FOXF - Earnings call transcript Q2 2024 | Fox Factory Holding Corp.

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Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Fox Factory Holding Corp.'s Second Quarter Fiscal 2024 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. And now I would like to turn the conference over to Toby Merchant, Chief Legal Officer at Fox Factory Holding Corp. Thank you, sir.

begin. may You

Toby D. Merchant,

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

went review earnings First, Mike will before earlier provide results everyone business out questions. updates, we then have release, open outlook. will to closing call should the for By Dennis Mike your afternoon. and and some quarterly then provide which will the remarks up access this the now,

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

would any other herein, result information, filed many remarks or company outside and except latest the to or Securities the required such reliance results, risks company's factors the future achievements your place the response meaning a like are results, by detailed to statements. Important that the Form and from questions. risks may or of law, annual on unknown and the reports statements Investors such materially with the and within to in XX-Q update statements no can control or implied differ expressed Commission. to report I events cause undue contain undertakes number as that performance in or each statements and federal in as new otherwise. additional which XX-K, company's on could differences contribute involve and everyone statements, forward-looking future prepared security whether obligation the Form not of the should company's on Exchange forward-looking quarterly of and performance laws, known to Such make management remind cause and forward-looking we Before company's achievements statements forward-looking forward-looking begin, of uncertainties, by are or a

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

Michael Dennison

Thanks, and for joining thank Toby. Good afternoon, us today. you

improvement profitability. continued in results sequential our anticipated, second net quarter and sales As demonstrated both

we delivered of $X.XX. For a per $XXX.X earnings QX, sequential of share of revenue, increase million adjusted X.X%, and

where of we a in an are which of Our margins of focus EBITDA margin our as on essential have both stabilized a at became Furthermore, was we industry believe When our of aftermarket public channels. QX, company enhanced equilibrium environment. across XXXX, OEMs is our at business due growth. When business our were combined opportunities, long-term In have aftermarket XX% our productivity sales. Fox with enhances categories optimization. and and provides component macro same between our unlocked which results positioned first mitigates through it segments XXXX we to current in and we crucial fiscal our an with points, our and we approximately we XX% business successful the to and acquisitions, adjusted markets At continued of have of and Since segments, diversification the controls optionality growth XX%. Diversification the incremental of focus today, fourth improved XX products, in result our XXXX, quarter XX.X% compete. geographies the have quarter. improvement as prior XX.X% from the for actions history EBITDA the basis adjusted expense stand those demand, incremental leader within strategy across opportunities risk time, enabled

Upfit expansion mountain work. strategy Our in us premium the our launch and entry bike of are of putting accelerated perfect this UTV, growth internationally our to product examples

that to While encouraged the seeing are stabilization revenues lending market remains bike, more we in forecast, XX% late in destocking. where stages the we're of the confidence incredibly by we sequentially, are grew channel difficult

to development, currently, spending. continue However, performance-defining laser-focused to discretionary on dynamics a reductions on recovery And and tighten also organization, product up generating to we concerted made in letting products. innovation factories. positions commitment we workforce weigh continue focus and to delivering relentless effort speed with Consequently, driving the in reduction the consumer macroeconomic of across demand the of a on and spending non-revenue are particularly costs our to

since Xst, some August President, departs Before Beginning Schemm, Chief position Tom XXXX, strategic channel. served to We instrumental for that our want bolstered Fox. segment that time, Officer, Tom May as announced the leadership AAG reviewing the today. its been AAG transitions our has the of have we Tom building departure in as Financial as during in will acquisitions Fletcher. performance, segment assume on following segment that briefly our has Dennis touch responsibilities he I the through wish leadership well President of and the of AAG aftermarket

will new team. Dennis manufacturing efforts. activities As has fresh His on function. have exceptional and the will strong driving segment's joining look been XXXX and stewardship leader, Dennis experience and treasury closely as strategy, our invaluable will accounting allocation our a operations, lead taken on and sheet, Fox's and Dennis. continue impactful of Brendan's overseeing been AAG's Enick, to Treasurer the over include to financial transition, to insights our this R&D businesses support to and responsibilities financial Accounting Chief commercial has audit. excellence operating our their past and of cash organization, Dennis leadership directly contributions balance Brendan oversee role continue Dennis' CFO, organization Brendan to take finance in us in from me. In diligently well to report involved and roles. heavily May Officer, has joined since with lead and He our capital has Brendon overseeing manage across forward the finance risk. in respective capacity work new flows and and the demonstrated I the as

