Fox Factory Holding Corp. reported earnings in the second quarter topped guidance, even excluding the benefit of IEEPA tariff refunds. Sales were down but at the higher end of guidance with “signs of stabilization” within the powersports, bike, and aftermarket channels. Fox Factory raised its earnings and sales guidance for the year.

Sales of  $358.1 million compared with guidance in the range of $343 million and $365 million. Adjusted EBITDA of $45.5 million exceeded guidance in the range of $32 million to $40 million. The company’s brands include FOX, Marzocchi, Ridetech, BDS Suspension, and Zone Offroad in shocks and suspension systems; Race Face and Easton Cycling within cycling components (cranks, wheels, and handlebars); and Marucci baseball and softball gear.

Second Quarter Fiscal 2026 Highlights

  • Net sales of $358.1 million, driven by continued strength in powersports, compared to $374.9 million in the prior year
  • Net income of $4.1 million, or $0.10 per diluted share, compared to net income of $2.7 million, or $0.07 per diluted share in the prior year
  • Adjusted net income of $15.5 million, or $0.37 per diluted share, compared to adjusted net income of $16.6 million, or $0.40 per diluted share in the prior year
  • Adjusted EBITDA of $45.5 million, included approximately $2 million of IEEPA tariff refunds, and exceeded the high end of the guidance range
  • Adjusted EBITDA margin (includes 50 bps of IEEPA tariff refunds) expanded 300 basis points sequentially to 12.7 percent, reflecting profit optimization execution across portfolio rationalization, supply chain, and operating expense management
  • Profit optimization initiative delivered $25+ million of gross savings in the first half; operational improvements to drive second half margin despite tariff, commodity, and freight headwinds
  • Reduced net debt by $9.1 million since 2025 fiscal year end and improved the cash conversion cycle by approximately 12 days year over year, further strengthening the balance sheet

Mike Dennison, Fox’s chief executive officer, commented, “Our second quarter results met or exceeded our guidance, with adjusted EBITDA margin expanding approximately 250 basis points sequentially, excluding tariff refunds. Our profit optimization actions remain on track to deliver approximately $50 million of gross cost savings this year, driven by continued execution across portfolio rationalization, supply chain, and cost discipline. A portion of what we captured in the first half was offset by higher input costs driven by geopolitical disruption and commodity inflation, including freight surcharges and fuel costs above original expectations. We are encouraged by signs of stabilization in powersports, bike, and aftermarket in general, while our upfit businesses continue to be constrained by limited availability of Ford F-150 chassis. Our team remains focused on sharpening the portfolio and becoming a more efficient organization that is positioned for growth and profitability.”

Dennison continued, “We expect to see continued strength in revenue through the back half driven by PVG with overall adjusted EBITDA margin tempered by continued macro headwinds and mix shifts. Our outlook assumes Ford F-150 chassis availability remains constrained through August and begins to recover in early September.”

Second Quarter 2026 Results
Net sales for the second quarter of fiscal 2026 were $358.1 million, a decrease of 4.5 percent, as compared to net sales of $374.9 million in the second quarter of fiscal 2025. This decrease reflects a $12.9 million, or 9.4 percent, decrease in Specialty Sports Group (SSG) net sales, and a $4.6 million, or 4.0 percent, decrease in Aftermarket Applications Group (AAG) net sales, partially offset by a $0.7 million, or 0.6 percent, increase in Powered Vehicles Group (“PVG”) net sales. The decrease in SSG net sales from $137.2 million to $124.3 million primarily reflects original equipment manufacturer (OEM) order timing, and channel destocking in response to market-wide economic conditions. AAG net sales decreased from $114.2 million to $109.6 million. The Phoenix, Arizona operations divested in the first quarter contributed $5.5 million of net sales in the prior year period and none in the current period. Excluding those operations, AAG net sales increased approximately 0.9 percent, as growth in the segment was partially offset by limited availability of Ford F-150 chassis for our upfit businesses following the 2025 fires at Novelis’ Oswego, New York aluminum facility. The slight increase in PVG net sales from $123.5 million to $124.2 million is mainly attributed to strengthening demand in powersports, where net sales increased 22.5 percent compared to the prior year period, partially offset by lower net sales in our autos-related product lines.

Gross margin was 30.6 percent for the second quarter of fiscal 2026, compared to gross margin of 31.2 percent in the second quarter of fiscal 2025. The decrease in gross margin was primarily driven by shifts in our product line mix and higher external input costs, including tariffs, freight, commodities and fuel, partially offset by cost savings realization.

