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While continuing to research the aftermarket sector and digging deeper into my next article on Fox Factory Holding (NASDAQ: FOXF ), I came across something both curious and interesting.With a degree in Finance and Accounting and previous experience in financial advisory, I use The Sharpe Quest to share my path as an independent investor and market analyst. My approach mixes long-term conviction holdings with tactical sector rotations, driven by the belief that investing isn’t about being right, it’s about m ...

Core Insights - Fox Factory Holding (FOXF) reported revenue of $374.86 million for the quarter ended June 2025, marking a year-over-year increase of 7.6% and exceeding the Zacks Consensus Estimate of $345.17 million by 8.6% [1] - The company's EPS for the same period was $0.40, up from $0.38 a year ago, although it fell short of the consensus EPS estimate of $0.43 by 6.98% [1] Revenue Breakdown - Net Sales for Aftermarket Applications Group reached $114.14 million, surpassing the average estimate of $111.75 million, reflecting a year-over-year increase of 6.6% [4] - Net Sales for Powered Vehicles Group amounted to $123.51 million, exceeding the average estimate of $110.15 million, with a year-over-year change of 4.9% [4] - Net Sales for Specialty Sports Group were reported at $137.21 million, significantly above the average estimate of $120.35 million, representing a year-over-year increase of 11% [4] Stock Performance - Over the past month, shares of Fox Factory Holding have returned +4%, outperforming the Zacks S&P 500 composite's +1.9% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Company Performance - Fox Factory Holding reported quarterly earnings of $0.4 per share, missing the Zacks Consensus Estimate of $0.43 per share, but showing an increase from $0.38 per share a year ago, resulting in an earnings surprise of -6.98% [1] - The company posted revenues of $374.86 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 8.60% and increasing from $348.49 million year-over-year [2] - Over the last four quarters, Fox Factory has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Outlook - The stock has underperformed the market, losing about 3.5% since the beginning of the year compared to the S&P 500's gain of 7.9% [3] - The current consensus EPS estimate for the coming quarter is $0.61 on revenues of $371.05 million, and for the current fiscal year, it is $1.85 on revenues of $1.44 billion [7] - The estimate revisions trend for Fox Factory was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Automotive - Domestic industry, to which Fox Factory belongs, is currently in the bottom 27% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Fox Factory's stock performance [5]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, segment performance, debt, and other financial disclosures for the periods ended July 4, 2025, and June 28, 2024 [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, assets, liabilities, and equity at specific dates Balance Sheet Summary | Metric | July 4, 2025 (in thousands) | January 3, 2025 (in thousands) | | :----------------------------- | :-------------------------- | :--------------------------- | | Cash and cash equivalents | $81,451 | $71,674 | | Accounts receivable | $185,359 | $165,827 | | Inventory | $412,762 | $404,736 | | Total current assets | $746,555 | $727,680 | | Goodwill | $377,366 | $639,505 | | Total assets | $1,965,002 | $2,232,310 | | Total current liabilities | $246,011 | $259,780 | | Total liabilities | $1,006,400 | $1,031,166 | | Total stockholders' equity | $958,719 | $1,201,182 | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, and net income (loss) over specific periods Statements of Operations Summary | Metric (in thousands) | 3 Months Ended July 4, 2025 | 3 Months Ended June 28, 2024 | 6 Months Ended July 4, 2025 | 6 Months Ended June 28, 2024 | | :-------------------- | :-------------------------- | :--------------------------- | :-------------------------- | :--------------------------- | | Net sales | $374,864 | $348,491 | $729,894 | $681,963 | | Gross profit | $116,991 | $110,963 | $226,670 | $214,121 | | Goodwill impairment | — | — | $262,129 | — | | Income (loss) from operations | $18,528 | $18,590 | $(232,059) | $27,465 | | Net income (loss) | $2,705 | $5,407 | $(257,029) | $1,911 |\ | Basic EPS | $0.07 | $0.13 | $(6.15) | $0.05 |\ | Diluted EPS | $0.07 | $0.13 | $(6.15) | $0.05 | [Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Reports net income (loss) and other comprehensive income (loss) for specific periods Statements of Comprehensive Income (Loss) Summary | Metric (in thousands) | 3 Months Ended July 4, 2025 | 3 Months Ended June 28, 2024 | 6 Months Ended July 4, 2025 | 6 Months Ended June 28, 2024 | | :-------------------- | :-------------------------- | :--------------------------- | :-------------------------- | :--------------------------- | | Net income (loss) | $2,705 | $5,407 | $(257,029) | $1,911 | | Other comprehensive income (loss) | $12,190 | $(2,435) | $7,821 | $(5,643) | | Comprehensive income (loss) | $14,895 | $2,972 | $(249,208) | $(3,732) | [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Outlines changes in equity components, including common stock and retained earnings Statements of Stockholders' Equity Summary | Metric (in thousands) | July 4, 2025 | January 3, 2025 | | :-------------------- | :----------- | :-------------- | | Common stock | $42 | $42 |\ | Additional paid-in capital | $345,932 | $339,266 |\ | Treasury stock | $(13,754) | $(13,754) |\ | Accumulated other comprehensive income | $8,045 | $224 |\ | Retained earnings | $618,454 | $875,404 |\ | Total stockholders' equity | $958,719 | $1,201,182 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary | Activity (in thousands) | 6 Months Ended July 4, 2025 | 6 Months Ended June 28, 2024 | | :---------------------- | :-------------------------- | :--------------------------- | | Net cash provided by operating activities | $37,468 | $36,037 | | Net cash used in investing activities | $(19,412) | $(26,579) | | Net cash used in financing activities | $(9,393) | $(10,688) | | Change in cash and cash equivalents | $9,777 | $(1,396) | | Cash and cash equivalents—End of period | $81,451 | $82,246 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of accounting policies and specific financial statement items [Note 1. Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies](index=9&type=section&id=Note%201.%20Description%20of%20the%20Business,%20Basis%20of%20Presentation,%20and%20Summary%20of%20Significant%20Accounting%20Policies) Describes the company's business, financial statement presentation, and key accounting policies - The Company designs, engineers, manufactures, and markets premium products and systems for bikes, powered vehicles, and specialty sports gear globally[24](index=24&type=chunk) - A non-cash **goodwill impairment charge** of **$262.1 million** was recorded in the first quarter of fiscal year 2025, impacting all reporting units, due to adverse changes in U.S. tariff policies and a sustained decline in stock price[37](index=37&type=chunk) - The Company operates on a 52-53-week fiscal year, with the three and six-month periods ended July 4, 2025, and June 28, 2024, each including 13 and 26 weeks, respectively[27](index=27&type=chunk) [Note 2. Revenues](index=14&type=section&id=Note%202.%20Revenues) Details revenue recognition policies and disaggregated net sales by segment, channel, and geography Net Sales by Segment | Segment (Net Sales in thousands) | 3 Months Ended July 4, 2025 | 3 Months Ended June 28, 2024 | 6 Months Ended July 4, 2025 | 6 Months Ended June 28, 2024 | | :------------------------------- | :-------------------------- | :--------------------------- | :-------------------------- | :--------------------------- | | Powered Vehicles Group | $123,514 | $117,795 | $245,612 | $235,908 | | Aftermarket Applications Group | $114,144 | $107,129 | $226,058 | $208,981 | | Specialty Sports Group | $137,206 | $123,567 | $258,224 | $237,074 | | Total net sales | $374,864 | $348,491 | $729,894 | $681,963 | Net Sales by Sales Channel | Sales Channel (Net Sales in thousands) | 3 Months Ended July 4, 2025 | 3 Months Ended June 28, 2024 | 6 Months Ended July 4, 2025 | 6 Months Ended June 28, 2024 | | :------------------------------------- | :-------------------------- | :--------------------------- | :-------------------------- | :--------------------------- | | OEM | $173,757 | $151,299 | $330,078 | $289,108 | | Aftermarket/Non-OEM | $201,107 | $197,192 | $399,816 | $392,855 | | Total net sales | $374,864 | $348,491 | $729,894 | $681,963 | Net Sales by Geographic Location | Geographic Location (Net Sales in thousands) | 3 Months Ended July 4, 2025 | 3 Months Ended June 28, 2024 | 6 Months Ended July 4, 2025 | 6 Months Ended June 28, 2024 | | :------------------------------------------- | :-------------------------- | :--------------------------- | :-------------------------- | :--------------------------- | | North America | $271,676 | $278,153 | $543,977 | $562,815 | | Europe | $58,147 | $37,524 | $106,424 | $64,774 | | Asia | $38,741 | $26,315 | $66,550 | $44,485 | | Rest of the world | $6,300 | $6,499 | $12,943 | $9,889 | | Total net sales | $374,864 | $348,491 | $729,894 | $681,963 | [Note 3. Inventory](index=14&type=section&id=Note%203.%20Inventory) Provides a breakdown of inventory components, including raw materials, work-in-process, and finished goods Inventory Breakdown | Inventory Type (in thousands) | July 4, 2025 | January 3, 2025 | | :---------------------------- | :----------- | :-------------- | | Raw materials | $249,602 | $245,368 | | Work-in-process | $23,110 | $16,519 | | Finished goods | $140,050 | $142,849 | | Total inventory | $412,762 | $404,736 | [Note 4. Prepaids and Other Current Assets](index=15&type=section&id=Note%204.%20Prepaids%20and%20Other%20Current%20Assets) Details the composition of prepaid expenses and other current assets Prepaid and Other Current Assets Breakdown | Asset Type (in thousands) | July 4, 2025 | January 3, 2025 | | :------------------------ | :----------- | :-------------- |\ | Prepaid chassis deposits | $31,217 | $47,094 |\ | Advanced payments and prepaid contracts | $22,931 | $26,496 |\ | Other current assets | $12,835 | $11,853 |\ | Total prepaid and other current assets | $66,983 | $85,443 | [Note 5. Property, Plant and Equipment, net](index=15&type=section&id=Note%205.%20Property,%20Plant%20and%20Equipment,%20net) Presents the breakdown of property, plant, and equipment, net of accumulated depreciation Property, Plant and Equipment Breakdown | Asset Type (in thousands) | July 4, 2025 | January 3, 2025 | | :------------------------ | :----------- | :-------------- | | Machinery and manufacturing equipment | $190,516 | $177,261 | | Building and building improvements | $84,492 | $82,224 | | Leasehold improvements | $42,294 | $40,663 | | Internal-use computer software | $38,315 | $38,572 | | Information systems, office equipment and furniture | $34,062 | $28,725 | | Transportation equipment | $24,712 | $23,299 | | Land and land improvements | $15,563 | $15,521 | | Total property, plant and equipment | $429,954 | $406,265 | | Less: accumulated depreciation and amortization | $(182,483) | $(159,872) | | Total property, plant and equipment, net | $247,471 | $246,393 | Property, Plant and Equipment by Geographic Location | Geographic Location (in thousands) | July 4, 2025 | January 3, 2025 | | :--------------------------------- | :----------- | :-------------- | | United States | $203,673 | $203,937 | | International | $43,798 | $42,456 | | Total long-lived assets | $247,471 | $246,393 | [Note 6. Accrued Expenses](index=16&type=section&id=Note%206.%20Accrued%20Expenses) Details the components of accrued expenses and warranty liability activity Accrued Expenses Breakdown | Accrued Expense Type (in thousands) | July 4, 2025 | January 3, 2025 | | :---------------------------------- | :----------- | :-------------- | | Payroll and related expenses | $30,214 | $22,504 | | Warranty | $18,543 | $21,593 | | Current portion of lease liabilities | $16,600 | $16,683 | | Accrued sales rebate | $10,459 | $7,852 | | Income tax payable | $5,460 | $9,343 | | Other accrued expenses | $9,320 | $13,452 | | Total accrued expenses | $90,596 | $91,427 | Warranty Liability Activity | Warranty Activity (in thousands) | 3 Months Ended July 4, 2025 | 3 Months Ended June 28, 2024 | 6 Months Ended July 4, 2025 | 6 Months Ended June 28, 2024 | | :------------------------------- | :-------------------------- | :--------------------------- | :-------------------------- | :--------------------------- | | Beginning warranty liability | $19,113 | $19,327 | $21,593 | $20,001 | | Charge to cost of sales | $2,679 | $5,546 | $4,147 | $9,489 | | Costs incurred | $(3,249) | $(4,180) | $(7,197) | $(8,797) | | Ending warranty liability | $18,543 | $20,693 | $18,543 | $20,693 | [Note 7. Debt](index=17&type=section&id=Note%207.