Fox(US:FOXF)2020-08-12 02:50Financial Data and Key Metrics Changes - In Q2 2020, the company generated sales of $183.1 million, a decrease of 4.7% compared to $192.1 million in Q2 2019 [20] - Gross margin was 32.8%, a 40 basis point increase from 32.4% in the prior year [21] - Adjusted EBITDA was $33.7 million, down from $38.2 million in the same quarter last year, with an adjusted EBITDA margin of 18.4% compared to 19.9% in Q2 2019 [24] - Net income attributable to the company was $12.6 million or $0.32 per diluted share, compared to $22.9 million or $0.59 per diluted share in the prior year [25] Business Line Data and Key Metrics Changes - Specialty Sports Group product sales increased by 10% compared to Q2 2019, driven by high demand in both OEM and aftermarket channels [10][20] - Powered Vehicles Group product shipments decreased by 14.5% compared to Q2 2019, primarily due to production shutdowns at OEM customers [20][12] Market Data and Key Metrics Changes - The company noted strong demand for its Specialty Sports products, particularly in outdoor recreational activities, which have seen a resurgence during the pandemic [10][16] - The demand for premium trucks and Jeep platforms remains strong, with new agreements signed with FCA for Jeep upfitting [13] Company Strategy and Development Direction - The company is focused on leveraging its diversified product portfolio to support a growing customer base, particularly in outdoor activities [29] - The expansion of the manufacturing footprint in Georgia is expected to optimize supply chain operations and enhance production capabilities [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery from factory shutdowns and anticipated continued demand growth in the second half of 2020 [17][29] - The company is prepared to adjust operations in response to any future government mandates related to COVID-19 [17] Other Important Information - The company raised approximately $198 million in net proceeds from a follow-on offering to enhance financial flexibility during economic uncertainty [27] - The acquisition of SCA contributed positively to sales, with a full quarter of sales included in the results [20] Q&A Session Summary Question: Can you speak to the increased demand for bikes and its sustainability? - Management noted a "bike renaissance" with increased demand across all product mixes, driven by new entrants into the sport and changing demographics [31][32] Question: What is the impact of factory shutdowns on Powered Vehicle sales? - Management clarified that the decline in Powered Vehicle sales was due to factory shutdowns rather than a decrease in customer demand, with a strong order book for Q3 [34] Question: How do you view the gross margin increase despite challenges? - The increase in gross margin was attributed to product mix and the benefits from the SCA acquisition, although there were also costs associated with factory shutdowns [36] Question: What is the current state of supply chains for bikes and Powered Vehicles? - Management indicated that the supply chain for bikes is improving, while the Powered Vehicle supply chain remains healthy, with no major issues expected for Q3 [43][44] Question: Can you discuss the rationale behind the equity raise? - The equity raise was intended to strengthen the balance sheet and position the company for potential acquisitions while maintaining liquidity during the pandemic [51][52] Question: What is the outlook for demand in the premium automotive sector? - Management reported strong demand in the premium automotive sector, with no signs of slowdown, although supply may lag behind demand [53] Question: How is the new facility in Georgia performing? - The Georgia facility is on track with production ramp-up, and innovative hiring strategies have been implemented to attract talent during the pandemic [69]