FOXF - Earnings call transcript Q3 2024 | Fox Factory Holding Corp.

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Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Fox Factory Holding Corp's.

Third Quarter Fiscal 2024 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I'd now like to turn the conference over to Toby Merchant, Chief Legal Officer at Fox Factory Holding Corp. sir. you, Thank

begin. You may

Toby D. Merchant,

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

Mike business call before remarks, then we up the updates First, your Dennis quarterly questions. the closing review will provide outlook. and some provide for results Mike and will will then open

release, which should have access earnings this to By out now, afternoon. went the everyone earlier

have not it's investor.ridefox.com. you our Relations had If review the at the available portion chance release, website Investor to on the of

Please note Factory Fox the that to company. this throughout will refer FOX or we as call,

statements risks, management would securities to the or the can begin, of within achievements known Such many make everyone may which by and of I meaning we Before a expressed to involve of or questions. forward-looking differ outside to laws, achievements your like future unknown cause response federal results, statements contain statements materially statements. in from and remind that implied the are performance number forward-looking additional the and forward-looking or prepared uncertainties, remarks results, control, such company's performance

Commission. as undue of law, or to information, place forward-looking a reliance Form company's such update on statements, by obligation risks XX-K, cause and latest whether otherwise. events and the each XX-Q that quarterly with statements or new not Important Investors should factors reports Form report no detailed or required filed differences Securities the result herein, contribute future could in to are other on except company's company's Exchange and undertakes the forward-looking and in annual the the on company as any

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

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

Michael Dennison

of you Toby, Thanks, the for call all and to today. thanks joining

representing team continued X.X% compared sequential quarter prior improvement quarter a third and as second second we million our sequential quarter's an delivered last by bike as a the XX% results Marucci increase X.X% up from was sequential also of led quarter year. Our delivered reflected delivered growth, of increase growth This solid of consecutive provided another business, our growth. growth revenue, XX%, $XXX increase. of double-digit the which acquisition The to following quarter

the fatigue talk results more reductions upcoming call. in forecast the guidance demand While results for with and and high our this OEM the the the our their further of consistent outlook spending partners and the uncertain commentary our many Fox's underlying the later forecast for end discretionary rates, reductions macroeconomic interest I will third performance-defining during strong, companies, quarterly of These as elections. section products at align and these in are the quarter outlook, landed range, remain quarter. inflation reduced products the with by about innovative from lower in in and

year several mix model issues quality of partners OEM our ongoing Additionally, changeovers and availability. and continue chassis to automotive at impact

vehicles inventories constrained impacts our begin of the customers. those through our over as that to to our And business. year slowdowns, abate in they facilities we lingering from 'XX challenges, to business now. to our the we QX closely half beginning flow quality and production model remains issues news The Although have face or are OEM when good seen concerns, is ship tied through whether within diversification Aftermarket, our business continue misaligned to expansion evolve to demand,

to implementing challenges decisively throughout the the responded our to both We've strengthen actions and immediate by year business. longer-term

by example, aggressively labor. saw we and structure, as demand at For and reduced costs our indirect corporate we've and across tighten, controllable managed our direct plants reducing

other We factory by Colorado closing a in and business have AAG taken plant more our efficiency strategic action also in improvements. making

our more the level is there must we and must have do, of and same world-class building we with do However, it brands. we in urgency commitment

developing began for need quarter, key levels our reflecting with our to of margins, volume production we our expected our for OEM's OEMs. nutshell, the align of to priorities, the series In our term. During of business the need plans deliver we commitments structure across the a near a regardless EBITDA historical third adjust to view

margin of enable the to hit in they beyond. that impacted the QX, profitability We and ground designed initial running negatively are in the driving while QX growth quarter, they actions

The nonperforming our and initiatives: reduce in focus footprint, costs. portfolio, is the X eliminate products consolidate reduce work inventory of reduce centered around our and our following finally, simplify and

I our Beyond team structure entire initiatives, have cost to our identify across all our the optimize of strategically segments. challenged opportunities X to

ensure environments, consistent toward of margins is and protect that oriented in efficiently demand we While business significant positioned cash we so growth, remain free operate our can we long-term optimally to flow. a that generating to drive number a company want and

was quarter. a AAG. important taking has he with within significant step management, action reduce quarter, In over to improvement opportunities to inventory, process the change and has taken Dennis identified this of first drive his An

strategies We that are implement our to across this we expect year. similarly other businesses impactful developing

diversification in on can geographies to that creating markets to a continuing resilient more are demand organization We our and create to nimble response across the segments, focus in cyclicality. also be industry products, shifts

price category, multiple points like improving have into to our move for MLB significantly acquisition addressable our consumers market, international our Marucci Recent accelerated entry the and bike growth and our partnership access initiatives, premium the while growth expanded brands.

