FOXF - Earnings call transcript Q3 2020 | Fox Factory Holding Corp.

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Operator

Greetings and welcome to the Fox Factory Holdings Corporation Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Haugen. David. you, Thank

begin. You may

David Haugen

Scott Good quarter afternoon, joined Fox you. Officer; welcome by and Financial Treasurer. and XXXX earnings third and Executive fiscal Chief am Dennison, Factory's our conference Chief Mike Officer Thank our to Humphrey, call. today I

provide Scott Mike results review financial will the Mike. will First, the remarks outlook from then quarter’s and followed business updates, by closing

went the now, the open then call today which everyone earnings have will your By up X:XX We questions. approximately to should accessed release, Time. PM out at for Eastern

or release, you've available of a If Please call, Factory had chance the not at FOX refer website the to note portion company. review Relations will the throughout this Fox we it's Investor that investor.ridefox.com. on to our as

I'd outside the to update otherwise. result or Except Commission. forward-looking of the or such risks and cause future that involve with as that Company future response unknown Before known Exchange any the Important number latest forward-looking statements. and factors additional like from remarks performance detailed or differences and contribute which contain or may everyone information, events in XX-Q and or in differ statements forward-looking achievements required and in Securities forward-looking performance implied obligation by statements statements no the achievements to Such could results, Form can prepared significantly results, the a as filed remind expressed uncertainties, to control company's new on herein, statements, XX-K to questions. and are the management such or by make Form many undertakes company's the of other whether a your law, annual of report we are to cause begin,

our earnings It important useful gross operating margins, that In that addition, metrics that income, to are adjusted A referenced. press the And GAAP been their these EBITDA are CEO, basis. on-going EBITDA non-GAAP which non-GAAP my of non-GAAP believe and tax, are in measures our posted non-GAAP prepared is non-GAAP pleasure call within today's better today's most expenses, has adjusted turn is of the performance are non-GAAP diluted and non-GAAP adjusted per reflect share, margin measures on our business also financial with Dennison. that, income these an to directly earnings included release comparable release, financial remarks, over in adjusted to financial on measures net our Mike reconciliation it to note website. we

Mike Dennison

appreciate join We taking call. us Thank to today’s you afternoon. and the time David for everyone good

business we want hope these of strength in over and XX% our our FOX The which was to third third result portfolio value our our quarter our which the million the within the $XXX.X diversified and XXXX. thank and to of times. family jump and who in I everyone am quarter safe to XXXX. is record Before but only us not achieve to our help pleased into quarter performance bringing and group, innovation customers incredible perservere sales member sports growing enduser of of performance trying a in our I resilience FOX single financial to third has conviction quarterly supports demonstrated every product brand our the healthy best-in-class compared report commitment highlights, staying on I in speciality grew is of with base. a

margin continues our have with finishing expectations, market growth Within expansion extended from through activities. nearly QX strong our as significant Specialty of third XX% our the leading of over PVG recreational from $X.XX, quarter in came robust an outdoor exceeding with further where business operating quarter a our strong SCA trend growth acquisition. we XX% adjusted the and on-going benefit demand to profitability back as as well fuelled expense contributed performance The Our share in aftermarket growing OEMs segment to Sports coupled the XXXX. the strong shutdowns continued leverage Group, topline the EPS gross

currently have stronger. complete environment achievement power are Georgia sport have supply Furthermore, bicycling OEMs without COVID-XX that both the wildfires. and production we schedule our demand our of demand meet achieved this our quarter, shocks and and California managed Georgia offerings to for transitioning demand OEMs pipelines This completed optimize which aftermarket demand. of the the all is third manufacturing our of practices the propelling the the transfer diverse we're with pleased amid and shipment be partners mentioning are a for environment category, already to meet and in shocks facility to Importantly, on ability to worth never and third full the monitored has continue ever our an levels. been What where pandemic automotive all In in chains we processes. lines. product Power attracting channel volume is participants is customers the disruptions while as new supply confident remain replenish and highest forks large we in we seen experienced to suppliers And we the to production of manufacturing volume drive well heightened gains. aftermarket is to back record chain the new and and reality the their Georgia in our to exceptionally global in we significant channels We've improvements extended successfully minimize we working shipped. and and and adapt quarter, have Vehicles production In of remains the to significant constantly automotive our operation our and is to ourselves to customer significant to distancing. transfer In our that OEM transition in successfully impact social find aftermarket strong facility Group, as in productivity XXXX.

