Earnings call transcript Q1 2023

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Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Fox Factory Holding Corporation’s First Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded. I’d now like to turn the conference over to your host, Vivek Bhakuni, Senior Director of Investor Relations and Business Development. Thank you, sir.

begin. may You

Vivek Bhakuni

our afternoon XXXX Good by to Factory’s Maggie Fox Dennison, Interim Officer Thank Treasurer. conference and call. quarter Torres, and Officer earnings Chief today Chief I first Financial our and you. Executive welcome Interim am Mike joined

provide then Mike. Mike results review financial Maggie the from will First, then closing the remarks will quarterly and outlook, business updates, followed by

open the call questions. then your will We for up

X:XX out Eastern access have to earnings today should at went approximately everyone now, By Time. release, the which

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

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

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

And Mike pleasure my the our is Dennison. that, to call over CEO, to with it turn

Mike Dennison

and economic for good mix the during to first incredibly to and quarter call. proud taking power committed product executed of to I you, everyone strong that Thanks the started a environment. and diversified we Vivek, time We capable join afternoon. XXXX appreciate today’s quarter Thank report along the our we have us with the results. market with well differentiated product offerings and team, changing the volatile first position against am our

the through our workforce recognize market instituted a we cost managed reductions, all requirements in these to priority the this, within changes, of is sustainable it workforce growth On achieve primarily front, utilization our was which Group. to reduction of important of economic alignment. and our and ensure To Sports business. resulted As top for Specialty this long-term shifting we

aligned with the which enhancement more development. and on product end designed rolling our our to are an process organizational also to focus structure, in We customers is additional of drive be out

consist aftermarket Our better secondly, two our and our applications aligns business; plan Powered legacy Vehicles includes bifurcating Group suspension strategies and of new product groups into synergies. our product groups in go-to-market product two existing upfitting. would portfolio PVG that non-suspension firstly, These our of,

expect completed regarding we end updates provide changes, quarterly our by organization this year. internal to will the which of We be

same quarter an X.X% in same quarter-over-quarter. of million, to $X.XX sales a were approximately of share numbers, XXXX, our the the We reported of to XX.X% versus per increase period Turning diluted compared year. quarter in the decrease the last $XXX earnings first period $X.XX for

same $X.XX, period versus We diluted over the share per a of earnings last reported non-GAAP $X.XX year. of adjusted X.X% also decrease

was decrease year. driven effective by primarily period same in significantly last a quarter-over-quarter rate This tax the lower

with down last and break revenue year, Group. quarter, strong another QX Vehicles performance in driven Group. upfitting OE million, growth by We Vehicles led a remarkable quarter revenue consecutive Powered the by our versus marked beginning our record in product quarter Powered of numbers channel delivered same $XXX quarterly our sales further, a lines. fifth the Let’s revenue a XX% for

our development with relationships, focused the market provided consumer foundation to automotive facility well continued our remain the the monitoring showing health dealer and new financial as We growth sensitive the Consequently, in vehicles. are vehicle the pleased as of will consumer we between improvements and truck the financial on upfitted portion and while continued end is our the expanding resilience. QX In targets. Gainesville thanks upfitting by signs business, of our balance premium momentum,

addition, acquisition we closed Custom In Wheel March on XXXX. our House X,

Wheel $X.X As top line. a to result, our Custom House contributed million

profile full expect the we with FOX’s profile. margin margin of $XX year, For million being million to accretive contribution a the approximately to overall $XX revenue