Group, forecast from broader performance. Vehicle $XXX our down consumers, segment by ticket Powered a of discussion a prior discretionary $XXX were million, and OEM demand Turning in larger partners year reflects of net previously. in spending which to response now market deferral in to from quarter, reduction million sales the a as In conditions the mentioned our

issues utilization in continuing than OEM combined This production resulted This to ongoing hesitancy, consequently, has volumes and that at the anticipated. delay quality lower facility we are with margin the our impacted OEMs our in quarter. performance rates

category the moderation we're broader as in we're inconsistent general while well. demonstrated as truck year, has resilience continues OEM more demand through this improvement seeing within seeing pressures, to face our The some automotive the automotive the dealer continues we excess to now category In move destocking. and space historically inventory, weigh market sector, of premium on consumer to although gradual demand pace

The OEM level in our was quarter the automotive de-commit from customers significant. of

unforecasted customer in For reduction and equated this was XX% the offset top X X.X%, a quarter. the a to partially customers, sector improved aftermarket whopping by of which within from PVG to by automotive XX.X% XX.X% this QX. XX.X% sequential this sequentially. overall Overall, QX product This reduction translated drop business, a to our

prior address to in well partners challenges, with levels market below with quarter. reductions within Similarly, appear taken the inventory line The demand this previously deliberately production managing OEM have dealer ongoing forecast we faces current segment the expectations. be retail consistent to our powersports of

be Fox PVG and a headwind, by to brand outlook remains demand customer to the though be the standard continues continues the consumers. sought within Even

if in fix channels can't fact, both of new PVG justify the they their customers the international which achieved vehicles In aftermarket, in level new over X current domestic highest will quarters, we bookings expense and a that the of in highlight one.

USA our customers, bikes new in new by in always, also [indiscernible] launching super racing. [indiscernible] announced win to a partnerships with We XXXX. motorcycling to roots return and QX, across new we In continue as our partnering under

off BRP In and with kicked side a CFMOTO line a new on the new on UTV. X-seater wins R and announced well new ZFORCE by Maverick partnership side, Outlander with we as as their products

With Goodwin not the race unveiled Extreme, JMC new also Ford, [ annual new Raptor at we on but awarded the ] event. only Ranger TX vehicle the Dakar were the program

but UTV many trucks. racing, And to X wins overall, of across in list, we and podium finally, were are too the different races the at both in there top frankly

our prior $XXX Phase comprehensive X a the deep productivity. need both of the critical has dive million we've a assessment operations, led identifying transitioned facility Moving the optimize to drive to and closed to team, transition, strengthen were Alongside customers completed to AAG to improvement. improve in into position including included compared that opportunities, leadership relationships. business and further $XXX Colorado, AAG. business other to facilities Net the in we sales challenges And quarter. the inventory year approach a our [indiscernible] our to million phased clear and

executing taking we're which decisive action. on has Phase centered X, now,

and with best the activity preferences. plan for our clear, inventory always accelerating of partners, latest dealer optimization it this late-model that the discussions meet position for second was of new OEMs became would September following consumer 'XX, part with trucks While that the XXXX, half key business in

provided an third The contemplated greater impacted As a in efficient our we quarter move our incremental of in manner. through guidance. we targeted to prior to support our help inventory promotional to programs such, degree plan dealers acceleration margins than

which inflecting watermark this margins recovery to market the capture a benefit the Thus, will XXXX. upward we significant to we future low through expect fourth and full removed rebounds. has before the constraint QX the has expect completing quarter, to positioned the year-end in us AAG However, when of growth, before be continue for

partners, Looking multiple platforms, common relationships increasing and new accessibility. ahead, and our other includes focuses X brand Phase components diversifying building and our potential marketplace overall partnering AAG a and for of initiatives. through and with existing plan This strategic upfit products aftermarket on new OEMs implementing to our expanding

Importantly, long-term is infrastructure on support routes, our initiatives. as our CMs performance we building to execute significant while The we're improvement. building these focus the our margin enthusiasm among renewing