to Power of our growth and are unique technologies. some share new the with Sport to customers our are and stronger PVG handle than R&D the we automotive product I'm And our pleased technology on-going with of relationships news validation ever. Our resources exciting development. optimizing

speak You technology in shock winning advanced racing. regularly semi authenticating, ever Valve. electronic at about valves race technology Class, Premier and the of a suspension desert victory pinnacle have me smart has live and This desert our blue off-road first connected called further solution challenge, trucks now Live become the heard taking the water active the

RZR probe harshness. and is also It Valve more rebuildable ready. the Honda proud as makes is we off-road same maximizes allows race proven, turbo tuneable Ford as the on us control Live delivered and have the suite platform XXXX as the for and well especially mountain UTVs athletes and In Raptor, from Polaris podium Live UTV addition, Polaris technology raise What of RZRs on Valve desert Talon running others. Pivot, Championship. which bikes fully complete FOX by Scott is World and available a technology Giant, minimizes that vehicle stability at

business OEM Another was for the on big accomplishment PVG side. our

are behind current excited factory Tremor introduced capable Ford and on-going FOX remain calls our featuring Off-Road recently We factory tuned operating monitor collaboration off-road the built Package product customers optimistic fundamentally across shutdowns brands. Ford this. own in most the that X.X or it we environment, confident to cautiously the dampers. Ranger ever, our regards In and our Ranger are off-road either development

our safety We employees healthy highest have measures keep and to integrated safe. the

will to businesses and be our governments to like actions. take However, today FOX, other required operations all adjust require federal state us should different

then, in all environments. rear we a to leadership the and build believe accomplishments In In mirror, to will summary, objectives view succeed we shareholder as pandemic in we and employees to world get as future long value. our financial and the have generate ahead, safe. growth term the our continue and for mid-term, we're in And Looking results to positioned and will keep leveraging be upon are back potential will demonstrated work and working be we normal. diligently hoping our operations well agile, Until flexible remain sustainable strong growth. near we drive to our existing navigate to we nimble and are confident

sports in group and operate vehicle environment, low to view in double segment Finally, term the the uncertain digits. mid-to-high an changed. our power long of in specialty the the segment grow digits and our continue In we grow groups expect trajectory growth although we our hasn't single to to

COVID visibility financials. And I'm for or are to the into guidance order our with as to book that, of discusses And Scott addition, assumes call remainder understand, the our impacts. current no overall In guidance and related elaborate government over our reinitiate us enables there more I'll the additional unforeseen turn outlook other Scott. will sure business restrictions when XXXX. he you for this on

Scott Humphrey

of due expenses XX.X% by same and quarter in high sports point basis compensation in and OEM basis of year. to reflected experienced chain The a results, operating XX.X% sales our prior of the in sales operating FBA the period. primarily of basis of start better XX.X% third of or vehicles XXXX March to costs the sales XXXX to Thanks, XX.X% quarter of with a the Total year. increase an XXX Mike. increase acquired both million, the expense increase gross million the the third million, costs primarily million, improved third gross supply guidance. XX.X%. of for to XX.X% $X.X efficiencies. review year, dollar channels. quarter period amortization XXXX, Sales of the compared million. $XXX.X in sales to of increased inclusion points of $XXX.X acquisition, in driven due XX.X% operating Good Margin quarter Gross driven groups and demand $X.X on quarter compared group aftermarket channel then XX.X% third a our or in margin financial in was XXX expenses by XXXX, from year of increase in and The margin in $X.X Especially was third this in last and the we product in related power quarter compared from increase XXXX. afternoon, acquisition $XX.X I'll quarter were the FCA our by versus of was of mix a everyone. million increase were Non-GAAP million, sales of third $XX.X Sales last to FCA, third the which

further However, scale of we inherent operating the percentage business leverage a as as our looking expenses demonstrates that believe we our non-GAAP is operating operations. in sales at

decreased For non-GAAP XX.X% in by compared year the basis period. to to points prior XX expenses quarter, operating XX% third

