FOXF - Earnings call 4 2023 | 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 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

Dennis afternoon, and Good joined to Factory's Officer; Fox by and Financial Thank Treasurer. Year and XXXX Quarter and Executive Chief Full Dennison, I'm our Earnings Fourth Chief Mike Officer you. our welcome Schemm, Conference today Call.

provide and closing by Mike and Mike. will quarterly then remarks review followed will First, year the financial outlook Dennis the full results. business updates And then for

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

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

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

the financial we and of margin net call expenses, to addition, financial Dennison. directly is operating certain my will comparable better profit, remarks our gross which per EBITDA company's has posted where operating over our to earnings business, useful that trends. financial to core press as including release, adjusted adjusted earnings EBITDA adjusted are gross included that, on with within and non-GAAP Reconciliations believe share, refer these allow evaluate we adjusted to their website. measures prepared In income, these to measures today's in to Mike performance adjusted release, our and adjusted metrics understand GAAP diluted adjusted turn and appropriate non-GAAP measures been are evaluate margin, also CEO, the investors And today's most pleasure our it in

Michael Dennison

highlights Good afternoon, you quarter for fourth sheet provide business operating will questions. Vi. your will the you, our then Thank discuss for earnings I and and our our us and strategy, Today, Dennis our today outlook. call. we open activity. details will call additional XXXX balance on thank results, prepared joining remarks, everyone, on financial After

fourth quarter we in which The which significant achievements half view headwinds as a contribution the million current was approximately as is included our For these began revenue, persist well Day. Labor challenges, which delivered And ongoing in $XX to the from in see million the first quarter, fourth quarter revenue wins $XXX saw we XXXX. after exhibited will with OE of Marucci. in

X, AAG to inventory One, of on bike quarter ongoing causing such the included business. ecommerce well our shocks year-on-year within lift more offsets growth as previously aftermarket created these conservative challenges the which as in recalibration partial have their the businesses rates be results. in and main components aftermarket interest X and kits near-term purchasing practices. in PVG provided customers UAW successes impact wheel, bike; X, we to our higher As strike highlighted, factors the as The and growth within

the While areas the from the direct the following million, our of UAW declines quarter impacted strike due strike's sales. the slowly in on lower these combination unable impact to to lower OE ramped in the which sales were manufacturers of This offset they the were in $XXX the and conclusion. original our indirect In resulted direct million year channels $XXX and Powered business. down equipment production on as indirect grew, influence Vehicle and prior impact of who expected, led to lines production, product strike the of from Group, strike net

dealers declines covered the end significant long-term were PVG OEs Consequently, volume Based a on less their and the in had costs quarter. end on the the with actions Some the through by our while business associated factors, work demand seasonality sharp of and inventory elevated order exhibited also as through consistent impact these within the levels distributors retaining others profitability. from OEs November, of advanced Powersports saw the warm the high workforce products, a of including lay snowmobile we problem, plan cause due inflated facilities To rates to or further to our to the strike. down highly during complicate importance financing after technologically driving and in shut to market. not skilled down conservatism make a floor costs. winter, or elected continue any sales and interest growth off trained

$XXX year, year mentioned, the even product businesses our million the for reduced in was significantly. share market to in the revenue custom the portfolio. the In year delivered the business by On power In wheelhouse with business, over exiting contributor growth increase quarter. million year the organically nearly PVG, many side for external this of with of $XX quarter. in we grew the primary in just a prior space illustrating The revenue, and our Applications so rose which sales Aftermarket XX% the prior headwinds group, from $XXX this our the grew to positive million

and In addition, solutions ecommerce quarters overall the Sport contributed in record growth. expanded to Truck

were production to the chassis limited mix and shut primarily by to strike the had due chassis which on due impact updating availability UAW caused our However, down factories, strike. at a significant business, delays

Positively, with more the existing in As an position conservative model-year saw new environment as for us Shelby plan especially aged also and of Customers the put opportunity on launch we work upfit with redesigned These releases remaining model as throughout expected conjunction took new are to fresh, our the we Harley-Davidson inventory year. develop vehicles, which the packages continue is result, pressure interest on floor slew rate on are kit in SSG, of to sales changes branded OEs release bike, ahead are trucks. product be Expansion in Powersports, in down future business. resilient reducing dealers a the to contented new a dealers and our growth of financing. levels. inventory. launch exciting And a vehicles, new models. driving higher and respect inventory high these will year In

share midyear, OE which half model $XXX million Our environment product, is of across are revenue the year have a begin maintained gained begin have spec Bike our will the excited year OE and XXXX. we late sales, partners as products net scheduled $XX of begun than in to million in quarter, normal positive innovative our 'XX less place in customers. new generated XXXX sign returning the that QX. to remain orders for of a we new model to fourth launches and quarter In The

