Investors interested in Automotive - Domestic stocks are likely familiar with General Motors (GM) and Fox Factory Holding (FOXF) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revisio ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company reported a net loss of $3.5 million in Q1 2024, a significant downturn from the prior-year's $41.8 million net income, driven by a 16.6% decrease in net sales, while total assets remained stable at approximately $2.25 billion | Financial Metric | Q1 2024 (ended Mar 29) | Q1 2023 (ended Mar 31) | | :--- | :--- | :--- | | **Net Sales** | $333.5 million | $399.9 million | | **Gross Profit** | $103.2 million | $133.3 million | | **Net (Loss) Income** | $(3.5) million | $41.8 million | | **Diluted (Loss) Earnings Per Share** | $(0.08) | $0.98 | | Balance Sheet Item | As of Mar 29, 2024 | As of Dec 29, 2023 | | :--- | :--- | :--- | | **Total Assets** | $2,248.3 million | $2,242.3 million | | **Total Liabilities** | $1,055.8 million | $1,020.5 million | | **Total Stockholders' Equity** | $1,192.5 million | $1,221.8 million | | Cash Flow Activity (Q1) | 2024 | 2023 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $9.4 million | $(66.8) million | | **Net Cash used in Investing Activities** | $(15.3) million | $(144.3) million | | **Net Cash (used in) provided by Financing Activities** | $(7.9) million | $157.8 million | [Note 2: Revenues](index=13&type=section&id=2.%20Revenues) Total net sales for Q1 2024 decreased by 16.6% year-over-year to $333.5 million, with declines across product groups and geographies, and a shift in sales channels | Net Sales by Product Group (Q1) | 2024 | 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Powered Vehicles Group | $118.1 M | $142.2 M | -16.9% | | Aftermarket Applications Group | $101.9 M | $138.7 M | -26.5% | | Specialty Sports Group | $113.5 M | $118.9 M | -4.5% | | **Total Net Sales** | **$333.5 M** | **$399.9 M** | **-16.6%** | | Net Sales by Channel (Q1) | 2024 | 2023 | Change (%) | | :--- | :--- | :--- | :--- | | OEM | $137.8 M | $217.7 M | -36.7% | | Aftermarket/Non-OEM | $195.7 M | $182.2 M | +7.4% | | Net Sales by Geography (Q1) | 2024 | 2023 | Change (%) | | :--- | :--- | :--- | :--- | | North America | $284.7 M | $291.9 M | -2.5% | | Europe | $27.3 M | $61.2 M | -55.4% | | Asia | $18.2 M | $42.1 M | -56.9% | [Note 7: Debt](index=15&type=section&id=7.%20Debt) The company's debt is primarily structured under the 2022 Credit Facility, including a $650 million revolver and a $400 million Incremental Term A Loan, with a 6.93% weighted-average interest rate - The 2022 Credit Facility was amended in November 2023 to add a **$400 million** Incremental Term A Loan and a **$200 million** Delayed Draw Term Loan to fund the Marucci acquisition[66](index=66&type=chunk) | Revolver Status (as of Mar 29, 2024) | Amount | | :--- | :--- | | Total Borrowing Capacity | $650.0 million | | Amount Outstanding | $392.0 million | | Available Borrowing Capacity | $258.0 million | - As of March 29, 2024, the weighted-average interest rate on outstanding borrowing was **6.93%**[65](index=65&type=chunk) [Note 11: Stockholders' Equity](index=20&type=section&id=11.%20Stockholders'%20Equity) A $300 million share repurchase plan authorized in November 2023 led to $25 million in repurchases during Q1 2024, leaving $250 million available - A share repurchase plan for up to **$300 million** was authorized on November 1, 2023, with an expiration date of November 1, 2028[90](index=90&type=chunk) - During Q1 2024, the company repurchased **378,464 shares** for **$25.0 million** at an average price of **$66.03 per share**; as of March 29, 2024, **$250 million** remained available for repurchase[91](index=91&type=chunk)[180](index=180&type=chunk) - Total stock-based compensation expense was **$3.9 million** for Q1 2024, compared to **$5.7 million** for Q1 2023[93](index=93&type=chunk) [Note 15: Acquisitions](index=23&type=section&id=15.