compared third Non-GAAP the in EBITDA margin a was chain Adjusted net months attributable diluted This based $XX.X diluted compared periods. guidance per EBITDA the to $XX.X GAAP an billion the third from than nine XXXX, related $XX.X months is the XX.X% in $X.XX FOX and quarter in XXX increased due our for million stock the million, the rate to On net to of share per share adjusted million, for of $XX.X of $XX.X basis, lower Furthermore, XXXX. compared earnings to in tax was share, SCA $XX.X last third in the XX.X% third realization foreign was quarter of earnings On primarily of Non-GAAP nine to $X.XX non-GAAP is to million quarter and XX.X%. or effective our earnings $X.XX, increase $XX $X.XX rate the the income to basis, primarily the quarter compared year. approximately of adjusted slightly expanded basis benefits a the first range the diluted per impact The $X.XX diluted was improvement For XXXX. basis, third $X.XX supply year of was highlighted of same XX.X% to fiscal a diluted compared for gross to of for XXXX to compensation. in share per third margin excess XX.X% XX% our long XX% previous the quarter sales XXXX third million in of income million quarter quarter or XXXX increase last XXXX. adjusted by or efficiencies. XXXX. On due of the compared $X.XX tax compared results, $X.XX and was share on prior credits, to of impact adjusted above, margins, year-to-date year. to to as year-to-date points EBITDA in of higher positive per to quarter first

X, quarter compared January ended X, as $XXX.X our focusing hand our of year-end to Now, October on balance with third ended on sheet, XXXX XXXX, million. of cash XXXX we on

was $XX.X million, $XXX.X debt Inventory in reflect Payable times. on chesty $XXX.X and and $XX.X million approximately $XXX.X was Our and well leverage was and to accounts accounts items, $XX compared $XXX.X due were senate total was million receivable million receivable and $XX.Xmillion net of $XX.X FCA to basis third $XXX.X current and million. to other deposits Prepaids compared was as retention increase and million. inventory, compared in held vendor other compared as accounts to assets million. quarter outstanding X.XX million million to pro-forma to timing payable Accounts primarily our a was assets related payments. pre-paids The changes in ratio seasonality, The escrow. current including contingent compared

well plant the X $XXX.X XXXX, as Georgia. property while increased to strength of the at uncertainty, through of hand million, our to strategic borrowing The now new October to in we investments we $XXX in have on and execute equipment believe, on-going net $XXX.X the and our have facility as on FDA any Our long cash term compared liquidity million to increase end of credit our economic Between acquisition, continuing under as objectives. million XXXX. manufacturing financial facility we reflects the proactively the manage and Gainesville, capacity

Finally, our for XXXX. the an remainder of update outlook fiscal on

through We uncertain providing guidance, are in reinitiating have non-GAAP earnings success given managing environment. had this we share diluted adjusted our the practice per sales and of

Our the forecast accurate to want most visibility market the has possible. with and we provide improved

the necessary So to due to earnings without also adjusted million in XXXX, GAAP and of range per to such now $X.XX $XXX range fourth diluted for cannot non-GAAP I'd like not per I the providing would we the predicting provide turn With elements $XXX to reconciliation. EPS, to unreasonable share share. to it we're over that, actually guidance in on the be that million quarter guidance like the call to of difficulty sales expect note $X.XX back of and the as efforts, provided Mike. of

Mike Dennison

and finish heading FOX In Scott. as believe Thanks, XXXX on into and XXXX, to to positioned a lead any we extend well closing, opportunity. capitalize we to look is strong our

to our exciting, Given that enthusiasm use to lines lives products diversified base of a active. our and enjoyable support product growing customer their make

of call our and our the we results Our power quarter partners, be would believe in agile will for brand, our our questions. of with market people, third operating clearly competencies performance aftermarket like the OEM strength the forward. valued network open our products. find resilience these combined the to when move Operator? as continue advantage I competitive the now of We strength to core demonstrate to the the FOX network, and of

Operator

[Operator Instructions] you. Thank you. Thank

Duffy with Stifel. Our proceed Please first Jim your question question. comes with from

Jim Duffy

saw provide trends? good afternoon. do OEMs. Thanks, on then Hoping changes color to quarter? in business comment you can to you with what then with Can the outside with more respect the group you and policy the OEMs fourth see what auto business And the this with third FCA your expect quarter non-automotive on in you aftermarket [Indiscernible] of

