Fox(US:FOXF)2021-11-07 15:59Financial Data and Key Metrics Changes - The company reported Q3 2021 sales of $347.4 million, representing a 33.3% increase compared to $260.7 million in Q3 2020 [24] - Non-GAAP adjusted earnings per share increased from $1.07 in Q3 2020 to $1.19 in Q3 2021 [13][40] - Adjusted EBITDA rose by 21.1% to $72.8 million in Q3 2021 compared to $60.1 million in the same quarter last year [36] Business Line Data and Key Metrics Changes - The Powered Vehicles Group (PVG) saw a 22.8% increase in sales compared to Q3 2020, driven by strong demand in both OEM and aftermarket channels [25] - The Specialty Sports Group (SSG) delivered a 48.1% increase in sales in Q3 2021, primarily due to high demand in OEM channels [26] - Year-to-date sales for SSG reached $956.7 million, a 52.3% increase from $628.2 million in the same period last year [26] Market Data and Key Metrics Changes - The company noted strong demand across all product categories, with no signs of abating demand due to a shift towards health-conscious and outdoor lifestyles [12] - Inventory levels remain close to historic lows, with an estimated 8 to 10 months needed to meet current customer demand levels [15] Company Strategy and Development Direction - The management team aims to achieve over $2 billion in revenue by 2025, referred to as FOX 2.0 [10] - The company is investing in key areas to improve speed to market and expand its service network [16] - Product innovation remains a key component of the growth strategy, with increased R&D spending by nearly $4 million in Q3 2021 compared to the prior year [21] Management's Comments on Operating Environment and Future Outlook - The management acknowledged ongoing challenges from labor, input costs, and supply chain issues, with material costs being the biggest headwind [22] - There is optimism about stabilizing demand across industries served, with confidence in the long-term business outlook [46] Other Important Information - The company ended Q3 2021 with cash on hand of $319.3 million and inventory of $246.2 million, reflecting investments to mitigate supply chain risks [41][42] - The effective tax rate for Q3 was 18.2%, in line with previous guidance [35] Q&A Session Summary Question: Guidance for fourth quarter margins - Management indicated that pricing strategies are being revisited to offset inflationary costs, leading to confidence in flat margins for Q4 [48][49] Question: Specialty Sports business and OEMs - There has been no significant move to decontent products as consumers are willing to pay higher prices for better equipment [50] Question: Material availability challenges - Supply chain continuity remains a challenge, but inventory investments have helped mitigate some issues [52][53] Question: Powered Vehicle side stabilization - Management believes stabilization is occurring in the powered vehicle business, particularly with OEM relationships [62] Question: Sales backlog and supply chain - The company is not leaving significant sales on the table, as they are prebooked through 2022 [65] Question: Infrastructure investments - Improvements in operating expenses are expected towards the end of next year as infrastructure investments continue [57] Question: Acquisitions and synergies - There is significant demand for the outside van business, with a focus on scaling production to meet this demand [59]