Fox(US:FOXF)2023-11-03 16:23Financial 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]