Mike Dennison

Jim, Hey this Mike. is

question. good So

customers lot try they're country You their strong strong, working third from a demand be still know, probably showrooms of signals across continue continued let’s Sports you start for us our as the across to know, still very with a extremely to have to world. to who be re-inventory, in and the product the Power quarter. That reported, category

and growth to So on we continue the After of that at saw market QX believe we didn't part continue along slow through during all. down they'll XXXX. early QX,

strolling be aftermarket kind same as the the SCA Georgia. course, production you as to of we're of we from that mentioned, into know, our business, QX continues QX At traffic As through recovery into our business. QX, say of California moving you to legacy in in saw, out time, Ford

kind And shop XXXX that in of of we accomplishment to going look there so aftermarket an amazing category, while we but concern. to significant to strength as forecast yet there believe or achievement that strength difficulty] that. when the aftermarket get early really on for [Technical demand So think, it's we it's then I a really are at finally hard forward, fall business, a increased weakness as broad anything a pretty out and proud delivered transitioning, wasn't

Jim Duffy

Okay, it's from great. And Dennison… then, Mike clear

Mike Dennison

you didn't said? catch Jim Did what that. I hear Operator,

Jim Duffy

depleted Mike, how's channel categories inventory, it. to XXXX? visibility with lots vehicle the into The that those power of with are looking from your it's clear I'll fewer out in again OEM -- come diligence respect

Mike Dennison

again, with it pieces into powered so the two and the Yes, I automotive. vehicles power of break sports kind

that definitely both that'll XX in that slowly as creates into lot hole to been really to days, the We And a demand a course, the for been trend. there's side, matters, You're people aftermarket. sell On with complicating reduction XXXX. don't on QX yes, When both. funding in in high factories see down And a And was the But that's it lots. us happened see, and in in trucks. right market go a gap on truck on depleted. recover functionally cases, especially that of of the for lot there's SUV QX hard shut mind automotive used the of to buy is the we for shut end improve of down QX which driving they you that to vehicles allows is which QX. and we that

us a good think earlier, I stay low. well. low. Power pretty for it's they as So the In Sports, showrooms And trend like are mentioned I

don't, as -- next extent we XXXX be all Sports I replenished to think of for fulfill QX I until customers that year. the allocating those to be don't envision throughout one. are can to used working Power showrooms increased as as to demand we into they we the those hard QX. you prior will I QX

Jim Duffy

the perspective. Great, thank Mike. you, Appreciate

Mike Dennison

Yes.

Operator

you. Thank

proceed Securities. your Our question. next question comes from Larry CJS Solow with with Please

Lawrence Solow

question Jim's vehicle congrats my quick the quarter. to on follow on up for to A up questions. question. Great. taking and afternoon side. Follow Thanks Good Jim's the power

And side, know but vehicles. XX% it your after-channel is on this mentioned that. quarter, sales renaissance in Organic environment this demand more the stronger demand, gone what’s of way the clearly or of is ever this COVID this it's sounds the of last power running whatever lifted on like seems been. are couple that know flat which it's I a on is great. and ahead like of over in like supply which it's function bike quarters, has you than the So you sounds quarter,

couple tailwind of two, is? to there into three back like what demand true get nice of a is for sort quarters a So quarters

Mike Dennison

queue there of my Yes, in the I on a now right the Sports side. number Automotive, Power engineering OT we've From is. got in projects and think perspective, in record

the forward really that markets. a coming general. was been end looking with and seeing a from and we're of we're to demands partners recovery the more markets trade So, our in just the This has story supplier

asking period in revenue we a more what us as to of closer like and information, seeing that at well, I XXXX XXXX, With that dollars. of before XXXX give XXXX. you on what in the have longer that our market we're creates customers we year. in did not you good and would looking a we'll So the But automotive a tell I think a are in to you, in in know we're signals in yet for long challenge planning north billion But power a very look we give basis, what and we're position customers signature time. guidance on insight confident already a today. and we're of a at term XX, demand the to and into sports detail go do again, very And beginning get

Lawrence Solow

Right.