the share ultimately the excited Marucci bikes following closed for team completion that in both our that These will expectations were whatever our The of Marucci's acquisition. XX. than the be. additional were be sales ordered, Marucci that acquisition CapEx since key net November 'XX especially revenue lines, the articulate and period model to The early product product better too plus included volume results on $XX drivers strong the the are year million we by new it's will sales aluminum direct-to-player launch. by the an Labor of of map we which volume by bottom of and throughout eventually While top generated driven from are sales year where launches businesses, have in in to product our level all generally incredible discussed road the and sales, by Like net XXXX. across plan on down team of in headwinds of other from X $X.XX X% product half delivered a inspired Overall, bats. our the significantly. Reflecting half the we Japan ability grew full was XXXX, clearly execution year XXXX. as wood and and of first Day, the merchant the tale lines back billion previously the after halves, especially expected in on year led prior year,

for OEs as we our down sales continue for the to product to Those million best-in-class keys that ensuring $XXX and of massive objectives. these some are return as the have maintaining key half Meanwhile, year-on-year us of are fixable in was and of the All our customers we operating brand with year-on-year where and long-term development, laser-focused our to a year these companies well where an and expected to is Investment not Specialty our XXXX to already bike confidence normal XXXX, decrease of will our remaining XX%, they turn model or OEs positioned first Sports that share a with health. research half have is make X which pickup. are that glut.We revenue were soft of face the this back to problem spec half the product vigilant expectations environment. that inventory success. a regain customers, brand we business elements brand dealt to is their and In our across Group, gained on forecast. with begin relationship development Bike back launches more below as and elements grow an of expansion, easy in QX new will which are attributable dilute

to products to And the our sales, XXX XXXX. and OEs bright to ongoing which of and growth growth believe riders sales drive that momentum innovative dealers power year margins technologically recently products. to will sales believe than aftermarket new industry. we the that On on which million, FOX or market. year-on-year and from through up points business in support $XXX expanded upgraded e-bike launches spot record and mix the more multiyear which Ford second, are XXXX's advanced will expanded expand within direct-to-consumer up with Toyota basis within delivered continue suspension introduce gains category, of releases our X.X% of our And typically we to expand to improvements demographic model higher and sports, our and high-end 'XX was last automotive finally, ecommerce A as First, vehicles PVG, due high the thereby components strong share of year, XX% were and where best-in-class distributors.

mainly million, ever Ford was by floor on currently utilized the UAW recent vehicle, plan Wheelhouse their the dual strength XX% our advanced dealer included Raptor year-on-year business to financing being up launches developed $XXX platform. in despite system for and upfit a product most of upcoming the in the the AAG impact. Our suspension product R custom and acquisition valve impact

consumer that and updates encouraged to are demand continue the we However, see higher-end interest. strong

We continue high these side-by-sides contented in will upfitting to have base which QX. customer late high-performance the customized, expand confidence year this into believe will with that vehicles. beginning UTVs affluent unique, well in and We high-end vehicles perform business, wants our

diverse As and to we that remain can performance on of which the products of the our business defining and differentiated model, delivering deliver. we move focused is highest XXXX, level all growth confident it in

billion year of XXXX, inclusive of to $X.XX to growing full see billion, Marucci. the revenues For $X.XX we

which across a When all in conservatism improve. by of forecasts the will our will guide of exhibited not we conservatism OE second forecast direct guess. improve, their reflection guide our Our this businesses, customer our is

to first growth pressures XXXX outlook the pressures XXXX quarter. macro be improved We the the expect to continuing saw half stronger driven expected forecast affected second rate on third with we what be to the In business. this and interest down Again, that consumer easing impacted to quarter year-over-year than be well. first being by expect we the with of see by in first second quarter aligned also of of half with easing. with as Consequently, will OEM continuing sequentially customers the half inverse the is and macro directly the same XXXX we of XXXX, our weigh our believe fourth 'XX,

these While rate is of the magnitude we cannot likely case, be of this sure reductions. timing or

us. mix bike availability finally, Yet lines. also corner conclude, turn To discounting the We upfitted of And near-term we and very product time, to our am acknowledge OEs challenges in in year exogenous releases. pleased same model from the I positioning. believe our strategic the chassis truck XXXX improvement with launching at front

and customer the dedicated by brands, We and pipelines members. loyalty, robust Dennis. talented call And over driven deep-rooted pro to disrupting and have that, AG, products our with diversification growing team aspirational by across the I'll and groups turn incredibly X athletes in SSG market of PVG anchored industry-leading innovative

Dennis Schemm

good programs chain on negatively manufacturing supply Total our financial October fourth flows, Thanks, slower our the review fourth fourth performance quarter site and then XXXX This the of structure slower-than-anticipated power the XX.X% first everyone. Mike, strike given remainder the a for given dealer and will consolidated and Powered and Group, of conservatism same balance discussing the had year to ramp-up PVG, guidance. reduced OEs, a quarter impacted sales by XXXX. in afternoon, also year was our disruptions. results Strike, quarter the were wrap net closures net The the sheet PVG sales with for $XXX.X upcoming in decrease also OE quarter cash we then in I'll strategy which compared in and of with and Vehicles sales XX.X% last delivered OE delayed half and the expect versus quarter full decrease along in inventory. begin capital fourth given of up in development $XXX.X XXXX. a million move with year. a sales ramp-up to during with of UAW impact distributor sales sports, of million,

