than maybe in the $60,000 range. Is that still the case? And any more color you can provide on the various segments within the auto upfit business to understand the macro impact?
If you deliver the right product, and again, a good example is AAG in Q3 that grew over 17%. If you deliver the right product at a more premium class than kind of the common meat and potatoes of that business, you'll win. And so the growth was a direct reflection of delivering the right product at the right price points, which are more premium than the average truck on a lot.
At this time, I would like to turn the floor back over to Mike Dennison for any concluding remarks.
Thanks for the time today, and we look forward to talking to you soon.
This does conclude the Fox Factory Holding Corporation's Third Quarter 2025 Earnings Call. You may now disconnect your line, and have a great day.
Financial data from Fox Factory Holding Corp.
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jul '26 |
+/-
%
|
||
| Revenue | 1,464 1,464 |
2%
2%
100%
|
|
| - Direct Costs | 1,032 1,032 |
3%
3%
70%
|
|
| Gross Profit | 433 433 |
1%
1%
30%
|
|
| - Selling and Administrative Expenses | 279 279 |
5%
5%
19%
|
|
| - Research and Development Expense | 72 72 |
9%
9%
5%
|
|
| EBITDA | 82 82 |
21%
21%
6%
|
|
| - Depreciation and Amortization | 41 41 |
6%
6%
3%
|
|
| EBIT (Operating Income) EBIT | 41 41 |
32%
32%
3%
|
|
| Net Profit | -299 -299 |
18%
18%
-20%
|
|
In millions USD.
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Fox Factory Holding Corp. Stock News
Company Profile
Fox Factory Holding Corp. engages in designing, engineering, manufacturing, and marketing performance ride dynamics products. The firm offers bicycles; side-by-sides; on-road vehicles with off-road capabilities; off-road vehicles and trucks; all-terrain vehicles; snowmobiles; specialty vehicles and applications; and motorcycles. It operates through the following geographic segments: North America, Asia, Europe, and Rest of the World. The company was founded on December 28, 2007 and is headquartered in Braselton, GA.
StocksGuide Premium
| Head office | United States |
| CEO | Mr. Dennison |
| Employees | 3,700 |
| Founded | 2007 |
| Website | investor.ridefox.com |


