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    FOXF
    Earnings call· Jul 2025(Q2 FY26)

    FOX FACTORY HOLDING Q2 FY26 earnings call FOXF

    Aug 6, 2026 Source

    Executive summary

    Fox Factory Q2 FY26 — Strong Profit Optimization and New OEM Wins

    Fox Factory delivered Q2 FY26 revenue at the high end of guidance and adjusted EBITDA above expectations, driven by strong execution of its profit optimization program. Despite significant macro headwinds from commodity inflation and supply chain disruptions, the company is raising its full-year revenue outlook and tightening its adjusted EBITDA commitment, supported by new OEM awards and stabilizing powersports and bike markets.

    Highlights

    5

    • Revenue of $358.1 million landed at the high end of the guided range.

    • Adjusted EBITDA of $45.5 million exceeded the high end of guidance by approximately $5 million.

    • Captured over $25 million of gross savings in the first half, on track for the $50 million full-year target.

    • Adjusted EBITDA margin improved 250 basis points sequentially to 12.7% (or 12.2% excluding tariff refunds).

    • Net debt declined by approximately $9 million year-to-date.

    Concerns

    3

    • Incremental input cost inflation is running nearly $20 million above the full-year plan assumptions.

    • Aluminum supply disruption continues to constrain F-150 production, impacting automotive OE volumes.

    • Specialty Sports Group (SSG) net sales decreased 9.4% year-over-year.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year net sales
    $1.42 billion to $1.47 billion
    high materiality
    High
    Full-year adjusted EBITDA
    $176 million to $196 million
    high materiality
    High
    Full-year implied adjusted EBITDA margin
    12.4% to 13.3%
    high materiality
    High
    Full-year capital expenditures
    approximately 2% of revenues
    medium materiality
    High
    Full-year effective tax rate
    15% to 18%
    medium materiality
    High
    Q3 FY26 net sales
    $355 million to $380 million
    high materiality
    High
    Q3 FY26 adjusted EBITDA
    $46 million to $54 million
    high materiality
    High
    Q3 FY26 implied adjusted EBITDA margin
    approximately 13% to 14%
    high materiality
    High
    Cost savings commitment
    approximately $50 million
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Powered Vehicles Group (PVG)
    Sequentially stepped down from Q1 due to shipment timing. Powersports channel inventory imbalance has been worked through. Automotive OE business impacted by continued F-150 aluminum supply chain issues and Toyota supply chain issues. Won significant new awards for late Q4 2026 and 2027.
    Powersports growth: 22.5% in the second quarterPowersports growth: 28% in the first half year-over-year
    		$124.2 millionslight increasestepped downdown from the first quarter
    Aftermarket Applications Group (AAG)
    Revenue decrease reflects an impact of approximately $5.5 million from the divestiture of Phoenix operations, partially offset by strength in aftermarket products. New OEM-driven customization programs continue to build. F-150 aluminum supply disruption continued to weigh on volume.
    Adjusted EBITDA dollars: up
    		$109.6 million-4%—improving approximately 70 basis points year-over-year and roughly 500 basis points sequentially
    Specialty Sports Group (SSG)
    Sequential increase reflects normal seasonal improvement in bike. Segment margin held flat due to cost discipline efforts. Bike market stabilizing, with new customer relationships and product expansion (e-bike) benefiting. Marucci softball is a bright spot.
    		$124.3 million-9.4%12.5%held essentially flat year-over-year

    Operational metrics

    18
    Gross savings
    $25 million
    H1 FY26

    Captured in the first half, on track for full-year goal.

    Incremental input cost inflation
    $20 millionabove original plan
    FY26

    Running above assumptions in the full-year plan due to geopolitical conflict, commodities, freight, and fuel.

    Adjusted operating expenses
    $78.5 million
    Q2 FY26

    Down from $83.5 million in the year-ago period.

    Adjusted operating expenses as % of net sales
    21.9%down from 22.3% YoY
    Q2 FY26

    Represents a 130 basis point improvement sequentially as a percentage of sales.

    Sequential reduction in unallocated corporate expense
    $1.5 million
    Q2 FY26

    Part of the overall reduction in adjusted operating expenses.