of We expect continue first to the XXXX. into this half conservatism

of lift from acquisition suspension Our increase availability, fourth upfitting by a chassis sales revenue sales and kits rates. $XX.X business This Wheelhouse Specialty X.X% aftermarket new AAG, decreased from by Sports net distributor quarter because the partially the last fewer conservatism therefore, and Custom the model was level same due compared This to to Marucci channels result XXXX the growth interest and applications compared launches. Net higher persistent the various delivered quarter aftermarket million lower offset group, sales in across dealer the quarter and Group reduced due holding positive inventory lower includes by of sales, the primarily to sales year. of acquisition. driven inventory in to fourth year in in high and XX.X% also the a contribution mix

were in consideration impact sales entirely impacted in SSG for by sales. bike over conclusion in decrease full in year bike Excluding On the grew The overshadows basis, of even when $X.XX declined PVG the a billion UAW SSG's significant strike, year which versus accomplishments and is mix upfit The the AAG, driven by ramp-up chassis XX%. full the Marucci, decline SSG's year, in XX.X% decline the XXXX. billion and decline sales slow into taking sales full $X.X business. that and XX.X% our after strike's and the allocation the

income and the a XX.X% of million gross a decrease driven impact gross due our net of in compared manufacturing million upfit in in offset to XX% fourth facilities. million fiscal fourth over last fiscal primarily the million to expenses and or which strategic an expansion, percentage chassis Factory's XX as decrease The of On to and by in is $XXX.X the grown increased a Amortization QX mix, basis compared fiscal with operating changeovers, points due company's quarter the intangibles, by basis, a or annual same expense in quarter shift by in were partially expense tax XX% mix sales the American year fourth from operating XXXX by million $XXX.X less to XXX the in fourth high-margin in our inclusion expenses was XX.X% the sales our expenses XX.X% decreased intangibles the Adjusted expenses margin of impact a offset partially $X efficiencies decreased costs XX% XXX of from in XXXX. of strike million of XXX year. operating in basis adjusted effective of XX% associated Fox XXX or year of we in by by primarily the years. was $X.X transformation the maintain Wheelhouse absorb a offset North the and quarter as prior pretax facility prior XXXX. to basis sales an in Wheelhouse tax to in period On sales gross Operating expenses of year. year. benefit by company's decision or the of mix annual to primarily in or decrease of upfitting, same fourth expenses controls of basis of restructuring think workforce, the at American the allocation fiscal $XX.X and the and increased million due Operating additional address XX.X% that given of sales XXXX of Custom we increased with points, points XX.X% quarter income. net XXXX. primarily for our markup, tax higher Marucci respectively. of increased $XX quarter note are expenses of cost lesser continuous which to as to margin amortization compared our expenses of decrease dealer XXXX, the decreased total model the decrease to by to facilities. XX.X% sales, delaying to period XXXX XXXX margin XXXX gross of the in in for organizational percentage was Total inventory last and net sales both versus in QX compared in in effective were prior While quarter North conservatism, X our the the production The $XX year. The in year $X.X bike expenses sales gross it's $XX due UAW prior important improvement. margin, and million in offset XX% to quarter the than was margin Marucci business I more has were the period point or acquired shift controls. valuation costs portfolio fiscal gross at efficiencies of effects The and fourth sales Adjusted sales the operating XXXX amortization excludes strong and year our basis, million, Adjusted same the an year compared $XXX.X and operating XX.X% inclusion operating of million, and operating acquired XX.X% cost respectively. compared expenses of Custom were of million $XXX.X the to portfolio

adjusted XXXX effective pretax On $X.XX the For expense compared the the diluted earnings $X.XX net XXXX. Net million year to quarter net year prior year basis, or in share $X.XX adjusted delivered same $X.XX EBITDA net same in decreased $X million decrease XXXX share decreased Earnings quarter income year. XXXX to million was margin lower in EBITDA $XXX.X earnings million approximately The million the XX.X% in for company's the diluted primarily million per $X.XX to fiscal share to million in per compared tax of compared in fourth due and of income portfolio $XXX diluted the in by in quarter the compared or expansion year highly last compared quarter adjusted XXXX. compared XX.X% fourth in fourth of to or fiscal was XXXX per diluted fourth a share period. workforce slow growth. strike $XXX.X ramp-up of of $XX of to mix, to fourth the was points to We million prior XXXX in the impact was trained ended, year million compared fiscal in compared fourth fourth income quarter net XXXX or EBITDA year to support $XX.X million compared XXXX $XX.X in diluted XX.X% of EBITDA was the in XXXX our XXXX our the $XX.X to the adjusted $X.XX the fiscal share Adjusted increases in to XXX fiscal to $XXX.X decrease XXXX. quarter basis Adjusted per for to diluted the million the year were to decreased fiscal of fourth the the in for XXXX. margin of per year versus earnings and of the to of the strike $XXX.X prior Adjusted XX.X% year. continued decreased income of decision due million prior cost fourth of facilities to $XX.X year. year by the million the quarter last full associated a to full change margin was quarter year EBITDA of XX.X% to the year, $XX.X per $X.XX our the year. million Adjusted keep XX.X% the UAW period in million in or share $XX.X quarter in XXXX. Adjusted fiscal $X.XX with after fiscal quarter in a Adjusted compared $XXX.X in $XX.X XXXX, income.

