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]

Core Viewpoint - Fox Factory Holding Corp. is conducting its Q1 2025 earnings conference call, indicating a focus on business updates and financial performance for the quarter [1][3]. Group 1: Company Overview - The conference call is led by key executives including the Chief Executive Officer, Chief Financial Officer, and Chief Legal Officer, highlighting the importance of leadership in communicating the company's performance [3][4]. - The earnings release for Q1 2025 is available on the company's Investor Relations website, ensuring transparency and accessibility of financial information to stakeholders [4]. Group 2: Financial Performance - The call will include a review of quarterly results and future outlook, suggesting a structured approach to discussing financial performance and strategic direction [3].

Core Insights - Fox Factory Holding (FOXF) reported revenue of $355.03 million for the quarter ended March 2025, reflecting a 6.5% increase year-over-year and an 8.06% surprise over the Zacks Consensus Estimate of $328.55 million [1] - The company's EPS for the quarter was $0.23, down from $0.29 in the same quarter last year, with a 4.55% surprise over the consensus estimate of $0.22 [1] Revenue Performance - Net Sales for the Aftermarket Applications Group reached $111.91 million, exceeding the estimated $98.50 million, representing a 9.9% increase year-over-year [4] - Net Sales for the Powered Vehicles Group were $122.10 million, surpassing the estimated $106.05 million, marking a 3.4% increase compared to the previous year [4] - Net Sales for the Specialty Sports Group totaled $121.02 million, slightly below the estimated $122.45 million, but still showing a 6.6% increase year-over-year [4] Stock Performance - Over the past month, Fox Factory Holding's shares have returned -7.5%, contrasting with the Zacks S&P 500 composite's +11.3% 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]

Part I: Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Net sales increased to $355.0 million, but a **$262.1 million goodwill impairment** led to a **$259.7 million net loss** and reduced total assets [Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary (in thousands) | Account | April 4, 2025 | January 3, 2025 | | :--- | :--- | :--- | | **Total Current Assets** | **$714,102** | **$727,680** | | Cash and cash equivalents | $68,601 | $71,674 | | Inventory | $408,786 | $404,736 | | **Goodwill** | **$377,226** | **$639,505** | | **Total Assets** | **$1,938,489** | **$2,232,310** | | **Total Current Liabilities** | **$224,475** | **$259,780** | | Revolver | $163,000 | $153,000 | | Term Loans, less current portion | $522,631 | $527,775 | | **Total Liabilities** | **$998,673** | **$1,031,166** | | **Total Stockholders' Equity** | **$939,894** | **$1,201,182** | - Goodwill decreased significantly from **$639.5 million** to **$377.2 million** due to an impairment charge. Total assets fell by approximately **$294 million** during the quarter[8](index=8&type=chunk) [Condensed Consolidated Statements of Loss](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Loss) Statement of Loss Summary (in thousands, except per share data) | Metric | Q1 2025 (ended Apr 4) | Q1 2024 (ended Mar 29) | | :--- | :--- | :--- | | **Net Sales** | **$355,030** | **$333,472** | | Gross Profit | $109,679 | $103,158 | | **Goodwill Impairment** | **$262,129** | **$0** | | Total Operating Expenses | $360,266 | $94,283 | | (Loss) Income from Operations | ($250,587) | $8,875 | | **Net Loss** | **($259,734)** | **($3,496)** | | **Diluted EPS** | **($6.23)** | **($0.08)** | - The company recorded a non-cash goodwill impairment charge of **$262.1 million** in the first quarter of 2025, which was the primary driver of the significant net loss and negative EPS[10](index=10&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (in thousands) | Activity | Q1 2025 (ended Apr 4) | Q1 2024 (ended Mar 29) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $680 | $9,352 | | Net Cash used in Investing Activities | ($7,180) | ($15,298) | | Net Cash from (used in) Financing Activities | $3,349 | ($7,886) | | **Change in Cash and Cash Equivalents** | **($3,073)** | **($14,059)** | - Despite a net loss of **$259.7 million**, net cash from operating activities was positive at **$0.7 million**, primarily because the **$262.1 million** goodwill impairment was a non-cash charge[19](index=19&type=chunk) [Notes to Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) - A triggering event related to adverse changes in U.S. tariff policies and a sustained decline in stock price led to a quantitative impairment assessment in Q1 2025[36](index=36&type=chunk) Goodwill Impairment by Reporting Unit (in thousands) | Reporting Unit | Balance as of Jan 