%20Acquisitions) The acquisition of Marucci Sports LLC for $567.2 million in November 2023 contributed $59.6 million in Q1 2024 revenue and $4.4 million in pre-tax income - The company acquired 100% of Marucci's parent company, Wheelhouse Holdings Inc., on November 14, 2023, for **$567.2 million**, net of cash acquired[105](index=105&type=chunk) - For the three months ended March 29, 2024, the Marucci acquisition contributed **$59.6 million** in revenue and **$4.4 million** in pre-tax income[111](index=111&type=chunk) | Preliminary Purchase Price Allocation | Amount (in thousands) | | :--- | :--- | | Goodwill | $243,940 | | Trademarks and brands | $174,700 | | Customer and distributor relationships | $83,800 | | Core technologies | $20,600 | [Note 16: Segment Information](index=25&type=section&id=16.%20Segment%20Information) The company now reports across three segments, all experiencing year-over-year declines in Q1 2024 net sales and adjusted EBITDA, with AAG showing the largest profitability drop | Segment Performance (Q1 2024 vs Q1 2023) | Net Sales | Adjusted EBITDA | | :--- | :--- | :--- | | **Powered Vehicles Group** | $118.1M (-16.9%) | $15.9M (-10.2%) | | **Aftermarket Applications Group** | $101.9M (-26.5%) | $14.9M (-59.0%) | | **Specialty Sports Group** | $113.5M (-4.5%) | $24.1M (-40.9%) | | **Unallocated Corporate Expenses** | N/A | $(14.4)M (-13.3%) | - The company re-aligned its segments in Q2 2023 and changed its reporting structure to three operating segments starting in Q1 2024[34](index=34&type=chunk)[53](index=53&type=chunk) [Management's Discussion and Analysis (MD&A)](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 2024 net sales declined 16.6% due to higher interest rates and inventory recalibration, resulting in a net loss of $3.5 million from lower sales, gross margin contraction, and increased interest expense [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Net sales fell by $66.3 million (16.6%) in Q1 2024, driven by unfavorable product mix, reduced operating leverage, and a significant increase in interest expense, leading to a net loss - Net sales decreased **16.6%** YoY, primarily due to product mix, higher interest rates impacting demand, and ongoing Bike channel inventory recalibration, offset by **$59.6 million** in sales from the Marucci acquisition[135](index=135&type=chunk) - Gross margin decreased **240 basis points** to **30.9%** due to a shift in product line mix and operating leverage on lower volume[136](index=136&type=chunk) - Total operating expenses increased by **$15.7 million (20.0%)**, mainly due to the inclusion of Marucci operating expenses and a **$5.3 million** increase in amortization of purchased intangibles[137](index=137&type=chunk) - Interest expense increased by **$9.8 million** to **$13.3 million** due to additional debt from the Marucci acquisition and higher interest rates[139](index=139&type=chunk) [Segment Review](index=32&type=section&id=Segment%20Review) Segment performance in Q1 2024 saw PVG sales decrease due to high interest rates, AAG sales decline from lower upfitting, and SSG sales impacted by Bike inventory recalibration offset by Marucci - Powered Vehicles Group sales decreased **16.9%** due to lower industry demand in Power Sports because of higher interest rates[147](index=147&type=chunk) - Aftermarket Applications Group sales decreased **26.5%**, driven by lower upfitting sales due to product mix and higher interest rates impacting dealers and consumers[148](index=148&type=chunk) - Specialty Sports Group sales decreased **4.5%**, reflecting a **$65.0 million** reduction in Bike sales offset by the inclusion of **$59.6 million** in net sales from Marucci[149](index=149&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) Operating cash flow significantly improved to $9.4 million in Q1 2024, primarily due to inventory reduction, with key cash uses including capital expenditures and share repurchases - Net cash provided by operating activities was **$9.4 million** in Q1 2024, a significant improvement from **$(66.8) million** in Q1 2023[154](index=154&type=chunk) - The improvement in operating cash flow was largely due to a **$20.0 