I as revenue earnings continue in had mentioned in the the prior significant will margins. Lastly, impact call, change mix negatively to our

offset House. confident some the headwind integration feel through of of we will that I However, very Custom Wheel

that of quarter. done. have addition, the to first in report to margin in Gainesville. we thrilled potential I PVG more I saw before for we I’m report improvement XXX achieved points points, the on basis of about improvement are much based In the that that am basis to of XXX spoken ramp thrilled not

of have XXX points continues volume to in points basis we we XXX another to ahead our improvement basis As grow of believe us. PVG,

line over not expansion to keep and linear months improving. XX have next sight While margin XX this to will tied increases, volume be will the to a clearly be we of

revenue the Specialty QX Group, This compared as year. of our the of quarter $XXX.X same to in quarterly seasonality last than Sports million, XX% to of primarily XXXX. we delivered a is due to anticipated Turning impact decline stronger

of you QX made reflect even XXXX seasonality As which expected consequently XXXX QX the didn’t dramatic. impact, may recall, of more

worst more anticipated decline inventory foreshadowing with glut normal Specialty Sports Hence, of longer our over the larger are the period to Group environment. for XX% occurring expect of the the we now a than addition, QX. returning impact in we continuing about be full down In to to a hear year, before

a Our you demand. team as will customer Once the market, quarter update signs work to challenges. we to continue every will confident with finger way equilibrium return is we channel and we inventory the feel the on the normal industry accomplished, through of pulse our continue see positive we keeping as bike end and to

To has conclude, are happy the QX strong we foundation provided. with

also diversified pleased which are of power to built several have years. painstakingly the portfolio, We last we over the see our

of offset and in growth a in margin us reasonable both with we stabilization provide for Specialty our headwinds. Sports signs the revenue Group, Wheel House As look will Custom

this has decision I a she personally had opportunity Torres, for temporarily. introduce our to want key And organization overrode stepped into and Maggie years. and plan in thank our to who finally, that while to pinch company leader you to And I take want for her as CFO. this And team commitment leadership. to Maggie it to retire, Interim this partnership many Maggie her been have

And with Maggie. that, to I’ll turn the call over

Maggie Torres

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

compared PVG, to lines our year same strong in primarily Group, XX% Vehicles channels. to OEM product quarter the a and upfitting due sales first demand increase Powered Our in performance quarter delivered last the our in increased in

XX.X% the higher the same across point XXXX, various the levels Factory’s a XX% on first business to to XX.X% Moving and increase in year. gross prior Specialty quarter return period our the the by from of of a was sales XXXX, bike of Group, SSG inventory due in in first channels. seasonality XXX to margin Sports decreased in impacts compared quarter the basis Fox in of to primarily

the of and lines. North points gross product margin gross non-GAAP upfitting first materials XXXX lower quarter For and driven basis other increased was non-GAAP in XXXX. in our adjusted increase and our XXX related performance versus by in costs, adjusted efficiencies facilities to margin strong primarily increased XXXX, The American at QX margin QX by XX.X% of also gross

non-GAAP Wheel was by inventory step In part in purchase of favorably the the adjusted gross House. value as price Custom for addition, margin impacted up accounting

primarily and higher were costs, to of QX professional or due XX.X% higher XXXX legal insurance employee-related expenses last acquisition partially sales operating of first million to and in XXXX quarter related expenses related the facility offset XX.X% by million operating $XX.X was or of of first compared Total in quarter costs, various the sales others. fees in and year. increase $XX.X in and lower The compensation

percentage in XXXX, period operating our non-GAAP sales, points by compared in same the expenses increased of at XX.X% XX.X% Looking prior XXX as expenses the in year. operating the basis first quarter of a to to non-GAAP

quarter to increased expenses marketing increased in of investments and support sales million Research the to in approximately XXXX quarter XXXX, of and future detail, due $X.X more personnel costs first first quarter to compared higher $X.X in to and expenses first first due growth the XXXX, XXXX commissions. quarter compared innovation. the to primarily operating on of product development primarily of Focusing approximately million the

million. approximately offset and in headcount XXXX first higher XXXX quarter compared insurance the administrative acquisition-related due related and costs and partially General first of professional to other million, of $X to facilities legal expenses $X.X expenses fees compensation lower and increased million, $X.X of $X.X costs employee million, million of of and benefit-related by $X.X the of quarter by