%20Debt) Describes the company's debt facilities, including revolving loans and term loan principal payments - The **2022 Credit Facility**, maturing on April 5, 2027, provides for revolving loans, swingline loans, and letters of credit up to an aggregate amount of **$650.0 million**[70](index=70&type=chunk) Revolver Loan Status | Revolver Status (in thousands) | July 4, 2025 | January 3, 2025 | | :----------------------------- | :----------- | :-------------- | | Amount outstanding | $157,000 | $153,000 | | Standby letters of credit | $164 | $155 | | Available borrowing capacity | $492,836 | $496,845 | | Total borrowing capacity | $650,000 | $650,000 | Term Loan Principal Payment Schedule | Term Loan Principal Payments (in thousands) | July 4, 2025 | | :------------------------------------------ | :----------- | | For fiscal year 2025 | $12,143 | | For fiscal year 2026 | $24,286 | | For fiscal year 2027 | $512,143 | | Total | $548,572 | | Long-term debt, net of issuance cost | $541,780 | [Note 8. Commitments and Contingencies](index=19&type=section&id=Note%208.%20Commitments%20and%20Contingencies) Outlines significant legal proceedings and other contractual commitments and contingencies - The Company is currently involved in a **federal securities class action lawsuit** and two **stockholder derivative complaints**, all of which the Company denies wrongdoing and intends to vigorously defend[83](index=83&type=chunk)[84](index=84&type=chunk) - **Bailment pool arrangements** for truck chassis with GM and Ford involve **interest payments**, while Stellantis chassis require **cash deposits**, with **interest expense** related to chassis on hand totaling **$1.7 million** for the six months ended July 4, 2025[85](index=85&type=chunk)[86](index=86&type=chunk) [Note 9. Derivatives and Hedging](index=20&type=section&id=Note%209.%20Derivatives%20and%20Hedging) Explains the company's use of derivative instruments for hedging interest rate risk - The Company utilizes **interest rate swaps** to hedge the variability of cash flows in **interest payments** associated with the first **$500.0 million** of its variable rate debt[88](index=88&type=chunk) Interest Rate Swap Contracts Summary | Interest Rate Swap Contracts (in thousands) | July 4, 2025 Unrealized Gain (Loss) in AOCI | January 3, 2025 Unrealized Gain (Loss) in AOCI | | :------------------------------------------ | :---------------------------------------- | :--------------------------------------------- | | April 5, 2022 - April 5, 2027 ($100,000 Notional) | $1,739 | $2,650 | | September 20, 2024 - December 26, 2025 ($100,000 Notional) | $76 | $(87) | | September 20, 2024 - December 25, 2026 ($200,000 Notional) | $(82) | $903 | | September 20, 2024 - September 21, 2029 ($100,000 Notional) | $(86) | $2,219 | | Total | $1,647 | $6,468 | - An estimated **$1.6 million** of existing **net gain** in **Accumulated Other Comprehensive Income (AOCI)** related to **interest rate swap contracts** is expected to be reclassified as a decrease to **interest expense** over the next 12 months[92](index=92&type=chunk) [Note 10. Fair Value Measurements and Financial Instruments](index=21&type=section&id=Note%2010.%20Fair%20Value%20Measurements%20and%20Financial%20Instruments) Presents assets and liabilities measured at fair value and related valuation methodologies Fair Value Assets Summary | Fair Value Assets (in thousands) | July 4, 2025 (Total) | January 3, 2025 (Total) | | :------------------------------- | :------------------- | :---------------------- | | Deferred Compensation Plan Investments | $4,455 | $4,394 | | Interest Rate Swaps | $1,815 | $5,685 | | Total assets measured at fair value | $6,270 | $10,079 | Fair Value Liabilities Summary | Fair Value Liabilities (in thousands) | July 4, 2025 (Total) | January 3, 2025 (Total) | | :------------------------------------ | :------------------- | :---------------------- | | Incremental Term Loans | $541,780 | $552,061 | | Revolver | $157,000 | $153,000 | | Deferred Compensation Plan Liabilities | $4,434 | $4,300 | | Interest Rate Swaps | $168 | — | | Total liabilities measured at fair value | $703,382 | $709,361 | [Note 11. Stockholders' Equity](index=22&type=section&id=Note%2011.%20Stockholders'%20Equity) Details changes in stockholders' equity and stock-based compensation expenses - The Company has an **authorized share repurchase plan** for up to **$300.0 million** in **common stock**, with **$250.0 million** remaining available as of July 4, 2025[100](index=100&type=chunk)[101](index=101&type=chunk)[221](index=221&type=chunk) - No **common stock** was repurchased for retirement during the six months ended July 4, 2025; however, **32,717 shares** were acquired to satisfy **tax-withholding obligations**[101](index=101&type=chunk)[220](index=220&type=chunk) Stock-Based Compensation Expenses | Stock-Based Compensation (in thousands) | 3 Months Ended July 4, 2025 | 3 Months Ended June 28, 2024 | 6 Months Ended July 4, 2025 | 6 Months Ended June 28, 2024 | | :-------------------------------------- | :-------------------------- | :--------------------------- | :-------------------------- | :--------------------------- | | Cost of sales | $347 | $320 | $645 | $556 | | Sales and marketing | $461 | $292 | $850 | $667 | | Research and development | $395 | $361 | $727 | $626 | | General and administrative | $3,359 | $1,230 | $5,695 | $4,259 | | Total | $4,562 | $2,203 | $7,917 | $6,108 | [Note 12. Earnings (Net Loss) Per Share](index=24&type=section&id=Note%2012.%20Earnings%20(Net%20Loss)%20Per%20Share) Provides basic and diluted earnings (net loss) per share calculations Earnings Per Share Summary | EPS (in thousands, except per share) | 3 Months Ended July 4, 2025 | 3 Months Ended June 28, 2024 | 6 Months Ended July 4, 2025 | 6 Months Ended June 28, 2024 | | :----------------------------------- | :-------------------------- | :--------------------------- | :-------------------------- | :--------------------------- | | Net income (loss) attributable to FOX stockholders | $2,744 | $5,407 | $(256,950) | $1,911 | | Basic EPS | $0.07 | $0.13 | $(6.15) | $0.05 | | Diluted EPS | $0.07 | $0.13 | $(6.15) | $0.05 | - Due to the **net loss reported** for the six months ended July 4, 2025, no **dilutive shares** were included in the calculation of diluted net loss per share for the period[111](index=111&type=chunk) [Note 13. Income Taxes](index=25&type=section&id=Note%2013.