Fox Factory Holding Corp., the parent of Fox, Marucci, Method Race, and Wheels, reported second-quarter earnings on an adjusted basis improved 4.4 percent as a 7.6 percent revenue gain offset margin pressures due to product mix changes and the impact of tariffs. Results in its cycling component business were helped by the stabilization in bike sales.

Fox Factory raised its sales outlook for the year but narrowed its earnings expectations to the lower end of its former guidance.

Second Quarter Fiscal 2025 Highlights

  • Net sales across all segments grew year-over-year and sequentially
  • Year-over-year net sales up $26.4 million or 7.6 percent to $374.9 million, compared to the prior year period, topping company guidance in the range of $340 million to $360 million
  • Sequentially, net sales up $19.9 million or 5.6 percent, compared to Q1 2025
  • Net income of $2.7 million, compared to $5.4 million in the prior year period
  • Consolidated adjusted EBITDA of $49.3 million was up $5.2 million year-over-year and up $9.7 million sequentially compared to Q1 2025
  • Year-over-year consolidated adjusted EBITDA margin increased 40 basis points to 13.1 percent, as compared to the prior year period
  • Sequentially, consolidated adjusted EBITDA margin increased 190 basis points as compared to Q1 2025
  • Earnings per diluted share were $0.07, as compared to 13 cents in the prior year period
  • Adjusted earnings per diluted share were $0.40, impacted by an effective tax rate of 50.9 percent, as compared to 38 cents in the prior year period
  • Cost reduction initiatives progressing in line with expectations and helping mitigate tariff impacts
  • Net leverage improved to 3.8x as compared to 4.1x in Q1 2025

Management Commentary
“We delivered significant progress in the second quarter with $375 million in net sales, representing growth across all three segments, both sequentially and year-over-year, along with continued adjusted EBITDA margin improvement,” commented Mike Dennison, FOX’s chief executive officer. “Our focus on world-class product innovation continues to drive growth even in these highly uncertain times. While our premium products are bolstering the top line, our operational improvement and strategic cost management initiatives are yielding tangible results on the bottom line.

“We’ve built a strong foundation for enhanced profitability as we navigate an evolving tariff landscape. Our proactive cost reduction and working capital improvement initiatives — including footprint optimization across three continents, production shifts from higher-cost regions, strategic sourcing, and customer pricing discussions — are helping us manage through this period. We recognize there’s more work ahead, and we remain focused on delivering performance-defining innovations and executing our product roadmap — a model that has served Fox well for decades and resulted in leading market share positions across our businesses. As the consumer discretionary environment stabilizes, we expect this combination of operational excellence and innovation-led growth to restore industry-leading profitability.”

Second Quarter 2025 Results
Net sales for the second quarter of fiscal 2025 were $374.9 million, an increase of 7.6 percent, as compared to net sales of $348.5 million in the second quarter of fiscal 2024. This increase reflects a $13.6 million or 11.0 percent increase in Specialty Sports Group (“SSG”) net sales, a $7.0 million or 6.5 percent increase in Aftermarket Applications Group (“AAG”) net sales, and a $5.7 million or 4.9 percent increase in Powered Vehicles Group (“PVG”) net sales. The increase in SSG net sales, from $123.6 million to $137.2 million, is attributed to the stabilization in bike sales. The increase in AAG net sales, from $107.1 million to $114.1 million, is driven by increased demand for aftermarket products. Meanwhile, high interest rates, high vehicle costs, and macroeconomic conditions continue to impact dealers and consumers. The increase in PVG net sales from $117.8 million to $123.5 million is primarily due to the expansion of the motorcycle business, which offset lower industry demand in the automotive original equipment (“OE”) product lines.

Gross margin was 31.2 percent for the second quarter of fiscal 2025, compared to a gross margin of 31.8 percent in the second quarter of fiscal 2024. The decrease in gross margin was primarily driven by shifts in our product line mix and the impact of tariffs.   Adjusted gross margin, which excludes the effects of amortization of acquired inventory valuation markup, decreased 60 basis points to 31.3 percent from the same prior fiscal year period. However, gross margin and adjusted gross margin increased sequentially from the first quarter of 2025 by 30 basis points and 40 basis points, respectively.

Total operating expenses were $98.5 million, or 26.3 percent of net sales, for the second quarter of fiscal 2025, compared to $92.4 million, or 26.5 percent of net sales, in the second quarter of fiscal 2024. Operating expenses increased by $6.1 million, driven by organizational restructuring initiatives, research and development, and sales and marketing to support future growth and product innovation. Adjusted operating expenses were $83.5 million, or 22.3 percent of net sales, in the second quarter of fiscal 2025, compared to $78.4 million, or 22.5 percent of net sales, in the second quarter of the prior fiscal year.

Tax expense was $2.8 million in the second quarter of fiscal 2025, compared to a tax benefit of $0.4 million in the second quarter of fiscal 2024. The increase in the company’s income tax expense was primarily due to the unfavorable impact of discrete items on its proportion of pre-tax income. For the second quarter of fiscal 2025, the difference between the company’s effective tax rate of 50.9 percent and the 21 percent federal statutory rate was also primarily attributable to the unfavorable impact of discrete items in proportion to pre-tax income.

Net income attributable to Fox stockholders in the second quarter of fiscal 2025 was $2.7 million, compared to net income attributable to FOX stockholders of $5.4 million in the second quarter of the prior fiscal year. Earnings per diluted share for the second quarter of fiscal 2025 were $0.07, compared to earnings per diluted share of $0.13 for the second quarter of fiscal 2024. Adjusted net income in the second quarter of fiscal 2025 was $16.6 million, or $0.40 of adjusted earnings per diluted share, compared to adjusted net income of $15.9 million, or $0.38 of adjusted earnings per diluted share, in the same period of the prior fiscal year.