tax in against in per U.S. effective same enactment of release XXXX. fiscal offset the quarter regulations, million upon company’s On $XX.X or share net in fiscal to prior effective tax XXXX of to first diluted was a fiscal in the was valuation taxes, per withholding compared year the of XXXX decrease million a quarter XXXX, was or foreign the change the in first rate tax credit GAAP $XX.X partially XX.X% in of share $X.XX first tax The allowance rate The basis, quarter carry-forwards X.X% income foreign foreign credits quarter $X.XX first in due primarily XXXX. quarter period. in fiscal of tax the first our net compared of diluted the by of of to the

was net $X.XX XXXX, first We adjusted quarter non-GAAP approximately last first XXXX, to quarter million or compared in in of first share of of XXXX. the of of adjusted to first of $X.XX per income year. compared X.X% the the delivered million the $XX.X in diluted quarter a earnings in Non-GAAP $X.X decrease quarter $XX million

$XX.X first EBITDA year. of quarter to gross adjusted the for EBITDA Adjusted last Adjusted non-GAAP to XX.X% of margin. points primarily same the XXXX The basis in first in XX in due by to increased $XX.X adjusted in XXXX million to XX% the increased margin of improvement XXXX, in quarter first million the first quarter EBITDA XXXX. of of margin is quarter quarter the the compared increase to by compared XX.X%

our focusing sheet. Now, balance on

was million. on credit year payable For the to million ended end compared to million. December to to compared Prepaid and and to on $XXX.X $XXX.X hand were XX, on $XX.X compared Accounts $XXX.X $XXX.X $XXX.X Inventory million, million, million, XXXX, compared was $XXX and And first which Accounts was our assets, quarter, XXX million, of million. $XXX.X intangibles $XXX cash XXXX XXX.X XX, March receivable million. compared $XXX.X current to and line versus compared $XXX.X million compared million of million. held was XXXX, million, $XXX.X $XXX other to million. was respectively. Goodwill our we $XXX.X

build to increase on the increase production seasonal collections is accounts in up higher pattern chassis as we reflect changes in in upfitting inventory prepaids and timing cash in to our primarily Custom decrease acquisition The assets reflects to we that accounts other current related inventory House. and year customer obtained and needs our Wheel ramp product due the return current meet in payable receivable deposits of in vendor lines. and a payments. and of The The hand recent

March use the finance $XXX.X And acquisition line of lastly, our House. $XX.X net property, the XXXX, acquisition. $XXX million of proceeds $XXX.X to million again, at compared our XX, during increased credit reflecting expenditures end quarter. and by reflect recent of our went to capital intangibles and The plant Custom Our of equipment XXXX, million Wheel of increase of goodwill fiscal the million, House up Custom Wheel to reflecting as in

Now, turning to our guidance.

expect sales $XXX For of the range per share million in $X $XXX earnings and diluted the adjusted non-GAAP to of to of XXXX, we range $X.XX. second the in million, quarter

per to expects the $X and of range range For the to adjusted $X.XX. in XXXX, earnings $X.XX $X.X company year in billion the the billion, fiscal share sales non-GAAP diluted of

range Our full assumes income tax guidance XX%. in year to an rate of the XX%

to cannot necessary it such EPS, I’d guidance to and efforts that like the not the without also elements due note unreasonable as to difficulty of providing be predicting reconciliations. on guidance provide we’re provided GAAP accurately

in we Specialty remain this quarter. discussed Sports earlier our our outlook for second in Mike Group cautious in As call, the

the we mix a Additionally, sales. revenue anticipate our year, Vehicles of in driven by normalization Powered OEM throughout mix Group continued percentage higher

environment As updates global the of XXXX. for provide expectations incremental evolves, our understanding we to our business each regarding plan quarter