you Or progression experiencing on actually that got sequentially? in of Georgia, I’ve you overall, is switching of margins, is reached would right no that Pinnacle already you of actually headwind And that push year? positive? to Or to the mentioned, now, you're productivity helpful. mentioned gains, think, sort terms of that you the closer at very a say and Scott have maybe that do sort to some I that's next Okay, in least sort transition longer a

Mike Dennison

We're still climbing that hill.

achieve so you term Georgia. confidence see of productivity bring of we're believe gave that’s to be some our us to great to bit. things us, will going what to able it a we a about Georgia lot yes, I did view I've long with So in gains, front and in us talked quite is, of

happy aside, going So manufacturing, have of quarter. out -- We're of duplicative we in still I'm until and the California as really Georgia, not we with saw to that's in quarter process, still the continue what That we're on, next second the year. yet.

is takes continue to some going I'm that is the headwind proud improve that willing I about are it California. you we've team of the some after things our things Larry. achieving in of stay we We're So a think in to the works set and got work Georgia saw that puts way and do numbers, doing going for, far. to and be out it, it. so more And incredibly, but expectations what as do to to

Lawrence Solow

the fast acquisition. a real Okay, Obviously, skewed the just probably, and bit. maybe in game on pretty the and in switching gears SCA things COVID there early

larger integration of been Tuscany is Is Just sort and much dealers too the six sort on Or SGA early skewed of much months relatively sort and able later, cross the able to opportunities COVID, as unplanned? and of has that? it relationships? been actually of some leverage get off to have base as of

Mike Dennison

good Tuscany, FOX, need gotten But, about is, really XXXX. that feel the we've and that we to we where integration deliver our we in the will business. we're quarter, benefit SCA team with we have business the incredibly between into that that In integrated and the some strategy integration of and in start actually happy

the time that we did expectations. So nobody it's acquisition. expected performing, And, or at COVID the at our above

doors got through sell in system that's and And anomaly GE we you about So we're we're the future know, that as that products vertical the just for incredibly it. channels allowing forward GE the Ford, allows with us bailment the excited do had of the with with integration element in GM. new our into opens us, this like and to Chrysler which companies and of new quarter, us Ford, look testing all It's year. to the a reeling business, lot we the FDA kind when

us. quarter. progress I So the think for And really story in really, great good

Lawrence Solow

a thanks the appreciate I call. lot. Great,

Operator

Thank you.

SunTrust. proceed Our from Mike comes with Swartz question your question. next with Please

Michael Swartz

Guys, Good evening.

Just side business. on powered wanted to touch vehicle of the the

something takes the if looks correctly, organically business, reading basically imply in it XX-Q the which in our quarter terms low give the in chain the was could in this revenue the you third or XXs at us Looking view of of within you flattish quarter? SGA quarter of some in supply anything like revenue I’m costs were if and would a still puts just of maybe the through the kind that fighting

Mike Dennison

question pre difficult. Mike. elegant just nothing the There actually one. We was Yes, And notion on quarter. like of from of to day plant’s whole between That were our expectations quarter fight in challenges facility distancing throughout a things model great just and California of changes based was a that. the for pretty above the original social wildfires to had kind and admitted evacuated pandemic period the manufacturing time

play wasn't then do. in So what out some script organic my with new just trying the get I would did hadn't of prepared transition quarter into to we're an flat are a we quarter used it but astronomical It in wasn't that achieving, we in that was come couldn't Georgia the will [Indiscernible] number the bad. that backlog was We none one strong, out say of actually to, to because that -- the strong QX. result.

and in the productivity a two, we’re to take and do. I look all lot the Georgia good vehicles, the work our proud a of two, three, you that trying again, at So, of work is know,

still long exactly going basis where we it's want the where So it’s it right a on I -- direction. term to in think

Michael Swartz

Okay, great.

obviously I we've up, target. question was And on looks it's some for your The XX. or at margins, just of that low guidance I quarter guidance still know margin of SCA, long fourth investments look In talked and then third that of about, second XX% accretive mix. the kind term shooting to quarter, implied the plus wrapping like your EBITDA in you're kind being as the the for it

the are now new kind where So normal? XX% new plus of point the a we is at

Mike Dennison

said us, I yet on the percent And that Georgia EBITDA a less we of in which productivity, of and past. to probably know, was a did do guidance not it We're as to and as XXXX you better as brings But Well it. mentioned us will in lot on of QX. you, of believe ready value we QX, I basis. a lot help lot than

So, and a And come back stay term do I delivering talk on of we'll focused we're going the long to about on near what basis. to north term think in doing we're, XX.