Total operating expenses were $92.2 million, or 25.7 percent of net sales, in the second quarter of fiscal 2026, compared to $98.5 million, or 26.3 percent of net sales, in the second quarter of fiscal 2025. Operating expenses decreased by $6.3 million, driven by our optimization initiative, including lower general and administrative expense and reduced discretionary spending. Adjusted operating expenses were $78.5 million, or 21.9 percent of net sales, in the second quarter of fiscal 2026, compared to $83.5 million, or 22.3 percent of net sales, in the second quarter of the prior fiscal year.

Income tax expense was $2.3 million in the second quarter of fiscal 2026, compared to $2.8 million in the second quarter of fiscal 2025. In the second quarter of fiscal 2026, the difference between the company’s effective tax rate of 36.0 percent and the 21 percent federal statutory rate was primarily attributable to unfavorable impact of discrete items in proportion to lower levels of pre-tax income.

Net income attributable to FOX stockholders in the second quarter of fiscal 2026 was $4.1 million, compared to net income attributable to FOX stockholders of $2.7 million in the second quarter of the prior fiscal year. Earnings per diluted share for the second quarter of fiscal 2026 was $0.10, compared to earnings per diluted share of $0.07 for the second quarter of fiscal 2025. Adjusted net income in the second quarter of fiscal 2026 was $15.5 million, or $0.37 of adjusted earnings per diluted share, compared to adjusted net income of $16.6 million, or $0.40 of adjusted earnings per diluted share, in the same period of the prior fiscal year.

Adjusted EBITDA in the second quarter of fiscal 2026 was $45.5 million and includes an approximate $2 million benefit associated with IEEPA tariff refunds, compared to $49.3 million in the second quarter of fiscal 2025. Adjusted EBITDA margin in the second quarter of fiscal 2026 was 12.7 percent or approximately 12.2 percent excluding the tariff refunds, compared to 13.1 percent in the second quarter of fiscal 2025.

First Six Months Fiscal 2026 Results
Net sales for the six months ended July 3, 2026, were $726.8 million, a decrease of 0.4 percent compared to the six months ended July 4, 2025. This decrease reflects a $23.4 million or 9.1 percent decrease in SSG net sales and a $1.8 million or 0.8 percent decrease in AAG net sales, offset by a $22.0 million or 9.0 percent increase in PVG net sales. The decrease in SSG net sales from $258.2 million to $234.8 million is mainly due to OEM order timing and channel destocking in response to market-wide economic conditions. AAG net sales decreased from $226.1 million to $224.3 million. The divested Phoenix, Arizona operations contributed $12.5 million of net sales in the prior year period and $3.7 million in the current period. Excluding those operations, AAG net sales increased approximately 3.3 percent, with growth limited by constrained availability of Ford F-150 chassis for our upfit businesses. The increase in PVG net sales from $245.6 million to $267.6 million is primarily due to strengthening demand in powersports.

Gross margin was 29.7 percent in the six months ended July 3, 2026, compared to gross margin of 31.1 percent in the six months ended July 4, 2025. The decrease in gross margin is primarily driven by the net impact of tariffs and other external input costs, including freight, commodities and fuel, and by shifts in our product line mix, partially offset by cost savings realization.

Total operating expenses were $192.6 million, or 26.5 percent of net sales, in the six months ended July 3, 2026, compared to $458.7 million, or 62.8 percent of net sales in the six months ended July 4, 2025. Operating expenses decreased by $266.1 million primarily due to goodwill impairment of $262.1 million recorded in the first six months of fiscal 2025 and our optimization initiative. Adjusted operating expenses were $164.0 million in the six months ended July 3, 2026, compared to $167.9 million in the six months ended July 4, 2025.

Other expense, net for the six months ended July 3, 2026 was $9.0 million, an increase of $10.5 million from $1.5 million other income, net in the six months ended July 4, 2025. The increase in other expense, net was primarily attributable to a $10.6 million loss on divestiture of the Phoenix, Arizona AAG operations.

Net loss attributable to FOX stockholders in the six months ended July 3, 2026 was $10.9 million, compared to net loss attributable to FOX stockholders of $257.0 million in the six months ended July 4, 2025. Net loss per diluted share for the six months ended July 3, 2026 was $0.26, compared to net loss per diluted share of $6.15 for the six months ended July 4, 2025. Adjusted net income in the six months ended July 3, 2026 was $22.9 million, or $0.54 of adjusted earnings per diluted share, compared to $26.4 million, or $0.63 of adjusted earnings per diluted share in the prior fiscal year.

