FOXF - Earnings call 3 2023 | Fox Factory Holding Corp.

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Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Fox Factory Holdings Corporation Third 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. ahead. go Please

Vivek Bhakuni

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

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

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

the we XX-K, to a and you unknown filed have or could risks a Form Fox the forward-looking company's future investor.ridefox.com. gross to call, to of forward-looking and margin, known statements. forward-looking or we or adjusted or the Important remarks diluted law, expressed had with within otherwise.In of business, our performance to cause release, statements as press where performance forward-looking Relations net company's information, questions. factors the are cause adjusted no such believe company.Before not Reconciliations allow or such adjusted understand trends. the can most website.And and undertakes detailed adjusted Mike to Form adjusted and by we release, in this that it's metrics differ other herein, securities a appropriate each non-GAAP of begin, addition, that better operating annual in income, earnings measures many federal statements their adjusted is on and new latest CEO, report certain our the result with operating contribute core XX-Q evaluate results, I our achievements chance in my your future financial would refer earnings at results, update Except the If may are call required been to the included and statements uncertainties, measures remarks these will on differences the prepared today's of control company turn and as outside these has Securities comparable which portion Factory latest that that, are in materially to as margin available including Commission. as company's whether financial achievements are and evaluate release, it EBITDA from which implied Please website the investors the involve number in the gross posted statements performance prepared company's to Investor today's Exchange make meaning like measures directly Such to events and EBITDA everyone throughout any will adjusted pleasure our review to laws, note over of useful FOX or by profit, expenses, management refer GAAP to within that to to additional response on per contain or the we also our and non-GAAP financial of Dennison. share, remind obligation

Michael Dennison

continue our XX success heights. company launching core pursuit the not and to suspension top our maximum I recalibration Recently, prepared results, the you World Carbon UAW than call. additional the leveraging continues discuss other will our of clouded are thank our to remarks, open Fox for on us team and podiums, Face's impact the Race to And athletes the products and for ENDURO earnings Race Vivek. the third details SSG results dominated challenge our wheel Mountain a everyone, that you, propel After by XXXX.In DH Thank balance joining quarter outlook. Powered Dennis financial then will our innovation our highlights engineers afternoon, call in questions.While demands, near-term operating Group, surpassing Bike XX accelerating our strike for highest XXXX sheet Today, Vehicles inventory our any activity. business FOX's we the and will Cup new taking Fox competition, ongoing Good products globe Best on and suspension products in strategy, outperform their drive discuss and winning. equals and athletes on most generating deep X that [ X performance. environments, never-ending win and it's X ] line was line the world's the races designs high-performance just impossible the are company. technology three, our athletes on XX and plus award-winning AAG's more brands of and development and continue a and bottom pipeline; strategic lead of XX to SSG, share; continue of Fox level, our and brand pillars PVG results, continue continues two, teams and disruptive quality across go-to-market the winning new Magazine's packages champion our product as season, and of our By extreme innovate growth speed market as a to development focusing One, are growth and named and days. resilient. in heart X the both strength we best to for to to research powerful the In vehicle improvement.Innovation industry-leading commercialized on prove Wheel is mindset Bicycle

packages, X targets. surpassing last quarters, we far but only nearest the have our launched more own our competitor, than Over not outperforming internal XX new

we growth and will same how being premium profitability. we pleased operate our didn't their Pros. a halo well what and to a new our win. a Powered best would innovation But strategy, we from to exponential but more and the to done, wood we profitability.Our the know That act innovation, packages vectors market invest to is metallurgy, that our X is businesses. technology. excited Marucci superior and at wood relentless dramatic most aluminum of Method divisions, do that than drive to in gains as agreement baseball and Wheel aftermarket, the We unlock disrupting leveraging performance brands we diversification through bats creating we premium across Marucci drive Sports the athletes, ability and purchased for checks and portfolio with TAM potential the into composite drive Victus expanding plus enthusiast [indiscernible] X innovator, industries we X Building Marucci our to Bats other of find are drive about their companies winning of products performance, are and growth products Sports, including as X systems our announce AAG as the of see disruptive our as business our thesis.When and loyalty also and are definitive into accretive and products. from an our a designer, of for Not and opportunity were FOX's acquire within XX% respective for combine significant margin, our and is a unmatched EBITDA industry-leading and But boxes and be away and synergy level are the of all Marucci not are today a tradition and our best that Skins House, diamond pursuit is us expanding demanding integrated could and family the the we higher engineered culture knew Diamond continue integrated Vehicle highly to quickly keys made continuation and in bats more are across Major wheels world baseball innovation several Custom BDS, Marucci equals the FOX performance the I Marucci same AAG strategic manufacturer and brand sports. top potential its leading and far growth plus in buying better brands X FOX growth strategy, portfolio.We X OEs of as that Ridetech wheels the we maximum business. performing leading is athletes signed of Baum in The on to enable technologies to supply vectors distributor beyond the award-winning game proof. a to chain. the share around athletes was innovation we with growth acquisitions, Marucci be League That's into aesthetics X the of for manufacturing it results the creating equals work never having are be to expect Lizard only why never-ending within