million** decrease in inventory, reflecting efforts to optimize inventory levels[156](index=156&type=chunk) - Financing activities in Q1 2024 included **$25.0 million** to repurchase common stock and a net increase of **$22.0 million** in revolver borrowings[159](index=159&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes have occurred to the company's market risk disclosures since its 2023 Annual Report on Form 10-K - There have been no material changes to the disclosures regarding market risk from the company's 2023 Annual Report on Form 10-K[170](index=170&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 29, 2024, with no material changes to internal controls during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 29, 2024[172](index=172&type=chunk) - No changes in internal control over financial reporting were identified during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[173](index=173&type=chunk) [PART II. OTHER INFORMATION](index=37&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) A class action lawsuit filed on February 20, 2024, alleges federal securities law violations regarding product demand and inventory levels, which the company denies and plans to vigorously defend - A class action complaint was filed on February 20, 2024, alleging violations of federal securities laws[75](index=75&type=chunk)[176](index=176&type=chunk) - The suit alleges material misstatements and omissions regarding demand for the Company's products and inventory levels during the period from May 6, 2021, to November 2, 2023[75](index=75&type=chunk)[176](index=176&type=chunk) - The Company denies all allegations of wrongdoing and intends to vigorously defend itself[75](index=75&type=chunk)[176](index=176&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) Updated risk factors emphasize potential adverse effects from work stoppages and supply chain disruptions, including U.S. port issues and customer labor disputes, with other risks consistent with the 2023 Form 10-K - The company highlights its vulnerability to supply chain disruptions from work stoppages at U.S. ports, citing potential impacts from events like the Baltimore bridge collapse and ongoing port congestion[177](index=177&type=chunk) - Labor disputes involving customers, such as the 2023 UAW strike against Ford, GM, and Stellantis, are noted as a risk that could adversely affect operating results[178](index=178&type=chunk) - Aside from the newly emphasized risks, there have been no other material changes to the risk factors described in the 2023 Form 10-K[179](index=179&type=chunk) [Issuer Purchases of Equity Securities](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2024, the company repurchased 400,820 shares for $26.3 million, including 378,464 shares under its $300 million repurchase plan, leaving $250 million available | Share Repurchases (Q1 2024) | Shares Purchased | Average Price Paid | Purchased Under Plan | Remaining Plan Value (Millions) | | :--- | :--- | :--- | :--- | :--- | | **Total** | **400,820** | **$65.50** | **378,464** | **$250,000,000** | *Note: Total shares purchased includes 22,356 shares acquired to satisfy tax withholding obligations, not part of the public plan*

Financial Performance - Net sales for Q1 fiscal 2024 were $333.5 million, a decrease of 16.6% from $399.9 million in Q1 fiscal 2023[5] - Adjusted earnings per diluted share for Q1 fiscal 2024 were $0.29, exceeding expectations, compared to $1.20 in the same period last year[9] - The net income margin decreased to -1.0% in Q1 fiscal 2024 from 10.4% in Q1 fiscal 2023[9] - Adjusted EBITDA for Q1 fiscal 2024 was $40.4 million, with an adjusted EBITDA margin of 12.1%, down from 19.8% in Q1 fiscal 2023[10] - The company reported a net loss of $3,496 for the three months ended March 29, 2024, compared to a net income of $41,767 in the same period last year[26] - Adjusted net income for the period was $11,925, significantly lower than $51,034 in the prior year[32] - Adjusted EBITDA decreased to $40,419, down 48.9% from $79,158 year-over-year[36] Sales