FOXF - Earnings call transcript Q4 2020 | Fox Factory Holding Corp.

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Operator

Good afternoon, ladies and gentlemen and thank you for standing by. Welcome to Fox Factory Holding Corporation’s Fourth Quarter and Full Year 2020 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded. I would now like to turn the conference over to your host, Vivek Bhakuni, Director of Investor Relations and Business Development. Thank you. begin. may you Sir,

Vivek Bhakuni

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

the Mike. then will followed the provide review by then year full closing Scott update Mike and financial from outlook, First, will remarks business quarter results and

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

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

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

and performance are our it of today’s that on evaluate are earnings to is an most release, measures Dennison. business financial reflect In the ongoing we that, our has basis. within appropriate to we Mike their business refer which to measures in remarks financial Reconciliations of our included over better these measures useful financial posted prepared addition, release, GAAP metrics these to non-GAAP will our as in press call today’s where believe non-GAAP been And CEO, with my pleasure our website. the turn with directly on comparable also

Mike Dennison

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

and soon day, focused we XXXX As all a challenges forget. only of that a on advantages, team’s anticipated remain year has performance. year know, not highlighted into results pandemic, also competitive ability and well-defined continue year and health to couldn’t dedication not to we strategy. demonstrate and Through fourth the continued and and in people and Fox’s every we execute but diverse themselves present was our amplified our communities. have both serious relentless well-being our a we focus, pandemic our the reflect will quarter Almost to management The our our full our

key on challenges. our share differentiator, growing in $X.XX these quarter highest-revenue has are times, a We XX.X% of our products, reported innovative the by The meet and versus we per was performance sales become $X.XX, fourth adjusted offerings set our believe, product agility fourth responsiveness availability quarter meet expanded and earnings the perspective, challenges. to significant share to report our our to unforeseen of demand million, our in last of team’s Our compared product wide-ranging the year. of with history. of QX performance-defining driven increase XX.X% strength non-GAAP pleased and and fulfillment today’s an diluted based market ability portfolio to in have that we combined $XXX.X perseverance, made am an company’s From increase I offerings, supply team’s of year-over-year. ability XXXX quarter chain profitability of a

sales Group, quarter a Sports ever take XX.X% at with for were revenue. Starting the of best look us business. Specialty our Let closer compared up making SSG’s quarter to XXXX, product this fourth

grew over full the SSG XXXX. year, XX.X% For

by operations members our relationships expansion a helping Given tangible team and opened controlling another were our ability capitalize backlog capacity, SSG restocking volumes. I an line base meet EU center. to These rider intangible products our months business, manage the we To fork Germany, managing not strong for strong channels, innovative flex our few production quarter shock customers sales costs European we customers, our and an of OEMs past penetration in service unit to execution successfully deeper and trends. new on but serve facility our to growth thus evolving our which had say our and demonstrated to operates of with better at unprecedented we Through represent distribution OEMs. cycle. and only expanded proud also able yet order across record am as very expectations,

In mentioned by addition, the in XXXX. received strong customers That established of customers end XXXX success well wins were foundation X had QX alike. a we as spec and into we our moved

our at and say, intent have be by at received of continues the forks to and multiple on the and one Vital recently for you both introduced what with me survey design innovation purchase three As and shocks. to innovation. Marzocchi core success, on MTB am to Building brand conducted for we is respect Pinkbike, happy number heard announce Based FOX awards number the XX-inch I our do. always that fork to

athletes wins and products fourth Going capturing back to in happy racing, XX enabled world X podiums, to quarter, roots I racing am our at XX our events, of the various our dominate championships. to that share

PVG of Group, grew Powered posted another strong to fourth Moving XX.X% as Vehicles quarter on we to our quarter compared the XXXX.