to balance flows. sheet cash Moving the and

the Fox be is inclusion of increase million from by Our for allocation inventory continues of strategy. of driven The inventory balance our strength million and Custom million $XX.X from of $XX.X sheet Wheelhouse. and underpins a source capital $XX.X in to Marucci

wheelhouse, across in Excluding acquisitions. continuous $XX.X by by goodwill we Marucci optimize Custom sales inventory The to reflects wheelhouse million, increase and our and driven the improvement by Custom Marucci organization. in efforts and inventory the intangibles lower decreased further

is leverage and our in with expectations. net Our year-end of X.Xx line as

pay down R&D, invest structure the through ability repurchase CapEx shares growth in and Our debt. provides to and and sales flexible capital optionality gives marketing the and to us

of as revolver December $XXX million of versus million is XXXX, XX, XXXX. XX, balance $XXX Our December as

on November Wheelhouse and million and and to our XXXX loan program. drew term from $XXX and during loan We million $XXX revolver A million our from These $XX loan. withdrawals XXXX Board a existing our of new by March revolver million. Custom approved Directors repurchase new were term of in our purchase third million in in term Our In $XXX payments partially share to Marucci capital. on in finance working of prepayments of offset balance million $XXX XXXX the quarter our XXXX, is our our support $XXX

in quarter, spend quarter per CapEx in share. shares During repurchased was the versus was X.X% prior CapEx the fourth upfit of the machine million, $XX.X purchase the year we shop SSG's up for fourth million, $X.X spend $XX.X up The at $XX.X increase power million. and full the an million sports of for CapEx versus $XX.X test spend $XX of PPG's Bite and in average upgrades the year prior quarter to capacity. is due to quarter million. price Lab, its year XX.X% Innovation

our true representing And and tenants we capital marketing, into core. our year sales and Additionally, X.X% invested X.X% and X%, versus to in In million. the invested of sales in we $XX.X allocation back R&D, respectively, and period. prior million, we $XX.X invested stayed X.X%

during in in In in our of SSG's XXX new $XX.X million XXX continue innovation riders north X.X% in and versus million to and and SKUs X.X% our prior invested investments R&D respectively, period. in suspension are the to both sales respectively, we supporting $XXX.X full For bike, resulted in looking year, efforts components. podium-winning PVG, Fox we XXXX. the X.X% In marketing, in sales, R&D year, the X.X%, of and representing year and drive introduce and

share in focusing e-bike in in are we And new gain are spec advancing well, We we AAG, and multiple space. we the continue on that growth as to exciting vectors. are releases proud

in premium, and expanding to different venture for invest improving of off-road groups. are we investing models all to our e-commerce in in points. across business to we price and our upfitting continue high-performance state-of-the-art lastly, cater design We our heavily our And where business side-by-side capabilities new are content updating designing and business

share I would Now guidance. select like some to

and the facing and PVG the level carrying at headwinds AAG due rate in to environment at the the continue more expensive. is higher inventory outlook interest cost level macroeconomic dealer distributor and consumer as of We

being the we since be began to fourth like recalibration longer to partially declines trough of will first bike offset is as demand the new further hit expect the and than consumer SSG's the destocking in by growth is in the year-over-year, see lowest first expected quarter, taking XXXX half While quarter in inventory with levels and product but launches ecommerce. anticipated, decline the

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

Our EPS QX, given the availability and strike from net impacted from that purchases model OE of chassis changeover in sales sports PVG. lower year-on-year power and delaying continuation and which are dealer the and overhang UAW demand year weaker bike is timing, destocking, mix,

and sequential see Bike releases, second to year expect environment and for launched We the model mix availability that XXXX improvement the for RAM model chassis is into year quarter as OEs the change expectation prepare improve, rate interest improves.

in the of XXXX for year-over-year growth XXXX. of second expanding As a first half to result, we to half decline the expect

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

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

believe robust is and of pipeline innovative brands, best-in-class XXXX share be by and given this that of product race won we map vision market products, industry-leading our $X billion in our our sales. supports belief Our innovator the will road

year. However, our this environment, on including largely rate margins are volume including sales vision tied XX% macro QX larger interest of since of will $X we and several mix exit product factors, our billion in OEMs, to and and in on rates the depend EBITDA uncertainties

watch aspirations second operating trends accordingly. year continue of visibility. We're we and this consumer a to revisit in we'll XXXX and and model the retail business adjust will As certainly in more have when half we environment, result, cost our to a dynamic

However, call structure, the position because and of Mike. I of a this investing future. turn our capital over from strength back we that, to strong to in are our like would and during flexible With downturn working

Michael Dennison

Dennis. you, Thank

the year, new start still are we year. faced managing we we we the through recognize of As that some challenges last that same

our developments had international on of launches, team to to EV around relationships, cash this team of our the I on where across number like have galvanized and development enterprise. for in ability increase winning product our call cannot advanced business higher X more and to strategy, with exciting we product the proud balance open a future. a strong X accomplishments, a or more and I positioning conviction new day flow prove by we a be future about based our I and equals in There every pricing Armed our innovation into as in However, be and is every much shifting now on Operator? and based are sustain excited plus energized way. X questions. our the sheet, this I never The platforms, customer expansion. remains gear am would