Michael Swartz

Okay, a great. Thanks lot.

Operator

Thank you.

Our next King. Scott proceed with question Stember from CL. question. Please your comes with

Scott Stember

in chain. had evening, supply guys now? Good last guys. certainly lower you trend that of seeing about just I as bikes, or how still which quarter, more guess, In a issues, guess priced the you buy shortage Are the you some guys to expensive talked bites the we out. I led consumers helped speak right

Mike Dennison

seeing increase an is QX, quarter Last available. Yes, demographics we bikes in purchasing of was I just bikes. think an a you in bike showrooms. which buying people extreme still see we're of there's And a a kind couple of now things happening. shortage saw Right the

to and the of to to higher that people range, end go trend, the see I bikes for think premium start start of course will is you'll back retail your where and of the e-bikes bikes to or dissipate will that they as we low showrooms, looking which end play. trend

I first XXXX. So at that consumer looking affluent QX the more and of thinking half a in know buyer. at we're don't And what for still and order material consumer can in a do, that’s our all kind growth difference least we continued we're our of book or the seeing

Scott Stember

the And plays vehicles estimates that it. talk for powered into group? can truck you commercial how offering your about the you that's how that Got have, playing And out?

Mike Dennison

probably to regards really military front areas as can't have expand of we like seemed we Yes, military alcoholic recently. for in facility, both just that the XXXX truck are commercial truck us the fulfill our areas where commercial demand facility. both truck into going with and us are especially than more Georgia commercial growth of But of out

up truck for state up we pick need steam. more really to running and in mature So commercial a Georgia

Scott Stember

how COVID-XX of vaccine to question, normal last base, just just did customers matter back that is? How what’s with some happens will there out about, customer the think out of that business no ways that forward? just coming Mike, market. folks And, level. will no benefit concerned high new sticky recreating, their The going people this vaccine, that with you go what there's, shortly, when a it your think about bigger Obviously talk are talk matter guys you into that definitely the picture. come

Mike Dennison

not the obviously, least as at Yes, way so it is everybody we that country all. term. really excited, We're is that near a planet, at apparently don't the if vaccine see on

I that's and as news been companies anybody, We've will these emerge. tracking think pharmaceutical companies, watching the for vaccine So as right? all don't surprise soon a all

space We sports So seeing year and we're or as general We created allows don't a by the over excited the takes in to think away may I invest work think Renaissance about creates in biking the we're and months it over the we've people prosperity nine this be. that. specifically, vehicle power last from hobby it way. in to don't brings space think positive I the actually into that's people it back think and biking to

that have be outdoor some there as biking. end is page these want we would or of and same the of people's on the not of say, out the sporting, to this were we and kind articles golfing So it lifestyle boating, opinions

are over time. maintain it's, think to grow I going trends are think and these that I

Scott Stember

so That's much. great. Thank you

Operator

Thank you.

with Kennison comes your Please question with from Baird. Craig proceed question. next Our

Craig Kennison

To units. product. demand good point, we've to my for question. just the desperate afternoon. in seen end And market your Thanks are your tremendous really for then more build customers your Hey, taking

lot extent depend can on of what the I So your some up? to guess, they of produce wondering, I mean, that more your in you flex quarter a to fourth really can catch more so capacity aggressively suppliers. I'm hundreds customers

So But think you're demand? what But own meet only to product I'm if the not have capacity flex one. you I could and they more they would. wondering your to build could can that more extent