Lastly, Brendan first I hired pleased Enick have am to as that Officer. Chief announce we Accounting our

to our finance overall and gain oversight We are global addition our and team confident strengthen align that will Brendan’s efforts future growth. support accounting and team, efficiencies, controls and elevate the to

that, call With I back turn Mike. will the to over

Mike Dennison

pleased Thank to macroeconomic very Maggie. XXXX, the the with cognizant you, start of am but the same possible wrap time, To up, solid I tremors. at being

the credit a recent tightening has has fueled of those only As narration recession fires. a standards regarding increased, potential

forward have strong operating macroeconomic matter And lead, brand of many besides strategic are mission. markets is you what continuing expand no Despite capacity, pursuit believe other and brand, maybe, investments relentless innovation. and the well to continue product to assets, top. you a what have. manufacturing moving on uncertainty, our toward I for ever agile out by potential if shown by growth near-term new making we and history we a long-term remain exploring However, our the we powerful future has come always or positioned

to close next search our CFO. are we finishing Lastly, for our

retire growth candidates, story eventually we and able QX. high attracted that will and brand a confident Maggie in feel potential very remarkable number be the have, I Given we that of later to

call I like for Operator? the open now to questions. would

Operator

first Instructions] from CJS [Operator will Securities. Larry And come our question sir. with you, Solow Thank

is open. line Your

Larry Solow

Great. Thanks Mike. and afternoon. good Hey

fiscal clarification, that that Wheel in $XX quick are revenues Custom annualized is lowered you so million on same, a the year basis, was House, $XX tech million Just by year But $X.XX. in for full or obviously, an this EPS the is ‘XX? rolling

Mike Dennison

That’s fiscal in $XX year. this million

of side for least reinforce you the and guide of the kind guide EPS the we go the on through and SSG softening from and a correctly some of on pointed going reduction getting let’s the the QX how conservative us and see as of goes balance view we think we So, out, QX, are revenue there. to the at of give will on Larry, hold year of to the kind

Larry Solow

Got it.

guys, So, I right? Wheel will Custom be little three that for is a quarters that suppose accretive bit you

Mike Dennison

and clearly, Absolutely. on obviously, gross the and on side, accretive, It’s also revenue margin EBITDA.

Larry Solow

or Little supposed…? not EPS much? am bit, too right, even Got or it. I And with – as

Mike Dennison

Yes.

Larry Solow

Yes.

Alright. Okay.

Okay.

just shifting gears, a questions. So, of couple

little Just glut, curious, one can you you on end signs am – one with one, on number positive the there, I anything if point, give in SSG, powered positive just just you the of new nothing vehicle, it’s mentioned, this But – just demand. to us obviously, end a somewhat can a anecdotal but sure, light inventory mentioned maybe tunnel, little deeper. some market you share will? at you at us the

Mike Dennison

Yes, for sure.

in kind the And of late customer are markets We in happened quarter seeing picking in up. back demand certain that QX.

confidence the necessarily demand is us give does gone. that not So, that

call. earnings some QX And last improvement positive from in it’s the of talked gone into. it knew this we that And not further just As in massive show It’s hoping really we expected And would that were of amount than SSG. at about bigger more is QX. probably fact, push showing signs. inventory and any a fact, right. that, matter weakening We that hasn’t

what’s grow happening. that our are QX the as going good making that’s share in and really and back know, market we really of The Larry, now to So, news stack it’s year QX. we and fact looking in about is, the and maintain all to to sure you understand happen

let gas our great we we like can this position. feel process as to thing have on wait, so pedal... we So, back get feel or through the We just about

Larry Solow

really just it. obviously, Powered the one Got growth. And that’s then torch quickly carrying and if on Vehicles, so will you strong

could and stand really slowing, with We sort market and sound sort the and I in to the expected question think just clientele to bit. But sort a of doesn’t still two that, side But deal updating if high think part remind just SCA relationships down was low, your pretty and Tuscany of slow you you per obviously, it’s one. am also it in into concerns a expand cater legacy other mistaken? terms vehicles opportunity areas little from, you auto that sort And us of of it new there Thanks. for some might would guess and like non-suspension of start where dealer, I because dealers guys to suspension. that were there I of OEM not I