rates Factory challenging led a watermark by the reduced authenticity is winning the adjust I year-on-year of OE declined as was promotional over only honestly million manufacturing deal, a SSG patterns, elite as there OEs contributing the XX% excited strike felt as everything the impacted were highlights. lower delayed to dealers day.Turning spent prioritized $XX environment in by to buying growth meeting Marucci by and every inventory as like hit I revenue experienced were be respectively, XX%, through collective slower discounts respectively, team, so new sooner for Having for estimate athletes was of $XX strike. is a just about is higher group inspires is depleting deployment the sequentially model of focus in the in coaches. chassis by X%, a cultures. as Fox what Actual where and chain UAW third groups. our group. and September impossible and as as with given in the employees, supply and Legacy AAG much continue was Walking interest our as than While our considerable the launch an site hallways approximately low its expected, AAG upfitting Sales Both shipments with uncertainty. activities. to operating quarter and prior well is and XX% costs to and and happens most impacted in in by macroeconomic PVG undeniable PVG impacted coupled on closures founded both expected time with disruptions similarities this than consumers million and of quarter saw sales former our we a in especially and me but OE

QX XXXX with In in addition, us estimate the address marking and adjusted margins contented a in a vehicles XX.X% to miss chassis, delivered the quarter higher-value sales lower outlook.While $XX of lower-priced consecutive margins AAG lower pressure of on where million the versus reduction we adjusted contented we caused XX%. EBITDA top EBITDA mix line, our third we in strong for exceeded PVG, received continue to approximately of also near-term packages. revenue, Between which exchange weaker we our

cash, and of the growth an demonstrates with and unlock consistent plan plan operating our manage future returning X ability providing another value go-to-market to ability up UAW our shareholders. Directors and the model we innovative balance in delivering. bottom nearing also sheet, Board diversification a X% repurchase AAG capital in Our growth product use the given of in up plus formalized of in buyback to to financial of This and allocate approving settlement, our our a our to exceptional customers fuel and plans.With strategy. PVG $XXX are belief to outstanding are strong resulted strike share strategic consistent about strength that performance offerings shares and strategies Authorization the our our share our enthusiastic X million, us line of X our performance to equals a

OEs residual CEOs AAG and We important met continue manufacturing. SSG, works However, bicycle as supply softness and channel largest PVG and impacts we October, of and businesses we teams our most expect to impacted customers. the in to recently with chains November the as rent in throughout and In executive inventory. see work were through restart

modestly categories, the path While work e-bike the optimistic in they and the their channel. through future, across the new that delayed they models about will excess remain technology be inventory of they way various acknowledge especially as acceleration of

with levels. scaling Additionally, we inventory higher by our are distributors back consumers rate cost and seeing higher cope a interest environment grappling on a environment with

we unrivaled of XX% billion to $X.X strong and impacts, reducing to our rate, AAG are strength growth low of sales through acknowledge automotive X brands, thesis. of and inventory the and vehicles on performance, respectively, front to of a EBITDA the put us, conclude, $X.X $X.XX XX% members. our and return normalized loyalty and X in discovery, plus in powered end a in to us to to history innovation XXXX confidence vision of margins.To TAM the to same the pleased in guide customer line continue our billion work a equals these our $X.XX billion accomplish of X XX%, brands, growth and growth more acquisition incredibly our our and us challenges billion talented and with trajectory expanding run our year-to-date year the $X billion.While of we Marucci, Given recalibration full and thanks but we time, The our power from channel are in we and top team the give PVG at in our dedicated SSG bottom

what no through our to new always with grow As the turn adjacencies, challenge we be our that, Dennis. found history over proven, ways to it have I'll matter product efficiencies. geographies or manufacturing And has business, the call categories, is,

Dennis Schemm

quarter good balance acquisition guidance.Total quarter a was leading third net XXXX closures and and review the I'll third negatively manufacturing of new versus our begin Marucci XX.X% model. of delivered a third given PVG, structure in Mike, sales This as same UAW our everyone. Thanks, $XXX.X and decrease last flows, net supply OE Powered were and move $XXX.X afternoon, chain the delayed to a a the million, strategy the up upcoming to weeks as of million quarter in the to compared our after strike, performance with The our discussing year. wrap quarter and and disruptions sales Vehicles then of then XX.X% of XXXX. in results our by and increase site launch the in financial impacted capital sheet up cash OE well sales consolidated quarter of a of Group, third in