What XX.X% our from from year, of U.S. sites key results is For the is PVG transition with the high year. very are that factory we and truly located fact of suffered that the rates achieve the areas the full COVID-XX to able to PVG full manufacturing typical want the impressive that the during prior highlight grew challenges. spread were partial versus these interruptions ongoing high shutdowns several levels was the factory growth second or the XX accomplished pandemic shutdowns in XXXX. in and This fall supply created days over despite I the quarters. by of and first caused that in own also of caused absenteeism our of chain year

and automotive Speaking our confident quarter, ability of the finish on Georgia production transfer fourth remains to second of to which in of end quarter efficiency expect drive improvements our the XXXX. our the successfully before in we facility, OEM we we remain lines, commenced Georgia and schedule productivity. large in

closely demand for Sports line the transfers order adjust Power the of customer increased our need may customers in timing and are commitments. meet However, monitoring we to product some to

will experience duplicative is complete. continue the we As we have fully cost previously transition to until stated,

we to see improvements However, in expect second margin this the of year. half

saw all-new relationship anticipated OEM Wrangler eagerly with XXX, the launch showcasing our powered QX of QX with the This began Gladiator launch the to in Jeep, Jeep shocks. of partnerships, of FOX’s Jeep solidifies VX X-inch-diameter further which our XXXX aluminum-bodied, the Turning launch Rubicon. the

the recently Another introduced. third-generation all-new example Raptor, which Ford was is

genesis truck the know, you all market. is As the of performance the Raptor

it fact Raptor One is suspensions. legacy used key that, innovative performance-defining truck, as can prestige commands daily the Baja also gives of race-ready thanks elements and while be to your the driver, the it’s a that our it

suspension measures year, For developed Raptor, X.X-inch Live an second. automatically Ford speed a the which exclusively times in Valve all-new revolutionary the train for we this model XXX

in pinnacle Moving accomplishments classes, our UTV pleased performance, McMillin suspension Luke the induction on naturally the the say, XXXX, overall in am member. top with our are products aspirated class proud X in the world, XXXX why positions to all Baja classes taking single swept UTVs, X top the racing with of to class, Larry combined. X showcased the In our X the achieves place. top I FOX all accomplishments again class the taking where FOX sweeping XX of very XX Roeseler wins, of with first every and forced In and team developed. we our Needless once the UTV spots top and

navigate thrive shown any also over but not will call team environment. the in And we Our turn to Scott. that, with has only I can

Scott Humphrey

begin we Mike. and quarter over in afternoon, fourth in million, XXXX our the financial increase million of of Sales fourth guidance. $XXX.X year quarter of Good the quarter full of I’ll and were review by everyone. then an results going $XXX.X XX.X% XXXX. sales fourth will Thanks our versus

sales full in to sales demand Sports the the year, For to in aftermarket compared million million a The driven year. and OEM versus $XXX year, increased high $XXX.X prior quarter by period in both increase by XX.X% in the channels. Group last same the delivered XX.X% Specialty the

year, SSG’s sales grew full XX.X%. the For

in SCA. to the Sports the Our XX.X% from increase as Powered primarily XXXX, in Vehicles of growth a delivered due as quarter sales business to fourth sales higher compared Group Power well

primarily XX.X%, of For to the grew full due the year, addition PVG SCA.

declined of fourth year-over-year. a gross the transition. QX basis decrease XX Factory’s channel to X% result of from versus period. were driven costs pandemic. for impact as of was a COVID-XX XXXX QX the Fox during of year in XX.X% mix Non-GAAP XXXX. Georgia approximately decrease revenue gross basis the as XX decreased by the margin the well Excluding was customers quarter down SCA that to in The into in point margin shut in during in by duplicative approximately days points OEM perspective, XX margin near PVG’s PVG onset due acquisition, XX.X% XX.X% the facility the Putting shift prior XXXX,

related year-over-year by incremental channel XXXX a points amortization on inclusion margin million of of Total For increase an of operating dollar in by and SCA increase acquisition-related year, in due of as as driven to gross was prior expense Non-GAAP product million, basis than basis quarter primarily in margin year, $X.X in costs million COVID-XX. sales the $XX.X costs the SCA higher transition $X.X The XX.X% the well quarter XX.X% and of offset compared for and the basis $XX.X to the the costs fourth higher sales operating year. points costs XXXX. The $X XX million. expenses of or to operating better expenses year. XX acquisition of full of XX.X%, compensation gross increase was mix, our were was margin compared also the gross was to XX% fourth last or in of million

decreased expenses our operating as a XX.X% the by However, looking compared XX.X% to at XXX operating points non-GAAP to sales, period. prior basis year of percentage non-GAAP in expenses

sales. or of SCA sales For to expenses million amortization year, $XXX.X operating total were of to of full XX.X% of operating primarily and compensation inclusion million, costs costs the operating of $XXX.X due or of $XX.X expenses million million. $XX.X million the expense in acquisition-related XX.X% The increase compared $X.X was

