Fox Factory Q1 Earnings Call Highlights
by Amy Steele · The Cerbat GemFox Factory (NASDAQ:FOXF) reported first-quarter fiscal 2026 results that landed at the high end of management’s revenue guidance and above the top end of its adjusted EBITDA outlook, as the company progressed on a cost-reduction program and completed a portfolio divestiture during the period.
Chief Executive Officer Mike Dennison said the company posted Q1 revenue of $368.7 million and adjusted EBITDA of $35.7 million. He framed the quarter as an early validation of the multi-phase plan the company discussed in February, emphasizing that Fox is “not counting on end market recovery or tariff relief in 2026” and is instead focused on “taking cost out, tightening the portfolio, and building the foundation for operating leverage when growth returns.”
Cost actions and portfolio changes
Dennison said Fox remains confident in delivering approximately $50 million of cost savings in 2026, consisting of about $10 million of phase-one carryover and roughly $40 million tied to phase-two actions that have been identified and are underway. In the question-and-answer session, Dennison added that the company saw “mid-single digits” of the phase-two savings flow through in Q1 and expects benefits to “progressively layer up as we move through the year.”
On the portfolio front, Dennison said Fox closed the divestiture of its Phoenix, Arizona operations during the first quarter, including the “Upfit, UTV, Geiser, and Shock Therapy businesses.” He said the proceeds are dedicated to debt reduction and that the company will continue to assess each business against three criteria: “alignment with our brands, synergy with our core competencies, and an ability to deliver accretive margins and durable cash flows.”
Segment results: PVG, AAG, and SSG
In Powered Vehicle Group (PVG), Dennison said net sales were $143.4 million, up 17.4% year-over-year. He noted the segment benefited from “timing dynamics” and later told analysts that the timing benefit from Q4 to Q1 was expected. Dennison characterized Q1 aftermarket performance as “a very good story,” with powersports also “a good story,” while automotive “held up to its expectations.”
In Aftermarket Applications Group (AAG), Dennison reported net sales of $114.8 million, an increase of 2.6% year-over-year, with growth from upfitting product lines and aftermarket demand partially offset by the Phoenix operations exiting during the quarter. He highlighted OEM-linked upfitting partnerships, referencing a new Q1 relationship with “another major automotive OEM” following a program announced in the second half of last year. Dennison described the partnership model as a differentiated strategy that pairs Fox innovation with OEM marketing and sales. He said the company began shipping “meaningful volume toward the end of Q1” as supply chain constraints eased and indicated progress continued into Q2.
Dennison also said Fox reorganized sales efforts and refocused on dealership expansion, calling it a long-term growth driver. He said the company added “over 135 new dealers” in the last 60 days and is averaging “over 60 new dealers a month.”
Despite AAG’s sales growth, Dennison said segment margins declined year-over-year due to volume and mix, operational challenges in upfitting, delayed deliveries of finished vehicles in an OEM upfit program (with shipments weighted to late Q1), and the dilutive impact of two months of Phoenix operations prior to the divestiture close. He pointed to an “industry-wide aluminum supply disruption” that has affected Ford production and constrained availability of F-150 Lariat and XLT chassis used across several of Fox’s upfit product lines. Dennison said Q1 and Q2 volume tied to that disruption is “not expected to be recovered in 2026,” though he expects back-half volumes to remain intact.
In Specialty Sports Group (SSG), Dennison said net sales were $110.5 million, down 8.7% year-over-year, consistent with what the company flagged previously. He attributed the decline primarily to a difficult quarter in bike, following stronger demand in the first half of the prior year when the industry “pulled forward orders in 2025.” Dennison said channel inventory has improved but remains volatile and that demand signals are “muted as consumers stay cautious.” However, he said Fox is making progress with new OEM relationships and product expansion, including e-bikes, and expects bike to improve sequentially in Q2 toward seasonal norms. He also cited a “temporary disruption tied to challenges in the Middle East affecting some of our suppliers and customers,” with most of the financial impact confined to Q2 and associated volume expected to shift into Q3 as conditions normalize.
