Fox Factory Q4 Earnings Call Highlights

26 Feb 2026, 22:48 by Danessa Lincoln · The Markets Daily

Fox Factory (NASDAQ:FOXF) used its fourth-quarter 2025 earnings call to outline a multi-phase plan aimed at rebuilding profitability in 2026, even as the company anticipates a lower revenue base tied to divestitures, product line rationalization, and a modestly softer market environment.

Chief Executive Officer Mike Dennison said full-year 2025 sales totaled $1.47 billion, up 5.3%, while fourth-quarter sales rose 2.3% to $361.1 million. Despite that growth, Dennison emphasized that “margin performance was not where it needs to be,” adding that “revenue growth alone is not the objective” and that the company is moving with urgency to close the profitability gap.

Profit optimization: Phase One completed, Phase Two accelerates

Dennison said the company completed its Phase One profit optimization initiative—targeting $25 million in savings—on time and on target. That effort included facility and warehouse consolidations across operating segments, supply-chain improvements, and better utilization of machine shops. He noted that tariffs “masked the underlying savings,” but said the actions helped the company tighten operations and accelerate countermeasures.

Phase Two, Dennison said, represents a “fundamental shift” toward a simpler and more focused portfolio centered on core, higher-margin businesses. Key areas of work highlighted for 2026 included:

Business line rationalization: Exiting businesses that are not margin-accretive, including an expected divestiture of the company’s Phoenix, Arizona operations by the end of the first quarter. Dennison said the exit of Shock Therapy, Upfit UTV, and Geiser is expected to reduce working capital and SG&A while improving margins and simplifying the model.
Supply chain and material cost productivity: Additional productivity through better utilization, footprint reduction, make-or-buy optimization, and material cost reductions through redesign and supplier actions.
Operating expense reductions: Cuts across sales, marketing, and G&A, including marketing and R&D spending not aligned with growth and profitability expectations.

In aggregate, management is targeting approximately $50 million of incremental realized savings in fiscal 2026. The company also plans to reduce capital spending from “3%+ of revenue” to approximately 2% of revenue in 2026, framing the shift as a focus on ROIC and free cash flow generation to accelerate debt paydown.

In addition, Dennison said the board will establish a transformation committee focused on operational excellence and margin improvement. Management expects the committee’s work to be incremental to the $50 million savings target.

Segment highlights: PVG headwinds, AAG growth with margin dilution, SSG challenged

Dennison reviewed performance across Fox Factory’s three operating segments, pointing to both pockets of stability and areas facing continued pressure.

PVG posted fourth-quarter net sales of $116.7 million. Dennison said the automotive OE business remained “reasonably stable and predictable,” benefiting from premium vehicle SKUs. PVG also delivered margin improvement in fiscal 2025, which management tied to Phase One cost actions. However, an aluminum supplier disruption at OEM customers reduced volumes; Dennison estimated the disruption lowered fourth-quarter revenue by approximately $8 million versus historical norms, calling it temporary.

The company also highlighted product and platform wins, including an aftermarket launch of Live Valve technology at SEMA in November, plus new OEM platforms with Ducati, Triumph, and Airstream. Dennison said Fox also saw early revenue from two large EV brands in autonomous mobility and performance off-road, with full production expected to support growth in 2027 and beyond.

AAG delivered fourth-quarter net sales of $126.2 million, up 12.5% year-over-year and 7.1% sequentially, driven by demand across Custom Wheel House, Sport Truck, and Ridetech. Dennison said AAG margins “would have been meaningfully stronger” excluding operations management described as dilutive, including the Phoenix business slated for divestiture. He also pointed to needed improvements in the PVD business to achieve a sustainable margin profile.

On the OE side, Dennison cited a performance truck program launched in the third quarter with a major OE partner as “an immediate success,” with initial units sold out and a backlog building into 2026. The company encountered temporary supply chain complexities, delaying shipments of approximately 300 units into late first quarter and second quarter of 2026. Dennison also said the company secured a second similar program with Ford that was announced at the NADA show.