3, 2025 | Impairment Loss | Balance as of Apr 4, 2025 | | :--- | :--- | :--- | :--- | | PVG | $94,063 | ($51,206) | $42,669 | | AAG | $258,243 | ($191,823) | $66,420 | | SSG | $287,199 | ($19,100) | $268,137 | | **Total** | **$639,505** | **($262,129)** | **$377,226** | - The company is involved in a securities class action lawsuit filed on Feb 20, 2024, and two related stockholder derivative complaints, alleging material misstatements regarding product demand and inventory levels. The company denies all allegations and intends to defend itself vigorously[79](index=79&type=chunk)[80](index=80&type=chunk) - As of April 4, 2025, the company had **$163.0 million** outstanding on its revolver and **$546.9 million** in term loans, with **$486.8 million** available borrowing capacity under its 2022 Credit Facility[73](index=73&type=chunk)[75](index=75&type=chunk) [Management's Discussion and Analysis (MD&A)](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net sales increased to **$355.0 million**, but a **$262.1 million goodwill impairment** led to a **$259.7 million net loss**, with Adjusted EBITDA at **$39.6 million** [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Q1 2025 vs. Q1 2024 Performance (in millions) | Metric | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | **$355.0** | **$333.5** | **$21.5** | **6.5%** | | Gross Profit | $109.7 | $103.2 | $6.5 | 6.3% | | Gross Margin | 30.9% | 30.9% | - | 0 bps | | **Goodwill Impairment** | **$262.1** | **$0.0** | **$262.1** | **N/A** | | (Loss) Income from Operations | ($250.6) | $8.9 | ($259.5) | (2,915.7)% | | **Net Loss** | **($259.7)** | **($3.5)** | **($256.2)** | **7,320.0%** | - The increase in net sales was driven by higher upfitting sales, increased demand for aftermarket products, growth in bike sales, and the expansion of the motorcycle business. This offset lower demand in traditional powersports lines[145](index=145&type=chunk) - Total operating expenses surged to **$360.3 million** from **$94.3 million**, almost entirely due to the **$262.1 million** goodwill impairment charge[147](index=147&type=chunk) [Segment Review](index=34&type=section&id=Segment%20Review) Segment Performance - Q1 2025 vs Q1 2024 (in millions) | Segment | Net Sales Q1 2025 | Net Sales Q1 2024 | % Change | Adj. EBITDA Q1 2025 | Adj. EBITDA Q1 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Powered Vehicles Group (PVG) | $122.1 | $118.1 | 3.4% | $14.4 | $15.9 | (9.4)% | | Aftermarket Applications Group (AAG) | $111.9 | $101.9 | 9.9% | $17.0 | $14.9 | 14.1% | | Specialty Sports Group (SSG) | $121.0 | $113.5 | 6.6% | $23.4 | $24.1 | (2.9)% | | **Total** | **$355.0** | **$333.5** | **6.4%** | **$39.6** | **$40.5** | **(2.2)%** | - **PVG:** Sales increased due to the Marzocchi acquisition (**$12.0M**), offset by lower industry demand in powersports. Adjusted EBITDA decreased due to product mix[155](index=155&type=chunk) - **AAG:** Sales and Adjusted EBITDA grew, driven by higher upfitting sales and demand for aftermarket products[157](index=157&type=chunk) - **SSG:** Sales increased due to growth in bike sales, though channel inventory recalibration remains a headwind. Adjusted EBITDA decreased slightly due to product mix[158](index=158&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Cash Flow Summary - Q1 2025 (in millions) | Activity | Q1 2025 | | :--- | :--- | | Net cash from operating activities | $0.7 | | Net cash used in investing activities | ($7.2) | | Net cash provided by financing activities | $3.3 | | **Change in cash and cash equivalents** | **($3.1)** | - The company believes cash on hand, cash flow from operations, and availability under its 2022 Credit Facility will be sufficient to fund operations for the next 12 months and beyond[164](index=164&type=chunk) - The company borrowed the full **$200 million** available under its Delayed Draw Term Loan on May 13, 2024. As of April 4, 2025, the company was in compliance with all debt covenants[174](index=174&type=chunk)[175](index=175&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures were reported, with key risks including interest rate volatility and inflation - There have been no material changes to the disclosures regarding market risk since the last annual report[180](index=180&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of April 4, 2025, the company's disclosure controls and procedures were effective at the reasonable assurance level[182](index=182&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[183](index=183&type=chunk) Part II: Other Information [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending against a securities class action and two derivative lawsuits alleging material misstatements regarding product demand and inventory - A securities class action lawsuit was filed against the company