On Marucci, Dennison said bat industry volumes have “continued to trend softly,” which led Fox and its retail partners to shift planned Q2 product launches into Q3. He said softball remains a bright spot, with new products resonating and share gains, adding that the softball business has grown “over 500% since 2024.” In Q&A, Dennison said Marucci was down in Q1 and pointed to inventory in the channel. Addressing strategic questions, he said, “we are running that business hard,” and added that the company is excited about the Q3 launches, particularly in softball.
Financial results: margins, EBITDA, and debt
Chief Financial Officer Dennis Schemm said total consolidated net sales rose 3.9% year-over-year to $368.7 million. Gross margin was 28.9% versus 30.9% a year earlier, with the decline “primarily driven by the unmitigated impact of tariffs and shifts in our product line mix.” Schemm added that Fox is seeing higher steel and aluminum costs across segments, with “some pressure building into the Q2,” and said the company’s profit optimization initiative is sized to absorb the impact within the framework communicated in February.
Adjusted operating expenses were $85.5 million, or 23.2% of net sales, compared with $84.4 million, or 23.8% of net sales, in the prior-year quarter. Adjusted net income was $7.4 million, or $0.18 per diluted share, versus $9.8 million, or $0.23 per diluted share, a year earlier. Adjusted EBITDA totaled $35.7 million, down from $39.6 million in the prior-year period, while adjusted EBITDA margin was 9.7%, which Schemm said was stable sequentially to 2025.
On leverage, Schemm said debt ended Q1 at $688.2 million, up about $15 million sequentially due to working-capital timing. He noted Q1 is seasonally the most demanding quarter for working capital and cited incentive compensation payouts and the cash impact of first-half 2026 tariffs. Schemm said deleveraging remains a priority and that the company amended its credit agreement to provide additional flexibility and covenant headroom, calling the move one taken “from a position of strength.” Capital expenditures were $5.4 million in Q1, about 1.5% of revenue, tracking below the full-year target of roughly 2%.
Guidance reaffirmed; tariff framework shifts
Based on Q1 performance and progress on cost actions, management reaffirmed its full-year fiscal 2026 outlook. Schemm said Fox continues to expect net sales of $1.328 billion to $1.416 billion and adjusted EBITDA of $174 million to $203 million. At the midpoint, Schemm said the outlook implies about 200 basis points of adjusted EBITDA margin improvement versus full-year 2025. The company expects capital expenditures of about 2% of revenue and a tax rate of 15% to 18%.
Schemm also discussed changing tariff dynamics. He said that when Fox laid out its 2026 framework in February, it anticipated about $15 million of incremental net tariff impact for the full year, concentrated in the first half. Since then, Schemm said the tariff framework shifted from IEEPA to Section 232, which applies to the value of aluminum input rather than the full finished-product value, resulting in a smaller exposure base. He said that, combined with pricing pass-through and operational mitigation actions, Fox believes the aggregate impact of Section 232 is “approximately neutral” to its businesses in 2026, excluding Marucci. For Marucci, Schemm said the tariff rate on imported bats decreased from 22% to 10%, which he described as a structural improvement, though he said the benefit in 2026 is being absorbed by softer demand and inventory dynamics.
On the possibility of recovering previously incurred tariff costs under IEEPA, Schemm said any recoveries are uncertain in timing and amount and would depend on allocation across customers and supply chain relationships. He said Fox did not include any potential recovery in guidance and would recognize amounts only upon receipt.
For the second quarter, management guided to net sales of $343 million to $365 million and adjusted EBITDA of $32 million to $40 million. Schemm said the outlook reflects two main factors: items shifting from Q2 into Q3, including the delayed Marucci product launch and the bike supplier disruption, and lower F-150 unit volume in upfitting tied to the aluminum supply disruption—volume that is “not expected to be recovered,” though back-half volumes are expected to remain intact.
In closing remarks, Dennison reiterated that the February plan is “landing,” said the company is reaffirming 2026 guidance, and emphasized continued execution on profit optimization, portfolio actions, and balance sheet strengthening.
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.
Founded in 1974 by Bob Fox in California, Fox Factory has expanded its technology base and market reach through strategic acquisitions such as Marzocchi Suspension, DVO Suspension and Walker Evans Racing.