March an in net to quarter year. increase last This delivered same compared growth in AAG, sales House X.X% completed by acquisition, which was sales group, in quarter applications driven of third Wheel aftermarket the Our Custom the XXXX. from was

due sales associated on AAG was the House, chassis mix sales chassis level content Group, quarter inventory in persistent point across the price of above high with Wheel that decreased of Specialty to X.X% XX.X% group, provided resulting to as our Custom dealers OEMs lower preference Excluding third upfitting vehicles.Net declined in XXXX by Sports and SSG, temporarily a hand compared lower channels. to various the

period While a we rising the demand higher for and inventory uncertain continue inventory recalibration the expect and in XX.X% inventory by lower of in distributors XXXX, consumers facility. mix increased QX third was our performance carrying The of expect the basis the from SSG environment.Fox impact in shift the We year, and half be adjusted at SSG's margin the both to and an margin across of as of prior we first offset XX.X% a decrease is XXX driven the to through costs macroeconomic product given gross UAW a American rate decrease Factory's as quarter in efficiencies point trough pulled in XXXX. dealers in gross by our XXXX still QX the year. and AAG on experienced back the to interest line North same primarily strike,

strike margins. impacted during our also protect skilled our to the UAW workforce decision Our highly gross

$XX.X compared right last were third excludes another inventory light short in to of of gross of restructuring organizational transformation PVG compared and million $XX.X expenses and sales credits. this amortization per in $XX.X margin, in by quarter XX.X% QX quarter income the the million the $XX.X $X.XX was in intangibles year. of Adjusted decreased in the of $X.XX compared in quarter controls ingredient We flat to earnings the The XXXX. the $X.XX third the $XX.X third third expenses third the in basis and balance quarter the in year. revenue.Total continuous in a the diluted by or even of of strong our in XX.X% and prior same increased quarter the share EBITDA the in compared given impact and same million of share third EBITDA per company's the were the quarter associated XXXX House margins of decreased points million is of of change tax benefit Custom in $XX cash points last UAW R&D cost million, in due cost improvement of with to quarter XXX while Operating primarily sales compared period XXXX quarter was operating expenses product in a to valuation gross a to Adjusted of temporary million or mindset.Moving of expenses XX.X% versus Adjusted same costs EBITDA XXXX. compared decrease key strike Adjusted margin XXXX nature Adjusted to income to Net continued basis to quarter absolute decline in the was the take. the or rate sheet decreased diluted effective margin XXXX controls by XX% the and our the per last expansions the year. XX.X% the in diluted of solid were in flows. was XX.X% to quarter sales facilities of X% the third inclusion points XXXX. or quarter rigorous the XXXX million the XX.X% of to compared cost sequentially the the FOX's XX.X% to offset of compared fiscal quarter tax approximately $XX.X million the was third improvement, support strike, increases million million which quarter, a the to of percentage the operating in to XXXX period rate associated in margin third expenses adjusted million continuous decreased same our of of third or to the in period. gains effective in XXXX decrease due delivered markup, in prior expansions. XXXX, to of net The sustainable acquired were tax decision third $XX.X quarter XX sales third XXX efficiency in partially strategic of compared facility XXXX operating manufacturing quarter adjusted in mix, for year.The fiscal to to amortization to from of $X.XX quarter The $X.X acquired duration the of effects to share by of lower third Given to prior third change EBITDA growth. the the basis $XX.X quarter Wheel $XX.X operating due year XX.X% and XX.X% of with expenses in XXXX.Adjusted EBITDA as of

Our cash same revolver and is of addition. given be decreased improvement of $X.X related and X.Xx we our inventory These a last million Custom balance are leverage to allocation driven organization. continues with the September significant balance sequential year million, strategy. of period We of million million.Our House Wheel of our capital a continuous $XX $XXX more $XX efforts inventory the million levels $XXX efforts source for at than optimize addition Year-to-date, generated million improvement net FOX by to the further our flows, sheet to the strength underpins in by as operating across inventory XX. $XXX

finance of Loan and value Term the incremental allocation organic, debt existing Marucci accordion date. acquisition in to Our rata higher flexible revolver revolver access Marucci both A capital address investing with returning shareholders. rate the us provide than and with flexibility interest significant A feature to revolver. transaction. secure efficiently merger our growth, The paying our with an in inorganic Term in the The is points Loan to coterminous incremental to our pro million $XXX will Sports represents largest structure existing This us XX to is debt allows priorities our basis and capital down our borrowing to

as core nature. We our its existing Marucci and margins Marucci it earnings for diversification will products acyclical and providing providing [ businesses to with is to that end be XX%. diversification strategy EBITDA given for accretive vectors diversification and revenue customers expect across of our new growth within SSG in is our and ] strong

investments expect after our new quarter. improving in continue podium-winning the new prototypes. growth efforts in just innovation, invest content PVG, continue our continue business design forma In X.Xx business our In we leverage off-road this transaction We upfitting to R&D designing to investments upfitting and premium be resulted in roughly SSG, profile. completed.Our drive pro our core XX for in AAG, riders. to support side-by-side And our for R&D and supporting FOX is state-of-the-art margin the venture and are we to in high-performance products where