remaining this rate business these all Dealers premium year second from production the Vehicle the concerns. vehicles. power auto are demand model continue conservatively, inventory sports down year. Turning to our sector, primarily performance. duration of high limited orders issues the of result rates. not trucks our retail $XXX extended robust is is revised and insulate demand vehicles, production This of outlook million, OEMs, aligning and now expectations automotive. Powered segment The from OEMs. $XXX nature prior reduction from fatigue, and to portion was This mixed, continues ramp the as a production remains were net major a to sales quality our our sports XXXX for in interest industry half in broader if manage lower of discussion and accordingly. In have many, of downward of from believe demand they the million OEMs and by power important been sales interest OEMs with OEM reduction In to XXXX we due premium, Group, Automotive challenged, consumer the With within for

However, consumer PVG. steadfast we of long-term power in we for the and strategy our support, broader are sports our signs remain OEM seeing similar excess automotive in space the to inventory conservatism customers. We

We're retained product already introductions we've of reductions, road cost targeted talent continued particularly support about strength share our new implemented strategy gains, opportunities the we've our seeing underscoring the excited to We're fruits upcoming product our While future core of portfolio. sports. power and military this differentiation in and innovations. through motorcycle, product and engineering and market map

to to car, Look which recently a us of we podium Raptor on the team. our be support won with entire in TX+, of XXXX. partnered we of to with on program in Ford's Lastly, capability for Ford the Ford the on Dakar based products take

to in $XXX prior million were Moving to year the Net quarter. million AAG. sales $XXX compared

demonstrating Our our consumers also in exemplifies strategy, participate which be diversification portion Fox of more portfolio. to portfolio wheels, This lift our of the to tires of continues approachable includes component resilience the enables appeal show in and importance price which at the growth product the aftermarket this may which growth, short-term. business, kits and points

Our face high automotive continues stubbornly challenges mix upfitting to business from chassis and reduced interest supply, rates.

higher-end strong which upfits, However, for with these our our conditioning. been aligns tempered and impacts excitement by well premium have for -- brand our the demand

supported to presents our AAG broader X by huge channels. a perfectly Our more opportunity our which resilient of creating goal plus operationalize a for business with dovetails equals business us framework, aftermarket X X

portfolio newly of Fox a job While what product expected phase our synergies we did good brands we maximize a launched growth Truck. of of AAG, creating see is you believe in in our to leading like Factory next

Given efforts of are which channel. X the ensure We yet stakeholders architecting now $XX of is believe in that $XXX intensity we core increase, sales the reflecting growth reduction saw and in million their over to the $XX offset bike believe time AAG levels. In to million strategies, all sales and million our the refocused $XXX this With refocus rate have we to by appropriate year, the years, can meeting long-term the business. effort, this recognized and million fully last Marucci we not of by when to past our net the business. a sustainable we margins compared restore drive we inclusion SSG, were within a growth needs driven

which revenue, deliver been its a discussing were significance seeing positive predictability. pleased bike and phase, last We However, XX% sign which increase bike, sequential a is we're of within have quarters, the inventory to over is we in conclusion. positive OEM destocking the signals both nearing of several

broader our been premium addition, the space move received entry has helping offset very sluggishness. In and into is well

are its generating in continues the remains launches continues U.S. are avenue an category coming the drive stabilization, year. basis market important European e-bike also our to lower throughout expanding quarters. to innovations the relative scheduled to and I These exceed demand am on transition is excited and product already our our of improve inventory. to incremental growth state The a the addressable to multiple due expectations, towards particularly new expected market market. Although excess for in about exposure a

performer. standout Marucci of upon the a to XX,XXX I and families Rouge. side house, Series just continues other the On be were World attending coaches fans, Baton players, from over returned Marucci descended the

me was compete for the for highlight the businesses. the potential championship, watching for While players excitement was seeing the young combined our