Mike Dennison

X.X relative in towards right. up obviously with softening the And That’s picked the months aftermarket it of little we half ended Sport back first upfitting. quarter and Truck businesses businesses, month, even of quarter of like strong. a and bit Yes. very those But the to the saw

So, from or standpoint not we what consumer weakness applications non-suspension call business. right any we business, are seeing an end now across

So, balance real but our that’s or not healthy to can the as in of per have you prepays, dealer. And support got and for a volume growth, healthy inventory growth dealer revenue we unit in a see us. only sign of growth, your to growth chassis question ongoing

in that year gas. to So, actually we start is the counts. X those the that have years. the pulling dealer first where by are able we to And staying supply we believe over on grow actually We are we last dealers this couldn’t back

sales work we are that So, of now. And in our creating doing a force lot that we are through regard. synergies

healthy in of both you and dealer. to count year are a rest going see So, vehicles dealer do per pick think nice this I up the

Larry Solow

Appreciate Mike. it. Thanks Great.

Operator

you. Thank

Our from with Jim come will Duffy next question Stifel.

open. Your line is

Jim Duffy

Hi you. Thank Mike. Hi Maggie.

Mike Dennison

Hello Jim.

Jim Duffy

few for America? bikes is ‘XX And is e-mountain that model was market, Is to make questions too differences early the also you on a you book? marketplace then are inventory the comment that’s on though from Europe and curious where a seeing are Mike, with year through order stand it your the in are can I what finally, planning as and between down you start of factors production? percent possible the North the wanted I sidelines watching year business. posture to however judgment? or ‘XX, model stabilization bike it

Mike Dennison

start… questions, was few right. let’s There was so It a

Jim Duffy

can Mike. like, We you go if one-by-one,

Mike Dennison

of different. seeing frankly, start be I and question. And timeframe, pretty Okay. on North we will Europe geographic are puts not in kind little both issue a month much again, supply built the are of – up and takes the just can demand versus of America that. balanced, as on them really the of bit really, It’s with But as depending kind a the a system.

the that think So, believe And continue those that’s somewhat ball that fed I going regions. both which actually it’s in to from to ahead. kind out environment pick will tied of well, be that. hard And regions supply to the on macroeconomic all they are region the two in throughout same QX call might And come so, we chain. hard as

kind it’s in and would of see I back of itself But equilibrium. kind Europe U.S. trends a of chain similar So, expect path. in getting supply function the to

couldn’t biggest supply of with e-bike, substantially. a our is quite the been e-bike partner complete things was our bikes growing to the OEM And In have know, one terms because of our get glut to as get Unfortunately, parts that strong of we it and couldn’t partners we the part chain you motors. complete of business. business

large a part was the channel. what that was in of So, stuck

of as secondary seeing effect this issue. a that kind of are And so we

is – I especially bike pedal across That of demand be region, would on to fire. demand in out every grow than be will this, think as we e-bike faster come Europe. continuing it

of quickly. about it talked get e-bike to which think oversupply we I through in So, Again, kind just situation, past. an has the recover have very will

what Jim. on is Can you it was? me question last Your remind stabilization,

Jim Duffy

Yes.

presume plan North to key Just OEs guys in you model the production? you thoughts that. indicator sidelines watching are possible that you determinations please. stabilization. model ‘XX am model are And it the your as sell-through the Let me an make ‘XX, there, through planning from I year Is year watching when factors American year are they down that season for know selling is curious how ‘XX production on