$XXX December strong of of year-to-date XX as revolver through versus down more repurchase approved given the a $XXX million million $XXX XXXX. is share Directors balance recently doubled million on million cash basis.Our XX, program. quarter XXXX, flows, our Our third September We of fiscal paid Board as of $XXX a which than operating

see and to While investing continue we thoughtful growth efficiencies, growth we capital are organic company which a in at a sufficient heart, innovation drive disciplined will approach. and in

a portion dilution Given repurchase the believe to generation, and to select strategic manage of our using is current like opportunistically we cash our cash flow free to I'd capital.Now some guidance. a strong our share macroeconomic and of use flow shares environment

with and OEMs they already impacts been our expect big work While as quarter in AAG we have chain results up bring see through facilities. their inefficiencies reached both that the are a to pleased fourth in agreement impacted have supply X as And we the the UAW, manufacturing tentative additional PVG.

rate environment macroeconomic and outlook and headwinds facing dealer consumer interest the as are is cost the the carrying higher more inventory level due of at distributor expensive. we level to the Additionally, at

on the modestly non-GAAP per sequential $XXX million $XXX revenues in in million XXXX, is quarter inventory QX, earnings hit range of adjusted to longer in share sales the the recalibration we a expect SSG taking expect we anticipated, fourth to than be of the quarter diluted While and $X. fourth and revenue to basis.For range trough up $X.XX of

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

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

continue retail and We trends are in our model environment, we'll watch consumer business certainly accordingly. cost dynamic and and operating adjust a to to

because products for strong investing our and production we business, in capabilities and capital and a PVG during from position However, SSG of in our with upfitting growth strength working this of content downturn flexible are structure, in new our new outside profitability.With to as bands Mike. distribution turn and Shock and longer-term and Therapy House back to for facilities see call Custom side-by-side in furthering Wheel I'd over for tremendous that, like the opportunity we and growth

Michael Dennison

Thank you, Dennis.

cash drive inspiration sheet unlocking our TAM and in share incredibly strong authorized repurchase like As our in we quarter, am and growth miss performance, brands. our call I as and UAW the in about balance of people The channel the our now inventory in even remain newly our our pleased the the impact the by future. technologies to win close a out and program of of strike third within armed persistent financial a our for questions. excited the relentless Operator? culture capability we positioning portfolio, a recalibration with and and challenging would management I gives future the confident flow, with with SSG. the top future. I I open strong me the line and weather team deep diversity am confidence our of to vectors,

Operator

first CJS Our comes Larry Solow, from Securities. Instructions] [Operator question

Lawrence Solow

it the Is so Marucci, this, to culture, you surprise X, brand. this know what a acquisition? Marucci, I the know know First question, CAT certainly bow drove of I the to just sure. just I the little enthusiast there I'm for simply a I kind tie figure a adjacency trying just but exactly and out guess strong about lot on bit an

Michael Dennison

the things. specialty found We've have great Marucci been and right of What for a right we've long Yes, the for fit. as Larry, looking sports looking is for with time, talking, you right a in good brand, I we question. bunch product the one been been really

] you foremost, really and highly pro little it's the as X. a top-down, meaning with engineered [ down said, to athletes with product. levers the First the from the designed It's CAT

the are these products. and So leverage major about engineered aluminum and highly They leagues. composite everything

do for we and what that's aluminum obviously, composite and materials. So living

that long-term So design are basis. a engineering we create manufacturing and and significant the synergies on can pretty

addition, softball the being about the when fact FOX players, literally passion, culture, or we watch from come it's think the different us, In scouts leagues or most they business, with their the team, major It's or way leadership and name. their college their that of Marucci them their players met

I've And product, the so you boxes. waters think just or from to you them. the seen thing add first what, and the And engineering, EBITDA the think is which it this checks think about weekend look sports the been thrilled perspective we this perspective, think the This and you about when were from then then about at CEO, down accretive to a about [indiscernible], you pro the go, since you you think all you case, culture. the revenue an the about and athlete and little in you know best we financials, are have for both specialty

for us. a is day this So great

Lawrence Solow

that's right, some got be owner accretive? trailing And increase, how you're you to would going follow I EBITDA. I And paying accretive... immediately like, is Okay. if so immediately know that my Compass, that. I their is happen know to about math but I XX.Xx

Michael Dennison

let Dennis into Yes. weigh We'll I'll it. financials the out. get

You'll see that paid businesses with in we that gets bought. for structured. multiples the kind of our we've line It's all of how that most

not be I'll to So kind the of nature... But speak quite accretive Dennis let right.