and innovation up XX.X% foundation to lay R&D and by investments of million, $XX versus $XXX.X were operating approximately million support of in Non-GAAP in In new and expenses the personnel million or driven growth. XX.X% $X.X increased future or addition, expenses sales product million infrastructure prior to support the XXXX $XXX.X G&A to sales year. our respectively, were

deduction margin certain EBITDA a of XX.X% $XX.X and primarily is quarter year $XX.X the higher the general our expanded to and to XX.X% increase margin adjusted positive FOX million of For by we XX.X% the same in quarter or offset quarter of long-range for quarter U.S. the costs million diluted was million previous This guidance impact our basis per leverage the net in points of XX% the of versus costs full the a optimization approximately growth. benefits to share on related increase fourth On XXXX, XXXX delivered on of EBITDA The Adjusted margin quarter quarter $X.XX compared higher lower full our million, the stock-based in the and GAAP XXXX is income We XX to to as of excess slightly of quarter to to set $X.XX by higher sales, a year. compared infrastructure million compared basis, from a basis, adjusted SCA results, EBITDA XXXX. activities. basis, a per of due foreign compared prior primarily was earnings to $X.XX in EBITDA future non-GAAP effective bolster million margin for year to of the Furthermore, points tax COVID-XX last sales prior quarter X.X% OpEx year. The percent income increase XXXX incremental our fourth million, rate primarily of due year EBITDA as the attributable related to increased in to XX.X% share million diluted our due Factory On Non-GAAP or last and XXXX. expanded rate the fourth per full $XX.X of compensation in year. in for to pandemic adjusted to per lower is the the the to positive share $XX.X increase compared was and results. in sales from impact $XXX.X for adjusted in $XX.X from delivered period. year. to Fox up fourth requisite in XXXX full basis XXX prior net XX%, administrative or FOX SCA fourth in XX.X%, compared and respectively. than earnings share impact fourth diluted year million On XX.X% a $XXX.X $X.XX of XX% the Adjusted of to $XX.X of the fourth and was the $X.XX an year $XX.X to EBITDA $X.XX diluted XXXX.

For $XXX.X million, earnings share million XXXX. of compared increase $X.XX year-over-year. per income an adjusted $XXX.X diluted fiscal the versus fiscal the of year We was $X.XX non-GAAP in net year XX.X% XXXX, XXXX to delivered in non-GAAP adjusted

increased of $XX.X was Now compared January XXXX to ended million end debt total to compared quarter our a in million XXXX, X.XXx. of was million. payments. other timing payable our in million. X, with reflects balance to year million. on on compared XXXX incentives X, to to approximately assets including inventory, deposits pro other Accounts Prepaids chassis million. escrow. sheet, $XXX.X in items, assets receivable $XXX.X fourth leverage forma Accounts prepaids primarily retention was and on as The hand of as $XX we cash increase $XXX.X to and receivable outstanding basis and And million to held million $XXX.X our contingent ratio focusing $XXX.X year was And million. million. was seasonality accounts January $XX.X compared to Inventory on accounts well to and vendor current SCA-related end on The XXXX $XX.X as $XX.X increased compared $XX.X compared million payable due net current changes

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

diluted Now turning of sales range million $X.XX in the to share. the XX.X%, margin we non-GAAP in to first earnings range to XXXX, the guidance, adjusted for XX.X% $XXX per and of EBITDA expect $X.XX adjusted quarter in the million, per share $XXX to range of

to range full and tax $X.XX in earnings of The For in of XX%. XX.X% XX.X%, in guidance $X.XX. EBITDA assumes the range year per range the the expects to to adjusted range of billion, diluted $X.XXX the $X.XXX share fiscal year XX% company’s sales margin XXXX to a rate XXXX, the of company adjusted billion non-GAAP

expect fluctuations to in tax due to variables, stock continue option the quarterly rate exercises. certain occur We during year like to some

We tax eye policies to any will changes new adapt on close also keep federal law. the in administration’s to a

of X% to on sales, be remains of expect X% Georgia in completion facility, the which of primarily We range to to for XXXX the CapEx due schedule.

sales. the to without the providing it provide term, and GAAP like such would difficulty expect efforts due be rate note actually of predicting CapEx to EPS approximately the reconciliations. guidance also on as guidance we X% cannot unreasonable elements that to necessary not For we provided long are of a of I

all the is Finally, business know, the as we adapting new normal. to world

pandemic. with We continue our evolving to and work overcome to challenges closely the global presented suppliers our customers the by