XX-inch ], RideTech Baja for In QX, with [ GM ] wheels Brenthel aftermarket lifts to to modernizes launches support suspension, Brothers. been launched the better our development received, designed suspension Fox X-inch fuel Body ] the that Ford These Mustang race by sector. our well and growth launched Sport the popular light truck Method in ] Truck [ XXXX have rear XX- and launched travel long continue system [ market. to and [ product the the wheels from front-end X- a teams with kits

and mix face chassis our outfitting to plan year-end and availability floor In terms persist at expect of challenges, current we high through the through existing to work as which dealers continues financing. business inventory near-term least environment,

our some of wheels and aftermarket the providing of our is with our components in growth However, kits, resilience demonstrating continued strategy. the portfolio diversification strength [indiscernible] business the both buffer, of success and

well believe we're we sustainable maximize to right and growth operational inventory strengthen to restore our foundation our the portfolio, taking positioned, clear brand drive of strategy margins. With the the and power steps

to $XX reflecting a Marucci last inclusion compared and million In of SSG, $XXX million year, growth net increase from business. sales in were continued $XX million primarily bike the

year-over-year another potential ] [ this model. XX% significant our $XX quarter's last on flat operating business increase year-to-date, improvement delivered increase we sequential leverage Our bike expenses XX% in the in a QX. and achieved operating maintaining increase sales Notably, while sequential built demonstrating business with million in

our last XX months. business than more supports which year-over-year, outlook sequentially to seen and While we certainly return a the balanced grew have bike a in

the We not call to inventory destocking are complete. ready

As not or exit next every lumpiness into or said the I time have previously, that same at will year. will rate, customer persist and channel

category customers. and the bike maintaining us addressable positioning. OEM diversifying and quo, to OEMs the softness Our from The a the premium XX business entry of brand's further effectively has into consistent our while our status entry for some market, the the segment in doubling our top challenge premium in total transformative smaller premium opportunity us strategic strength represents buffered expansion

OEM From important the expansion. another regional towards maintains a due perspective, while avenue our success positive, which participation, stabilization. continues from market the the response e-bike U.S. overwhelmingly our market strength European true has represents the further performance-defining been heritage. also its strategy broaden category, in inventory for staying seeing relative positioning, early to to to The We're better customers progress market validating while similar market to

wireless ] In the launched [ reviews Valve also new our positive third to NEO and overwhelming solutions early success. quarter, we Live

commitment premium the of at Another innovating sport. to end our the of example high-performance

to Turning Marucci.

Our relative demonstrate brands strength expansion. continue market and share to

field series CAT new and world focused preparing bat our we as behind While with bat the Freeman, Freddie the Marucci XXXX. the Baseball are to as stars, become to utilizing particular are with MVP such Major the seeing excitement Marucci launch, XX partners League our official around we scenes bat beginning take and

a amount of story keeping year ensure work is that the The to XXXX first us multiyear of success busy is XX/X.

both Marucci as XXXX. softball that new product lines believe very House Victus set Hitter's we for investments up and in addition, well well In recent from as us

the deliver launches margins as capacity home build Some and of to these upcoming near-term runs. on we capability weigh product likely will

excitement With the that on we items they is it around their all brings immediate some of acknowledge discretionary during me signs also softness from for this comments period, are of which important business, uncertain Marucci to budgets needs against outlook. as their our seeing balance consumer with some this

recent on for providing OEM across on and well from the segments tempered think have Based quarter the will we a upcoming are as all view this as forecast feedback performance we our and private only is QX, partners public OEM detail. challenges. of review in their these more customers latest prudent based We for that Dennis the ongoing received

thoughts XXXX. our influencing These dynamics are around early also

the bike, and our remain for While as as we're aftermarket retail to environment base customer our well PVG, case in new Marucci group, capture is growth poised industry to expectation challenging. wins in applications

can Dennis earlier taking demand as refills more we margins line be as we growth, to the highlighted will EBITDA macro. will set X drive generation, pipeline actions in However, success our for and cash profile, If consumer recapture detail, driving discuss of best-in-class flow improvement for even up regardless the in initiatives near-term our exponential robust recapture diminished as with top ourselves I decisive and will improved growth. we

this invest control, sentiment in while partners. Nonetheless, the customers, we costs. new [indiscernible] the conditions broader our of the create to on As aggressively which and to and year, strength we depend continuing what existing will the on we products OEM largely macroeconomic overall pace of traction magnitude and reliability recovery around can with innovation new are is drive that and focused managing consumer

