Fox(FOXF) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total consolidated net sales for Q2 2024 were $348.5 million, a decrease of 13% compared to$ 400.7 million in Q2 2023 [28] - Adjusted net income was $15.9 million or$ 0.38 per diluted share, down from $51.4 million or$ 1.21 per diluted share in the same quarter last year [30] - Adjusted EBITDA was $44.1 million for Q2 2024, compared to$ 79.4 million in the same quarter last year, with an adjusted EBITDA margin of 12.7% [31] Business Line Data and Key Metrics Changes - In the Powered Vehicle Group (PVG), net sales were $118 million, down from$ 140 million in the prior year, primarily due to lower OEM demand [12] - In the Automotive sector, demand from major OEMs was mixed, with premium trucks remaining robust while broader OEM automotive space showed signs of excess inventory [13] - In the Aftermarket and Accessories Group (AAG), net sales were $107 million compared to$ 156 million in the prior year quarter, with growth in the component aftermarket portion [15] - In the Specialty Sports Group (SSG), net sales were $124 million, reflecting a$ 19 million increase driven by the inclusion of Marucci, despite a $23 million reduction in bike sales [17] Market Data and Key Metrics Changes - The bike segment saw a 52% sequential revenue increase, indicating stabilization as the channel destocking phase nears conclusion [9][17] - The European market continues to improve relative to the U.S. market, which remains in a state of transition towards stabilization [18] Company Strategy and Development Direction - Diversification across business segments, products, markets, and geographies is a key component of the company's long-term strategy to mitigate risk and enhance growth opportunities [8] - The company is focused on innovation and product development, particularly in the bike and aftermarket segments, to drive future growth [9][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic challenges but remains optimistic about sequential growth in the second half of the year, driven by new product launches and improving market conditions [24][36] - The company is adjusting its full-year guidance to reflect a more tempered sequential revenue lift in the second half, influenced by industry demand and quality challenges [23][34] Other Important Information - Leadership transitions were announced, with Dennis Schemm taking over as President of the AAG segment [10] - The company has secured an improved covenant profile on its capital structure to provide more flexibility amid uncertain macro conditions [33] Q&A Session Summary Question: Revised outlook and confidence in recovery - Management indicated that the revised outlook is primarily influenced by AAG and PVG, with SSG on track for the year [36] Question: Impact of quality issues and supply chain on automotive OEMs - Management clarified that demand is not the issue for premium products, but quality issues and supply chain challenges are significant factors [39] Question: Cost management initiatives - Management highlighted significant reductions in corporate operating expenses and actions taken to improve cost of goods sold [41] Question: Growth expectations for Marucci - Management expects strong double-digit growth for Marucci, projecting it to exceed$ 200 million for the year [49] Question: Future product launches and market conditions - Management confirmed that product launches are on track and that the company is optimistic about the trajectory of the bike segment [22][46]