and Revenue - Aftermarket sales increased to 59% of net sales, up from 46% in the prior year quarter[4] - For fiscal year 2024, the company anticipates net sales between $1.53 billion and $1.61 billion, with adjusted earnings per diluted share ranging from $2.30 to $2.55[13] - Net sales for the three months ended March 29, 2024, were $333,472, a decrease of 16.6% compared to $399,851 for the same period in 2023[26] - For the three months ended March 29, 2024, net sales decreased to $333,472 thousand from $399,851 thousand for the same period in 2023, representing a decline of approximately 16.6%[41] Profitability - Gross profit for the same period was $103,158, down 22.6% from $133,298 year-over-year[26] - Adjusted gross profit for the same period was $107,643 thousand, compared to $136,368 thousand in 2023, reflecting a decline of approximately 21.1%[41] - Gross margin decreased to 30.9% in Q1 2024 from 33.3% in Q1 2023, while adjusted gross margin fell to 32.3% from 34.1%[41] Operating Expenses - Total operating expenses rose to $94.3 million, or 28.3% of net sales, compared to $78.6 million, or 19.7% of net sales in Q1 fiscal 2023[7] - Operating expenses increased to $94,283, up 19.9% from $78,608 in the prior year[26] - Adjusted operating expenses were $80,299 thousand for Q1 2024, compared to $70,330 thousand in the prior year, representing an increase of about 14.2%[43] - Operating expense as a percentage of net sales rose to 28.3% in Q1 2024 from 19.7% in Q1 2023, while adjusted operating expense as a percentage of net sales increased to 24.1% from 17.6%[43] Cash and Debt - Cash and cash equivalents decreased to $69.6 million as of March 29, 2024, down from $83.6 million as of December 29, 2023[12] - Total debt increased to $762.4 million as of March 29, 2024, compared to $743.5 million as of December 29, 2023[12] - Cash and cash equivalents at the end of the period were $69,583, down from $83,642 at the beginning of the period[29] Assets and Liabilities - Total assets increased slightly to $2,248,277 from $2,242,298 at the end of the previous quarter[24] - Total liabilities rose to $1,055,788, up from $1,020,537 in the prior quarter[24] Strategic Initiatives - The company is focused on strategic initiatives, including the expansion of the Aftermarket Applications Group's operations[39] - Forward-looking statements indicate expectations regarding future performance, including potential synergies from the acquisition of Marucci and anticipated demand for products[46] Acquisitions - The company incurred $5,041 in acquisitions of businesses during the period, compared to $130,918 in the same period last year[29] - Acquisition-related costs and expenses for the three months ended March 29, 2024, totaled $678 thousand, down from $1,404 thousand in the same period last year[41]

PHOENIX, March 11, 2024 (GLOBE NEWSWIRE) -- Upfit UTV Inc., a subsidiary of Fox Factory Holding Corp. (NASDAQ:FOXF) ("FOX" or the "Company"), announces the launch of its high-performance luxury utility terrain vehicles (UTVs) to showroom floors on March 22. Upfit UTV offers vehicles with unmatched quality, performance, and reliability. "I could not be more excited to introduce these state-of-the-art UTVs to the marketplace. What was once a dream over five years ago is now a reality, backed by precision engi ...

Investors looking for stocks in the Automotive - Domestic sector might want to consider either General Motors Company (GM) or Fox Factory Holding (FOXF) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with s ...

One of the most unforgivable transgressions a publicly traded company can commit is to miss on its earnings. That was the reason investors punished vehicle components manufacturer Fox Factory Holding (FOXF -26.82%) on Friday. The market reacted sharply to the company's latest set of quarterly figures, trading out of the stock and sending its value down by almost 27% in price.Top- and bottom-line skidsDue to what management characterized as "challenging macro and industry headwinds," Fox Factory's fourth-qua ...

