FOXF

Overall Financial & Cost Optimization Progress

• The company delivered Q2 2026 revenue of $358.1 million at the high end of its guided range, and adjusted EBITDA of $45.5 million, approximately $5 million above the high end of guidance.
• The $50 million full-year 2026 profit optimization program is on schedule, with more than $25 million in gross savings captured in H1, matching the halfway target. Approximately $10 million of savings comes from phase one carryover, and $40 million will come from phase two, consistent with the February 2026 framework.
• Working capital efficiency improved year-over-year: the cash conversion cycle improved by 12 days, and days inventory on hand fell to 136 days from 150 days a year prior. Net debt declined $9 million year-to-date, with a net leverage ratio of 3.7x as of quarter end, well below the 5x credit agreement covenant.

Portfolio & Strategy Updates

• The company continues to evaluate all business units against three criteria: alignment with core brands, synergy with core competencies, and ability to deliver accretive margins and durable cash flows. Proceeds from any non-strategic divestitures will be used for debt reduction.
• Capital expenditure remains disciplined, with Q2 2026 capex of $4.1 million (1.1% of revenue) and H1 capex of $9.5 million (1.3% of revenue), consistent with long-term targets.

Product & New Business Wins

• PDG secured multiple new awards in 2026: a new vehicle program with an existing OEM launching in 2028, and a new electric vehicle autonomous vehicle program with a new OEM that will begin shipping in late 2026 and deliver incremental volume in 2027. 12 new vehicle fitments launched in 2026 to date, including expanded aftermarket live valve offerings, and multiple major OEMs now integrate Fox's proprietary ECU into their premium halo models.
• AAG's new OEM-driven customization upfitting program continues to grow, leveraging OEM marketing and sales channels to reduce Fox's go-to-market costs, improve factory overhead absorption, and align with OEM premium vehicle innovation roadmaps, while supporting long-term dealer network growth.
• SSG's bike business maintains leadership in the premium suspension segment, with ongoing investments in new growth categories including the 32-inch cross-country platform and e-mountain bikes, with strong sell-out demand for new premium technology products. Marucci continues executing on its product roadmap, with new launches planned for H2 2026.

• Full year 2026 net sales guidance is raised to $1.42 billion to $1.47 billion, up from prior guidance, reflecting better than expected H1 performance.
• Full year 2026 adjusted EBITDA guidance is maintained in a narrowed range of $176 million to $196 billion (representing 5% to 16% growth over 2025 on roughly flat year-over-year revenue), with an implied full-year adjusted EBITDA margin of 12.4% to 13.3%, down from the prior 13.1% to 14.3% range to account for higher than expected incremental input costs.
• The baseline guidance assumes commodity, freight, and fuel costs remain at current elevated levels through the end of the year, and does not assume any cost relief or end market recovery; any reduction in these costs would be upside to results. Guidance absorbs $20 million of incremental inflation above the original full-year plan, with $15 million of this incremental pressure expected in H2.
• Q3 2026 net sales guidance is set at $355 million to $380 million, with adjusted EBITDA guidance of $46 million to $54 million, implying an adjusted EBITDA margin of 13% to 14% (up from 12.2% in Q2 excluding IEPA tariff refunds).
• Capital expenditure is expected to total approximately 2% of full-year revenue, and the full-year effective tax rate is expected to be 15% to 18%.
• Management expects incremental margin expansion in H2 2026 driven by the higher weighting of phase two cost optimization savings, anniversary of 2025 tariff implementation, and ongoing pricing and surcharge recovery actions with customers. The full-year $50 million cost savings commitment is reaffirmed.

1. Performance Drivetrain Group (PDG): Net sales of $124.2 million in Q2 2026, with a slight year-over-year increase. Sequential revenue decreased from Q1 2026 due to favorable shipment timing in Q1, and segment margins declined quarter-over-quarter as expected due to product mix. Power Sports within PDG grew 22.5% year-over-year in Q2 and 28% year-over-year in H1, as OEM customers worked through channel inventory imbalances. Automotive within PDG faced continued volume pressure from aluminum supply chain disruptions for F-150 production and Toyota supply chain issues. PDG contributes approximately 34.7% of total consolidated Q2 2026 net sales.