Marucci international Hitter's as shocks, Fox boasting associated parking make including brands being a product thousands House Lizard softball, accessories, Victus high-performance our leader were of and to reminder and that sold products in lots opening as which by our of out. in and are Skins guiding with generated with markets. The to swing portfolio, category. UTVs, bats a to players this pop-up combined trucks and for were apparel their and of Our Marucci's things. And host gain the driven further And it by essentially the united aspirational factors It and literally Fox filled Hitter's stores everywhere as vehicles Tokyo, a success customers upfitted solidifies Marucci's traction. across Marucci is same, Truck platform the latest X such Fox and was of and of enthusiasts. tons interest. one also innovation Victus Hitter's brands were market Factory the the position House growth House including baseball vision continues Marucci the

represented baseball, and we starting Marucci highlight and finalists but MLB products. I'm grip at with MLB players bats congratulate rights underscores license bats. To Victus brands announced official Marucci's as Home combined were recently Baseball, the also using the horizon, agreement our X both Major on designated achieving the the Run our even team well levels. With of about League the new our year Derby more for growth for with MLB's January position choice MLB, not partnership, the distinction. game at to the both potential excited and particularly Skins' recent exclusive official professional Marucci very this exclusive cement our end, that only thrilled as fact, X, This future XXXX. of our Victus agreement status with all brand's we're as provides of leadership This for bat All-Star this in that agreement Lizard premier a In further

our exciting The ahead, the segment, Marucci's strong positions half Looking SSG. bike growth us through coupled of anticipated trajectory optimistic consistent recovery of the about and pipeline second we're this continued for with year. in performance the product well

Now for our on some comments outlook.

revised and prudent must While in guidance encouraging continue expectations of customers. aligning we with see our be to of our stabilization responsible OEM bike, signs in we large

is in adjusting anticipated the in the we moderate of tempered our demand reduced sequential by guidance lift second form year. positive more than initially still a a XXXX. reflect year, not the the albeit us eliminating half are orders to from growth growth. Despite and sequential improvement As we more throughout to which driven directly but year that these a expect projected. This culminate maintain revenue we adjustment which challenges, quality near-term through result, our half trend our second of are full subduing pace sequential the passed Furthermore, outlook. industry lowered challenges, of a at anticipate continue of forecasts, to ongoing in directly this We OEMs

availability its model across inventory, year and pipeline on our include, diversified what's bike for in and gradual product mix, upfit positioned in releases, assumptions our progress improvement remains new but kit inventory and new doubling in us steady new the relentless continued OE's launches, innovation. impact product product and strength, half, for of portfolio Marucci's sports We're second the revised and business. In and improvement our of ongoing product lift made excellence half launches. chassis within a closing, growth power dealer of 'XX slow strong by channel Our well successful, launches fueled brand the year down company second the wheel

In position and investments Dennis. R&D value. And what focusing future with current aftermarket stronger our meantime, our are enhance just the groundbreaking to targeted and to XXXX on We're capitalize I'll emerge a components, cycle can will to share call we us we market protect opportunities. building of navigating that, the equipped adapting by more both diversified which we're at believe releases and to We're control well over intended not turn environment. the Our shareholder to company high-margin to on and growth. expand augment strategically model the

Dennis Schemm

and Mike, sheet begin afternoon, discussing move then flows, then our guidance. good our of strategy and structure I'll results Thanks, to a with everyone. our up balance second cash and by capital wrap quarter financial and review

Fox the the we our internal lead Since partners honored we Before organization our responsibilities. improving closely I'm upon about its of processes Mike enhancing our the dive President. X operational AAG effort have a streamlining all the and segment strong working joining both Mike's last to interactions next leadership focused segments. execution quarter, into comments build with This with to my and year, as believe had build pleasure foundation efficiency, very new I across want includes capabilities, a on and within our upon customers. I and in to in AAG. I've

unlock team the In fact, convinced to of potential our team, loan not its accelerate to solid and is the his our Accounting integrate accounting, term created. to our Brendan eager analysis financial work finance in Officer, with including his Particularly recognize business an leverage portfolio opportunity that and has and working leadership hard brands the X X and and within execution now, our team to right planning power for with manner. and to deploy an methodically to in Marucci, full Chief that and the involvement efficient of I'm I'm adding our to work AAG. I'd we the size his Enick strategy, also given X plus quite scale. perspective deal his for take the fresh acquisitions aptitude and including up have treasury, like a the of the