Financial Data and Key Metrics Changes - For fiscal year 2024, the company expects sales in the range of $1.53 billion to $1.68 billion and adjusted earnings per diluted share of $2.30 to $2.60 [6] - Total consolidated net sales in Q4 2023 were $332.5 million, a decrease of 18.6% compared to $408.6 million in Q4 2022 [59] - Net income in Q4 2023 was $4 million or $0.10 per diluted share, down from $53 million or $1.25 per diluted share in the same prior year period [72] Business Line Data and Key Metrics Changes - In the Powered Vehicle Group (PVG), net sales were $118 million, down from $133 million in the prior year quarter due to the UAW strike's impact [31] - The Aftermarket Applications Group (AAG) saw sales rise to $121 million from $117 million in the prior year quarter, driven by the custom warehouse business [34] - Specialty Sports Group (SSG) experienced a 41.4% decrease in net sales compared to Q4 2022, primarily due to high inventory levels [51] Market Data and Key Metrics Changes - The company noted that the high interest rate environment has pressured dealer inventory levels, leading to conservative purchasing practices [32] - The e-commerce business expanded significantly, with direct-to-consumer sales reaching 3.6% of total sales, up 260 basis points from 2022 [46] - The company expects the first half of 2024 to decline year-over-year, with growth anticipated in the second half driven by easing macro pressures [71] Company Strategy and Development Direction - The company is focused on maintaining a strong balance sheet and investing in R&D to support new product launches and market share growth [4][8] - The strategy includes a commitment to innovation and product development, with plans to launch over 150 new products in 2024 [88] - The company aims to leverage its acquisitions, such as Marucci, to enhance growth and market presence [42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business despite ongoing challenges, citing a robust pipeline of innovative products and strong customer relationships [3][4] - The company anticipates a return to a more normal operating environment by late Q2 2024, contingent on improved chassis supply and OEM production [24] - Management acknowledged the need for caution in forecasting due to the dynamic environment and uncertainties in customer demand [7][90] Other Important Information - The company reported an adjusted gross margin decrease of 300 basis points to 29% in Q4 2023 compared to 32% in Q4 2022 [53] - The effective tax benefit was $3.1 million in Q4 2023, compared to an effective tax expense of $0.2 million in Q4 2022 [56] - The company has a flexible capital structure, allowing for investments in growth and share repurchases [57] Q&A Session Summary Question: What is the idea with the revisions that are working on? - Management highlighted optimism due to product launches and new customer relationships, indicating a positive outlook for the second half of the year [2] Question: How much of the improvement is driven by demand versus supply chain improvements? - Management noted that improvements are expected from both demand recovery and supply chain enhancements, particularly in chassis availability [21] Question: What are the expectations for the various business segments in 2024? - Management indicated that SSG is expected to be flat to down, while PVG and AAG are anticipated to show growth, driven by new product launches [95][97]

Product Innovation and Development - Fox Factory Holding Corp. reported a strong focus on premium-priced products, which are positioned in the high-end segment of the market, enhancing performance and control for consumers[13] - Recent product innovations include the Live Valve electronic suspension system, which adjusts to changing terrain in real-time, currently utilized in UTVs and mountain bikes[25] - The company has seen increasing consumer demand for performance-defining products, with a focus on high-end bikes and powered vehicles, contributing to growth opportunities in international markets[23] - Fox Factory's revenue growth is supported by a track record of innovation, with multiple new products developed over the past several years, enhancing ride dynamics and performance[22] - The company aims to expand its leadership position by continuing to introduce new products that meet evolving market trends, such as changing bike wheel sizes and the rise of off-road capable vehicles[27] - The company emphasizes ongoing research and development, leveraging feedback from professional athletes and consumers to refine its product offerings[24] - The company is focused on leveraging technology and innovation to develop a diverse portfolio of performance-defining products, including expansion into recreational vehicles and street car applications[28] Market Presence and