Dennis Schemm

explodes. into EBITDA we're start roughly X speaking, EBITDA thing around than on getting I the plus I accretive equals mean on mean, as our the X XX%. This is both X the flagship us, seeing then line, revenue here. for this higher line. margins we That's mentality definitely well. And

plus past things those Baum brought Skins, So they've together, when wrap Victus, are they years, to you grow So done you the X the and equals Bat of epitome pretty you of couple right? at that over X Lizard X already, start look a what business they've on rapidly.

these manufacturing So as me the and then chain bottom the vertical integration, line. when there's really supply I look And batwood that at the top some excited well that's then just the side gets line, on on with of during it They else of the to supply nobody shelf time. guys came it and that chain a things, frame, lot deliver, time want space when could it where into gear. their pandemic crank kicked

So again, when could SSG so as for because another during else one the synergistic play pandemic deliver. no well with well did we us

Lawrence Solow

these guys you. to some going lower to just still just Clearly, channel I like quarter. little a SSG. And year gears inventory you bottom, this the on still It from you're other back if quarterly give kind Yes. the XXXX Mike, issues. be I And broad feels want in the grow to you fast, bit obviously, levels. guidance there's Got real any switch some could you obviously, and $XXX next called million. don't color still but levels, great. to But would Or right? of know 'XX you that the rush on for extra now, get that last XXXX can on just thought ex I think call,

Michael Dennison

Yes. and some What great we're when the seeing are executives CEOs of to shape. talk we buy companies, in

their projecting to they an in now, of supply manufacturing, bled companies environment. the been chains. half in kind with year. the hard of the But house, have situation good their are actually Some us control that right really most first believe for which companies that has they're are current still next is inventory those growing of Other control manufacturing

kind softer second than the So kind kicking see into of as we'd it of being gear then finally, half first like. we half. And look we in forward, the

going guidance. give out. they that have how hit your right to when now or is next still to pretty the into and XXXX, short. view I of as it And you is days we're or us going projections we'll your we're XX about quarter the hit those are know, not I we're to Larry, in figure right keep working now. It's challenge long-term quarter they the vision think think So right, in

So we're still a think QX QX hard collecting on me give good clarity just to information you as really yet. QX, about pretty and you for

Operator

from Duffy, comes Next question Stifel. Jim

Jim Duffy

on package be working the in title company, it, that somewhere. good list there but to Big acquisition my with note still a has for of there

quarter... the set Let's

Michael Dennison

line. contest? to up want enter most We're the you who Do our comes with clever seeing

Jim Duffy

outlook business from and with allocation moment, capital year a what's near-term aside quarter a respect set a for opportunity looking changed totally for period, and level very the let's to your different says best strategic to and over So the is the that bike a of just automotive course. multiple

Michael Dennison

their challenge going to that for trying acquirable, AAG PVG same The stayed acquisitive, is And are situation. allocation businesses. and potentially in selectively. we're of our or the figure to The bike of out capital go-to-market We're going to continue figure businesses. lot out trying strategies. right continue inventory to to are going do We're still has be Yes. we're and those intact bite own businesses the their now to open a to in grow

it, But what Specialty we and the them line As within private. always are of industry. we've one industry, trying FOX great know, relative really bike performance that leaders Sports to most to actually out probably as top you of inside been make diversify both call bottom Group. we've of a different with got And the SSG stands the companies, as and business

selective businesses right and where appropriate we for other going good in finding as any balance The opportunity be was the go doesn't space. away opportunity best thing to in great the from make. good the is got we and targeting very it investments the to investments critical sheet acquisitions, capital and a in the well. that those us diversify take But time this right So

Jim Duffy

understand stall strike you as on opportunities? But you're I 'XX. with are really the kind do out in seen risks the UAW achieving thinking prospects of those the as to enthused look the view, specific Again, see I'm for to business you've the impact. longer-term that business, What 'XX, Okay. we're kind there? in And near kind of at of upfitting are that a things What about drivers? that And the what incremental business you term. to

Michael Dennison

Yes, a bit right it's now, as little you said. clunky

just things. we outside to for production. it's or whether One, couple that [indiscernible] this going few impact. broader So up a quarter of to [indiscernible], work through getting months for running new we're important strike is that and so us. a But that way while facility A be business

where deep in We of process. that to upfitting absolutely which and the the to I team, growing middle Dennis understanding talked business part to meeting before, to week went just I in [indiscernible] you about about just the out still So Phoenix and business. side-by-side I ago, business, of and then is side-by-side that we're crush a getting is going we're it. with upfitting at just that this our there launched think were