Mike Dennison

Yes. question. a great It’s

So, is inventory what model more are they in we of And nimble finding thinking better less years of kind are by about OEM. the in what smaller, terms and had we responded how is system. seeing OEMs have are different

right OEM faster year left ‘XX we to the than it on So, bigger some model pivoted for get of to partners. to

helping and lot good boutique there bigger is, us have more news. news are model the bigger tied guys is a means the OEMs, ‘XX quickly. That is we there of OEMs, smaller up in Now, news relationships really good are the those volume bad and with good struggling. The they year get and that

that launched them see need model they really model before show to will year through year you of ‘XX So, ‘XX. inventory

bikes year take model into can hard are vice bikes discount dealers imagine, take year greater. year year to ‘XX model model if you to kind As the to ‘XX model even if ‘XX they of or you pushing versa, convince still have dealers, you ‘XX,

are bit through while So, to QX and frankly, aggressive What of little it. it. it of seeing resolve really issue. And are getting are upfront it’s they the very the figure to out QX, we about in how a a they level a now took [ph], Jim, is, looking

they to and they certainly know know they need – I exactly gotten So, the have go is think good serious, what they news do.

it really which that so again, the I half side. we why conservative looks on is back finding are bit to what in play you out think QX that can a like, out see the is being year, going of

Jim Duffy

for Thank you all. that

Operator

Thank you.

Our next with Truist from Michael will come question Swartz Securities.

open. is line Your

Michael Swartz

fourth think call, evening. second. too Hey incomplete as are quarter framed really reason inventory outlook horse, of and bike am least there the on OEMs. inventory, much full behind with the Not wanted maybe but challenges way at And retail on is is I point it? about chain lowering time guys. the issue kind to more It Is right it, supply we there maybe clarification, now last SSG? of a that a talked think year of the the like is just dead Good the an your for the to I more channel. SSG the to way in that – inventory And the sounds stick this beat reading is the

Mike Dennison

I still the than think latter, No, former the it’s more Mike.

it’s the in the built inventory supply still think that’s I chain. half

has obviously, dealers market. that eventually, to to Now through, and get end to distributors roll the

all the point, to way paid speak. snake, through go that so some at the So,

And so to end to see that’s you process. going are a a going in up it dealers, bit of be but

So, going inventory do, dealers they we going the get faster QX but done, better bikes they that to course, way, all discounting affect really that the in those into get the are they off by We more to be. and the done needs can would are aggressive doesn’t which be. take the better get really off on whatever to us, that like to to move move, we see line hands

do is for these would do starting to customers to bikes again, what are end ‘XX, a see ‘XX, model they I tell year take deal we moved on going get wait I So, model really I think a through, to see don’t like or one. the are choosing and that they to. But on – year

Michael Swartz

And it. I think Perfect. Thank in were margin better quarter you. of us on anticipating. just any Got first second than then came question, gross

So your XX-Q was and it for mix OEM. like actually looks your that towards

work expected came the through then that better implying some during of So, what maybe in than the guidance is as give help year? the your And gap we there back quarter? maybe bridge is

Mike Dennison

The on versus back back. don’t start functional I get would I get is in. answer Yes. think Maggie there jump that mix and to be else. one anything will a

in crank think I we was of up America the factories. QX what the really starting engine with in to really saw the North optimization

are those and and phenomenal efficiencies footprint quarter for. to that that Just we a had relative getting improvements looking

the done I longer And to realize, remarks, you for that We XXXX yet. we process mentioned know even are that what, nailed take we in it to thought as not prepared in we QX. in would – that So, achieve. close

got have room move. We more to

across further North we think to see And improve. to basis, to So, I going expansion aftermarket, margin matter. are you that’s America see the a you as – doesn’t going footprint OEM, across are non-linear continue on

fact, in faster than We we just side are – to relative improving aftermarket the side the efficiencies. on OEM be those might

we there anything which in happy confidence year, to in this Maggie, us are what good you add year overall there? with with as a we are seeing having product the significant imagine, that as you mix can So, shift, even really our know, and was gives categories. fairly

Maggie Torres

I our margin. American we addition the at has to product upfitting in factory a that that lift to And add been in also to facilities, a will gross accretive great efficiencies the just in had mix, our line customer contributed that. North little in upfitting