%20Income%20Taxes) Details the provision (benefit) from income taxes and effective tax rates Income Tax Provision (Benefit) and Effective Rates | Income Tax (in thousands) | 3 Months Ended July 4, 2025 | 3 Months Ended June 28, 2024 | 6 Months Ended July 4, 2025 | 6 Months Ended June 28, 2024 | | :------------------------ | :-------------------------- | :--------------------------- | :-------------------------- | :--------------------------- | | Provision (benefit) from income taxes | $2,800 | $(371) | $(837) | $(1,638) | | Effective tax rates | **50.9%** | **(7.4)%** | **0.3%** | **(600.0)%** | - The **effective tax rate** for the six months ended July 4, 2025, was **0.3%**, primarily due to the **impairment impact of non-deductible goodwill**[115](index=115&type=chunk) - The **One Big Beautiful Bill Act (OBBBA)** was enacted on July 4, 2025, introducing significant tax provisions, but it does not affect the measurement of **deferred tax assets and liabilities** as of July 4, 2025[117](index=117&type=chunk) [Note 14. Acquisitions](index=26&type=section&id=Note%2014.%20Acquisitions) Describes recent business acquisitions and their financial contributions - The Company **acquired Marzocchi Suspension S.r.l.** on December 19, 2024, for **$20.5 million** (net of cash acquired), aiming to expand its **motorcycle suspension manufacturing capabilities**[120](index=120&type=chunk) Marzocchi Acquisition Financial Contribution | Marzocchi Financial Contribution (in thousands) | 3 Months Ended July 4, 2025 | 6 Months Ended July 4, 2025 | | :---------------------------------------------- | :-------------------------- | :-------------------------- | | Total revenues | $11,691 | $23,660 | | Total pre-tax losses | $(722) | $(2,345) | - **Goodwill** of **$3.3 million** was recognized from the **Marzocchi acquisition**, which is **tax deductible** for U.S. income tax purposes[124](index=124&type=chunk) [Note 15. Segment Information](index=27&type=section&id=Note%2015.%20Segment%20Information) Presents financial information by operating segment, including net sales and Adjusted EBITDA - The Company manages its activities through three **operating segments**: **Powered Vehicles Group (PVG)**, **Aftermarket Applications Group (AAG)**, and **Specialty Sports Group (SSG)**[126](index=126&type=chunk) - **Adjusted EBITDA** is the key financial metric used by the **Chief Operating Decision Maker (CODM)** to measure the **profitability and financial performance** of the **operating segments**[131](index=131&type=chunk) Net Sales by Segment | Net Sales by Segment (in millions) | 3 Months Ended July 4, 2025 | 3 Months Ended June 28, 2024 | 6 Months Ended July 4, 2025 | 6 Months Ended June 28, 2024 | | :--------------------------------- | :-------------------------- | :--------------------------- | :-------------------------- | :--------------------------- | | Powered Vehicles Group | $123.5 | $117.8 | $245.6 | $235.9 | | Aftermarket Applications Group | $114.2 | $107.1 | $226.1 | $209.0 | | Specialty Sports Group | $137.2 | $123.6 | $258.2 | $237.1 | | Total net sales | $374.9 | $348.5 | $729.9 | $682.0 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and future outlook, including a detailed analysis of operating results for the three and six months ended July 4, 2025, compared to the prior year, critical accounting policies, liquidity, and capital resources, and a discussion of forward-looking statements and risk factors [Cautionary Note Regarding Forward-Looking Statements](index=30&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) Highlights inherent risks and uncertainties associated with forward-looking statements - **Forward-looking statements** are subject to **substantial risks and uncertainties**, including changes in **general economic conditions**, **market disruptions** from escalating **geopolitical tensions** (China-Taiwan, Russia-Ukraine, Israel-Palestine), **growing inflation**, **higher interest rates**, and **tariffs**[143](index=143&type=chunk) - **Key risks** include **dependency on a limited number of suppliers** for materials and vehicle chassis, which could lead to **increased costs** or **supply chain disruptions**[143](index=143&type=chunk) - Other risks encompass the ability to develop new products, expand into new markets, increase aftermarket penetration, accelerate international growth, and manage exchange rate fluctuations[143](index=143&type=chunk) [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Discusses key accounting policies and estimates that significantly impact financial reporting - A non-cash **goodwill impairment charge** of **$262.1 million** was recognized in the first quarter of fiscal year 2025, impacting all reporting units, due to **adverse changes in U.S. tariff policies** and a **sustained decline in the Company's stock price**[148](index=148&type=chunk) - The **fair value of reporting units** for **goodwill impairment testing** is determined using a weighting of income (discounted cash flow) and market approaches, with **sensitivity analyses** performed to assess the **impact of changes in key assumptions**[149](index=149&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance and operating results for the reported periods [Three months ended July 4, 2025 compared to three months ended June 28, 2024](index=34&type=section&id=Three%20months%20ended%20July%204,%202025%20compared%20to%20three%20months%20ended%20June%2028,%202024) Compares the company's operating results for the three months ended July 4, 2025, and June 28, 2024 Operating Results: Three Months Ended | Metric (in millions) | July 4, 2025 | June 28, 2024 | Change ($) | Change (%) | | :------------------- | :----------- | :------------ | :--------- | :--------- | | Net sales | $374.9 | $348.5 | $26.4 | **7.6%** | | Cost of sales | $257.9 | $237.5 | $20.4 | **8.6%** | | Gross margin | **31.2%** | **31.8%** | **-0.6%** | - | | Operating expenses | $98.5 | $92.4 | $6.1 | **6.6%** | | Income from operations | $18.5 | $18.6 | $(0.1) | **(0.5)%** | | Net income | $2.7 | $5.4 | $(2.7) | **(50.0)%**| - The **increase in net sales** was driven by **stabilized bike sales**, **increased demand for aftermarket products**, and the **expansion of the motorcycle business**, partially offset by lower industry demand in automotive OE product lines[154](index=154&type=chunk) - **Gross margin decreased** by **60 basis points** primarily due to **product mix and the impact of tariffs**[155](index=155&type=chunk) [Segment Review (Three Months)](index=36&type=section&id=Segment%20Review%20(Three%20Months)) Reviews the financial performance of operating segments for the three-month periods Segment Performance: Three Months Ended | Segment (in millions) | Net Sales (July 4, 2025) | Net Sales (June 28, 2024) | Net Sales Change (%) | Adjusted EBITDA (July 4, 2025) | Adjusted EBITDA (June 28, 2024) | Adjusted EBITDA Change (%) | | :-------------------- | :----------------------- | :------------------------ | :------------------- | :----------------------------- | :------------------------------ | :------------------------- | | Powered Vehicles Group | $123.5 | $117.8 | **4.9%** | $16.4 | $15.9 | **3.1%** | | Aftermarket Applications Group | $114.2 | $107.1 | **6.6%** | $16.0 | $14.2 | **12.7%** | | Specialty Sports Group | $137.2 | $123.6 | **11.0%** | $30.4 | $29.2 | **4.1%** | | Unallocated corporate expenses | - | - | - | $(13.5) | $(15.1) | **(10.6)%** | - **Powered Vehicles Group net sales increased** due to the **Marzocchi acquisition**, while **Aftermarket Applications Group** and **Specialty Sports Group** saw **growth driven by increased aftermarket demand** and **stabilized bike sales**, respectively[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) [Six months ended July 4, 2025 compared to six months ended June 28, 2024](index=37&type=section&id=Six%20months%20ended%20July%204,%202025%20compared%20to%20six%20months%20ended%20June%2028,%202024) Compares the company's operating results for the six months ended July 4, 2025, and June 28, 2024 Operating Results: Six Months Ended | Metric (in millions) | July 4, 2025 | June 28, 2024 | Change ($) | Change (%) | | :------------------- | :----------- | :------------ | :--------- | :--------- | | Net sales | $729.9 | $682.0 | $47.9 | **7.0%** | | Cost of sales | $503.2 | $467.8 | $35.4 | **7.6%** | | Gross margin | **31.1%** | **31.4%** | **-0.3%** | - | | Operating expenses | $458.7 | $186.7 | $272.0 | **145.7%** | | (Loss) income from operations | $(232.1) | $27.5 | $(259.6) | **(944.0)%**| | Net (loss) income | $(257.0) | $1.9 | $(258.9) | **(13,626.3)%**| - **Net sales increased by 7.0%** due to **stabilized bike sales**, **increased aftermarket product demand**, and **motorcycle business expansion**, despite headwinds from high interest rates and vehicle costs[169](index=169&type=chunk) - The Company reported a **significant net loss of $(257.0) million**, primarily driven by a **$262.1 million goodwill impairment charge** recognized during the period[171](index=171&type=chunk)[176](index=176&type=chunk) [Segment Review (Six Months)](index=39&type=section&id=Segment%20Review%20(Six%20Months)) Reviews the financial performance of operating segments for the six-month periods Segment Performance: Six Months Ended | Segment (in millions) | Net Sales (July 4, 2025) | Net Sales (June 28, 2024) | Net Sales Change (%) | Adjusted EBITDA (July 4, 2025) | Adjusted EBITDA (June 28, 2024) | Adjusted EBITDA Change (%) | | :-------------------- | :----------------------- | :------------------------ | :------------------- | :----------------------------- | :------------------------------ | :------------------------- | | Powered Vehicles Group | $245.6 | $235.9 | **4.1%** | $30.8 | $31.8 | **(3.1)%** | | Aftermarket Applications Group | $226.1 | $209.0 | **8.2%** | $33.0 | $29.0 | **13.8%** | | Specialty Sports Group | $258.2 | $237.1 | **8.9%** | $53.8 | $53.3 | **0.9%** | | Unallocated corporate expenses | - | - | - | $(28.7) | $(29.5) | **(2.7)%** | - **Aftermarket Applications Group** showed the **strongest Adjusted EBITDA growth at 13.8%**, driven by increased demand, while **Powered Vehicles Group's Adjusted EBITDA** decreased slightly due to **higher R&D expenses**[178](index=178&type=chunk)[180](index=180&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's ability to meet short-term and long-term financial obligations Cash Flow Activities Summary | Cash Flow Activity (in millions) | 6 Months Ended July 4, 2025 | 6 Months Ended June 28, 2024 | | :------------------------------- | :-------------------------- | :--------------------------- | | Net cash provided by operating activities | $37.5 | $36.0 | | Net cash used in investing activities | $(19.4) | $(26.6) | | Net cash used in financing activities | $(9.4) | $(10.7) | | Change in cash and cash equivalents | $9.8 | $(1.4) | - The Company expects **cash on hand**, **cash flows from operations**, and availability under its **2022 Credit Facility** to be **sufficient to fund operations** for the next 12 months and beyond[188](index=188&type=chunk) - The **2022 Credit Facility** provides **$650.0 million** in **revolving loans**, maturing April 5, 2027, with a **weighted-average interest rate of 6.41%** as of July 4, 2025[194](index=194&type=chunk)[195](index=195&type=chunk) - Recent developments, including **new and expanded tariffs** under the **Trump administration** and the enactment of the **One Big Beautiful Bill Act (OBBBA)**, introduce **cost and tax framework uncertainties**, which the Company is **evaluating**[200](index=200&type=chunk)[201](index=201&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) States no material changes to market risk disclosures from the prior annual report [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Details the evaluation of disclosure controls and internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=43&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Assesses the effectiveness of the company's disclosure controls and procedures - Management, with the participation of the **CEO and CFO**, evaluated the **effectiveness of disclosure controls and procedures** as of July 4, 2025, and concluded they were **effective at the reasonable assurance level**[207](index=207&type=chunk) [Changes in Internal Control over Financial Reporting](index=43&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Reports on any material changes in internal control over financial reporting - There was **no change in internal control over financial reporting** identified during the period covered by this Quarterly Report on Form 10-Q that has **materially affected**, or is **reasonably likely to materially affect**, **internal control over financial reporting**[208](index=208&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=43&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) Acknowledges