Operator

question Securities. And we'll Instructions] Larry first today with Solow [Operator take our from CJS

Lawrence Solow

the --clearly, just of feels year not in first as lot margin new the a in but a Mike, a a guidance like little lots sales It guess only the ramp but of -- little your not question, and up, issues probably issues, progresses. seemed gotten guess have moving in parts. I what worse. I to deeper big builds

started the you certain. much clearly terms need that you're of to how today exit can guidance year which the about I'm just an get in get today share your demand is your of to correction and that's to a what improvement exiting year-end bit what you're than ready of year, more vision kind talked improvements maybe supply, versus hopefully what a rate. higher that -- but today, in sure you those inventory fasten what OEM little you improved from You with production year-end. the slowdown lot year.I not from if But to incorporates driven of by in drive destocking, less

question that get -- by can out over improvement much bucket can is of driven that some just hopefully demand of If like some how kind you of of the just of that the you will the things time? improve versus

Michael Dennison

That's a And good of lot questions. question. a

of the number me things half try now to year positivity let through the So that start the a and some towards us through that take give the to continue product of year. minute The that feedback. back piece launches are

an as product year that product, was of innovation, alone, we're launched example, products control, the prior XXXX. internally, it you And we new support over that in we So And PVG year XXX that PVG, XX. XXX to things alone.That's to in alone, launching are can this know, as product XXXX a quality launches.

to product So new to can on see relative that which you been is business. arguing our driving we key development, have

what those rate, a So are the we're continue bikes. our spend for drive road that. this our and see 'XX rates is our to come more model of model exit with product but bike, range materialize back volumes in on question. those that confidence to do launches to Again, big end are interest of less going that year customer, needs a 'XX highly do That materialize. rates the matter. interest bit product with to product affluent happen year give supports with things those consumers items. to Tat's like We down in the little But start middle to the to year in map impacted, portfolio high range, half. What need comfortable that we really volume vision

has to they saw in What on the over to So about in where because forecast. got in backed ask forecast a and when COVID, We back for late you environment more. over-forecasted it OEMs improve and was to and we think like up would the massively. half. got their OEMs backed under was Interestingly Larry, back especially then And in they that off what commitments to come 'XX, enough, deliver where we late forecast. QX new then the 'XX, would they just frame time get back macro continue really

lot in about when we versus hedge down had do And up to so process. a hedge we we and forecast, think we're tend And past. in pretty years now their like this to conservative learned we've

that, seeing too. You're

actual to forecast shape. we So get have to in. we'll I think that, And we great we that back in can believe do be as

Lawrence Solow

at in that actual you too? markets the seeing you occur actually this of the customer getting end demand, dealers vehicle interest vehicles. And market environment? on I any side, demand. want seen higher I of much interest have get terms more you the hold higher are least Or just as real are But fearful -- are rate mean, in switch your in could some environment, in slowdown end don't you that rate, to that,

Michael Dennison

seeing in customer slowdown we're think I aftermarket for sure. not

business many lot in Raptor OEM up.I'll They're going the about one R, max brand-new vehicle. about those portfolio OEM the know. Raptor at is and vehicles and they new in you though, as Race have we talked of us fixing slow Raptor, down So sales tell you maybe in that buying we customers a they're slows driveway. from We are have because down, away capacity things moving of the of the a the That's projects, on one then talked side, that picks aftermarket XXXX. the when this for that if

not seeing sales they're the in So units. of anything those

conviction of parts a It's has of see that start other strong. the where to of some stayed in So just soften. that we we customer have business that as lot

Lawrence Solow

then not Got just of much cutting. last it. cost sounds And question. in like terms there's It

much will in than you're because down in in look as cost bit just improves, businesses, back a that suffer not improves a good Is to You're likely the too even the right? worse and were in these a they half improve margins at absorption QX rebound expecting So it? little maybe to year. leverage then cutting of the start way QX,

Michael Dennison

And it. be where some at great We're factories That's mind, some a long-term we for or to like of our it's people, don't we and amount way need shift doing and to an reason for in the a That's that.But we're whatever of side great We're a that look efficient. in corporate or night near-term in optimization something ongoing now problem. future. don't event. need improvement we have conditioning trimming better the certain hard to be find doing should more my a right in we just huge majority in it just a shift understand this,

So our we're guns the and road product sticking map. to to sticking

Dennis Schemm

Yes.

sales, going see to through continue this we're All to you'll period. marketing, So spend. R&D,

future. right the the I think move it's for

Operator

with Next, America. we'll hear Alex of Bank from Perry

Alexander Perry

business, about versus give was could the a in the $XXX maybe And we about just you're versus some we more from how did in the just million the I rate isolate year, SSG thinking are PVG how coming and AAG if color I that thinking that SSG about standpoint. you you First, then hoping legacy guess various for growth business XXXX? segments

Michael Dennison

Yes. Good question, Alex.

here specifically for second. a So we'll talk SSG

in see guide. So you'll we're not expecting the it --

We You down as of can XX inversion that Dennis see not any is see business there's we'd our is the being XXXX the just But pretty expecting obviously year. We're of for opportunity -- the guide. a in half PO function short, of about there days. talked to and about.So first business improvement recovering it kind improvement back in the think visibility in like and or this year that an improvement SSG this XXXX year. as in this forecast visibility half our