Adjusted EBITDA in the six months ended July 3, 2026 was $81.2 million and includes an approximate $2 million benefit associated with IEEPA tariff refunds, compared to $88.9 million in the six months ended July 4, 2025. Adjusted EBITDA margin was 11.2 percent or approximately 10.9 percent excluding the tariff refunds in the six months ended July 3, 2026, compared to 12.2 percent in the prior fiscal year.

Balance Sheet Summary
As of July 3, 2026, the company had cash and cash equivalents of $61.3 million, compared to $58.0 million as of January 2, 2026. Inventory was $382.9 million as of July 3, 2026, compared to $388.6 million as of January 2, 2026. As of July 3, 2026, accounts receivable and accounts payable were $198.8 million and $134.9 million, respectively, compared to $190.7 million and $141.4 million, respectively, as of January 2, 2026. Prepaids and other current assets and other assets were $121.2 million as of July 3, 2026, compared to $108.4 million as of January 2, 2026. Accrued expenses were $84.4 million as of July 3, 2026, compared to $92.1 million as of January 2, 2026. Total debt was $667.7 million as of July 3, 2026, a decrease of $5.8 million, compared to $673.5 million as of January 2, 2026. Net debt, defined as total debt less cash and cash equivalents, was $606.4 million as of July 3, 2026, a decrease of $9.1 million compared to $615.5 million as of January 2, 2026.

In May, the company proactively amended its credit agreement to provide additional financial flexibility, including the expansion of the net leverage covenant to 5.0x, compared to the prior 4.5x. As of July 3, 2026, the company’s net leverage ratio calculated under the credit agreement was 3.7x in compliance with the applicable covenant levels.

The increase in cash and cash equivalents was mainly due to proceeds from the divestiture of our AAG operations in Phoenix, Arizona, including the collection of principal on the related note receivable, and proceeds from asset sales, partially offset by changes in working capital, debt repayments, capital expenditures, and debt modification costs. Inventory decreased by $5.7 million from January 2, 2026, driven by divested inventory, partially offset by an inventory build to support second half demand. Days inventory on hand improved to approximately 136 days from approximately 150 days in the prior year period. The increase in accounts receivable is due to timing of collections. The decrease in accounts payable reflects the timing of vendor payments. The increase in prepaids and other current assets is mainly attributable to receivables arising from the divestiture of our Phoenix, Arizona AAG operations.

Progress on Phase 2 Profit Optimization Initiative
Fox Factory continues to execute its multi-phase profit optimization strategy targeting approximately $50 million of gross realized savings in fiscal 2026. In the first six months of fiscal 2026, the company captured more than $25 million of gross savings, a portion of which was offset by external cost increases, including tariffs, freight, commodities and fuel. The company expects those external costs to remain elevated and has reflected an incremental amount beyond its original plan in its second half outlook. Phase 2 focuses on three strategic elements: business line rationalization to exit operations that are not accretive from a margin perspective; supply chain and materials cost productivity improvements; and reduction in operating expenses across sales, marketing, and G&A functions. The company continues to evaluate strategic alternatives for other non-core assets to ensure alignment with profitability standards and strategic objectives.

Outlook
For the third quarter of fiscal 2026, the company expects:

  • Net sales in the range of $355 million to $380 million; and
  • Adjusted EBITDA in the range of $46 million to $54 million.

For the fiscal year 2026, the company is raising its net sales guidance and narrowing its adjusted EBITDA guidance:

  • Net sales in the range of $1.42 billion to $1.47 billion,  up from prior guidance in the range of $1.328 billion to $1.416 billion; and
  • Adjusted EBITDA in the range of $176 million to $196 million, up from prior guidance between $174 million and $203 million.

Guidance for the third quarter and the full fiscal year assumes that commodity, freight and fuel costs remain at or near current elevated levels for the balance of the year. In addition, guidance absorbs nearly $20 million of incremental input cost inflation beyond the company’s original fiscal 2026 plan. Guidance also assumes that availability of Ford F-150 chassis for the company’s upfit businesses remains constrained.

The company may become eligible to recover as much as $8 million of additional tariff costs previously incurred under the International Emergency Economic Powers Act (IEEPA) framework. Any such recoveries are subject to significant uncertainty regarding timing and amount, and a portion of any amounts recovered may be shared with the company’s commercial counterparties. The company has not included any potential recovery in its outlook and will recognize amounts only upon receipt.

Image courtesy Fox Factory Holding Corp.