FOX FACTORY HOLDING CORP Q4 FY2024 earnings call

• Completed closure of Colorado facility and initiated footprint consolidation in PVG and AAG, with benefits starting Q2 2025.
• Progressed on $25 million cost reduction initiative, identifying $25 million in savings across COGS and SG&A.
• Improved working capital by $55 million year over year, with AAG, SSG, and PVG each contributing to this improvement.
• Continued product development initiatives, including new products for bikes and motorized two-wheel vehicles, and partnerships with OEMs and dealers.

Powered Vehicle Group (PVG)

• Net sales in Q4 2024: $116 million, slightly down from prior year quarter but up $6 million sequentially. Adjusted EBITDA margin improved by 310 basis points. Automotive faced headwinds from OEM production issues, while power sports had uneven demand but new OEM partnerships like BMW, Ducati, Triumph. The Fox brand remains strong in aftermarket.

Aftermarket Applications Group (AAG)

• Net sales in Q4 2024: $112 million, down from prior year quarter but up $12 million sequentially. Adjusted margin was 12%, a 250 basis points sequential improvement due to cost reduction actions. Chassis inventory optimization and improved chassis mix from OEM partners contributed to this performance.

Sporting Solutions Group (SSG)

• Net sales in Q4 2024: $125 million, up from prior year due to Marucci acquisition. Adjusted EBITDA margin was 22.4% but down sequentially due to inventory optimization and growth investments in Marucci. Product development and Marucci's role as MLB's official BAT partner were highlighted, with growth investments in softball also noted.

• 2025 net sales expected in range of $1.385 billion to $1.485 billion, adjusted EPS in range of $1.60 to $2.60, full-year adjusted tax rate 15%-18%.
• Q1 2025 net sales expected in range of $320 million to $350 million, adjusted EPS $0.12 to $0.32.
• $25 million cost reduction plan back-end loaded, with 30%-35% of savings impacting first-half earnings and remainder in second half.

• Tariffs and regulatory policy changes, with fluidity in timing and size making it challenging to mitigate fully.
• Volatile market demand affecting OEM customers and inventory levels.
• OEM production issues and uneven demand across segments.

Q: Discuss Taiwan facilities consolidation and capacity relative to pre-COVID levels.

A: Capacity is in line with pre-COVID, with increased efficiency and lean practices within the same footprint, leaving room for growth in 2025.

Q: Update on upfitting business and dealerships.

A: PVD team working on cultivating relationships, diversifying dealers, and delivering right products to customers.

Q: Bike business flat revenue year over year, put and take factors.

A: Upside potential from new product launches and inventory control, but conservative due to challenging forecasting and market noise.

Q: Marucci's MLB partnership timing and impact.

A: Growth expected in Q2-Q3 2025, but premature to put a number on it as it's a new relationship with much work to do.

Q: Auto business OEM conversations on tariffs.

A: Premium vehicle segments less affected, but consumer demand and inflation impact still a concern, with pricing indexing in place with OEMs.

Q: Bikes inventory and Europe market.

A: Bike industry healthier, but some inventory in channels and Europe had slower end market in Q4 2024 due to inventory reluctance.

Q: Expense savings $25 million timeline.

A: $25 million cost reduction plan is a significant lift, with progress made, and back half of 2025 seeing more impact.

Q: EBITDA margin by segment unfolding.

A: SSG and bike start soft then recover, AAG ramps up with cost savings and product releases, PVG flattish with sequential improvement in Q1-Q2.

Q: Consumer sentiment and bike buying in Q1.

A: Positive signs seen in Q4-Q1, but bike industry depends on model year product appeal and interest rates, which remain a factor.