However, we created by of our on COVID-XX, especially supply and impacts remain conscious chain the of those the both customers. our risks

we touch optimistic we remain our presenting about will year, highlighting in obstacles may guidance prospects upon this about the shortly. which may without face As we positive feel XXXX, also as cautious Mike

to updates of the our Mike. back expectations to quarter evolves, incremental environment for to that, like global regarding the I call each turn plan As With XXXX. we would provide business understanding our over

Mike Dennison

was but more both as a resilient, Thanks, Scott. exited stronger a challenging, and XXXX and the closing, we In year company. team

all and first our growth and our extend time, the momentum organization capitalizing we Our In for in nimble, product XXXX, revenue is learnings new on our generating the more maintain We for of $X long-term leadership. agile through market billion the value sustainable past will continual year. categories, from innovation confident we existing that to surpass in expect and feel and shareholders.

that also and will that confident in are world be normal to and are much we progressing, will the excited We future, once vaccinations the return are again. safer

and very impact macroeconomic uncertainties headwinds However, arise materially near and that could we term, of potential cognizant remain performance. pandemic-related our

on focused significant situation safety supplies. and well the to will OEM continuing possible the we as integrate and measures materials automotive continue related shutdowns highest chassis raw as and commodities especially Thus, safe. to and are while or to We like price issues our aluminum accordingly keep healthy in steel employees fluctuations to adapt monitor

been FOX. part his global company Chair for XXXX. the since shareholder is his much-deserved wish independent He several customer Mendenhall the in and I lives Dudley Operator? a become we delivering will lastly, to announced will always, our of Larry all base mentor the Larry the his will Executive FOX successful generating total then of return during today active, Board Enterline, success, enjoyable. now I and CEO, at Directors; company while to Board, growing company We Chair our of like has the instrumental best the been To the has open our of Board decade, Executive retirement. call private-to-public questions. continue of effective my goals the as prior making role and return before exciting his expansion, an X, transition through has And became Committee. Chair and what the Hlay over Chair, integral continue April our XXX% retirement for first as acquisitions, As from of the and against tenure. the as been has a the Jean of in Larry Audit has would CEO creating almost maneuvered

Operator

from Larry our Instructions] question We first Securities. CJS [Operator will Solow with take

is line Your open.

Larry Solow

growth Great. Good just with environment. a coming segments? know just XX%ish of – don’t a maybe on but color and or in remarkable good on give us of you by targeted can year by between the really a segment, I of afternoon this how see you growth on very really Can two you challenging and bit congratulations guide a the category off you year year out little shaking SSG, maybe sort

Mike Dennison

are Yes, say, risks both throughout sure, some opportunity. growth Mike. with We associated to seen has Larry. This the and to past both challenged bookings XXXX. having They growth. with remarkable see that SSG, as I’ve some in segments that is significant said go continue different you

so that, of view with maybe that the in year, challenges. half supply good caution only And of pretty chain have we a the back the

we’re as are bike a well. you know not very bike, on We components full the

could or other cause push-outs that And so manufacturing, for if components bike push-ins affect us. of

numbers the long-term With to be also right a rate challenges both expectations and we at of well consider at in that in we But work XXXX businesses with compared perform about in guys will now, of press, PVG, for have heard chip big guidance the and from about that not we issue guidance. other the that have in But to believe it So perform be growth the that the the of talked and in we to in year. kind quite relative the – SSG a our automotive growth, be of you’ve our Georgia. we have coming half opportunity as growth actually what and better. we year to couple look thoughtful to about kind for transition past, well if for the the through as that have continue means things XXXX to to to chassis conscientious volumes that some automotive, in great back to relative want of oversized

Larry Solow

is would maybe, fair order concern it So, than looks book demand like it sounds the or say? be there side if and the that might on your one like be more to what supply the challenge today,

Mike Dennison

That’s say, fair Larry. to

really far, together. supply isn’t problem about this is so that think demand this chains come those pieces I make really to and have all a all it

Larry Solow

Right. back your little like, And a expect about your it briefly. facility know full in And margin comments, versus actually your prepared half guidance, I QX your year you of and mentioned from full bit some numbers I the improvement talked that that and you look Georgia year guess guidance the higher. are you in the year does –

hurts just of some So And little trying a Obviously, but probably gets the that. from idea lost is whatnot. going run. that’s COVID you get and excess shake short feel I the bit benefit the to inefficiencies shuffle still increasing out. in getting an a you demand, margins to problem, are it high-class how with am in then your hopefully perhaps But which

this where to of move So, maybe from And little sort out short see to on if opportunities the more importantly, more X we Georgia? look you color years long-term, X like a run?