SSG posted fourth-quarter net sales of $118.2 million, down 5% year-over-year, reflecting what Dennison called a challenging environment across both bike and Marucci. He said the bike industry is stabilizing slowly, while tariffs are pressuring OEMs and contributing to inventory levels below historical norms. Dennison also referenced “disruptive market entrants” changing competitive dynamics and forcing some legacy bike brands to consolidate or cease operations. Against that backdrop, the company’s bike business finished fiscal 2025 slightly above 2024, which management presented as a sign of brand strength and discipline on margin protection.

For Marucci, Dennison said the fourth quarter was stronger than the third quarter as retailers took inventory of new products ahead of holiday shopping. Still, he noted performance was a departure from the original plan for the year and that profitability remains below historical rates, citing strategic growth investments, go-to-market improvements, and tariffs. He said Fox plans a strategic review of the business to consider alternative options as it sharpens focus on its core portfolio.

Fourth-quarter financial results include goodwill impairment

Chief Financial Officer Dennis Schemm said fourth-quarter gross margin was 28.3%, down from 28.9% a year earlier, primarily due to product mix shifts and tariffs. Operating expenses included a non-cash goodwill impairment charge of $295.2 million related to the company’s share price.

Adjusted operating expenses were $82.6 million, or 22.9% of net sales, up from $76.4 million, or 21.7%, in the prior-year quarter. Schemm attributed the increase primarily to the reinstatement of incentive compensation payouts versus no bonuses in the prior-year period.

Adjusted net income was $8.3 million, or $0.20 per diluted share, compared to $12.8 million, or $0.31, a year earlier. Adjusted EBITDA was $35.0 million versus $40.4 million, and adjusted EBITDA margin was 9.7% compared to 11.5%.

Debt reduction, tariffs, and 2026 guidance

Schemm said the company paid down $13 million of debt in the fourth quarter and $33 million for the year, ending fiscal 2025 with $673.5 million of debt. In the Q&A, management said its net leverage ratio ended the year at 3.74 versus a covenant ratio of 4.5.

On tariffs, management said fiscal 2025 saw $50 million of gross tariff impact, with about $25 million offset through cost actions and pricing/supply-chain measures. For 2026, Fox expects an additional $30 million of gross tariff impact and plans to mitigate about half, resulting in an estimated $15 million net headwind in the first half. Management said it has not included any potential benefit from recent developments in its guidance and that it would pursue tariff refunds where possible, but did not include refunds in the outlook.

For fiscal 2026, Fox guided to net sales of $1.328 billion to $1.416 billion, which Schemm said implies a year-over-year decline of about 6.5% at the midpoint, largely due to divestitures, product line rationalization, and a slightly down market. The company guided to adjusted EBITDA of $174 million to $203 million, representing an adjusted EBITDA margin of 13.7% at the midpoint—about 200 basis points above the 2025 rate cited on the call.

For the first quarter of 2026, Fox expects net sales of $343 million to $369 million and adjusted EBITDA of $27 million to $34 million, with management anticipating a more challenging start to the year due to tariff timing, SSG bike comparisons, and ongoing impacts from the Phoenix operations until divestiture.

During the Q&A, management confirmed it has a buyer in place for the businesses slated for divestiture and said proceeds would be used for debt reduction.

About Fox Factory (NASDAQ:FOXF)

Fox Factory Holding Corp., headquartered in Duluth, Minnesota, designs, engineers and manufactures high-performance suspension systems, shock absorbers and related components for powersports, light-vehicle and mountain-bike applications. The company’s FOX brand offers a comprehensive portfolio of forks, shocks, coilovers and internal bypass dampers aimed at OEM and aftermarket customers seeking enhanced ride quality, control and durability across off-road vehicles, motorcycles and bicycles.