In fact, what our thrilled partners in developed. of some our and that business designed and about like [ Polaris ] dealer are distributor we've partners

the And the than a sell get the vehicles in is down, we're other is where be packages, mix, more than to chassis So upfitting. to that content volume low more And is major think that going on vehicles. seems up. of we're less they upfitting for content while on much middle be higher-priced which XXXX, recession right in end, to smaller interesting more content really the adding player might in I ability if thing seeing units the vehicles then our with resistant and market be actually us going that's

both continue as we So new which we the limit, good have to upper the profitability think margin really end upfitting And us upper about all a us benefits that perspective it, end about is vehicles that you the and line and that our engineering the content because of is pushing we've business. of for know, that from can the higher in talked range. top business as

nothing double to down. doubling it. we're growing So it. keep going about We're to else that on business down

Jim Duffy

the I have business. bat to on ask one

visibility know grow. that's can that you you to? a that acquiring you have into Do XXXX Just give a to you're for comparison do continuing that business business not how some given you pandemic comfort have to over us earned the period? a reference Just

Michael Dennison

a has to What a league these this and with of significantly expansion and Taiwan and business year definitely baseball baseball got a grew also in interesting. more think picking more all nicely. equipment lot up maybe to And it's got grow of mean of that lot the the in up there are in and Yes. Korea playing out field college the points in That softball, the middle return is by of, in we price and Japan, I there bats. we pieces these very going there's very to across learn. that continued is way. you've was international some room especially saw post-COVID a world. are then but And the Kids

next forward think got now, the going a good than us, do. obviously and look to can years, to to we especially really when of we business So growth, next years our in growth better what X, I in in I but business X front this X lot X it's bike there's I can grow of X the go actually see has think

coded they're It's more I'm where baseball. this bump actually So business confident necessarily the don't in I goes. opposite. And think

the think got post-COVID could to of mass. sports people return it I when better kind

Operator

Anna Glaessgen, comes question next Our Riley. from B.

Anna Glaessgen

touching on fourth quarter. SSG the guess for I

the model think on like you prepare improvement about call, to a be sequential next as BOEs I to or last talked bit, launch next going first extend given expecting the It Is the product. delayed that's year channel sounds normalization could XXXX, level half. beginning of in but mentioned of the expecting that should inventory that in year to the you we channel. something be then

new So should expect that product? when we

Michael Dennison

a Yes. question. Anna, good it's

some said seeing are managed our customers, some inventory like OEMs the have new roll earlier, some better We year. out well. very I who of model are,

But and QX. fairly who it's to as growth the significantly their of a his in canceling in which quarter earlier are moderate us had pointed in struggling in in more they committed production helping the this over reflection plans Dennis is that's year. script, QX, So that quarter QX out of OEMs some in other

the 'XX, afford really components do 'XX. to didn't inventories. on they of that's products not rid knows going everybody QX. shift Everybody mix if do trying in in in in get to their that's is old can't and And all the So just that they really

be the have new So about inventory. really I solved the another questions tied pretty eliminate earlier bike of to about things miss together. got by to of dramatic the mentioned year people problem. with 'XX. there model when the as They through have getting don't this have to out that businesses. spring Those when to you in They models, have And in our think are one inventory June. They

Anna Glaessgen

it would parse quarter on is to be? what fourth Got the assumed to touching it. guidance, possible UAW And be the then out impact

Michael Dennison

Yes, I October. finding sure we ended end though be can the is even of significant, going obviously. tentative It's mean to the that at out What we're strike try. fairly

it finite on real these factories restart not up I'm October not it it's number. because depends the So pretty month, and a down is pace was you reason think, The that they and challenge okay, you it's that and answer clean. the to linear the and gives why hesitant

we're and into holidays. get of these November, then So see my through is impact the opinion going to strikes the to going we're

after we're for the reason is QX in our think the right limited through in going a in and because implications while just to run of in So the I conservative the guide it that's holidays strike that, November, problem.

in So we're the real of QX. business our on OE positive not automotive part

Anna Glaessgen

into Are And this will you be that expecting 'XX? XXXX? chassis end availability to just normal Or could by up Got following extend it. back of the there.