the inherent limitations that restrict the effectiveness of control systems - Management acknowledges that **control systems provide only reasonable, not absolute, assurance** of achieving objectives due to **inherent limitations** such as **faulty judgments**, **simple errors**, **circumvention by individual acts or collusion**, and **management override**[209](index=209&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) Details ongoing legal actions, including class action and derivative lawsuits - A **federal securities class action** was filed on February 20, 2024, alleging **material misstatements and omissions** regarding **product demand and inventory levels**, with the defendants **denying all allegations**[210](index=210&type=chunk) - Two **stockholder derivative complaints** were filed in October 2024, premised on similar factual allegations as the securities fraud case, claiming officers and directors **breached fiduciary duties**[211](index=211&type=chunk) - The court **dismissed the initial amended complaint** in the securities fraud case but **granted leave to file a second amended complaint**, which the defendants have **moved to dismiss**[210](index=210&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) Highlights significant risks, particularly those related to trade policies and supply chain - **New and expanded U.S. tariffs**, including a **universal 'reciprocal' tariff of 10%** on all countries effective August 1, 2025, introduce **additional costs and uncertainty** into the supply chain[215](index=215&type=chunk) - There is a risk that continued U.S. tariffs could be met with additional **retaliatory tariffs on U.S.-produced exports**, intensifying **broader trade uncertainty** and potentially impacting **global economic conditions**[216](index=216&type=chunk) - The **Uyghur Forced Labor Prevention Act (UFLPA)** poses **risks of product detentions**, **supply chain disruptions**, and **penalties** if **suppliers are found to have dealings**, directly or indirectly, with entities on the **UFLPA entities list**[217](index=217&type=chunk)[218](index=218&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports on common stock repurchases and the remaining authorization under the plan Common Stock Repurchases | Period | Total Number of Shares Purchased | Weighted-average Price Paid per Share | Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs | | :---------- | :------------------------------- | :------------------------------------ | :--------------------------------------------------------------------------------------- | | 4/5-5/9 | 32,406 | $20.65 | $250,000,000 | | 5/10-6/6 | 311 | $26.32 | $250,000,000 | | 6/7-7/4 | — | — | $250,000,000 | | Total | 32,717 | $20.70 | $250,000,000 | - The **shares purchased were acquired** from holders of **restricted stock unit awards** to satisfy **tax-withholding obligations**[220](index=220&type=chunk) - As of July 4, 2025, **$250.0 million** remains available under the **$300.0 million share repurchase plan authorized** on November 1, 2023[221](index=221&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Confirms no defaults occurred on senior securities during the reporting period [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) States that mine safety disclosures are not applicable to the company's operations [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) Discloses information regarding Rule 10b5-1 trading arrangements by officers and directors [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed as part of the quarterly report on Form 10-Q [Signatures](index=48&type=section&id=Signatures) Contains the official certifications by the company's principal financial and accounting officers

Financial Data and Key Metrics Changes - The company reported net sales of $375 million for Q2 2025, reflecting a 7.6% increase year-over-year [27] - Adjusted EBITDA margin improved to 13.1%, marking the highest level in nearly two years [6][30] - Gross margin decreased to 31.2% from 31.8% year-over-year, while adjusted gross margin was 31.3% compared to 31.9% in the prior year [27][28] Business Line Data and Key Metrics Changes - In the Powered Vehicles Group (PVG), net sales increased by $4.9 million to $123.5 million, driven by growth in the motorized two-wheel business [11] - The Aftermarket Applications Group (AAG) saw net sales rise 6.5% to $114.1 million, attributed to increased demand for aftermarket products [14] - The Specialty Sports Group (SSG) reported an 11% increase in net sales to $137.2 million, supported by strong bike business performance [18] Market Data and Key Metrics Changes - The company noted that the consumer discretionary environment is stabilizing, which is expected to support enhanced profitability [10] - Tariff impacts were highlighted, with an increase in expected tariff costs from $38 million to $50 million for the year, affecting various segments [33][49] Company Strategy and Development Direction - The company is focused on four key initiatives: footprint consolidation, portfolio optimization, working capital management, and a $25 million cost reduction program [7][9] - Emphasis on product innovation and R&D is seen as crucial for maintaining market share and driving long-term growth [6][10] - The company is strategically expanding into new OEMs and industries, particularly in the motorcycle and electric vehicle sectors [11][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macro challenges and achieve growth through operational excellence and innovation [10][35] - The outlook for the second half of 2025 remains positive, with expectations for improved order books and product launches [25][32] - Management acknowledged ongoing tariff pressures but emphasized efforts to mitigate these impacts through various strategies [33][87] Other Important Information - The company is on track to reduce net leverage to below three times by year-end, with a focus on debt reduction [31] - Free cash flow generation is anticipated to be approximately $80 million for the full year [32] Q&A Session Summary Question: What is driving the raised sales guidance? - Management indicated that the entire enterprise is performing well, leading to increased confidence in the second half of the year [41][42] Question: How is the company addressing the higher tariff impact? - The increase in tariff impact is attributed to both the Marucci mix and products from Taiwan, with specific allocations provided for each segment [49] Question: Is there directional improvement in the powersports market? - Management noted that while stability is returning to the powersports market, interest rate improvements are necessary for significant growth [50] Question: What is the outlook for the bike business? - The bike business is expected to grow, with a focus on stabilizing inventory levels and preparing for new product launches [63][67] Question: What are the growth vectors for Marucci? - Management highlighted global growth, diversification in product lines, and expansion into softball as key growth areas for Marucci [78][81]