turn over the that, with Dennis. call I'll to And

Dennis Schemm

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

million, reflecting quarter the QX business. bike of of results. fiscal million of net XXXX, the strength $XXX.X of third an Marucci were in of X.X% Total consolidated versus XXXX acquisition quarter sales the $XXX.X in sales the third in fiscal impact and increase the

to the and gross shifts AAG our compared in accelerated inventory last of line fiscal reduced gross third optimization XXXX adjusted margin XX.X% XX.X% quarter decrease on lower mix, in driven XX.X%, quarter by in the Our year. in operating and margin same and segments. product was were across The respectively, our leverage volumes

primarily net were expenses million year. last in sales million attributed quarter third in XXXX or the $XX.X of the was net operating in fiscal XX.X% to of The quarter of Total compared to Adjusted of quarter to sales XX.X% operating $XX.X sales or expenses year. XX.X% acquisition. expenses our as increase of $XX.X same in in same percentage of the million operating the XX.X% increased last compared Marucci from inclusion a third the XXXX expenses period to of operating

third million in the in quarter XXXX a $X.X in expense The due in expense $X.X tax the pretax of XXXX. The fiscal was primarily decrease was income company's to a expense to of quarter decrease tax income. million compared tax third of fiscal

$X.XX the last per income of was net diluted quarter $X.XX was third million $X.X the or quarter $XX.X per share income per $XX.X or share the diluted $XX.X diluted $X.XX year. in to year. or compared per or adjusted million $X.XX third diluted in XXXX fiscal Net to in million compared share same share income last And million quarter net of

XX.X% the million the million of Adjusted fiscal quarter third fiscal EBITDA the fiscal XX.X% $XX.X the $XX quarter margin quarter compared year. fiscal of was third $XX EBITDA of to XXXX EBITDA compared of to million same third was year. in in XXXX. compared last Adjusted quarter XXXX the XXXX the third quarter for quarter in to last million same was $XX.X for in Adjusted

in our The decrease and absorption customers are margin volumes fixed industries adjusted that facing, EBITDA various temporary to is in which initiatives. the reflect offset our our continues at margin our and impacting include improvement across measures unique challenges and in performance cost partially facilities. accelerated adjusted control mix AAG, and by inventory cost EBITDA Other of our shifts optimization drivers portfolio continuous

X flows. build. cash XXXX, XX, by and to the sheet balance In compared ended the months or driven rose year-end $XX.X XXXX, inventory September inventory to X.X% million by Moving planned

that is focused at the moment, evolved. on I'd like area are landscape the this how stress very that to an However, we has consumer given

the are challenging we as and possibility balance this we carefully of to that managing can. sheet mindful fast We leverage into backdrop macro possibly as working XXXX, will our be capital that decrease extends we ensure

greater create expense million $XXX,XXX and we reduce in to interest executed of X by reduced by effectively interest in fix expected is expense interest the QX million. it our to rate strive to we interest expense $XXX As swaps debt. predictability, during for our QX, This quarter $X.X

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

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

continue be paydown to the is to priority for allocation. very will We capital prioritize R&D, but clear, debt

since we paid the In have debt. in $XX closed quarter, million an additional down we fact,

be full guidance. sales full billion of in and the $X.XXX per to $XXX in $X.XX earnings share in of This of adjusted million a to range to the of diluted We adjusted range and of to moving now adjusted expect $X.XX and implies to $X.XX tax range to Now earnings quarter year $X.XXX and share per year million XX%. to XXXX XX% diluted $X.XX. of sales $XXX the rate billion fourth

regarding Building year. flat Marucci XXXX, bike for near-term specifically, upon our QX prior plan the to expectations both with and Mike's be XXXX, in and relatively more expect base comments we

with flat dealer upside lots. We opportunity, OE in clear dealers expect both AAG and helping should PVG relatively to incentives some result be sequentially,

but call, We preliminary on more detail XXXX our is will earnings insight during for follows. as QX provide assumptions our

XXXX as it and from to like a under remains XXXX, PVG bike in demand XXXX in absolute measured lot and relates assuming will an look are perspective, dollars. that pressure OE We as