Adjusted EBITDA in the second quarter of fiscal 2025 was $49.3 million, compared to $44.1 million in the second quarter of fiscal 2024. Adjusted EBITDA margin in the second quarter of fiscal 2025 was 13.1 percent, compared to 12.7 percent in the second quarter of fiscal 2024 and compared to 11.2 percent in the first quarter of fiscal 2025.

First Six Months Fiscal 2025 Results
Net sales for the six months ended July 4, 2025, were $729.9 million, an increase of 7.0 percent compared to the six months ended June 28, 2024. This increase reflects a $21.2 million or 8.9 percent increase in SSG net sales, a $17.1 million or 8.2 percent increase in AAG net sales, and a $9.7 million or 4.1 percent increase in PVG net sales. The increase in SSG sales, from $237.1 million to $258.2 million, is attributed to the stabilization in bike sales. The increase in AAG net sales, from $209.0 million to $226.1 million, is driven by increased demand for aftermarket products. However, high interest rates, high vehicle costs, and macroeconomic conditions impacting dealers and consumers continue to pose challenges. The increase in PVG net sales from $235.9 million to $245.6 million is primarily due to the expansion of the motorcycle business, which offset lower industry demand in power sports and automotive OE product lines.

Gross margin was 31.1 percent in the six months ended July 4, 2025, a 30-basis-point decrease compared to the gross margin of 31.4 percent in the six months ended June 28, 2024. The decrease in gross margin is primarily driven by shifts in our product line mix and the impact of tariffs. Adjusted gross margin, excluding the effects of the amortization of an acquired inventory valuation markup and organizational restructuring expenses, was 31.1 percent in the six months ended July 4, 2025, a 100-basis-point decrease compared to 32.1 percent in the six months ended June 28, 2024.

Total operating expenses were $458.7 million, or 62.8 percent of net sales, in the six months ended July 4, 2025, compared to $186.7 million, or 27.4 percent of net sales, in the six months ended June 28, 2024. Operating expenses increased by $272.1 million primarily due to the impact of goodwill impairment. Adjusted operating expenses were $167.9 million in the six months ended July 4, 2025, compared to $158.7 million in the six months ended June 28, 2024, primarily on higher investments in research and development and sales and marketing to support future growth and product innovation. While adjusted operating expenses increased, adjusted operating expense margin improved from 23.3 percent to 23.0 percent, reflecting leverage on higher sales.

Net loss attributable to Fox stockholders in the six months ended July 4, 2025, was $257.0 million, compared to net income attributable to FOX stockholders of $1.9 million in the six months ended June 28, 2024. Net loss per diluted share for the six months ended July 4, 2025, was $6.15, compared to earnings per diluted share of $0.05 in the same period of fiscal 2024. Adjusted net income in the six months ended July 4, 2025, was $26.4 million, or $0.63 of adjusted earnings per diluted share, compared to $27.8 million, or $0.67 of adjusted earnings per diluted share, in the same period of the prior fiscal year.

Adjusted EBITDA increased to $88.9 million in the six months ended July 4, 2025, compared to $84.6 million in the six months end June 28, 2024. Adjusted EBITDA margin decreased to 12.2 percent in the six months ended July 4, 2025, compared to 12.4 percent in the period of the prior fiscal year.

Balance Sheet Summary
As of July 4, 2025, the company had cash and cash equivalents of $81.5 million, compared to $71.7 million as of January 3, 2025. Inventory was $412.8 million as of July 4, 2025, compared to $404.7 million as of January 3, 2025. As of July 4, 2025, accounts receivable and accounts payable were $185.4 million and $131.1 million, respectively, compared to $165.8 million and $144.1 million, respectively, as of January 3, 2025. Prepaids and other current assets were $67.0 million as of July 4, 2025, compared to $85.4 million as of January 3, 2025. Goodwill was $377.4 million as of July 4, 2025, compared to $639.5 million as of January 3, 2025.

Total debt was $698.8 million as of July 4, 2025, compared to $705.1 million as of January 3, 2025. The increase in cash and cash equivalents was primarily due to a decrease in prepaids and other current assets, resulting from lower chassis deposits as a result of working capital optimization efforts, partially offset by capital expenditures and debt repayments. Inventory increased by $8.1 million, driven by foreign currency translation, planned inventory builds to support anticipated demand, and the impact from higher tariffs, partially offset by our strong execution of continuous improvement efforts to optimize inventory levels across the organization, particularly within PVG. The change in accounts receivable is due to higher sales in the fiscal quarter ended July 4, 2025, compared to the fiscal quarter ended January 3, 2025. The change in accounts payable reflects the timing of vendor payments. Goodwill decreased after the company conducted its quantitative impairment assessment in the first quarter of fiscal 2025, triggered by adverse changes in U.S. tariff policies, including new and expanded tariffs enacted by the current presidential administration, and a sustained decline in the company’s stock price, resulting in a non-cash impairment charge.

Third Quarter and Fiscal 2025 Guidance
For the third quarter of fiscal 2025, the company expects net sales to be in the range of $370 million to $390 million and adjusted earnings per diluted share to be in the range of $0.45 to $0.65.

For the fiscal year 2025, in consideration of the company’s year-to-date performance and current visibility to tariff impacts, it now expects net sales in the range of $1.45 billion to $1.51 billion, adjusted earnings per diluted share in the range of $1.60 to $2.00, and a full year adjusted tax rate in the range of 15 percent to 18 percent. Previously, guidance called for sales in the range of $1.385 billion to $1.485 billion and adjusted EPS in the range of $1.60 to $2.60.

Image courtesy Fox Factory