What are the key drivers for the steep ramp in EBITDA margin from Q3 to Q4, as implied by guidance?

The primary drivers include the net release of cost savings programs, especially as the company anniversaries tariffs from the prior year, leading to greater fall-through. Additionally, revenue and margin contributions from Marucci's bat launch (delayed to Q3), recovery from bike timing delays in Q3, and the recovery of PVG from F-150 chassis issues in Q4 will contribute to the margin improvement. “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.”

What is embedded in guidance for the bike segment in the second half, and what stage of recovery is the business in?

The bike business is expected to be extremely stable year-over-year, not growing, but with strong margins. A pickup is anticipated in Q3, followed by a seasonal leveling off in Q4. The premium nature of FOX's bike products contributes to predictability, and new product launches, particularly in e-bike and drivetrain technology, are driving demand, with some products currently sold out. “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.”

Could you provide an update on the new bat launch for Marucci in Q3, and how the company is managing inventory challenges alongside new innovation?

The Q3 bat launch was intentionally delayed from Q2 to ensure optimal inventory levels in channels for a successful launch. While innovation is key to driving demand, the company is also actively engaged in inventory cleanup through discounting. It's a tricky environment requiring a balance between innovation and managing existing inventory. “We delayed that launch ourselves to really create the best opportunity to have a great bat launch with heavier volume.”

FOXF

Fox Factory (FOXF) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jul 2025 (Q2 FY26)· Consumer Discretionary· Aug 6, 2026

Source: earnings call transcript

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

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

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

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

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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 million	slight increase	stepped down	down 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

Product announcements

Product	Type	Timeline
12 new vehicle fitments	expansion	so far this year
Teryx H2 with advanced chassis control system	launch	this week
Proprietary ECU	expansion	ongoing
RZR Pro R Boost with 3.0 Live Valve X2 series shocks	launch	Earlier this week
New vehicle with existing OEM (Automotive)	launch	drive meaningful volume in 2028
Advanced technology on an autonomous vehicle (Electric Vehicle market)	launch	begin shipping at the tail end of '26 and drive incremental volume in 2027
Marucci new product launches (bats)	launch	Q3 FY26
Marucci new product launches (softball)	launch	ongoing

Deals & partnerships

Phoenix operations Portfolio 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

Escalating geopolitical conflict and commodity price inflation Q2 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 production Continued 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 market Near-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

F-150 production recovery

Q3 FY26

Current Aluminum supply remains a constraint, impacting Q2 volumes.

Target Planned 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.

Find out whether FOXF delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.