Fox well frees to me maximize broader and AAG him remains our partnership sure our As Treasurer, making up role drive business. focus many continued to I capacity to look on well contributions of team growth positioned have and that shareholder forward to to our finance value. for take the prepared which on

with the and various year-over-year sales results. macro second a consolidated headwinds and our due unique the a exist in $XXX.X the quarter of in to year, half for of We net in second we to on were first of the the of line Now sales Total albeit fiscal at versus serve. quarter $XXX.X that second decrease the challenges expectations, the in quarter industries result of within delivered million and temporary lower million, XXXX XXXX. the fiscal XX%

to Total gross margin in XX.X% quarter was operating primarily of same mix as XX.X% of the the markup, XXXX valuation operating in in leverage second of net second acquired partially operating compared last last XX.X% in was shifts on by Custom operating the product XX.X% percentage at by X million in gross XXXX Marucci prior margin quarter Wheel expenses lower were reduced same of quarter XX.X% volumes The XX.X% year. the or in segments, or versus the cost across million expenses the increased of amortization line expenses acquisitions, our the to in which compared decreased was decrease of the fiscal our year. year. to and facilities. Adjusted attributed Our fiscal $XX.X in effects increase of controls. offset sales sales fiscal The of net XXXX, driven offset North efficiencies in American quarter quarter $XX.X by partially of the sales to a inclusion House margin, second our and excludes from inventory gross

was or XXXX the million of the benefit industries our expenses margin our operating quarter second XX.X% Excluding challenges sales quarter of The in impacting as compared a to $X.XX adjusted compared XXXX. The income per decrease last of our temporary in fixed quarter second $X.XX second company's to and in drivers control year. increased the cost include to facilities our share XX.X% the quarter expense in diluted $XX.X portfolio growth, $X.XX a mix across quarter to EBITDA and in was per and performance customers due Adjusted a $XX.X share, net second various expansions tax to primarily with of partially operating second share, associated absorption $X.X compared facilities. Other was the in at million year-over-year. Adjusted of of was quarter our base same XXXX, And was support tax shifts offset to the compared for fiscal XXXX. volumes margin second cost $XX.X margin quarter quarter year. million by cost diluted that of in reflects million improvement or adjusted facing, to our in Tax XX.X% on margin million we measures. of cost second to of our income EBITDA income. Net a percentage year. pre-tax in same these aftermarket or share $XX.X same EBITDA quarter diluted strength diluted increases benefit point second to year. Adjusted improvement $X.X $XX.X per control the compared the compared XXXX the net continuous and fiscal quarter measures delivered acquisitions, fiscal million in period initiatives. the the to the million the of million in which EBITDA fiscal XX.X% in last adjusted unique $X.XX or decreased XXXX, $X.X of decrease is income and last Sequentially, EBITDA are per in basis last sales XXXX XX in expenses fiscal organic was of our XX.X%

Now to and balance the flows. sheet moving cash

by for or strong months to end organization, X PVG. optimize to levels by and X.X% builds our June XXXX, demand, Our the sufficient $X.X allocation partially of Fox offset inventory compared inventory year million particularly of XXXX, across continuous efforts inventory anticipated In to a to inventory source driven strategy. capital planned be to ensure strength improvement by within execution our ended balance underpins the sheet rose continues XX, meet

our of quarter and Our end line with as net X.XXx, leverage in is expectations.

invest growth gives us to structure sales cap through and flexible ability us Our to and the down R&D, debt. CapEx, marketing in pay allow to

million revolver as balances XX, Our of versus was XXXX. of XX, million June $XXX XXXX, December $XXX

$XXX Our of million loan net fees. balance approximately term loan A was

an loan of drew months We macro. to we covenant flexibility, improved down the pay XXXX, recently fiscal X to uncertain first balance. draw given structure and the more our on the term profile provide on us our capital secured those $XXX During million with proceeds revolver used delayed

to Now I'd guidance. like comment on

performance duration the been we our While acknowledge has must our broader the year-to-date in influencing of expectations, the macro largely environment. headwinds line with

$X.XXX we We of diluted As to be billion, range earnings are billion a range share for in adjusted the revising per $X.XXX sales XXXX. to now in outlook and fiscal year $X.XX expect to our result, full $X.XX. the of