AAG, expect XXXX. OE AAG Marucci In see past changeovers the year and move segments, such concerns, meaningful our the and in see growth cost as We expect [indiscernible]. we do to reduction quality our specific to to we in expect benefit model from and

margins improve we of revised sales expectations, result to a our and the taking As action flow. are cash

have X will taking and we our we OpEx are margin, cost we ensure on optimized. to are take We strategic of to action segments all gross already identified improve measures direct across that

and We involve portfolio, $XX are reduction consolidation reduction more footprint, nonperforming and than cost products saving our our working of in plan inventory of to in cost costs. capture simplification of savings. reduction on of These a million in elimination actions

We an environment. cadence of expect can. our uncertainty to of progress, control imperative call. the QX It that measures provide you on structure including demand is next And the given we our consumer, we where with XX immediately exert aligned the with months, the the during update our we cost keep must these for

we OEM our focused capitalize In remain ourselves the on long-term return growth our meantime, partners to opportunities market strategically and on to as growth. strategy, positioning

Michael Dennison

our we've growth and closing, cost swiftly for foundation commitment while positioned to plans In made environments. we're to more actions the in reduction acting in our margins and our investments comprehensive ensure to innovation, The imminent well volatile taken challenging, drive market to demand we're and with operational a profitability business near-term date long-term we've further and strengthen through to unwavering conditions combined program enhance remain Fox to success. position strategic

flexibility current the our price points ability business to with model and brands customers strength multiple in Meanwhile, serve important environment. diversified provide navigating across industry-leading and

growth positioned building we and accelerate deliver to value enhanced shareholders. believe to blocks is these our well With Fox in place,

over operator. I'll And the that, turn with to the call

Operator

[Operator with CJS first Larry Instructions] Securities. We'll Solow to go

Lawrence Solow

level, greater into to that way in issues. obstacles resolve it demand quality like that these feels has maybe if from it broad guess question, more continue quality is a sounds high demand I kind the Great. But and good a Mike, main even a some of you 'XX be the issues. like it to summarize issue longevity Is going maybe of brush? first

Unknown Executive

just the the not OEMs, Larry, that. issues issues are Yes. I clear automotive are supply at be want be clear, are on to I within causing mean, quality that quality Fox. issues to there

starting We're QX. feel 'XX Yes, yes. issues see But abating. in, in the quality model it are to year does like come

really seeing we're vehicles? X-plus to faced a see demand. we months we a see consumers year, for down past that materializes. to last that go positive got if lots we'll comes kind get lot but they've of they've things nice So have the Can to if to those happens, challenges that and And that the last back, us even of to bounce buy wait in

Lawrence Solow

preliminary stuff. Got you. then bike segment, I It's the just appreciate really helpful. And outlook, on all the

I I next like slower, a bike know the in which on like guess is too, but year. decline sequential in good seasonally looks Just XXXX QX, pretty usually it you're on flat QX, building initial it sounds pretty outlook.

year. that of So historical maybe the demand levels well Is actual -- to say? or still in bit historical end still kind under fair market below in next

Unknown Executive

we we to Yes, look up the top the QX, as quarter, sequentially, it. know, prior good here's on you see XX% nice In a at which up had how quarter. was XX% of

So QX was good.

was it softer than a we little QX expected to But be.

seasonality, So we QX, to to us they that we're softness seasonality, well. view a "Okay, going have gave going we're with some that little of mentioned. And think you as which have said,

I think year-on-year be So in up QX. we'll

that's in year good. so is year-on-year up as QX our first And well. QX, And

that's good. So

out already all in the really think OEMs of have in the we're us I inventory of being give issues come or the thinking tempered But XXXX. QX to problems, really that relief in

in being we're business in So in the next we see part happens really early so that what conservative estimate, year. that pretty of

Operator

Anna to next B. Riley. Glaessgen go with We'll

Anna Glaessgen

continuing to on on start Larry's like on I'd guess question SSG. I

SSG increase. in Looking more bit what's would quarter? at year-over-year margin last sales you have an more year, dig into the little bit expected margin maybe compared little of going on considering adjusted Could uplift EBITDA the to of in I a a the

Unknown Executive

Yes.

question, great Anna. So

what on ahead things. side was happening the so saw of Marucci we And

spending next ahead for ready as softball-related they well. launch get as there as year, So well spending as for MLB launches ahead the they're

put some that so And SSG. on the pressure in margin side

Anna Glaessgen

little expecting, more X% into XQ. believe versus you'd and we I the flattish for you're land. in on heading expectations double-digit piece, in think, a on you disclosures, Can they year? the that And that based the I it. grew I Marucci from consumer about the think just growth that expected roughly Got year, quarter, into is talk about referenced coming pressure that bit nearly achieve [indiscernible]