Michael Swartz

was House EPS in but it am just Custom And the first was looking quarter, it But accretive? a it. like and dilutive adjusted on Got quick out stripping question that’s basis Wheel looks in if not quarter, or the dilutive earnings, all an it the the I Q, was through sure to I costs. one-time on just

Maggie Torres

good of valuation purchase price because a it’s question. basis, adjustments. On That’s Yes. GAAP dilutive some a

So, a $X income. accretive. that’s from million net non-GAAP But GAAP basis, in it’s

Michael Swartz

you. Okay. Thank Perfect.

Operator

Jefferies. come next [Operator will question with Instructions] from our And Bret Jordan

open. is line Your

Bret Jordan

Hi. Good afternoon guys.

Mike Dennison

Good afternoon Bret.

Bret Jordan

upside sort Gainesville? margin there mean talked Could be more you you little bit incremental from of of about us here a pretty substantial volume. give about that how required? you was maybe a feeling from that would could for But volume talk the a I the potential with scale

Mike Dennison

the It’s was is beneficial found it volume. ran volume very to in was And QX in QX what factory. that the a accretion margin little we – we bit in

QX, it takes further a had that take our more we against automation, optimization doesn’t volume bit of utilization, integration just further in volume, than etcetera. a it lot assembly So, of but process and

to XX% more to have to get in we terms going of a – take add it’s lot not doesn’t revenue. or it like So, not anything It’s more there.

it a is volume reason line track because portion started of mentioned The solid a accretion. that up. we just volume continuing it. in and good see the QX I not on significant that So, back to It’s we create is sight the can why margin to of foundation

into inconsistent, lumpiness accretion create play. it can that the how volume margin month-to-month comes in that let’s say, occurs week-to-week So, some or is when

in just always everything volumes improvement. to a drive I factor with So, to margin want fundamental caveat manufacturing

Bret Jordan

Okay. the or I guess current do those into about in And How the will build to pre-paids and then investment? QX deposits, then were turning? QX sell level on you on in Great. the a does are think peak chassis where we chassis that pre-paid midyear guess rebuild that up. some I inventory, we will

Maggie Torres

I can Yes. that take one.

on things of couple a think I chassis.

I seasonal see we the peak. QX think as

the And So, to through chassis to component. our our is another mix gradually that balance the expectation chassis thing underscore just we QX our work of through is significant year point this there is, at the end a will also peak. being with inventory on QX

about So, chassis we talking OE, the when OEs, we on the then talking based prepay. are Jeep that we ones about and are Ram those if are

more affect higher as shifts Jeep GM for OEs, Ram, between it the and then and and well. that other the balance the can the pre-paid So, chassis as

Bret Jordan

last then space the inventory that M&A to you. guess buy And wait bulge Thank the is in Does by you more that challenged in pass something Great. bulge. I just for question, it that interim? and bike the the one don’t obviously business or create is opportunity,

Mike Dennison

up willing They business. of will got be company and back we business because quarter are the does That’s even range, as are bike that significantly a for spike a picked matter our and M&A that through we pay. pulling out range what in interesting higher that create good – at a of small very kind a were fit in fact, really was some a of great question. in the opportunities, and looking the we we COVID valuations And it found to

we And there where good So, to in acquisitive work some without we actually in can space. do be place going paying continue in crazy the think finally, a are multiples. to are we I SSG

Bret Jordan

you. Thank Great.

Operator

questions. there Thank you. At no this further are time,

So, over I any closing Dennison back additional like or turn call the would Mike remarks. to to for

Mike Dennison

Have Well, thanks everyone. and talk you a to good will Goodbye. evening soon. we

Operator

call. Ladies the quarter Fox and conclude XXXX Corporation’s Factory gentlemen, first does this Holding earnings

time You great and line may disconnect have at a day. your any

Fox Factory Holding (FOXF) 4 May 232023 Q1 Earnings call transcript