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

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

midpoint, as was well. There the And CATXX new underpinning improving this our year-over-year reflects the to of AAG, conditions, industry mix from pace suggested the of availability While the stabilizing at the the of that portfolio, growth several product the a a more continue launches in expect and of from space. prevailing prior new sequential in full it growth second bike drivers bike moderate to and including launch still half are an quarter and year-over-year in market, third chassis year diversified aftermarket launch year, Marucci's products its impacts entry-premium and growth our in into the the than return implies plan. we beginning at in growth QX expectation what albeit into

positive However, been the that, and challenges of like by has turn to the to macroeconomic call back factors tempered these headwinds. With I'd Mike. ongoing impact the industry

Michael Dennison

Thanks, Dennis.

of like While we're very to of year second we positioned large the product is reiterate our I'd macroeconomic facing the share the current better portfolio customers, and leading market in challenges grounded that dynamics ever with the entering OEM in a been. than remain it's realities current the that well half

would capitalize for to culture conditions deliver the team our improving customers. I commitment and our call model, Our would like our have open their company, to value Operator? and the to for our premium Fox shareholders. I market thank to questions. innovation prepared entire positioning diversified to business like on and brand commitment now us to

Operator

to Securities. Larry And we'll go afternoon first Instructions] of Solow CJS [Operator this

Lawrence Solow

far But revised there. you caution as maybe, and like sounds sounds you kind SSG just not to the throughout coming from too. too it you're did feels but that the much, like Can It there, I like unwrap outlook. to pretty guess, of rising PVG most that's that, seems the as SSG good, lot A of I will 'XX. part that the next that second you several have question through continue -- AAG. recovery demand the that kind consumer growth the that to continue -- And also then and do guess need Do improve sort for you the is trajectory need rate of of does interest environment to of confidence you quarters?

Michael Dennison

this is Mike. Larry, Yes,

So and the year. from perspective, are the is which and plan our plan SSG, Marucci of on meeting both both combining bike on, balance for

So they're so intact thought for far. year with we've through what the

a In a in chain. the especially quality half year, the significant caused in takedown other have space, by their are of supply PVG, really around such and issues rates function large the automotive they cases, of in is some interest OEMs, the terms impact it's back in which challenges and it those and AAG seeing of and

significant that the of back that's So portion takedown. half

headwinds, we're into on and going In driving product a of that not we outweighs terms see all. of these we what lot innovation, XXXX, product think but focused and

sequential and So that a as out into same of see scenario XXXX. we plays that. in growth think And function it's QX we QX, continue

Lawrence Solow

much it be question it how much -- the -- is stuff the -- it, it powered quality me mark? that's hard may the portion quantify or can that's demand of vehicle Obviously, is that, like a improve guess hopefully feels not it And on so much OEMs, economic PPG, surprise is of that the vehicles, big tough it of underlying probably of is which versus the I auto yes, the the a hindering? supply, that to biggest to just these lack change. how in Okay. issues, but powered side, And biggest the

Michael Dennison

after. demand a a the that product and addition, we Ford be are it's are sought And OEMs it's of that's to about both issues X problem, an kind I've demand talked These function products, excellent which Yes, in Stellantis at In where an quality chain Toyota, is trucks issue. supply both there chains dealers, not a Ram, great highly That's isn't the cities, is tail those to solve premium are challenge think presold. presold different Toyota of as usually these past, and question. problem. a a When to automotive the about a rates. these Ford. In supply typically continue And the or the in and vehicles It's quality harder inventory you story. Jeep headwind for [indiscernible]. that's and a interest share mentioned those than of and issue. And cases, probably the limited in

can it's and us they you X pieces, pretty break for those of kind where into So clear land.