    Effective tax rate
    36%compared to 21% federal statutory rate
    Q2 FY26

    Primarily attributable to the impact of discrete items in proportion to lower levels of pretax income.

    Adjusted EBITDA margin (ex-tariff refund)
    12.2%compared to 9.7% in Q1
    Q2 FY26

    An improvement of approximately 250 basis points sequentially on an apples-to-apples basis.

    Total debt
    $667.7 milliondown $20.5 million sequentially
    Q2 FY26 end

    Also down $5.8 million from year-end.

    Net debt reduction
    $9 million
    YTD FY26

    Below where the company expects to finish the year, reflecting seasonal working capital build and H1 tariff impacts.

    Net leverage ratio
    3.7xagainst the 5x covenant
    Q2 FY26 end

    Calculated under the credit agreement, established within the amendment completed in May.

    Cash conversion cycle improvement
    12 daysyear-over-year
    Q2 FY26

    Demonstrates efforts to improve working capital efficiency.

    Capital expenditures
    $4.1 million
    Q2 FY26

    Represents approximately 1.1% of revenues.

    Capital expenditures (H1)
    $9.5 million
    H1 FY26

    Represents 1.3% of revenues for the first half.

    Incremental inflation (H2)
    $15 million
    H2 FY26

    Anticipated in the second half, part of the $20 million total incremental inflation.

    Potential IEEPA tariff recovery
    $8 million
    previously incurred

    Company may become eligible to recover, timing and amount uncertain, not included in outlook.

    Powersports growth
    22.5%year-over-year
    Q2 FY26

    Stabilizing force for the company.

    Powersports growth (H1)
    28%year-over-year
    H1 FY26

    Strong growth in the first half.

    Phoenix operations divestiture impact
    $5.5 million
    Q2 FY26

    Impacted AAG net sales.

    Industry KPIs

    8
    MetricValueDetails
    EPS$0.37USD per diluted share
    Revenue$358.1 millionUSD
    Inventory~136 daysdays
    Gross margin30.6%%
    Sg a OPEX ratio21.9%% of net sales
    Adjusted EBITDA ebita$45.5 millionUSD
    Cash investments balance$61.3 millionUSD
    Tariff impact mitigation$8 millionUSD

    Product announcements

    8
    ProductTypeDetails
    12 new vehicle fitmentsexpansion
    Teryx H2 with advanced chassis control systemlaunch
    Proprietary ECUexpansion
    RZR Pro R Boost with 3.0 Live Valve X2 series shockslaunch
    New vehicle with existing OEM (Automotive)launch
    Advanced technology on an autonomous vehicle (Electric Vehicle market)launch
    Marucci new product launches (bats)launch
    Marucci new product launches (softball)launch

    Deals & partnerships

    1
    Phoenix operationsPortfolio optimization

    Divestiture of Phoenix operations based on alignment with brands, synergy with core competencies, and ability to deliver accretive margins and durable cash flows. Cash proceeds will go directly to debt reduction.

    Risks & headwinds

    4
    Escalating geopolitical conflict and commodity price inflationQ2 FY26, expected to continue in H2 FY26

    Pushed commodity prices (fuel, ocean and inland freight rates, carrier surcharges) higher, adding expedite freight and rerouting costs. Incremental input cost inflation is running nearly $20 million above the full-year plan assumptions, with approximately $15 million anticipated in the second half.

    Mitigation: Profit optimization program, cost savings initiatives, pricing and surcharge recovery actions with OEM and channel partners.

    Aluminum supply disruption for F-150 productionContinued in Q2 FY26, expected to impact Q3, with planned production to hit factories in early to mid-September.

    Remains a constraint for F-150 production, impacting automotive OE volumes. Also reduced forecast for high-demand Toyota vehicles.

    Mitigation: Reflected in the revised outlook and guidance.

    Mixed demand signals in bike marketNear-term

    Consumers remain cautious overall.

    Mitigation: Aggressively pursuing new technologies and brands, leveraging relationships with new players and disruptive technologies, focusing on the premium segment.

    Inventory challenges in sporting goods (Marucci)Q1 and Q2 FY26, ongoing

    Experienced discounting in Q1 and Q2 to move inventory.