Mike Dennison

I’ll to in But of in terms I’m shift still that happen what still of good little a and to committed getting an – Scott margin here – year. my improvements and let remarks, question And Yes, things Sports. well we back in Power improvement relative it’s a half we example comment in to as committed to as the are there margin. prepared the in see

our of reported that by kind who want We’re bookings business, from the business. fluid we that year does and record or seeing which move have nature the of – of impact some you the in to know, that customers some as level

factor, come start hopefully, change margin and through working to business it relative QX are doesn’t back COVID, into although the more get to then, we to very now, improvement right is expect it our was it to But manufacturing here significant So absenteeism. us the and where macro a but can we we significant the in normal factor by abate, when to year. in those for expect we with expect be not that level, we a U.S. a to

do on want you So to Scott, margin the comment piece?

Scott Humphrey

Sure.

through improvement the all get in I been as the transition, and gross the lines on analysts are asking expect. Sports margin business and the think still of the traditional XXX moving we worry know we basis the at, have still once I well. for from while for full move El the let’s looking that think have between you through say, legacy shock points as of are over a business, moving kind I what and obviously Power we XXX, but we business PVG, Cajon we about transition, to And

still to ways which robust. That do obviously demand time. and we a incredibly in at transition, hard So very have meet is that to is go demand same the customer your

Larry Solow

that. appreciate guys. I Okay, great. Thanks

Operator

Duffy to will Stifel. And move Jim we next with

open. line Your is

Jim Duffy

out are sports, OEM wishes Hi, to a challenges about and I’m you year impeding guys. to of that issues visibility best imagine just specific is want are that backlog I the Dudley. the Can that, that curious, start into And Hope and the you congratulations are to business? then bike you you other all provides call you? currently in there specialty visibility well? the business on suppliers. listening. Larry of they backlog speak to have in the doing Do guys. now runway something seeing of half well My Are flagged more I that related that right or that happen? could perhaps bike that you second

Mike Dennison

Mike. Jim, is this

that. listening, for I’m They Larry the Dudley. so on they and appreciate So thanks are comments sure

or if into you book, In probably that backlog side the will, terms equation, of of other SSG, we’re order seeing XXXX.

components. and So times, demands bike times, what business, talking able XXX a if with the we’re our based some lot to, XXX, north capacity, on the reports, view We’ve lead especially. are to times back down. going even days lead current a the much that are about the in reading been further extra in of been bring XXX, seeing up We’ve of you’re lead

supposed to let’s XX but XXX closer So days. where say we’re days, we’re a be not at, lot to we’re

a So on space. pretty of going we’ve in got good what’s that view

And this look stuff so assuming and think really stays the year strong. macroeconomic I all year at as intact, next – we we in

out to those just call all forward-looking as bikes. as to I on vigilant get now. on that of daily be components challenges, today, than want out the issues, a we us, sure business terms our of for what do In complete not basis are anything to need specifically they so other components we through to the a call to the and right to it pull dealing push of very chain on our to basis understand need concern capacity a nothing reinforcing working we that that right ensure suppliers, support component seeing with and calling and supply out get partners making they OEM the specifically all their

way normal so have progress in think improved I to in at back go least Things a to I net of last from But people got made to have a environment more long the get a a perspective, a couple of positive. lot quarters. that’s we’ve think SSG. visibility

watch we’ll close. it So

Jim Duffy

curious just question to strong the SCA, inventories chassis terms given and speak supply, guidance that your tight. to that? I’m What’s Okay. super and on if Mike, And for you’re support then inventories quarter of in the And seeing how outlook availability could first lean inventories another of you delivering what are? look path on to

Mike Dennison

Jim. good really questions, Two Yes.

is inventory our So tight.