Lawrence Solow

And you. Got only if there's on so guess just management. can cost just I I can squeeze more, you one much do.

do maybe actually you are headcount I to manage well? fast that? trying not So as some as headcount? the of but are And expect you Or to what initiatives? start back, manage Or know you growth so come to

Dennis Schemm

job me the of they're about one, let question. I'm CFO on it plans. in right proud as And you think it's down X It's press super given that cost. buckets now different for these absorption seeing our to the decisions that the like And protecting we're making great all this actions, I'm break a release. really seeing in and of margin, curtail of right important. Corporate really our where I is see lack my team because for like you on OpEx cost can is

over -- in almost Marucci. XX% million are OpEx That's down year-to-date significant. excluding when we $X.X decline. XX million corporate OpEx general, is down are year-over-year, That $XX in We year-to-date. our

to to COGS facilities in very, cost AAG than one facility. then is we actions that. is very also things as That outside in also And to so improvements leverage Colorado of decisions well, it's action took we've when that we you're basis. AAG, some your us manufacturing some some And really, about to recently significant. And But in took going on take much hard Group, talk our then future to more on are give these operating out close an keep really that of significant the having and point here one are revenue because that decreases I just on amount the our decided vans. year-over-year basis in wanted

move save with I what is COGS And costs flex on which than here second got leverage And to take are consolidation to I'm moving shape we think look we like up did you've see you ability lag growth. guys so that had forward. But the dollars discussed to Remember, will the standpoint following. a there, about also operating excited quarter. further to most that revenue our in bike no the going about

QX but saw from we our XX% increase in COGS insignificant. As that add they very was QX, to very, move revenue,

So leverage to This went When was to the me This to about our going trough, from start are gets come to see XX% extremely some positioned there corner early talking leverage. these Mike well of days. be businesses great, XX%. we what exciting. and the what turn is is out great operating we

Operator

We'll now Mike go Instructions] next Swartz Truist. at to [Operator

Michael Swartz

I just on the wanted commentary. to follow-up

about that If quarter to guidance, or I which growth and the quarter, XXXX? kind out the the we the I so. think at through XXXX. the brackets the to sequential Is fourth through baseline in, use around off that the look of expectation of talked half implied as then through you revenue back continues the year right think we grow for of say that guidance $XXX right quarter million

Michael Dennison

But of very our things XXXX, a I our quickly like the have MLB. in us product in it's And license for in XXXX. today. tailwinds early to with and keep come see too mind, mix going are mean Yes. that XXXX our lot going product agreements guide we to we where that's

to we We got want we lot think of be don't the and to sequential growth the predict meaningful we've yet, tell we thereabouts you economy, tailwinds everything beginning So can to that set we try of but year. starting the up year, and going $XXX us. of into good that see we predict million for to QX of can't have that a can off next that are QX

Michael Swartz

the guess whether now there's little the order we're you sitting any quarter? first business. a midway on seeing And here any third fourth we're as updates Okay. right think color in have of all? around quarter bike Great. quarter, visibility for that kind you I Do third kind call, the gave books I what you in through and at of And -- almost backlog on the quarter

Michael Dennison

in limited But strong. trending QX early. this like looking visibility seeing we where QX is QX saw We're is in QX, and QX above

I my our positive. projections well. half our comments for is the and very bike both on pretty So Larry, Like and in business doing it's very, They're to business predictions plan. said back Marucci

Michael Swartz

be then just of with And final -- the destocking the guess channel? got inventory prior I that CATXX need to done launch? launch. the you And retail just any what's of the hits cadence Great. there Marucci was within business, before generation that question within that Okay.

Michael Dennison

we're We destocking we of is Fox didn't our see that with product No. any required. product see things launches in within know the way one doing you and that the on more Marucci business aggressive innovation, But we're as front.

may you and other we've more more quicker seen the than forward past. launches, the and So see Victus Marucci product brands going with probably in

the to technology new provide important it's and continue new think products we to consumer enthusiast base. and So to

we're that why driving that's so hard. So

Operator

to We next of now Perry at go Bank America. Alex

Alexander Perry

Two segment contribution here. of in is sort just like what expected And half? sort Marucci back of the the embedded then the segment? by in recovery is what guess, of growth I questions in guide sort the first, sequential modeling or by

Dennis Schemm

Yes.

the this way half, basically when we're Marucci talked track. on being thinking the is bike I'd and Mike at about second So look about

combined essentially off $XXX them there are changes And the coming no $XXX the essentially, those perspective on guide from AAG. in The around really and million. change X. million PVG of the back half to real So is X

fairly think like a that $XXX around going million for I from right the here PVG safe I think of kind year, flattish full be it'd mark. to forward say modeling is perspective,

to be fine I right main for starts QX up. in it's AAG put probably to around there to would quarters driver think first our and an similar PVG, AAG that Does That's QX. help? of inflection as the in flex I couple probably with