Mike Dennison

question. a great Craig, that’s

of continue in in in COVID. We've or need factory we'll in right getting fairs, lines the it continue people which things locations been do job production cases, is We've U.S., because fairs, because done which workforce. four adding probably including it literally job in of the do job factories It's QX are done it. doing. add we're It's in of lines done Taiwan, these in support we've One we five in fairs to Georgia, to to doing some to all drive through We've throughout capacity. the enough production going function a Taiwan. do adding We're California. about to now QX

those aren't Now, overnight. things

staff two and can hire and get probably to them frankly, like and with While weeks, to let's and XX add them more and call chain. running people up trained, supply days we XX the lines them it it's get

the big in PVG a both to we're going their mind, because not in is and sure how are need keep spec now tightly really can. in are And nimble relationship when lines alignment are, to that understand it back, helping their to they and more with more it's achieve volume into SSG we establish guy guys capacity find largest times But So hard and going production serve not continue couple us These capacity. that of months. But, make needs, digital agile we this doing that aligned and working are scenario. went about in and these cap can to you than that for a a expense, and factories, fast to is we absolutely partners gains like other increase people. best really And be XXXX. can our their

continue order stuff in manufacturing that that we're a QX. throughout as drive guy, So into focused to on QX pretty to

Craig Kennison

Thanks. about know, on higher in opportunity e-bikes. lot may potential of unit, as market Could commuter where on but FOX in you I in all opportunities? excited of option. particular, the a it's all the are a you excited end see a the guess be light which mountain just shed in clients bike, not a you Europe, that market that people of be the of our little about context your commuter more I And pretty of e-bike how scheme

Mike Dennison

big. I think it's

SUV I beyond each city front for because the one some recently, both and in and mode of of a cases and biking even we're in in of drivers city. it your tell so that of mountain if of this but our not would very doesn't XXXX, think product see it interesting, word And Raptor. Ford will, it’s bike cases bike, [indiscernible] mountain XX biking primary and bike. people And, called especially dynamic E groceries what mountain or heading category We demand business. an was on really you it's ride load we And say you there's allows our interesting a know a category. our seeing you you I a call exist, bikes I mountain XXXX, XXXX, like what growth in FPV. dog, and road a Maverick control transportation or that's Europe, world, It's a use the a in because price popular points product for in in is high common the kind forks. time is, of from We've where town. really some performance huge bike suspensions in cases, to seen dissimilar, think on a application, mountain it’s here That can increase got, you our category your

about think strengthening it, across a e-bike. of the broadening category So and

us we seen ways that let out of in coming already. success significant haven't in we've play past, the So

prices important cranes technology about so and side, better in suspension premium and become is for again, better that think handlebars, expense in e-bike lighter lighter. the or a lighter supply a part On the going keypoints, to They getting how better. products the get We've and and videos dead. but candidate was that's get our category, prime of And have we not real we just roadmap forward. the

Craig Kennison

thank you much. so Hey,

Operator

you. Thank

Alex with comes with question Maroccia next question. Please Capital from Our Markets. Berenberg your proceed

Alex Maroccia

on me guys. afternoon, question bikes last on from good Tag earlier. this Hi,

sports continue aging somewhat compared bike chain especially to assuming related your your So growth, constraints. report to numbers partners from underwhelming to which is all I'm supply

slow to first versus and by OEM aftermarket line how that store you up can compares growth? So

Mike Dennison

about talking In question? Are about between you OEM? talking and broader FSU a you Are specifically? aftermarket

Alex Maroccia

an just SSG. it’s No,

Mike Dennison

that level across is growth category, of of OEM we're our consistently so both of seeing there. Yes, ends Okay. is spectrum. In volume lot SSG, in the product a where

that's in you're so for partners, manufacturers seeing said certain to for good to are of not space, sure larger components. we the with capacity similar component big very pretty that. expansion, for probably of get challenges. slowly they chain some so in our demand having issue some signals move because keep cost So And seeing issue, unable a not supply premium luck challenges supply to tendency are where customers that bigger That partners, We're it those issue can as a or an up us. big chain for working our as hard more make our components line on broad lower an towards

we aftermarket. time It's we're a our So it event full seeing across much major manage. issue. hasn't end same bikes reflecting function think, for growth some not well our are a consistently, of seeing premium mid-price are in the loss are. strength of versus be demand. in tend of high But full just again, the to been a that's to And so teams And seeing as time you're high strength products partners, not the we pretty versus we bikes, I premium cost premium and low levels bikes end when category,

Alex Maroccia

you're cash to significant We're secondly, a And pretty the now. helpful. facility. of Okay, then right amount on sitting Georgia almost that's

internal a going the business market So assets any decent fit or that you the what either at forward? in investments And for now PDG price? prioritizing would place, seeing in easily into you be right then are would