So customers as these from glowing of see, you while a us -- as give answer grain salt. heard our love customers Larry, give my that big forecasts take that as we to to we

so our now, have that don't we numbers. And right into baked

forecast to help And got OEM, product going tough. of to that's automotive and and the -- We're to were other be aftermarket they will by changes in so But to and things where build. as our 'XX. us. reflection and launches businesses, volume want OEM. like really But driven go a the in in be that. In their there's cycle a reflection sales [ in of been down aftermarket it's potentially we're expecting that powersports that going PVG much when we absolutely a built really lot ] to some We've their flat space through rights business do namely it's so

so And room later forecast again, the year. this we're, give hedging in some forecast this and improvement us for really in to

Dennis Schemm

-- -- we AAG, the new into side-by-side flat, offset decline the business upfit relatively first outfitting is in flattish And this operation us that the relative in think but half also I going is for the will help business. I got of since to the that mean, seeing have a them of effect mainly some that year that we've we're

Alexander Perry

other is the sort Any the expected quarter business? then given Perfect. That's merchant seasonality contribution how modeling in one by help And of on the very out XXXX? that What helpful. plays of just question.

Dennis Schemm

has certainly us, we position year, Yes. do -- $XX live $XXX challenging yet putting Coty this, little of here delivered they Marucci last With quarters X through because A in gone know about the million. results a not me million. like did But Marucci. what with little is

$XXX million. essentially, you're So at

is bigger October have would because that yet.My to had you probably pre a just so got Coty to they and time, period of not November early November where account Friday And for it Black has that on October reported been sales. take

were speaking, get probably there. $XXX I roughly I'm million-ish. these would $XXX guys million, So guessing How around

so probably I of well. as without be me on Does look details. growth assumptions think that normal top best That's it at that then some the that giving would make make just way that, could And you put to sense? you guys right? more

Alexander Perry

That's incredibly helpful. Yes.

Operator

will question next Baird. Our come from with Kennison Craig

Craig Kennison

customers Powersports side, you? pattern order the their your curious with reset On recently I'm OEM Powersport how

Michael Dennison

Labor -- And Yes. it's kind in probably really QX, December caused into early what of as reduction call January. started it it late would but it, post Craig, Day The early go. biggest QX. February and analog, Think of digital, between is more the shift significant.So not to a I about us that's and carried was bit it really and kind December

in what? We're up going back because face You us forecasts to We're these their value. backing own take process know just not think at off on yet. they're of we and telling these the are not going to customers

is sensing December having February, you're just what that coming the that's So from we as they're significant challenges. conservatism that really reduction to from inventory saw is really us some in

Craig Kennison

been in recent guidance whether we've It another to is an like We've still or wondering absorb? helps. glut done signal area. just channel whole there's that feels some detected the that whether has work for there your And processed inventory in issue. that the Yes, I'm

Michael Dennison

we've we've that. worse of help We approaching that the said, taken based guidance. basis. new some time is some year them real -- we're in like the hedged I products this that down what get, offset actual we're The in on potentially? we and new customers and actually get might it good some On Could our that news space forecast seeing

for -- everything for we it into help is road and just map completely. we given the this And buy product I to forecast some think us. be of would we and of that. offset said going product before, year It's believe not some the that we're I don't like with So can current development

Operator

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

Michael Swartz

provide some in the business, year maybe the And OEMs 'XX larger between behavior there you some Just a and on more timing difference of more of little you around bike I the customers? also, are the model thinking seeing and within. the the commentary color global any your mean, about domestic-oriented changeover

Michael Dennison

that this, or they're that that the great we're U.S. exited have. now companies the gas. model launches is boutique, by have are the companies already right?That's behind inventory is have the problem And we're going guys confident tons a what referred sign in which already whether obviously what's is back to, for in we're year to big for XX year 'XX. the move have they'll volume of great launch later Yes, question, on is or we it's those exiting are -- model inventory actually good that side. will that The problem the My POs is, Europe bad here about of What conservative 'XX while smaller companies, that year in to model taking side with 'XX they on Mike. we're year spec with model seeing you perspective global positivity, the

a by year all So they year we're on inventory be companies their the pretty of will exit as late QX. model volume just 'XX comfortable the 'XX It's model function that what of challenges.

some we're out products that in fairly some We're gaining it. stack. product aftermarket. love seeing launched got quickly new We We've that's the our So recently reading actually stack. of how we sell just launches. kind We're great

the It's we aggressive all about before we've won there. war us faced. So out some of we've And have that time it. to be destocking green that say to some too just shoots do you this there's early give

Michael Swartz

business it for maybe Maybe for embedded are your maybe again big us growth you longer then guidance. And business, 'XX just as the the Marucci in that Dennis, to what's term? 'XX remind some both referenced growth in in pertains what opportunities it and adding

Dennis Schemm

purchased when us impressed really that things the growth we the that of multiple vectors was them One back they had. November in

to they're on demonstrate continuing we're one growth Softball. like the of positioned there as this we'll Hitters to the to those They've fastest-growing And some out apparel It's probably year.And to growth of try as to strong well we're launches year, come but and out got strong that some really Bats, some tight well the on House are well. expansion in cool this well. as due keep feel a lip really, on continued those, growth see I them then capitalize expecting see there. in clearly sports

that generating so be us should And revenue for too.