Unknown Executive

Yes.

is great as what record in did out widespread, another, deliver So box, see time which called the is talking quarter and there Marucci for in in us, and another the not and was do, fantastic. you a probably them job they so is is softness. what committed in baseball that's big on doing they QX At when just for that causing same [indiscernible] you're macro Academy, softness for to some those resellers to

So come we that in we QX. that through see and did QX, expect in

got we in QX have got think that we little a agreements XXXX now. launches a all macro help. with we've the focused the sort bit. so Marucci, those on and MLB things focus that pushing it on Right will down to we're there So product that's now, But some what

Anna Glaessgen

brand on a any and managing and on right could. more, I Dennis, a Got story big about But fully it. appreciate too brand cost long track the the really in picture and that any term. question. I little costs clearly focused one going Do growth thoughts balancing I have about I longer-term cost is the story. record innovation think if bit now. have Fox, about concerns investments of pipeline? Just being just a the think And you strangling as maybe you far

Dennis Schemm

Fantastic question.

as far frankly, been takedowns. dealing And and not quite uncertainty of now. a macro long been this have we too there's result with environment delivering though, on OE OE these we've so our And for commitments

tired it And and are so just just OEs, we the the decided enough's action to of makes taking we trying tea decisive enough, have leaves where read from sense.

help focusing assets a exercises footprint like margins help can a making our elimination up that's QX. just plants, efficiency and make nonperforming in, us perspective, sense, Reduction, we products, the opportunity so on cost going have going is feel also late is what as to where The we of run reduction consider overall, identified costs. some after. Simplification really, stronger. in we in where up those to and in And X for or absorption. right so this demand it's We returns. really us say, deliver us the it we massive began us set future consolidation the and best-in-class makes inventory of buckets to going is that I sense, to predictably these And just I'd us for warehousing it path that then that allow from to sure to scale efficiencies prospective margins people reduction us makes

do I as you well? comments on some that mean, Mike, have

Michael Dennison

Yes. this No, perspective, at side, very from need $XXX that. closer my XX% get company We the back it's operated EBITDA a And to think question. well good I a to has to that on range million quarter EBITDA.

can do meet importantly, we that actually of strengthened we the comes, to most the growth see But that growth exponential value I think are brands what when we do because then when They're us. the allows us growth to and make up back it. us to of grow really kind a worth healthier comes supply and that just clean faster system to when company

Unknown Executive

continue seeing the just all what that If to example we to it's And predictable able this, in deliver season. we allows Marucci, invest continue MLB, of on like just ourselves you're I in do a launches us spending ahead said ahead be gives can before margins, to growth, think to Yes. we And invest to add the think freedom it best. spending in important softball I on the having ability what us would. improved it's for margins perfect we to to

Operator

with Alex of Bank to next America. move We'll Perry

Alexander Perry

wanted the guide, to first, the Just so bike of legacy I sort clarify SSG business.

in sequential clarify wanted to relatively XQ Marucci flat about million right? I a to I with be the think bike dollar both would think quarter-over-quarter, in $XX imply year, or prepared said so XQ. to prior of just Am tune I thinking the the you and remarks, I step which that down that.

Dennis Schemm

Correct.

bike, be it expecting to direct prior we're to be flat with on the really relatively So year.

CODI So and what flat around around expect we -- be asking, us speaking, Marucci, be right? to that XX ]. that's year. last that $XX would million, Relatively so what $XX [ right with combine they to And million relatively probably did you're to

Alexander Perry

helpful. to next implied And then Very the sort and the for gross you. well? as for margins, I I gross of quarter takes puts about margin for then the move year wanted margin quarter, the and outlook gross fourth ask we as guess, Got into fourth big

Michael Dennison

as here, I'll we take move PVG forward so first. Well,

so we orders we the as from in downs that handicapped And quickly lack when were the to ability the pull OEs. we maneuver late definitely receive

PVG a So expect would in margins. to we see improvement sequential

which We'd to basis that move, AAG, we accelerated did expect come In XXX hurt margins back in points. inventory an our QX. probably by

then with into going bike flattish we're combined you the bike there, margin and there. Marucci when relatively to and sorry, or to growth move see segment continue perspective, -- from And Marucci, SSG sequentially,

over then we're that improvement cost-out to continuing the sequential along And longer make, should way. see with term, these you moves the