a we make wherever much theme. as pretty shipping We’re can general

like the really challenge QX, the in do in So that factory is. the kind give we think to to I and of In that me. what plus XX round numbers had deal massive of us with days in you’re hard. that a we to improvements. We’ve days we’re sounds results had, on if trying you to these X,XXX had numbers, couple XXX In as about of In QX of or you cases lot deliver issues just our creates help that might a means XX of days XXXX case And a us some XX, you that math a revenue So unproductivity that QX, give that’s quarantine, means QX. number, to alone, or working lot, as sound company, that had a headwind right? per in is And your reflection you QX, And going XXX. that, not a a we let me what take, need. if factories. have like get production you COVID give of Jim, caused minimum. But that has think abated hit some we

it’s So close do on but first to a COVID. to of help QX We seems in very and and think challenge a a this half bit the going year, in QX. better, us for us little still doing be keep eye that’s we it

Jim Duffy

Thanks. on SCA, Then Mike?

Mike Dennison

yes, And good SCA, then on question.

we SCA, on partners. biggest our very So are working with closely

chassis are know the that You chips that the you short. that require in news hear those about

we’re the the first to different good. year think creative need. getting of the So and looks what working We with automotive we provide half suppliers

comment half year of back the good. year, through the of But to too half so on that the yet. maybe working still We’re early looks first pretty the

the of majority to relate the solved we’ve issues think us. as I would it So

want We sit on at quickly but least now. first good can we now, feel the from Things change we it. half. a where eye good close there, to we about So keep right feel

Jim Duffy

you. Thank

Mike Dennison

You bet, Jim.

Operator

Mike Truist we take with our will from next Securities. Swartz And question

Your open. line is

Mike Swartz

to I and made guess, follow-up the on afternoon Good Scott, comments wanted guys. Hey earlier. just good you evening.

singular talking business? Just that Georgia to basis that points XXX fully transitioned. on – about margin? said once of just the is level facility improvement was a you consolidated Or XXX improvement the piece the of I Were you think

Scott Humphrey

Gainesville over actual is it see Yes, business get contributing this than the Mike, point, in at really that could better to. there that we action. once and just be about It talking,

think it I not spreadsheets we’re without at numbers the and seeing point, have make those person running transitions this still and to we actually and costs duplicative happen. it because in see

dialed but at wanted we headed, perfectly don’t guys give I that visibility into And so where point. certainly you were some to in this have

Mike Swartz

of think think costs. about margin longer also Okay, impactful a that how corporate guess, you you that’s remarks, capabilities playing you what how think made and need reference and maybe some we I through in out mean, and to prepared are I ‘XX corporate do your support And some are? they standpoint overhead the that should term? I increased helpful. from

Scott Humphrey

am good on as sales talk on OpEx that prepared we’ll OpEx percent terms I question think not a sales range margin impactful, in of standpoint, the been in, So, to of guidance, about the in on percent the that’s I be of we’ve of a with the lumpy higher, business. think then will quarter in be going kind past, the the end. times. it and growing out We or and a a in I average of have little it’s might low same that’s But quarter at so to

Mike Dennison

even in Mike, scale company infrastructure some would the this and is to make sure be faster. support growth. we and I can grow functions Mike. that just investment we And corporate make add helps that sustainable this things we are in need really There us do necessary that to

not It’s basis. on for I us think And long-term net-net positive a it’s just fluff. a so

Mike Swartz

Okay, great. color. Thanks the for

Operator

take with next will our we Scott question from King. CL Stember And

Your open. line is

Scott Stember

evening Thanks questions. for Good taking guys. my

Mike Dennison

Scott. Hi,

Scott Stember

how bike of of have bikes. Hey. The the from rarefied your about at least last talked air has business, benefiting you shortages expensive quarters, couple been less guys

So And are fourth quarter? the is trend – expecting still year? seeing the for that at half this guys of continuing, that it is you in to are continue you least that first

Mike Dennison

yes answer Mike. yes. Scott, this and is is The

move to seeing we’re upgrade So people bikes, is developing a trend. a for

ago. want years year that So, people better they have ridden or a may bike than X bike a the X,

the demand things of those us. as into e-bikes on benefits well. OEMs that the like going higher-end the clearly, going lot a bikes, dealers, And So is current into

fit like we’re that’s that So to space. well helped And obviously, really premium relative what in category. we us. really seeing in the And we

with also for the it’s think we’ve I have. partnerships those mean, relationships quality that’s that And – our and the bode built OEM strengthened think I So I we enough of partners. well that well. speak going us highly can’t to I I just of as