Michael Dennison

with of [ 'XX. which we assumption vehicles, Generally the in an whether speaking, miss at in really these business it's throughout issue There's models to I 'XX be won't Barco launched, challenges this that year that you faced year. My think operating it a end the will the want our get at all the getting other back 'XX, see in we the little new in it or in on is mix. ]

Operator

question Mike from next comes Truist. Our Swartz,

Michael Swartz

start acquisition. to just Maybe Marucci on the

line be I the is the what revenue both then and for And there? Can give XX% baseline think growth top as on outlook is the you EBITDA longer-term growth you what business sense us margins accretive the throughout a said for the that margin. well? would to of

Michael Dennison

we and a us see little I They real, then very the little integration for from strategy margins. the mean, saying chain very And EBITDA this them bit, down a hesitation, a margins, we side, synergies on moving They're vertical fact margin a them that strong well. road EBITDA why we very, vector hit manufacturing closing the deep growth understand date these and accretive right is shy to away supply forward. now early is the we're material don't right we've with that that have going Yes. And So have them achievable fantastic very side now, this a well. that's side sourcing for yet, given raw from It's as going but us without and I'm right? for forward.

Michael Swartz

benefit assume reflecting And first would to Marucci guidance? in from your any you're quarter say, I not needless

Michael Dennison

nothing, That nothing absolutely in correct. Marucci. There is is guide the from

Michael Swartz

we that But Great. lot as some the a to negotiations getting this should there more be of start higher with the pricing and impact of And aggressive switching contractual with labor is temporary about strike. maybe just in there's risk costs, elements vendors? then their of any they nature. auto structure think Okay. cost Obviously, of and over the their that

Michael Dennison

it, you. thing I seen Mike. haven't would We with question same the

advanced our innovation So most you the I will think on made. technology drive as question valve our is it. it's a platform that selling ever you're products OEMs I expensive continues upcoming to new that dual and great tell and and we've the most product that strategy is technologically with that Raptor asking we're

And downstream the we're is where going of those most elasticity we're in to these to price mind, product make So and make cheaper on going to continue keep types better is of going for better vehicles. versus push OEMs products. to up those because points

lineup. So in there's for pricing the less them there of the there, pressure then is end probably bottom

going to those for less reasons. we're think I just So get pressure

Operator

America. Our Alex of comes Bank Perry, from next question

Alexander Perry

coming was that we lowered But to how impact of the maybe of you a then the is tune versus way sort on guidance under much what of sort that? of how quantifying UAW? take impact if sort strike thought that contextualize the some context it strike. so the is quarter was know and And I UAW SSG UAW the wanted just Did the guess by, gave you you on much fair I clarify, of I in of XQ of you million. the qualitative to there in of impact to $XX were like your mention

Dennis Schemm

that's Yes. question. a think No, I great

So think I from the he in impact talked million prepared in around $XX it strike. being Mike's about remarks, QX,

about there post and it we of that to QX, the inventory to there's is million strike prestrike much thinking grind all probably to $XX in business I OEs. recalibration When or slowing this way working was UAW where is because gets the And continue look impacted. of that relative remainder, pretty with just impact and October that we then and quarter. and our the so the right, so distributors and the essentially through And was SSG was got another difficult, as it

of ramp going be Some they is as impacted to November start to up. back

call less not the So macroeconomic then leaning there's expensive. I'd causing nail distributors But of to down. in as much that to inventory there this carrying inventory. the is it's dealers challenging cost that also more They're that really rate hold what interest environment is and much because

for this impact how I'm that's combined So rough about million But is macroeconomic that thinking math, it. I a or overhang. mean million so $XX and UAW $XXX SSG, for

Michael Dennison

think in of we things dealer you're that climbing having products is on, to lot floor interest I finance of our And September vehicle they consumer they pressure. a bike a But just more your was inventory. seeing I buy a what is obviously, range the the does the the hold as the to which and that are cash of Interestingly to distributor the our when your you've dealer to click QX or rates we lot and we're understand nobody want a of importantly, significantly at of interest really are to interest rates said the a always buyer, is past, a buyer important to your end kind at in And those post is, a high inventory we've in under business, or us of rate we of about enough, get saw what because buyers questions, kind buyer regardless asked what's the buyers. you're whether a products. least, Labor to or plan. what you're interest saw of car Day, buyer wants our so due rate and tend of a double in we I think said you're really what of one Alex, that know when Dennis affluent,

maybe want to most. Somebody worth in a inventory that month would they have the past, of hold held at their quarters

this kind So learning all environment in, weird we're of that it's in all that a we're nuance about.

And out right also so other understand. to Dennis' comments that we're and that. were here rationalize playing There's in things trying

Dennis Schemm

more different, the of what I talked much right? doing capital Yes. mean, about are cost We're acting The think $X million, no highlighted we about we call, I that? is down another expensive inventory on today. right? our taking Why

what So rates it X.X ago, today look is at we're it years dramatically versus what you different. was take paying on a

balance as and customers. the our rightly what? So staying distributors is guess and sheet, And within focus dealers our right, So and well on so.