Operator

We'll Roth move Stember with to MKM. next Scott

Scott Stember

Yes.

side. Moving over bike to the

think from we I a starting better year? you business green job we sides seeing, quarter, America and OEMs U.S., flattening did both how Can at inventory, you QX least progress those of maybe of there there. shoots they there, to Europe, but some just of see in about how last some next that and -- was things were a are into the definitely talk North guess, the about managing commentary of that I with the

Michael Dennison

Yes.

do our recovery. business that looked and might XX, we top to the continues we interesting say top the the top in XX. I saw Europe find top one OEMs, of it's is in XX distributors. So our things than with you QX, U.S. dealers top XX at Scott, slightly better when When XX of terms But

which get saw What in great significant signals XX we players QX, signal. in certain in a below list, we below are which though, line, faster, at is were our above water also bigger smaller cases, that saw, When the those that look to we that was expectations, starting and top healthier basket some, players. to we softening

more and maybe into it back got a the bringing you've smaller an big So looks inversion cautious inventory the with and consumer through got of you've cost year them come slower a players issues, interest guys almost put model financing dealing like businesses. have lot a those floor in which plan growth where and of attack, now the consumer, have

the XX So see it growth weakness body we to in was in started an nice interesting the the a of lot some quarter sector. change and where top in

at will We'll through that look XXXX. in what take continue comes think a QX. I

Scott Stember

Got over it. Marucci. moving And to then just

again talked, a initial things that And what like that be think fourth on about some it -- apples-to-apples and talk Marucci quarter. I whether an grow for flattish being can there then year-over-year bit. it from softening sounds You basis made sounds you about guess, comments maybe will they little the helped in you the just next expectations like can you But vectors your happen? year,

Michael Dennison

A couple of things there. Yes.

probably we launches to So be with logic. don't macro do will aside, double Marucci on the product will what want and doing But space to planned the macro we we're that because is bad grow have next what aside, year, in will believe comment do try digits. we what macro that

Atlanta here Brave at addition, locally [indiscernible] MLB interesting new stores XX it the doors, agreement that [ for up so opened even the about MLB. Stadium new with ], In what's is Marucci many up opens

So growth planned already we us of additional product in launches the will have top believe on expect. we we growth give the 'XX that that

Operator

Stifel. Next to with Jim Duffy

Jim Duffy

I wanted to ask on upfitting.

the still a do inventories, you in not quarter, channel environment? normal there? work would With characterize the third the consider would little demand Or is given dealers for more you that support to there

capacity? with the upfitting, for further for vision some, you speak can to positioning for on opportunity the you're rethinking to secondly, if then offering go-forward that, offering that business? product the there's adjustment And And

Michael Dennison

take half take I'll the Jim, and Dennis first half. Yes, the second

on of inventories So dealer is the very case-by-case when based some brand. basis a the much

Some Still sell fairly trucks, the get them, GM in seeing having through issues, are pretty and course, with we cases, probably as produce And some they Stellantis. the specifically and we're can dealers, of where Ford, nicely. healthy. you they know, of Jeep

We lots. have more to there out to those clear do work

And the to in is thing the newest the comes year. it product when having model inventory most important newest

and all And model so year. in year effort into model a of lot done of coming could that quarter our have vehicles was force the and next this in launches new we QX work eliminate year up the to they'll so older

Stellantis about of GM think and we Ford where pretty and outside are heading. I So feel Jeep, good

And Dennis us, and will quality take this I resolved. that think launches. I'll some Ford that they've help product had mainly issues let the year

Dennis Schemm

map work several lot Yes. the road in meetings. doing of with Trussville product And we've a on product Thanks, [ been Jim. team and ]

we different you participate since took fact, strategy customers I at And to to which command. will a more that tell developing In allow we're will price points.

So first performance we're into and back bringing foremost, all our of packages.