in margin So side International point. again, significant, pretty opportunities then accretion well. final lots and here of as strong the One strong too. expansion growth is

So and be expecting well to so there. acceleration start we some some presence news Japan, should in there as there because see of more a just we're getting

Michael Swartz

know synergies? of a Okay. on talked follow-up Are Are Marucci. in any cost I any the material embedding 'XX outlook? embedding you synergies. those you just about you've the And

Michael Dennison

Not 'XX. in

the are in there by 'XX. but in significant for some do putting guidance. opportunities are think I I And in opportunities, don't There's work 'XX. we're think that our not that way, to there

Operator

Jefferies. Jordan with from Our next come Bret question will

Bret Jordan

the start Marucci guess, about shakeout? do talked think season think sales. after I a maybe things seasonality, I into about what's million, that on I maybe on baseball but $XXX the think -- around maybe the follow-up, that, like But we it softens fall and but A quarterly how the strength you some -- sells of

Michael Dennison

more is it extreme Brett. The is than usually now, seasonality

is and the Again, in the product XX% the With se. Bats the different portfolio. that the Bats of spaces, referred just launches business today not product rest per of newest not Dennis to

big that out. to the is So biggest you'll actually QX typically we're them. quarter now and of QX quite is some seeing see taking quarters that's used be I seasonality QX. And a What think historically for

spaces, enter can quarter lighter quarter So as being launch QX.But it's it really down we these what lighter And we The that a more to throughout further products think year. into QX. we the -- comes even absorb of bit when. I a QX, and probably some being little even revenue

Bret Jordan

that margin need about haven't then, guess to the we that is number And margin Okay. the there back absorption Gainesville you getting overhead that there? plus XXX have quarters far production facility? start Is leverage. get ever from from of talked of Or potential couple potential we your a basis before the something the to -- changed fixed as last I thoughts as points you

Michael Dennison

because remarks, lot 'XX, a out of any, QX, just our didn't of UAW. saw called we in course, in we although We of as improvement see prepared

the way path the those keep But and pushing on back in just then QX, let's long Day we're softness until, a So now say, we and throughout UAW. all Labor came improvements year. we'll new in some that

matter know what do, we So point. to volume your does to

think we once and moving forward, in. I see back then that UAW we'll past So get come

Operator

Riley. with question next come Our will Anna Glaessgen from

Anna Glaessgen

it say I incorporating frame at had changed least kind reluctance to that's seems a buckets recalibration of trying was understand guess spoke higher November like this to since inventory. shift bit the understood. UAW inventory to last dealer that any of bit more piece in little powersports and great. that way those report. little be would the interest last out a is strike take what's of terms to Would fair in then biggest Or at It be we point, better or some? I'm rates the impact, fairly well We loosened started kind

Michael Dennison

do relative fine. on don't really of think other just a that's vehicles. in forecasting I some just it's do truck, If softening some called QX. in and be softening it's truck at the although high-end softness. see to of product it but AAG not past.Is a the plus, And OEM We automotive major in function Yes have the just significant? on in It's floor the We in the you're December $XX,XXX is OEM space, no. general, in probably that's plan really you right If you out Shelby RAM and visibility vehicles, fine. financing powersports, a a plan contributor lot. financing, as the think tied to see not right we've floor I necessarily $XXX,XXX more function may in and

macro stuff And spend to product mix. their out. to product a It's have something and new around -- again, consumer and fresh nothing money. want I have you works just rates it's function of a nothing development -- just it's for think So road interest itself issues. map or to that It's around

all you're seeing like think companies in I that ours.

enticing to it if And If up you can don't, to a law they're you to something pull create be problem. and a that's going money. can spend then consumer, their

these So and product to growth important in our launches be to are incredibly going success XXXX this year.

Dennis Schemm

had think Mike, I to you the out what just November. And when other was in a were thing add expected with to than bike that, little we certainly would softer we be

in So been deterioration clearly, demand. some there's

we year the more should model quarter. start so these the into the go built and that forecast. is there seeing as This OEMs of We more second that growth to in And 'XX. first in quarter

Michael Dennison

It's a good point.

You've out be. heard this going faster better me say we're of they get the to problem, the off

whether about worried not So show or business it's the until if QX. and it a are. But share take waves so just it pain, I'm through stuff. quarter, get back there our more QX take they to we pattern, get can't normalized to have where get get to differentiated product spec I a I and they done. how want

the take with just pain like it's go, and So deal let's it.

Anna Glaessgen

Did one. the clarify to to say XQ? want did Or was just -- in growth it I back Dennis, you second you half?