Sales - The company has established strategic relationships with leading OEMs, including Specialized and Ford, to develop and design innovative products, reinforcing its brand image and driving sales in the aftermarket channel[16] - In fiscal year 2023, approximately 36% of net sales were attributable to powered vehicle-related products, compared to 27% in 2022 and 28% in 2021[42] - Approximately 38% of net sales in fiscal year 2023 were from aftermarket applications, up from 31% in 2022 and 28% in 2021[44] - The company currently sells to approximately 100 OEMs and distributes products to over 5,000 retail dealers and distributors worldwide, with 50% of net sales coming from OEM customers[53] - The company has long-standing relationships with top bike OEMs, including Specialized and Trek Bicycles, which contribute to its market presence[59] - The company aims to increase its aftermarket penetration by selectively adding dealers and distributors and expanding aftermarket-specific products and services[30] Financial Performance and Growth Strategy - The company generated approximately 25% of its net sales from bike products in 2023, indicating a strong reliance on the high-end bike market[121] - The company reported a consolidated net income of $X million for the year ended December 29, 2023, representing a Y% increase compared to the previous year[12] - The company provided guidance for the next fiscal year, projecting revenue growth of B% and an expected net income of $C million[12] - New product launches are anticipated to contribute an additional D million in revenue, with a focus on expanding into E markets[12] - The company is investing $F million in R&D for new technologies aimed at enhancing user experience and operational efficiency[12] - Market expansion efforts include entering G new regions, which are expected to drive an increase in market share by H%[12] Acquisitions and Strategic Initiatives - The company completed several strategic acquisitions, including SCA Performance Holdings in March 2020 and Wheelhouse Holdings in November 2023, to enhance its product offerings and expand its market presence[29] - The acquisition of Marucci in Q4 2023 aims to enhance the company's position in the baseball and softball industry, which is dependent on high-performing products[122] - The company has completed the acquisition of I, which is projected to add J million in annual revenue and strengthen its competitive position[12] Operational Challenges and Risks - The company faces risks from international geopolitical conflicts, which may negatively impact its business and operations[99] - The company relies on a limited number of suppliers, and disruptions could lead to significant production delays or increased costs[100] - The company must continuously enhance existing products and develop new ones to meet consumer needs and maintain market acceptance[105] - The company operates in a highly competitive environment, facing competitors with greater financial and marketing resources[108] - The company’s performance-defining products are discretionary purchases, making them vulnerable to economic changes[93] - The company’s financial condition may be adversely affected by global public health epidemics, including the ongoing effects of COVID-19[93] - The company is vulnerable to supply chain disruptions, particularly from labor disputes at West Coast ports, which could negatively affect its operations[127] - The company faces competitive risks from new technologies such as artificial intelligence and machine learning, which could impact its ability to innovate and maintain market share[110] Financial and Economic Factors - The company experienced increasing prices for raw materials and supplies, leading to price adjustments for customers; however, continued inflation may reduce customer demand or sales volumes[171] - The Federal Reserve increased benchmark interest rates multiple times in 2022 and 2023, which may continue to rise in 2024, potentially increasing the company's interest expense and reducing available funds for operations[178] - A hypothetical 100 basis point increase in interest rates would result in an approximately $6.5 million increase in interest expense for the year ended December 29, 2023[179] - The company is subject to extensive laws and regulations related to environmental compliance, which may require additional expenses and modifications to product offerings[182] - The company may incur significant costs due to intellectual property disputes, which could distract management and affect operations[146] Compliance and Regulatory Risks - The company is subject to evolving privacy laws, such as the GDPR and CCPA, which could increase compliance costs and legal risks[164] - The company faces risks related to compliance with employment practice laws, which could lead to increased costs and litigation risks[189] - The company is subject to various litigation matters that could have a material adverse effect on its business and financial condition[198] - Compliance with regulations regarding conflict minerals may lead to additional expenses and impact sourcing and pricing of materials[193] Employee and Talent Management - The company employs approximately 4,300 employees across various regions, primarily in the U.S.