Alexander Perry

Great. that And how in then any and commentary half? the should on we Marucci thinking be back of

Dennis Schemm

the story looking growth for Marucci We're seeing strong year. full Well, a year. the at here double-digits entire I mean, is

And XX% So would that around around I Again, we're they're up right $XXX a to putting $XXX I be standpoint, around they going think last think year, year-on-year. thinking good conservative from million million. be did them modeling. plus

Michael Dennison

Yes.

most is to year. literally with every see. goods, will discretionary book deflating When pretty an order consumer exciting economy you're quarter that's record in across this quarter a current Our Marucci Marucci have

Operator

next Duffy go Instructions] Jim Stifel. to We'll [Operator now with

Jim Duffy

I'm and higher to help approach, correctly, in Bikes also want the a could $XXX levels. to it to million a 'XX. businesses. of guiding a you've anchor you that to bikes on If e-bikes. try understand us more bottoms-up the from businesses your of the run away to business going picture take got back I'm They've in margin is bike to XQ view pricing, to volatile you you stay of the I take 'XX I hoping big have XQ time, addition upfitting, XXXX, those was X been X know but recently. XXXX business Encouragingly, try since rate. And

to expand million you and be bike. when content have about into also lower about units capacity priced per figure should $XXX You XXXX? that to think What relative bikes, OEM thinking in

Michael Dennison

Yes.

emerge at of see said, that when bucking then to of it we're got that think scenario. expanding north you mix, we why destocking power, that, that this Well some for in believe $XXX in XXXX us. as sign out industry. a back right, portfolio, is of in And continues as you we to, gets not trends year, bike yet, our in as million all those the down has positive occurred guiding number are think as recovery said, can Jim. all innovation, we very this product results. helping our that's of look us kind a product, but bike. we're And are tailwinds things you it tailwind pricing, us Those XXXX, for said, be which gets You've XXXX we We the

our of view think that's we So XXXX.

Jim Duffy

I'm going of to represent question, this but shift a is follow-up upfitting.

Colorado XXXX, acquired Maybe that was probably type Can I out directional baselining doing XX,XXX, of indicator with business, volume the of normalization business like between the what of of kind XX,XXX us units facility of that's good marketplace? vehicle you equation, before a basis? you that you're capacity. in think or help the on an annual

Michael Dennison

Jim, pre and to it ] just [ going kind can I that accurate. data go so I you but have on I'd XXXX between be give (sic) I'm to time back Larry, of was frame. range, would that, the say X,XXX XX,XXX a and in pull

difference. So -- but the it was here's

of in the the we've higher. things upfit that vehicles the been from is price increase One average talking And vehicle content. about per relative significantly XXXX is to

support down in XXXX. business, can with It leadership with even a really area really on strong right think dealers. relationships content run product in XXXX comes that and we to and volume of pieces together, to the significant So our we we improvement put off lower and in Dennis's drive when base a a to revenue our

Operator

next Stember MKM. from now our Scott take We'll ROTH question of

Scott Stember

on or idea Europe. seeing give the be here model in just launch or talked Last What quarter, X business. 'XX going signs SSG you are previous the years? encouraging Maybe I U.S.? said of X big will this in versus side, you for Questions the over you mainly seeing size had think bike us an how out, the year product about some that's the

Michael Dennison

products We mind, when I OEMs. all sell continents. we're products, we Yes. launch keep launching mean, it across in to

and Europe And OEMs the better launches OEM customers into and the these region. U.S. destocking consumer sell bikes European doing cover So seeing the U.S., even that of with we're in European Europe both

work of in Again, the cleanup. But around the premium the the think has level but be inventory the I up. helpful. year we of end terms most strong XXXX, lagging, this that's it going system the to at through we're of stages product final time been the into U.S. still So the think The U.S. I do will and is but catch mix. we're get of by product getting our late anyway. to And it'll

us this see get it that's our balance So the year up, be cleaned numbers. It's and to that we're both going going in to Europe. U.S. and in to benefiting

Dennis Schemm

I premium, that's total right? story of probably that very, declining. we market And like entry entry not growing this, That well ] is our on the of or very is the are if those think not And real into segment launches. here, doing premium positive -- you're TAMs, years entry EX, [ in addressable

that And me taking we R&D record surprise we to of be so, must and is how And like share. in not innovation customer looking continue for. feel would what the our we because invest and track

Scott Stember

out lucrative then Major will then just Marucci, Got 'XX Could question be on big frame could it. it And How how Baseball League that last you in maybe contract. the be? the and 'XX?