and certain officers, alleging material misstatements and omissions regarding demand and inventory levels for the period of May 6, 2021, to November 2, 2023[185](index=185&type=chunk) - Two related stockholder derivative complaints were also filed, alleging breaches of fiduciary duties by officers and directors. The company denies all allegations of wrongdoing in these cases[186](index=186&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from U.S. global trade and tariff policies, including potential supply chain disruptions from new tariffs and forced labor laws - The company identifies significant risk from existing and potential changes to U.S. policies on global trade and tariffs, which have created uncertainty and could adversely affect results[187](index=187&type=chunk) - Specific tariff actions highlighted include increased tariffs on aluminum and steel, a **20%** tariff on imports from China and Hong Kong, and a universal **10%** "reciprocal" tariff, which has been increased to **125%** for Chinese goods in retaliation[187](index=187&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) - The company faces potential supply chain disruptions due to the Uyghur Forced Labor Prevention Act (UFLPA), which could lead to delays, rejections of imported products, and increased operating costs[193](index=193&type=chunk)[194](index=194&type=chunk) [Issuer Purchases of Equity Securities](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company acquired **22,980 shares** for tax obligations, not under its public plan, with **$250 million** remaining for future repurchases Share Repurchase Activity (Quarter ended April 4, 2025) | Period | Total Shares Purchased | Avg. Price Paid per Share | Purchased as Part of Public Plan | Approx. Dollar Value Remaining in Plan | | :--- | :--- | :--- | :--- | :--- | | **Total** | **22,980** | **$25.48** | **0** | **$250,000,000** | - The shares purchased during the quarter were acquired from holders of restricted stock unit awards to satisfy tax-withholding obligations and were not part of the public share repurchase program[197](index=197&type=chunk) - The company's Board of Directors authorized a **$300 million** share repurchase plan on November 1, 2023. As of April 4, 2025, **$250 million** remains available under this authorization[198](index=198&type=chunk)[96](index=96&type=chunk)

Group 1: Earnings Performance - Fox Factory Holding reported quarterly earnings of $0.23 per share, exceeding the Zacks Consensus Estimate of $0.22 per share, but down from $0.29 per share a year ago, representing an earnings surprise of 4.55% [1] - The company posted revenues of $355.03 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 8.06%, compared to year-ago revenues of $333.47 million [2] - Over the last four quarters, Fox Factory has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - Fox Factory Holding shares have declined approximately 32.9% since the beginning of the year, contrasting with the S&P 500's decline of 4.3% [3] - The company's earnings outlook is mixed, with a current Zacks Rank of 3 (Hold), indicating expected performance in line with the market in the near future [6] - The current consensus EPS estimate for the upcoming quarter is $0.40 on revenues of $347.5 million, and for the current fiscal year, it is $1.88 on revenues of $1.42 billion [7] Group 3: Industry Context - The Automotive - Domestic industry, to which Fox Factory belongs, is currently in the bottom 22% of over 250 Zacks industries, suggesting potential challenges ahead [8] - The performance of Fox Factory's stock may be influenced by the overall outlook for the industry, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Data and Key Metrics Changes - First quarter sales reached $355 million, reflecting a 6.5% increase year-over-year, with adjusted earnings per share at $0.23, aligning with expectations [7][24] - Gross margin improved by 200 basis points sequentially to 30.9%, while adjusted gross margin decreased to 30.9% from 32.3% year-over-year due to a shift in product mix [7][25] - Net loss for the quarter was $259.7 million, or negative $6.23 per diluted share, primarily due to a goodwill impairment charge [26] Business Line Data and Key Metrics Changes - In the Powered Vehicles Group (PVG), net sales increased by 3.4% to $122.1 million, driven by motorcycle business growth [12] - The Aftermarket Applications Group (AAG) saw net sales rise by 9.9% to $111.9 million, with adjusted EBITDA margin improving to 15.2% [15] - Specialty Sports Group (SSG) reported a 6.6% increase in net sales to $121 million, although adjusted EBITDA margins decreased to 19.3% due to seasonality and investments in product engineering [17] Market Data and Key Metrics Changes - The automotive sector is showing signs of stabilization, particularly