[75] - The company relies on skilled engineers for product design and production, with intense competition for talent in Taiwan, California, and Georgia[130] - The company is facing challenges in retaining skilled finance personnel due to increased demand in the market, which could impact financial reporting accuracy[210] Stock and Shareholder Information - The company is authorized to repurchase up to $300.0 million of outstanding shares of common stock through various methods, with the program expiring on November 1, 2028[208] - From January 2, 2021, to December 29, 2023, the company's stock price fluctuated between $190.29 and $49.12 per share, indicating significant volatility[199] - The company has 41,953,938 shares of common stock outstanding as of December 29, 2023, out of an authorized 90,000,000 shares[202]

Financial Performance - Fourth quarter 2023 net sales were $332 million, a decrease of 18.6% from $408.6 million in Q4 2022, driven by a 41.4% decrease in Specialty Sports Group (SSG) sales[5] - The company achieved a net income of $4 million, with earnings per diluted share of $0.10, compared to $53 million and $1.25 in Q4 2022[9] - Adjusted EBITDA for Q4 2023 was $38.8 million, resulting in an adjusted EBITDA margin of 11.7%, down from 18.8% in Q4 2022[10] - For the fiscal year 2023, net sales totaled $1.464 billion, an 8.6% decrease compared to fiscal 2022, with SSG sales down 42.8%[11] - Gross profit for the twelve months ended December 29, 2023, was $464,812 thousand, down 12.5% from $531,343 thousand in the previous year[28] - Adjusted net income for the twelve months ended December 29, 2023, was $120,846 thousand, a decline of 41.0% compared to $205,278 thousand for the same period in 2022[30] - For the three months ended December 29, 2023, net income was $4,051 thousand, a decrease of 92.3% compared to $52,959 thousand for the same period in 2022[33] - Adjusted net income for the twelve months ended December 29, 2023, was $167,473 thousand, down 28.0% from $232,670 thousand in the previous year[33] - Adjusted EBITDA for the twelve months ended December 29, 2023, was $261,048 thousand, a decrease of 18.9% compared to $321,831 thousand for the previous year[37] Expenses and Margins - The company reported a gross margin of 31.7% for fiscal 2023, a decrease of 150 basis points from 33.2% in fiscal 2022[11] - Total operating expenses for fiscal 2023 were $304.7 million, or 20.8% of net sales, compared to $284.6 million, or 17.8% in fiscal 2022[12] - Operating expense for the three months ended December 29, 2023, was $81,009 thousand, an increase of 9.9% from $74,167 thousand in the same period of 2022[44] - The company reported a net income margin of 1.2% for the three months ended December 29, 2023, down from 13.0% in the same period of 2022[37] - Adjusted gross margin for the twelve months ended December 29, 2023, was 32.8%, compared to 33.4% for the previous year[41] - Adjusted operating margin for the three months ended December 29, 2023, was 20.6%, compared to 16.2% for the same period in 2022[44] Acquisitions and Growth - The company completed the acquisition of Marucci, contributing $17 million in revenue for Q4 2023, and also acquired Custom Wheel House earlier in the year[4] - The company is focused on the acquisition of Marucci and expects future performance improvements from this acquisition[45] - The company aims for $2 billion in sales by 2025, contingent on various market factors including OEM demand and macroeconomic conditions[18] - The company is exploring opportunities for international growth and market expansion[45] - The company is focused on increasing its aftermarket penetration to enhance revenue streams[45] Cash and Assets - The company had cash and cash equivalents of $83.6 million as of December 29, 2023, down from $145.3 million a year earlier, primarily due to debt payments and share repurchases[16] - Total assets increased to $2,242,298 thousand as of December 29, 2023, from $1,618,336 thousand as of December 30, 2022, representing a growth of 38.5%[26] - Cash and cash equivalents decreased to $83,642 thousand as of December 29, 2023, from $145,250 thousand as of December 30, 2022, a decline of 42.4%[26] - Total liabilities rose to $1,020,537 thousand as of December 29, 2023, compared to $496,950 thousand as of December 30, 2022, an increase of 105.5%[26] Future