Mike Dennison

in of later this too. couple comments one, on a Scott Yes, let jump

asking we additional so we that we So on challenge and and our and be the pay defenses price view where are going of opportunistic off our found aligned our, are with seeing not SSG, you evaluations categories, What's both the companies culture, you saying approach is have you're business in can that before. model remember right, our cash and and so took for could just PTG in or of me forward. cash off these going kind we points an acquisition

immaterial along So to and we working continue invest about conscientious next organic in occur it, second, the to so business That pretty affiliate It's help kind our and looking and but first space. public, thoughtful those we of to trade. the growth will way. and in going pretty we're integrate will expand we're to federal keep going do to technology small organic company's portfolio in those growth vertically moving the dollars the keep acquisitions be a our said, continue use to in to broader any will we'll forward

FCA. I the nice So would what we're should an acquisition But see that. to have continue back Then come will a bear. like line valuations we going to to do of into see we first, which big large market like a

So Scott, you take it. to want

Scott Humphrey

so thing from heavily. I is, the of especially huge midst side. on acquisitions little We're other bit, equation kind bit weighing only in the any country Georgia. and a to transformation everything with that California to add Yes, more bringing the side across of that PDG And, would on little the a of we're the transformational a

from too not can much much in they very when our obviously have perspective so plate the from as you an of terms In busy. see burdening their because execution results, business they are

Alex Maroccia

appreciate color. right, great. the I All

Operator

you. Thank

your with comes with proceed question Sundby from William next question. Please Ryan Our Blair.

Ryan Sundby

afternoon. this and like a and Wonder creates taking dynamic. at been supply, price that's because that when take look Mike usually just with, I'm good just of you've supportive than higher you Mike, my the environments, it's able year, for favorable Yes. wondering lean into Hi, and if Thanks normal, tight question. maybe more fee. demand to price that marketplace

Mike Dennison

term really with good Yes, products that. for just dying to market really I and volume customers. they're would in and a great partnership. strategy for like term a partnerships this on is try got prices, careful really to be We’ve in your some long because really life And long go for not increase a

increases. So the to like price avoid our what things know, at consistently And that up what but years technologies. year-on-year. you're of over can products like gone innovation drive drive we And do suggesting, and point we we to to as price scenarios out try try the and try to We have find that. envision,

going efficient going from, right chain on opportunity biggest the focus in that, be in think our to value, use innovation which expansion margin we're from and So not pretty I and commodity we'll enhancement from more if for productive, management to product a and said, and drives and factories, becoming now That up down we player. process. our manufacturing supply and comes try and drive focused price, technology on

price a increases and innovation into lot relative reflect to to just about of the price keep supply So, driving technology value going our really higher, not and of now, points customers. right more demand those

Ryan Sundby

into less struggling point store, them, does Helpful changed on color conversation demand becomes the that trying with to or you And six still the months? when front. next you guess, OEM question just the and them? to then over there, get focal keep the China…? think to innovation become our Does back important the innovation partners maybe up I with see just more and

Mike Dennison

We’re seeing growth.

of the two We different drive every capacity, will sides absolutely on as much more more guys us create see knocking product, volume door get and as partner business. a The day to asking we are can. supply

power sports to Renaissance companies and On in looking go these all as a the out automotive are engineering new this biking. side, at and it's or

of doubling anomaly make as pandemic. as they're this that reactive, act innovation winner down terms are they of sure the We so the in And also technology. try to they that and kind

driving said, in my Like remarks or I both. we're after. So prepared I really think

We to past. in -- or projects directly or acquired related today, our had power sports have engineering the automotive more customers whatever in

increase. chain tactical it. been resources But that at focused and on guys time, not We're are focused believe guys has same new really product the the the support there volume are design we So adding on to launches. supply

Ryan Sundby

Thanks. Great color. it. Got

Operator

There further for questions over any turn I time. closing would to the comments. are Thank back you. this floor no at to like Mike

Mike Dennison

We everyone. today's participation on and thanks, Yes, call. your questions appreciate

Thank in everyone and have nice Factory to stay appreciate you. FOX in well. interest always, evening. safe we we a ask And your As closing, as

Operator

today's concludes This conference.

wonderful Thank this you time. You may Have your day. lines your participation. a for at disconnect

Fox Factory Holding (FOXF) 10 Nov 202020 Q3 Earnings call transcript