Alexander Perry

little guide And of year-over-year? the long-term of there impact is Yes. help Like say the carrying through higher your That's bike is mid- then XH that where up to that impact, impacting upfitting like really really of only as high y just question in seeing environment the mean? the amount my like on for XXXX. we second you is It does more terms challenged. a trucks What know Does sort retailers. the move mean I they're like helpful. down rate digits. sort is you're just 'XX that Would in of versus of versus inventory sounds most x pronounced is willing that carry SSG year? the last single

Michael Dennison

more they are It's board. of And cases, they're it. quickly that. is you discounting in are of as obviously and heavily. you'll who give Dennis, OEMs the the lot inventory dealers so it half across an inventories nimble. as down through online as I'll that I'll an a first half pretty And doing responding, this flush the things you see and taking of of Alex, system. think in bike how they actually one are When can, direct the take their the they're can about to be dealers trying example, bike second much

just see want dealers of it that's can you to the that hold play kind don't So the out to inventory.

have with can as dealers are a direct-to-consumer automotive, powersports. I'd it's also it's in financing some do automotive, not customers fashion. significant as get I that some that discounts play So in our just push from out the hands say floorplan is kind seeing as fast in you that well. agree And And do of you, issue. as that their we into taking they of OEMs a... you're space comments though, the big own then to in Dennis, of and it through

Dennis Schemm

start a 'XX at That's the up half to of and modestly half 'XX XXXX. 'XX, then we'd of they back with into you bikes in grow the as first I'd overall models, going our in say XXXX. if this the those to And on we year. help continuing with look of But half mentioned, doing contextualize things, and is Mike really the growing are some would OEs they way are first of year here, the bike us, good seeing side right, I of a the into they're and in of next Yes, job half half to as the this and this expectation. be take grow business models second is back move

Operator

from Baird. comes question Kennison, next Our Craig

Craig Kennison

to about wondering area or wanted cut just cost? I ask an to if quickly you spend R&D a was itself. quarter I'm dramatically. was that's that the dynamic elected timing down if where

Dennis Schemm

Yes.

grow or That CapEx it comes continue are and with forward, We the to the important command most the back of can to costs our do to business going we higher when marketing going margins the sales line. to not things down into R&D, cut one spend. for and is,

rate you tax lower in there This R&D basically, was saw was the talked being So QX. about tax credits what you remember, through. we if coming

Michael Dennison

to infrastructure. going we're we're back, going if to cut Craig, Yes, cut back on

R&D on cut are those business get not anything X key that allocation back will We of capital our until else. before elements

Craig Kennison

comes R&D through So the that tax benefit line? on

Michael Dennison

sorry? again, that What's

Craig Kennison

the R&D come Does the tax line? on benefit through

Dennis Schemm

came of some that just that's part basically spend Well, There it. saying credits that some through that offset I line. of the were was in there

Craig Kennison

what to is, Okay. FOX just as business question not? that that can could Marucci guess it add CODI through I relates And the transaction, my

Michael Dennison

Yes.

obviously, CODI, So respect, have we're you've company. manufacturing CODI. of a And a got long we of history a for lot

aluminum that Craig. do, like they and i the one can we know and bats manufacturer CEO materials is Victus you is that's and/or supply which Marucci really is we day. things go and support while the Elias other companies, basically the If from we're a But perspective, of about, a a it I a help gold our perspective chain And and CODI of and Elias after every do Marucci that manufacturing guide are know our as most composite, is. percentage company Baum can like you AND talked of biggest their story, And because what well. of just

baseball So difference brand of much players, from value what, do can in we're our ours it of marketing from working a then marketing our strength, there's not the them but how that in you we strength and can are side perspective. that drive business with our not that know benefit in is there's other pro use, incremental lot leverage, business. And racers the assets, typically,

as So well. about And we're excited we're growth engine. a just that

I with is and lot that lean can our and compelling, do. a really to be, think think, going in So work we ability team I to there's

is against that nothing CODI's fantastic. got, what there's company So

they've in So I'm they with done own what the years impressed them. really X that

to it. we're or look I'm crush got going that the Now the that to so ball, next saying really like. and X to the bat ball we've speak, X years

Operator

time. further now have for back queue I any in questions call We at to Mike Dennison this over turn remarks. concluding no the the like to would

Michael Dennison

all Appreciate guys see Thanks, you. the everybody. Talk to and ballpark. you we'll time in Yes. tonight,

Operator

conclude Corporation the Factory This Holding Third does XXXX Quarter Call. Fox Earnings

line, You may day. great have and a disconnect your now

Fox Factory Holding (FOXF) 2 Nov 232023 Q3 Earnings call transcript