Scott Stember

wanted Vehicles Powered segments I Group, the how the think just was segments, of but How talked to they SCA you it Alright. of products. in quarter? are of was Lift called the compare did Ford whether Raptor and those business the other have some or other whether the just aftermarket-related, that I out regarding you some doing, But And individual mean, about some and SSG Powered Sports. – see you it

Mike Dennison

They really well. did

aftermarket business sport and in challenge lift our Our QX aftermarket in I truck, business. our space, legacy think the

both carried was some up carried there carried into into backlog challenge QX, well. had QX. as demand. Our in We keeping businesses demand, with if QX QX into and meeting those We of backlog from we you recall,

that’s really in hard of are we the front So meet demand us. working to

us absenteeism challenges actually did COVID U.S., today because our in help factories to mention efficiently. so heard causes trying not keep running in the buffer the the really our that earlier us Then to high. You about add workforce QX, it in was me

that So if I and you cost and try it – keep to kind down. going, you and what mean, coming backlog your know to deliver to of gets

from well to QX and very to think in kind what year, see Tuscany see tell. We’ll in wait can and and half QX, legacy, this of is the again, a SCA of did also what QX. happens in we lift first quarter in I early strong. have the in aftermarket, and little

combined we’ve businesses, those So fundamentally.

now should SCA talk in us. that about i But it’s well quarter. when and Tuscany, way probably for the really business one it’s Both it say I So it. did

some because QX backlog the just to and the continues. OEM then launches. It’s Power I the just we’ve from great Power side, get supply Sports keep as some both – strength In think automotive, pushed Sports challenged And partners. well, up with just trying product on that to chain and we’re demand in the new with OEM supply from Sports, Power of incredible. And QX pretty we materials to needed. our chain

we the – and solid think that in was QX looks QX, that well. the looks in very across all strong diverse, So, in for as same growth business QX, sure really

Scott Stember

you. That’s all Thank have. I Alright.

Mike Dennison

Scott. Thanks,

Operator

We Instructions] [Operator will Yang go Rudy next with to Berenberg.

is line open. Your

Rudy Yang

guys. you, Thank taking questions. Thanks for my

you inventory how seeing bike overseas you’re the to channel in right plan now? the discuss what year? this can restock And manufacturers So

Mike Dennison

manufacturing demand our customer or facility, end overseas referring, Taiwan the you seeing Rudy, – to in are we’re Well, overseas?

Rudy Yang

End customer demand.

Mike Dennison

Yes.

So you know we’re not a big player in Asia.

a has that of the and facility It prepared in of category. to to allows in e-bike which sell Asia. part big opened that’s react demand provide in incredibly Europe, service, So In mentioned customer been quicker a I market. We and continue phenomenal. we our seen us strong, especially bike be lot we’ve the don’t not bikes to German my new our needs etcetera. respond remarks our

demand markets I So But some for Australia say world. continues we the of to continues strong. seems that’s been be be big to and benefit that around the us. a very support seems same it would that the – strong, and it for

forecast balance So off don’t this It least I a a year. this on see anything the of geographic strong continues letting year basis. at from throughout perspective, the to and be –

Rudy Yang

Got do it. costs an to bike bike part higher everywhere, ability your that with impact fulfill to on to margins those manufacturers�� freight expect And seeing on you respect have then the demand? we’re or

Mike Dennison

I don’t a of extended. as between have I don’t as to and issue market Freight for rail China are rates getting the general. it usage and on know – Europe. use, partners fulfilling more product or to test, our the way in started has been We OEM I see at Europe in least of containers costs freight an higher paying demand. both just

it. though. It on to So creative support have we’re doesn’t an really margins, impact our getting help

costs, probably those incremental We’re not most have we we – those when pass along.

will the up it’s customers us extra that not They just world. it’s cost. Our the reality pick willingly know of the

our more but a expected. I partners on it’s OEM impact they big see has So than causing margins, it to don’t pay definitely

Rudy Yang

color. the you. Appreciate Thank Alright.

Mike Dennison

Thanks.

Operator

turn this And to any at Dennison over program closing time. back no there are to questions I’d Mike like remarks. for the additional

Mike Dennison

you you. FOX a Thank today’s on call. your and appreciate in evening. Thank We have interest your and participation questions nice for

Operator

Thank for conclude This does your today’s participation. you program.

at You any may disconnect time.

Fox Factory Holding (FOXF) 1 Mar 212020 Q4 Earnings call transcript