And stages I brand. per think important. we're multiple then to really really, have going that's

these that allow many offerings. points to participate in And so more be we'll price consumers will at

just so there array the not realization consumer. on coming And that wants points to truck. got a We have price of to based that $XXX,XXX everybody we're out

Jim Duffy

pricing Great. question, you, would looking on Are opposite to back for the imagine wanted I environment clearly lot the just an coming and they're seeing ask last pricing a environment where there's Okay. terms? where your not I with however, of power. OEMs, better then you And to

Michael Dennison

to requests mixed to In product something product consideration. see around some price or our a give bag. of for engagement. a we a It's some us some Usually, specific lines, parts it's product launch

we're On not a no, seeing that. widespread basis,

to try innovation. to pricing continue We through drive

And so and one these we new our every up. we price across the more products on products product to OEMs take can new get innovate can of segments,

significant a we are reality map of for It's the not in. us. issue the of part So

for wrong asking. So you're not

meaningful for think of good I it's But part a a it's the readout. most question. part, not

Dennis Schemm

the give going Yes. margin in gross there us getting because we're out to best is And profile. to continue reality is that invest newest going with sure R&D opportunity our we're the to continue the to making best products

Operator

Jefferies. Jordan move with next We'll to Bret

Bret Jordan

of it consumer talk Marucci? chance could pay the if the League on something what at about to your that structure Or is remains you minimum the side license Marucci? that soft the you is a to bat have Or just side, Baseball with baseball delever Can volume? on the I guess, tied the there sales margin Major guarantees? relationship that's

Michael Dennison

go of we're come because them of what in with so their That's with far partner comfortable with agreement and they're the MLB. the with Marucci we've both a at confidential course. in be structured can't too us and day, the really We end agreement, Victus. But Yes. excited to have

see a we year. positive this So next net-net as

box, of in stadium to that a big a the conversation. the different put don't resellers low. is whole think going softening if when of Even minimum in pretty that threshold I is about at there [indiscernible]. softening the think best see And be you're you big going happening are some to with we've the minimum commitments

this as So see all we upside.

Bret Jordan

then AAG around the Or that there accelerating softness at we're other truck the categories And Okay. inventory level? product? consumer's AAG talking liquidation, is type fit a within seeing are this about really

Michael Dennison

in aftermarket the side the lift upfit business. your very are XXX% performing you the businesses When of well. kits, look at side, these wheels,

businesses well. In that those our doing them. prepared comments, They're with happy we're are remarks, about really hitting I think talked their it we

this want that the in really clean get chassis to the to is get So for around can right that the so chassis do. trying we efforts we

Bret Jordan

then I signs I you quote is And in of consumer, is been just challenging for that in Or quarters? that giving you the the finally, the were is with end the some seeing sequential -- seeing of XX? into Okay. you're getting remarks, guess recent trend the outlook you've here, the in that's underlying guess and about you or that worse softness same talked think softness 'XX prepared that that

Michael Dennison

QX uplift. in that we softer increases of a have it was softer probably just to from But is overall and QX. with was perspective. that things We some confidence Friday due give think sort an different Black Obviously, bit comes events QX. played in of consumer to quarter. It QX a yes, and that

Operator

final our Craig question to move Kennison Baird. from with We'll

Craig Kennison

but addressed wanted to already, a upfitting lot business after the go You've again, I Dennis.

assess would would in it how sit than past? maybe you been so, the if you addressable it? in differently that market, chair it's framed frame and real you the And As total frame

Dennis Schemm

talking you upfits XX,XXX per were in the we like about to talking we were past, framed it you're I'm when XX,XXX that the how about So year supposing doing.

the because far door. not be door, upon right in in overnight, right, greater right chassis opportunity we get can that, is dependent think to getting than going mix that the the there I the it's the

going putting that do to that in -- mix that performance as think priority. I with and our these So grow. to then a volume new back and that, chassis the we're stages as in product, going combined after see improves, we're continue and that lineup

to very aggressively And an count. as Another important well QX XXXX. that dealer priority us going is as are is pursue into in to very, more increasing we

so significant macro more for a will And us think growth drivers accommodating X moving those environment. be forward, I things with especially

Craig Kennison

different you dealer per offering the points. maybe more array units helpful, price sell Do to And perhaps? you best there's That's addressing an Dennis. maybe mentioned also think broader a of better, good, products opportunity with

Dennis Schemm

factors more feel one with also, important moving do to going And then to the dealers I I XXX%, to going No, that, be offerings. that's more of period we're appeal forward. think

hand. items those think I So X hand go in

Operator

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

Michael Dennison

and for Halloween. a Thanks today. everybody's time it, We appreciate Happy

Operator

Fox Thank Third Corporation's Factory you. conclude This does Earnings Call. Holding the Quarter XXXX

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

Fox Factory Holding (FOXF) 31 Oct 242024 Q3 Earnings call transcript