Outlook and Challenges - Fiscal 2024 guidance projects net sales between $1.53 billion and $1.68 billion, with adjusted earnings per diluted share expected to range from $2.30 to $2.60[17] - The company anticipates demand for its products to remain strong despite potential supply chain disruptions[45] - The company aims to improve operating efficiencies and maintain profitability in the upcoming quarters[45] - The company is committed to developing new and innovative products to expand into new categories and end-markets[45] - The company is facing risks related to inflation and interest rate increases by the U.S. Federal Reserve[45] - The company acknowledges potential challenges from geopolitical tensions affecting its supply chain[45] - The company is aware of the impact of consumer preferences on its product demand and is prepared to adapt accordingly[45] - The company incurred interest expenses of $19,320 thousand for the twelve months ended December 29, 2023, compared to $8,939 thousand in the previous year, reflecting a significant increase[28] - Research and development expenses for the twelve months ended December 29, 2023, were $53,179 thousand, a decrease of 5.4% from $56,205 thousand in the previous year[28] - The weighted-average shares used to compute diluted earnings per share for the twelve months ended December 29, 2023, were 42,432 thousand, slightly up from 42,384 thousand in the previous year[28]

Financial Data and Key Metrics Changes - Total consolidated net sales in Q3 2023 were $331.1 million, a decrease of 19.1% compared to $409.2 million in Q3 2022 [37] - Adjusted net income was $44.8 million in Q3 2023, a decrease of approximately $12.6 million or 22% compared to $57.4 million in the same quarter last year [45] - Adjusted EBITDA decreased by 25.1% to $63.7 million for Q3 2023 compared to $85.1 million in Q3 2022 [46] - Adjusted EBITDA margin decreased by 160 basis points to 19.2% in Q3 2023 compared to 20.8% in Q3 2022 [46] Business Line Data and Key Metrics Changes - The Powered Vehicles Group (PVG) delivered a 12.4% increase in net sales in Q3 compared to the same quarter last year, but was negatively impacted by the UAW strike [37] - The Aftermarket Applications Group (AAG) delivered an 8.2% increase in net sales in Q3 compared to the same quarter last year, driven by the Custom Wheel House acquisition [38] - Specialty Sports Group (SSG) net sales decreased by 58.6% compared to Q3 2022 due to high inventory levels across various channels [39] Market Data and Key Metrics Changes - Year-to-date growth in PVG and AAG was 35% and 16% respectively, despite the challenges faced in Q3 [34] - The company expects the inventory recalibration in SSG to continue through the first half of 2024 [39] Company Strategy and Development Direction - The company announced the acquisition of Marucci Sports, which is expected to be accretive to revenue and EBITDA margins, aligning with its diversification strategy [25][51] - The company continues to focus on innovation and brand strength as core elements of its growth strategy [22] - The "one plus one equals three" growth mindset is driving topline and bottom-line improvement [14] Management Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing inventory recalibration in SSG and the impact of the UAW strike on business performance [21][32] - The company remains optimistic about future growth opportunities, particularly in the powered vehicles and aftermarket applications segments [34] - Management expects Q4 2023 sales in the range of $300 million to $340 million, with full-year guidance of $1.43 billion to $1.47 billion [58] Other Important Information - The company approved a share repurchase program of up to $300 million, demonstrating confidence in its operating model and growth plans [31] - The effective tax rate was 9% in Q3 2023, down from 20.8% in Q3 2022, due to benefits from R&D tax credits [44] Q&A Session Questions and Answers Question: What drove the acquisition of Marucci? - The acquisition was driven by Marucci's strong brand, engineered products, and cultural alignment with the company [61][68] Question: Is the Marucci acquisition immediately accretive? - Yes, the acquisition is expected to be accretive to both revenue and EBITDA margins [70][72] Question: What are the prospects for the upfitting business in 2024 and 2025? - The upfitting business is expected to grow, particularly with new facilities and product offerings [88] Question: How is the company addressing the impact of the UAW strike? - The company is managing inventory levels and expects residual impacts into November [32][102] Question: What is the expected impact of the UAW strike on Q4? - The UAW strike is expected to have a combined impact of approximately $100 million, including $25 million specifically related to SSG [113]