Dennis Schemm

QX our be should current be then the expectations. back sequential And see half we would QX to growth. growth, growth Sequential with

Anna Glaessgen

I SSG Got XQ the in of be comments, to since prepared the it. think And the like said level back on that, some should you going lowest destocking started.

million be that? think in to that the about sub $XX So that Is the XQ. would right way

Dennis Schemm

is That correct. absolutely

be lower will $XX We million. than

Operator

Jim Duffy Our final question come will with Stifel. from

Jim Duffy

the your for the a With us that visibility mind, sure, more been that destocking. dealerships, dealerships I and Like they help the detail dealership shaping been are framework around? per aged the little of much environment still dig has Is you which years, to I floor financing been vehicles can you is appreciate destocking number process? about I thing? difficult it a think on business, guide? in big is upfit has a that this, on a used be in some inventory recent driver And in and plan I guys assumptions appreciate challenge. process appreciate wanted the to challenge. how there type a in are of Where have

Michael Dennison

starting just those off mean, QX. are components, of SSG, start again, I we to Yes. a framing in up some slower with

last because softer And pretty overall a as now are start. we in at again, the those about year, into a right? We right a SSG year-on-year, XX% perspective, so when PVG you ramp-up. year-over-year now. clearly a guide, half.From of experiencing to UAW first of demand, So the levels off a think growth just And division that year-on-year, it flat especially a factor where fantastic because down to trough that's slow are OEs is with growth the Power in move significant but headwind business start with Sports QX, slower and to

this distributors XX% to with couple mountain was mean, then dealers and from -- years we're over because clearly the there. -- with our for just seeing X that's last years And time with And upfit into a of And AAG, fantastic that's in shaping for tougher built them Powersports guide, plan and floor so the a financing that's having it a group. the business. growth that year tougher back of I again, the weaker back.

that business. taking not chassis. lot. really plan the on just We're their the dealer But inhibiting right the LTIP we're is so in putting more financing, enough And on getting slower risk this getting definitely floor you not fantastic growth dealers just and year, then because chassis. product And have

and that well. And Does significant quite on us pretty a help? influence a so having as frankly, standpoint from margin that's

Jim Duffy

does. It

upfit more to destocking closely business point dealer more as a Or for where happened Just all there match are sell-in you given unfolds? year in an the is the on business, close sell-through? upfit on that restocking even lots opportunity can that's

Michael Dennison

Jim, is this Mike.

in. jump me Let

model we're year seeing is a changes. conservative the from approach dealers what So very to

X dealer. let's years. updated So truck truck X the X haven't the years. RAM same that a had you're has or last say RAM in They

actually them for now, 'XX. on available 'XX, inventory in there's model while for out put holding launched so to year they're going to right And get early is their which lot

that going you something customer to I the the new world, you will out and It's year. a if be a rate because have you've selling we're still dynamic out floor-plan don't to can work I In problem the it's So at find the want sell-through my show just the have elevated bit that, just with a new all. fine. dealer When challenged test year do and do Even feel product, think and really how fast side for lot. by financing, that have year.So out new comes models, is who's get case, wait vehicles model dealer pretty And I the next trying got packages. in and come to interest come if model lots do just interesting. our means, when, models model of on dealers in don't before, a upfitting. it's the going going to you'll the have want of can lot think it. want we and fairly because those as model an many current early But it's launch to they're buy to on to the really year to way with who, understand I go what it how and custom year to going going the new new And upfit they're same we on to fresh, vehicles down come my set I trucks you sell. to it down said when to this

Jim Duffy

the strike? for by and influence specific forward. like manifest of now the offline. the Bronco Raptor Raptor ramp that And opportunity timing thinking strike? most the contributors. strike. the platforms vehicles to from new for or that Ranger rolls curious which start nice about there the platforms UAW in incremental Is OEM the in been my still Which the the rest as But there so for had numbers? influenced how we around me, to And I'll question from been When this Last even is a would then arms like forth, get the auto I'm trying catch-up difference a I'm UAW to production business, have take like

Michael Dennison

for launch OEMs. of potentially induced. vehicle a because interesting changed from It's Yes. it told like that UAW And frame things UAW we're some specifically our us these not a time being where looks to

QX saw of things And QX to of so we're in push some year we this supposed into that be launched last year.

So there Again, says nobody there. implication is that outright, some Jim.

seen.I we November kind were the us year on just So what back infer was statement, but let OEMs from what play companies, some of we it's hard that make to get out. would to in think we've production faster and for others really that saw

was dealers not production, production. and the any to us full we there not out full inventory forecasted. in to be real expected, enough had they they the not what get hurry exit think being materialized. I them we But and quarter at could And fact, saw not kind which back in like interesting back to what of

any hard some can the long-term it's and take model the influenced influenced think it's So by QX there this so quarter just catch-up I think basis, by rates, macro, I by changes happen. number it's on a it that out of year. But year reapply interest think so to a and to is I

we're positivity, do move that think we're going or to what, a QX to but that might, We I be QX. I would betting just one-for-one there say into you not yet. know but from hard-pressed on So is QX

Operator

question-and-answer call for additional today's session. the turn any over now Dennison Mike closing conclude I will will That remarks. to

Michael Dennison

you Thanks, James. Fox appreciate interest Have evening. We'll Again, in everybody's talk to Factory. I soon. a good

Operator

This Corporation's does Quarter Factory conclude XXXX Fourth Earnings the and Call. Full Year Fox Holding

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

Fox Factory Holding (FOXF) 22 Feb 242023 Q4 Earnings call transcript