    Mitigation: Innovation and new product launches (e.g., delayed bat launch to Q3 for optimal impact), active inventory cleanup efforts.

    What to watch in Q3 FY26

    5

    F-150 production recovery

    Q3 FY26
    CurrentAluminum supply remains a constraint, impacting Q2 volumes.
    TargetPlanned production to hit factories in early to mid-September.

    Why it matters

    Resolution of F-150 supply chain issues is crucial for PVG and AAG segment volumes and overall revenue growth.

    Based on the latest OEM production schedules, we now have planned production, which should hit our factories in early to mid-September.

    Q&A highlights

    7

    How is the mix between legacy upfitting and new OEM-driven customization programs evolving, and what are the volume expectations for the second half?

    Legacy custom upfitting remains the primary business model. New OEM partnerships, while a smaller part of the mix, provide significant benefits by driving dealer engagement, leveraging OEM marketing and sales, and absorbing factory overhead, leading to increased productivity and efficiency. This strategy expands product offerings within existing OEM relationships.

    “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.”

    asked by Peter McGoldrick · answered by Michael Dennison

    2 min read6 chapters

    Detailed Narrative

    01

    Profit Optimization Program Execution

    Fox Factory's profit optimization program is on schedule, having captured over $25 million of gross savings in the first half of FY26. The company remains confident in its full-year target of approximately $50 million in gross savings, comprising $10 million from Phase 1 carryover and $40 million from Phase 2. This program is crucial for margin expansion and offsetting significant macro headwinds🌐, including rising commodity prices and freight costs.

    02

    PVG Segment Performance and Strategic Wins

    The Powered Vehicles Group (PVG) delivered $124.2 million in net sales, showing a slight year-over-year increase. Powersports grew 22.5% in Q2 and 28% in H1, benefiting from channel inventory stabilization. Automotive OE business was impacted by persistent F-150 aluminum supply disruptions and Toyota supply chain issues. PVG secured significant new OEM awards, including 12 new vehicle fitments, an autonomous EV OEM, and expanded Live Valve offerings, which are expected to drive meaningful volume from late Q4 2026 into 2027 and 2028.

    03

    AAG Segment Dynamics and Aftermarket Strength

    The Aftermarket Applications Group (AAG) reported $109.6 million in net sales, a 4% year-over-year decrease, primarily due to a $5.5 million impact from the Phoenix operations divestiture. Excluding this, the segment grew modestly. Aftermarket components showed strength, with categories like Custom Wheel House, RideTech, and Sport Truck benefiting from product launches and consistent demand, as consumers invest in existing trucks. New OEM-driven customization programs are building, leveraging OEM marketing and sales channels to target new dealers and absorb overhead.

    04

    SSG Segment Stabilization and Bike Market Trends

    The Specialty Sports Group (SSG) delivered $124.3 million in net sales, down 9.4% year-over-year but up 12.5% sequentially, reflecting normal seasonal improvement. Segment margin remained essentially flat year-over-year due to cost discipline. The bike market is stabilizing, with new product launches, particularly in e-bike and 32-inch cross-country platforms, driving demand and attracting new consumers, leading to some products being sold out.

    05

    Marucci Business and Product Innovation

    Marucci's softball business continues to be a bright spot, with new products resonating and becoming an increasingly important contributor. New bat launches were strategically delayed from Q2 to Q3 to ensure optimal inventory levels and market impact🌐. The Lizard Skins grips business is performing well, with optimized warehousing and strong end-market demand across various sports. The company is trimming less successful product lines to focus on core strengths.

    06

    Macroeconomic Headwinds and Mitigation Strategies

    Fox Factory is facing significant macroeconomic headwinds🌐, including escalating geopolitical conflicts driving higher steel, aluminum, fuel, ocean, and inland freight rates. This has resulted in nearly $20 million of incremental input cost inflation above original plans, with approximately $15 million anticipated in the second half. The company is actively implementing cost optimization initiatives, pricing adjustments, and surcharge recovery actions with OEM and channel partners to mitigate these pressures.

    AI-generated summary of the company’s earnings call. Not investment advice.