2. Aftermarket and Accessories Group (AAG): Net sales of $109.6 million in Q2 2026, a 4% year-over-year decrease. Excluding a $5.5 million negative impact from the Phoenix operations divestiture, the segment grew modestly year-over-year, even with reduced F-150 volumes. Adjusted EBITDA increased year-over-year, with segment margin improving 70 basis points year-over-year and 500 basis points sequentially. Aftermarket components grew year-over-year, supported by strong demand for premium customization as consumers upgrade existing vehicles amid high interest rates for new purchases. AAG contributes approximately 30.6% of total consolidated Q2 2026 net sales.

3. Sports & Lifestyle Group (SSG): Net sales of $124.3 million in Q2 2026, a 9.4% year-over-year decrease and a 12.5% sequential increase from Q1 2026. The year-over-year decline was expected due to industry-wide order pull forward in 2025. Segment margin held essentially flat year-over-year despite lower revenue, reflecting strong cost discipline. Within SSG, the bike business is seeing gradual inventory stabilization with mixed near-term demand, and e-bike is a key growth area. Softball within the Marucci business is a strong growing bright spot, driven by recent product innovation investments. SSG contributes approximately 34.7% of total consolidated Q2 2026 net sales.

• Escalating geopolitical conflict has pushed commodity prices (including steel and aluminum), fuel, and freight rates higher than original full-year planning assumptions, creating $20 million of incremental unplanned input cost inflation as of Q2 2026, with $15 million of this pressure expected in H2.
• Ongoing aluminum supply chain disruptions continue to negatively impact volume for F-150 related automotive programs, with production not expected to resume at Fox's facilities until early to mid-September 2026.
• Consumer demand across end markets remains mixed and cautious, with continued inventory stabilization processes ongoing in the bike industry that create near-term volatility.
• Higher interest rates have dampened new vehicle demand, though this has partially benefited Fox's aftermarket upgrade business. Uncertainty remains around the timing and amount of potential additional IEPA tariff refunds, with no recovery assumed in current guidance and any recovery potentially requiring sharing with counterparties.

Q: What is the current and expected mix of legacy vs new OEM-aligned upfitting business in AAG, and what are the expectations for the back half of 2026? / A: The business mix is still heavily weighted to Fox's traditional custom upfitting, which remains the primary go-to-market model. The new OEM-aligned program is a smaller share of volume with lower per-unit content than custom upfitting, but it delivers meaningful benefits: OEMs handle marketing and sales, reducing Fox's go-to-market costs, and the higher volume improves factory overhead absorption and productivity. The new program also drives long-term dealer network growth, making it a valuable complementary addition to the legacy business.

Q: How should investors expect the bike business within SSG to perform in the back half of 2026, and what is the current stage of industry recovery? / A: Management expects the bike business to be stable year-over-year in the back half, with a sequential Q3 pickup from Q2 supply chain disruptions followed by normal seasonal leveling off in Q4. As a premium market leader, Fox has benefited from greater predictability through industry inventory volatility, and the business has now stabilized. New premium products for e-bikes and emerging technology platforms are seeing strong sell-out demand (even selling out in some cases), which gives management increased optimism for long-term growth.

Q: What factors drive the expected steep sequential EBITDA margin ramp from Q2 to Q4 2026? / A: The main driver of the margin ramp is the full realization of the $50 million cost optimization program, which was designed to weight savings to the second half. An additional factor is the anniversary of 2025 tariff implementation, which removes year-over-year cost pressure starting in the second half. The delayed Marucci new bat launch (moved from Q2 to Q3) adds incremental revenue and margin in the second half, and the resolution of Q2 bike supply chain timing issues also contributes to the sequential margin improvement.

Q: What is the outlook for incremental margin expansion in SSG if the segment returns to sustainable growth? / A: Both the bike and Marucci sub-segments of SSG are expected to grow in the second half of 2026. As growth materializes, segment margins will climb to a strong long-term profile, with both businesses contributing to expanding profitability as volume grows and cost discipline is maintained.

Q: What is the net go-forward impact of tariffs on results for the back half of 2026 and 2027? / A: After years of adjustments, most tariff changes have now cycled through the business. Fox's operations and supply chain teams have offset roughly half of the original $80 million annual tariff impact, bringing the net impact to around $40 million. If there is no additional new tariff volatility going into 2027, existing tariffs will become fully baked into product pricing, customer agreements, and internal forecasts, becoming a much less material impact on quarterly and annual results.