Michael Dennison

about and as and work to as launching we relationship to before, way stadiums think to partner, of in into with start a in league. a ability gain about using the partner little in and as which down bit couldn't with the number early MLB do with the early It's exclusive it. bit doorways, little But represent financial number that Yes. the It's a all the think in just to really capabilities, MLB our of the do really lines, XXXX. we those players, now numbers the MLB the taking all customization probably what new we bat putting players our we storefronts the with XXXX little

huge partnerships this these step-up double from years to the X So the significant of and go a like going MLB. next to part we to is is in actually business our come a think ability there X

to working it's early we've too call started been about numbers was really It bit on since part this but significant. for important this Marucci. little day and business of the a So talking XXXX, a out relationship, we

Operator

now Baird. to at next go We'll Kennison Craig

Craig Kennison

of wanted an another with I think grow you've the opportunity addressed Dennis, I that you to also upfitting for at most trucks questions, past, of as to characterized business. run but might in the I had you my long-term. the make mean into of wondering, resize the step opportunity that dealer. per you the I'm but grow dealers, And number role, as if number and just that

Dennis Schemm

in about be involved the with the specific, product. because excited a for I and we business more upfitting getting and PVG question, thanks couldn't fantastic AAG team the Yes, offer

we changing And that changing, sure the we've as of map that dealer. Product that's paying the but I'm going and corners going can have open, wins. at that my X got in cost something and attention looks then sure And to really be it in, and I'm is tide And for be I'm been that when with wide the people. so, on customer way me, there make best forward that things with structure, she is we to, here, emphasis. going with to up wants around and well is to to be Danaher, that's to a our making going going road it. we're is cost are meeting in buy. great product important we're have showing an level ensuring days a This stuck why from us going so be on be the customer right or the be extremely focus always moving We market about he team and to to got to how

AAG going I we got going think put are the with I those be first we're my XX best to and team days. But and win. focuses to the team going to think get PVG. in great this together, we're And in going a in, in XX,

Craig Kennison

away? just other anxious words, situation partner there, rates your you in base shrink maybe And maybe as to the are and a economic pressures to that dealers where be carry Could build it grow, from with other then product. go

Dennis Schemm

our have great relationships we with right dealers. now think some I

it And the really buy. really sure product. we've then got the it's about it's think And I customer on meeting she that to or how making again, is execution. he wants

to great has a out I next again, and start But to opportunities. the a of be know for there on team the too. reporting got on working team. in we're do seeing need we lot we'll think job ideas. back what the this get sure, with as I've better I there, And quarter

Michael Dennison

just add I'd that. Yes. Craig, to And on

shrink. think to I we had

into done, AAG the turning You've you we've to point getting dealers, that the right seen in be getting if dealer lineup in the the settled, work Once shrinkage and product the right got this year specifically. will. we'll chassis PVG now growth and that see right

will, vehicle available about think these chassis dealers. When of that some new adding Fox you having that think we're product sell by occurred Truck, our partially caused dealerships right -- has shrinkage, what the to in halo had if Factory offer I we So partially caused we by by to adding mix and just and lineup.

of increase combination it's we'll focus a on focus product, So if in going to dealers, right on, right to got sure and we needs forward. the right the the we've But will a continue market. the product we focus add the go things that dealerships of that dealerships or to and lot Dennis provide right make

Operator

things And closing gentlemen, back have Mr. I'll no sir, we Dennison. further it appears for hand any afternoon, you, to questions this comments.

Michael Dennison

you Thank to guys you. the interest their I time hope good in Fox want and for have talk thank Factory. taking soon. We everyone evening. a We'll

Operator

Thank a conclude Again, and much you, We will evening. thanks all you Mr. so great today's call. gentlemen, everyone. Dennison. ladies that for conference wish Goodbye. Again, joining us

Fox Factory Holding (FOXF) 1 Aug 242024 Q2 Earnings call transcript