in the premium truck category, despite broader market caution [13] - The motorcycle business is experiencing growth, offsetting declines in traditional powersports product lines [12][15] - The company is leveraging international growth opportunities, particularly in Asia, to mitigate domestic market challenges [53] Company Strategy and Development Direction - The company is focused on operational efficiency, innovation, and strategic growth initiatives to drive long-term shareholder value [22][32] - Key initiatives include simplifying and consolidating manufacturing footprint, optimizing product portfolio, and enhancing working capital management [9][10] - The company aims to achieve $25 million in cost savings through various strategic actions throughout 2025 [11][30] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the broader market environment but is optimistic about sequential margin improvements and top-line growth across segments [21][32] - The company is continuously analyzing tariff impacts and implementing mitigation strategies, including cost reductions and price adjustments [22][31] - Despite uncertainties, management reaffirms full-year guidance for 2025, anticipating continued growth and margin improvement [29][30] Other Important Information - The company completed the closure of one of its Taiwan facilities, which is expected to yield cost benefits starting in Q2 [9][18] - The company is actively managing inventory levels to support demand and prepare for potential tariff impacts [27][44] Q&A Session Summary Question: Update on demand from bicycle OEM partners regarding tariffs - Management noted a spectrum of responses from OEM customers, with no significant demand reduction observed due to tariffs [38][39] Question: Key drivers of growth in the upfitting business - Growth is attributed to better product execution, improved dealer relationships, and a favorable product mix [41][42] Question: Quality of inventory and potential for cash generation - Management emphasized a strategic approach to inventory builds, focusing on high-demand aftermarket products [43][44] Question: Updates on international opportunities - The company is expanding its international relationships, particularly in Asia, to diversify its market presence [53] Question: Impact of tariffs on supply chain and consumer demand - Management discussed various strategies to mitigate tariff impacts, including commodity price adjustments and insourcing [64][66] Question: Did the company see any pull-forward in demand due to tariffs? - Management indicated minimal pull-forward in demand, with some product launches influencing sales [70][71] Question: Insights on the performance of the lower-priced fork in the market - The lower-priced fork has expanded market share and is performing well [105]

Financial Data and Key Metrics Changes - First quarter sales reached $355 million, reflecting a 6.5% increase year-over-year, with adjusted earnings per share at $0.23, aligning with expectations [6][21] - Gross margin improved sequentially by 200 basis points to 30.9%, while adjusted gross margin decreased to 30.9% from 32.3% year-over-year due to a shift in product mix [6][22] - Net loss for the quarter was $259.7 million, or negative $6.23 per diluted share, primarily due to a goodwill impairment charge of $262 million [23] Business Line Data and Key Metrics Changes - In the Powered Vehicles Group (PVG), net sales increased by 3.4% to $122.1 million, driven by motorcycle business growth, with adjusted EBITDA margin improving to 11.8% [11][12] - The Aftermarket Applications Group (AAG) saw net sales rise by 9.9% to $111.9 million, with adjusted EBITDA margin increasing to 15.2% [13][14] - Specialty Sports Group (SSG) reported a 6.6% increase in net sales to $121 million, although adjusted EBITDA margin decreased to 19.3% due to seasonality and investments in product engineering [15][16] Market Data and Key Metrics Changes - The automotive sector is showing signs of stabilization, particularly in the premium truck category, despite broader market caution [12] - The company is experiencing uneven market conditions across various product lines, but is managing financial commitments through disciplined execution [7][19] Company Strategy and Development Direction - The company is focused on cost optimization, portfolio optimization, and working capital management to enhance operational efficiency and free cash flow generation [8][10] - Strategic initiatives include simplifying and consolidating manufacturing footprint, optimizing product mix, and implementing a $25 million cost reduction program [9][10] - The company remains committed to innovation and new product development, which is essential for customer engagement and long-term growth [7][8] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing challenges from tariffs and market volatility but remains optimistic about sequential improvements and long-term growth potential [19][20] - The company reaffirms its full-year 2025 guidance, expecting top and bottom line improvements despite market headwinds [25][29] - Management emphasizes the importance of operational efficiency and strategic growth initiatives to drive long-term shareholder value [19][29] Other Important Information - The company has quantified the potential gross impact of tariffs to be around $50 million for the year, representing approximately 5% of the cost of goods sold [28] - Inventory levels increased by 1% compared to the previous fiscal year, driven by strategic stocking in aftermarket businesses [24] Q&A Session Summary Question: Update on demand from bicycle OEM partners regarding tariffs - Management noted a spectrum of responses from OEM customers, with no significant reduction in demand observed due to tariffs [34][36] Question: Key drivers of growth in the upfitting business - Growth is attributed to better product execution, improved dealer relationships, and a favorable product mix [38][39] Question: Quality of inventory and potential for cash generation - Management emphasized a strategic focus on inventory builds to support demand, particularly in aftermarket businesses [40][41] Question: Updates on international opportunities and product development - The company is expanding relationships internationally, particularly in the wheel and bike segments, to diversify geographically [50][51] Question: Impact of tariffs on supply chain and manufacturing - Management discussed various strategies to mitigate tariff impacts, including insourcing and adjusting pricing with OEMs [60][62] Question: Observations on consumer demand and potential pull-forward in sales - Management did not observe significant pull-forward in demand but noted some early product launches may have influenced Q1 sales [67][68] Question: Seasonality of Marucci products and impact of MLB partnership - Management clarified that seasonality is influenced by product launches and not solely by the baseball season [82][86]

Financial Performance - Net sales for the first quarter of fiscal 2025 were $355 million, an increase of $22 million or 6.5% compared to the prior year[4] - Adjusted earnings per diluted share improved to $0.23, compared to $0.29 in the prior year period[9] - Adjusted EBITDA in the first quarter of fiscal 2025 was $39.6 million, with an adjusted EBITDA margin of 11.2%[10] - Gross margin was 30.9%, sequentially up 200 basis points from the previous quarter[4] - Net loss attributable to FOX stockholders was $259.7 million, compared to a net loss of $3.5 million in the prior year[9] - Net sales for the three months ended April 4, 2025, increased to $355.03 million, up from $333.47 million in the same period last year, representing a growth of 6.7%[26] - The company reported a net loss of $259.73 million for the three months ended April 4, 2025, compared to a net loss of $3.50 million for the same period in 2024, indicating a significant decline in profitability[26] - Adjusted EBITDA for the three months ended April 4, 2025, was $39.60 million, slightly down from $40.42 million in the prior year, reflecting a decrease in adjusted EBITDA margin from 12.1% to 11.2%[34] - Gross profit for the three months ended April 4, 2025, was $109,679,000, compared to $103,158,000 for the same period in 2024, reflecting a year-over-year increase of 6.5%[38] - Adjusted gross profit for the three months ended April 4, 2025, was $109,843,000, up from $107,643,000 in the prior year, indicating a growth of 2.0%[38] Costs and Expenses - The company estimates an annual potential impact of tariffs to be around $50 million in higher costs[14] - Research and development expenses increased to $17.04 million for the three months ended April 4, 2025, compared to $14.44 million in the same period last year, an increase of 18.0%[26] - Operating expenses for the three months ended April 4, 2025, totaled $360,266,000, significantly higher than $94,283,000 for the same period in 2024, primarily due to goodwill impairment of $262,129,000[40] - Adjusted operating expense for the three months ended April 4, 2025, was $84,415,000, compared to $80,299,000 in the previous year, showing an increase of 3.4%[40] - The operating expense margin for the three months ended April 4, 2025, was 101.5%, compared to 28.3% for the same period in 2024, indicating a substantial increase due to the goodwill impairment[40] - The adjusted operating expense margin for the three months ended April 4, 2025, was 23.8%, slightly down from 24.1% in the prior year[40] - Acquisition-related costs and expenses for the three months ended April 4, 2025, were $203,000, down from $678,000 in the same period in 2024[35] Cash Flow and Debt - Total debt as of April 4, 2025, was $709.9 million, up from $705.1 million as of January 3, 2025[12] - Cash and cash equivalents decreased to $68.6 million from $71.7 million as of January 3, 2025[12] - Cash and cash equivalents at the end of the period were $68.60 million, down from $71.67 million at the beginning of the period, a decrease of 4.4%[28] - The company experienced a net cash provided by operating activities of $0.68 million, a significant decrease from $9.35 million in the prior year[28] - Total current assets decreased to $714.10 million as of April 4, 2025, from $727.68 million as of January 3, 2025, a decline of 1.5%[24] - Total liabilities decreased to $998.67 million as of April 4, 2025, compared to $1,031.17 million as of January 3, 2025, a reduction of 3.1%[24] Future Outlook - For the second quarter of fiscal 2025, the company expects net sales in the range of $340 million to $360 million[13] - The company anticipates future growth prospects and improved operating efficiencies, although various risks may impact these expectations[42] - The company is focused on developing new and innovative products and expanding into new categories and end-markets[42] - The company is implementing cost reduction initiatives to improve margins throughout the year[3]

Core Viewpoint - Fox Factory Holding Corp. reported financial results for the first fiscal quarter of 2025, showing a 6.5% increase in net sales compared to the previous year, despite facing challenges from high interest rates and tariffs [1][4][9]. Financial Performance - Net sales for Q1 2025 were $355.0 million, up from $333.5 million in Q1 2024, driven by increases in all segments: AAG up 9.9%, SSG up 6.6%, and PVG up 3.4% [4][7]. - Gross margin remained stable at 30.9%, while adjusted gross margin decreased by 140 basis points to 30.9% [5][40]. - Total operating expenses surged to $360.3 million, or 101.5% of net sales, primarily due to a goodwill impairment charge of $262.1 million [6][9]. - The company reported a net loss of $259.7 million, translating to a loss per diluted share of $6.23, compared to a loss of $3.5 million or $0.08 per share in the prior year [9][27]. Segment Performance - The Aftermarket Applications Group (AAG) saw net sales increase from $101.9 million to $111.9 million, attributed to higher upfitting sales and demand for aftermarket products [4][35]. - Specialty Sports Group (SSG) net sales rose from $113.5 million to $121.0 million, driven by growth in bike sales, although inventory recalibration and consumer demand posed challenges [4][35]. - Powered Vehicles Group (PVG) net sales increased from $118.1 million to $122.1 million, mainly due to the expansion of the motorcycle business [4][35]. Operational Insights - Adjusted EBITDA for Q1 2025 was $39.6 million, down from $40.4 million in Q1 2024, with an adjusted EBITDA margin of 11.2% compared to 12.1% in the prior year [10][33]. - The company is implementing operational improvements and strategic cost management initiatives to enhance margins throughout the year [3][6]. Guidance and Outlook - For Q2 2025, the company expects net sales between $340 million and $360 million, with adjusted earnings per diluted share projected between $0.32 and $0.62 [12]. - For the full fiscal year 2025, net sales are anticipated to range from $1.385 billion to $1.485 billion, with adjusted earnings per diluted share expected between $1.60 and $2.60 [12]. Balance Sheet Summary - As of April 4, 2025, cash and cash equivalents were $68.6 million, down from $71.7 million at the beginning of the year, while total debt increased to $709.9 million [11][24]. - Goodwill decreased significantly to $377.2 million due to a non-cash impairment charge related to adverse changes in U.S. tariff policies [11][24].

Core Viewpoint - Fox Factory (NASDAQ: FOXF) is positioned as a strong investment opportunity, particularly in anticipation of a recovery in discretionary spending and the commitment of enthusiasts to their sports and hobbies [1] Group 1: Investment Thesis - The company is recognized for its strong premium brands, which are appealing to consumers [1] - The focus is on identifying companies that offer healthy dividends while waiting for capital appreciation [1] - The shares of Fox Factory are considered temporarily undervalued compared to its fundamentals, peers, and historical levels [1] Group 2: Investment Criteria - High odds for capital appreciation are preferred, ideally driven by foreseeable catalysts [1] - The investment strategy emphasizes companies that reward shareholders in two ways: through dividends and capital appreciation [1] - The analyst has a background in the HVAC industry, which influences the focus on related stocks [1]