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) Fox Factory reported Q2 2025 net sales of **$375M**, with sequential and year-over-year growth across all segments, while adjusted EBITDA and its margin improved despite a decline in net income [Second Quarter Fiscal 2025 Highlights](index=1&type=section&id=Second%20Quarter%20Fiscal%202025%20Highlights) Key financial metrics for Q2 2025 show sales growth and improved adjusted EBITDA, alongside a decrease in net income Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | Change | Sequential Change (vs Q1 2025) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $374.9M | $348.5M | +7.6% | +5.6% | | Net Income | $2.7M | $5.4M | -50.0% | N/A | | EPS (diluted) | $0.07 | $0.13 | -46.2% | N/A | | Adjusted EBITDA | $49.3M | $44.1M | +11.8% | +$9.7M | | Adjusted EBITDA Margin | 13.1% | 12.7% | +40 bps | +190 bps | | Adjusted EPS (diluted) | $0.40 | $0.38 | +5.3% | N/A | | Net Leverage | 3.8x | N/A | N/A | Improved from **4.1x** | - Cost reduction initiatives are progressing as expected, mitigating the financial impacts of tariffs[5](index=5&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management attributes growth to product innovation and operational improvements, actively managing tariff impacts to restore profitability - CEO Mike Dennison highlighted that growth was driven by product innovation, while operational improvements and cost management initiatives are improving profitability[3](index=3&type=chunk) - The company is proactively managing an evolving tariff landscape through several initiatives[4](index=4&type=chunk) - Footprint optimization across three continents - Shifting production from higher-cost regions - Strategic sourcing - Customer pricing discussions - Management expects the combination of operational excellence and innovation to restore industry-leading profitability as the consumer discretionary environment stabilizes[4](index=4&type=chunk) [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) Q2 net sales increased by **7.6%** year-over-year across all segments, but gross margin contracted due to product mix and tariffs, while the first six months saw a significant net loss primarily from a goodwill impairment charge [Second Quarter 2025 Results](index=2&type=section&id=Second%20Quarter%202025%20Results) Q2 2025 net sales grew across all segments, but gross margin declined due to product mix and tariffs, while operating expenses increased from restructuring and R&D Q2 2025 Net Sales by Segment (in millions) | Segment | Q2 2025 Sales | Q2 2024 Sales | YoY Growth | Growth Driver | | :--- | :--- | :--- | :--- | :--- | | Specialty Sports Group (SSG) | $137.2 | $123.6 | +11.0% | Stabilization in bike sales | | Aftermarket Applications Group (AAG) | $114.1 | $107.1 | +6.5% | Increased demand for aftermarket products | | Powered Vehicles Group (PVG) | $123.5 | $117.8 | +4.9% | Expansion of the motorcycle business | | **Total Net Sales** | **$374.9** | **$348.5** | **+7.6%** | | - Gross margin decreased to **31.2%** from **31.8%** in the prior year period, primarily driven by shifts in product line mix and the impact of tariffs[7](index=7&type=chunk) - Total operating expenses increased by **$6.1M** to **$98.5M**, driven by organizational restructuring, R&D, and sales & marketing initiatives[8](index=8&type=chunk) - The effective tax rate was **50.9%**, significantly higher than the **21%** federal statutory rate, due to the unfavorable impact of discrete items in proportion to pre-tax income[9](index=9&type=chunk) [First Six Months Fiscal 2025 Results](index=3&type=section&id=First%20Six%20Months%20Fiscal%202025%20Results) For the first six months of fiscal 2025, net sales increased by **7.0%**, but the company reported a significant net loss of **$257.0M** primarily due to a goodwill impairment charge First Six Months 2025 Key Financials | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $729.9M | $682.0M | +7.0% | | Gross Margin | 31.1% | 31.4% | -30 bps | | Net (Loss) Income | ($257.0M) | $1.9M | N/A | | Net (Loss) per Share | ($6.15) | $0.05 | N/A | | Adjusted Net Income | $26.4M | $27.8M | -5.0% | | Adjusted EPS | $0.63 | $0.67 | -6.0% | | Adjusted EBITDA | $88.9M | $84.6M | +5.1% | - Operating expenses for the first six months increased significantly to **$458.7M** from **$186.7M** year-over-year, primarily due to a goodwill impairment charge of **$262.1M** recorded in Q1 2025[14](index=14&type=chunk)[32](index=32&type=chunk) [Financial Position and Outlook](index=4&type=section&id=Financial%20Position%20and%20Outlook) The company's balance sheet shows increased cash and reduced debt, with a significant goodwill impairment in Q1 2025, leading to updated fiscal 2025 guidance reflecting higher tariff expenses [Balance Sheet Summary](index=4&type=section&id=Balance%20Sheet%20Summary) As of July 4, 2025, the balance sheet reflects increased cash and decreased total debt compared to the beginning of the year, with a notable reduction in goodwill due to an impairment charge Balance Sheet Highlights (as of July 4, 2025 vs Jan 3, 2025) | Account | July 4, 2025 | January 3, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $81.5M | $71.7M | | Inventory | $412.8M | $404.7M | | Goodwill | $377.4M | $639.5M | | Total debt | $698.8M | $705.1M | - Goodwill decreased significantly due to a non-cash impairment charge taken in Q1 2025, triggered by adverse changes in U.S. tariff policies and a sustained decline in the company's stock price[18](index=18&type=chunk) [Third Quarter and Fiscal 2025 Guidance](index=4&type=section&id=Third%20Quarter%20and%20Fiscal%202025%20Guidance) The company updated its fiscal 2025 guidance, expecting net sales between **$1.45B** and **$1.51B** and adjusted EPS between **$1.60** and **$2.00**, factoring