Fox Factory Holding Corp. Reports First Quarter Fiscal 2025 Financial Results

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].