in increased tariff expenses Fiscal 2025 Guidance | Metric | Q3 2025 Guidance | Full Year 2025 Guidance | | :--- | :--- | :--- | | Net Sales | $370M - $390M | $1.45B - $1.51B | | Adjusted EPS | $0.45 - $0.65 | $1.60 - $2.00 | | Full Year Adj. Tax Rate | N/A | 15% - 18% | - The company's expected pre-mitigated tariff expense for 2025 has increased from approximately **$38M** to upwards of **$50M**, which management believes it can absorb within its updated guidance through countermeasures[21](index=21&type=chunk) [Financial Statements and Reconciliations](index=7&type=section&id=Financial%20Statements%20and%20Reconciliations) This section presents unaudited consolidated financial statements, including balance sheets, income statements, and cash flow statements, along with detailed reconciliations of GAAP to non-GAAP measures for adjusted net income, EBITDA, gross profit, and operating expenses [Condensed Consolidated Financial Statements](index=7&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The condensed consolidated financial statements show total assets of **$1.965B** and total liabilities of **$1.006B** as of July 4, 2025, with a net loss of **$257.0M** for the six months ended July 4, 2025, primarily due to a goodwill impairment charge - The Condensed Consolidated Balance Sheet as of July 4, 2025, shows total assets of **$1.965B** and total liabilities of **$1.006B**[30](index=30&type=chunk) - The Condensed Consolidated Statement of Income (Loss) for the six months ended July 4, 2025, reports a net loss of **$257.0M**, heavily impacted by a **$262.1M** goodwill impairment charge[32](index=32&type=chunk) - The Condensed Consolidated Statement of Cash Flows for the first six months of 2025 shows net cash provided by operating activities was **$37.5M**[35](index=35&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section reconciles GAAP net income to adjusted net income and adjusted EBITDA for Q2 2025, detailing adjustments for amortization, restructuring, and other expenses, and provides segment-level adjusted EBITDA - For Q2 2025, GAAP Net Income of **$2.7M** was reconciled to Adjusted Net Income of **$16.6M**, with key adjustments including **$10.4M** for amortization of purchased intangibles and **$3.6M** for organizational restructuring expenses[37](index=37&type=chunk) - For Q2 2025, GAAP Net Income of **$2.7M** was reconciled to Adjusted EBITDA of **$49.3M**, with major reconciling items including depreciation and amortization (**$21.4M**) and interest/other expense (**$12.6M**)[40](index=40&type=chunk) Q2 2025 Segment Adjusted EBITDA (in millions) | Segment | Q2 2025 Adj. EBITDA | | :--- | :--- | | Powered Vehicles Group | $16.4 | | Aftermarket Applications Group | $16.0 | | Specialty Sports Group | $30.4 | | Unallocated corporate expenses | ($13.5) | | **Total Adjusted EBITDA** | **$49.3** | - Q2 2025 Gross Margin of **31.2%** was reconciled to an Adjusted Gross Margin of **31.3%** after accounting for amortization of acquired inventory valuation markup[44](index=44&type=chunk)

Company Overview - Fox Factory Holding Corp. is a global leader in the design, engineering, and manufacturing of premium products for specialty sports and on and off-road vehicles [3] - The company's portfolio includes brands such as FOX, Marucci, and Method Race Wheels, known for their championship-level performance [3] - Fox Factory is a direct supplier of shocks, suspension, and components to leading powered vehicle and bicycle original equipment manufacturers [3] Upcoming Financial Results - The company will announce its second-quarter results for the period ended July 4, 2025, on August 7, 2025, after market close [1] - A conference call with the executive management team will be held on the same day at 4:30 p.m. ET to discuss the results [2] - The conference call will be available for live streaming on the company's website and archived for one year [2] Business Strategy - Fox Factory aims to diversify its product offerings and increase market potential by acquiring complementary businesses [3] - The company provides products in the aftermarket through a global network of retailers and distributors, as well as direct-to-consumer channels [3] Communication and Disclosure - The company utilizes various means to announce material information, including SEC filings, press releases, public conference calls, and its investor relations website [5]

Group 1 - Fox Factory Holding (FOXF) has seen a 20% increase in stock price over the past four weeks, with a mean price target of $32.25 indicating a potential upside of 35.6% from the current price of $23.78 [1] - The average of eight short-term price targets ranges from a low of $24 to a high of $50, with a standard deviation of $8.60, suggesting variability in analyst estimates [2] - Analysts show strong agreement on FOXF's ability to report better earnings than previously predicted, which supports the view of potential upside [4][11] Group 2 - The Zacks Consensus Estimate for FOXF's current year earnings has increased by 0.4% over the past month, indicating positive sentiment among analysts [12] - FOXF holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates, which suggests a solid potential upside [13] - While price targets can be misleading, the direction implied by the consensus price target for FOXF appears to be a good guide for potential price movement [10][13]

Core Viewpoint - Zacks emphasizes a ranking system focused on earnings estimates and revisions to identify winning stocks, while also considering trends in value, growth, and momentum to find strong companies for investors [1] Value Investing - Value investing is a popular strategy for identifying undervalued stocks using fundamental analysis and established metrics [2] Fox Factory Holdings (FOXF) - FOXF is currently rated with a Zacks Rank of 2 (Buy) and has a Value grade of A, making it a stock of interest for value investors [3] - FOXF has a PEG ratio of 1.38, significantly lower than the industry average of 4.10, indicating potential undervaluation [4] - The P/S ratio for FOXF is 0.7, compared to the industry average of 0.75, suggesting it is reasonably priced based on sales [5] - FOXF's P/CF ratio stands at 9.05, well below the industry average of 27.71, highlighting its attractive cash flow outlook [6] - Overall, FOXF appears undervalued based on these metrics and has a strong earnings outlook, positioning it as one of the market's strongest value stocks [7]