Fox Factory Holding Corp.’s earnings declined in the fourth quarter but reached the high end of guidance. Sales grew 2.3 percent, as gains in its Powered Vehicles and Aftermarket Applications segments offset a 5 percent drop in Specialty Sports, driven by declines in both diamond sports products and bike products. The company announced Phase 2 of its profit optimization plan, targeting $40 million in savings.

Sales of $361.1 million were in line with guidance in the range of $340 million to $370 million. Adjusted EPS of 20 cents a share compared with guidance in the range of 5 cents to $0.25.

Fox Factory’s brands include Fox, Marucci and Method Race Wheels.

Fourth Quarter Fiscal 2025 Highlights

  • Net sales increased 2.3 percent year-over-year to $361.1 million.
  • Net loss of $287.0 million, or $6.86 per diluted share, compared to net loss of $0.1 million, or $0.00 per diluted share, in the prior year quarter.
  • Adjusted earnings per diluted share of $0.20, compared to $0.31 in the prior year quarter.
  • Adjusted EBITDA of $35.0 million.
  • Paid down an incremental $13 million in debt in the quarter, as compared to the third quarter end. 

Full Year Fiscal 2025 Highlights

  • Net sales increased 5.3 percent year-over-year to $1.467 billion.
  • Gross margin of 30.2 percent was down 20 basis points year-over-year.
  • Phase 1 of the company’s Profit Optimization Plan yielded roughly $25 million in savings, primarily offset by the realized net tariff impact of approximately $25 million.
  • Paid down $33 million in debt year-over-year.

Mike Dennison, Fox’s chief executive officer, commented, “Fiscal 2025 was a year of both challenges and meaningful progress for Fox Factory. Despite ongoing headwinds across our end markets, we delivered consolidated revenue growth while successfully executing our Phase 1 Profit Optimization Plan, which yielded approximately $25 million in realized cost savings for the year and helped us mitigate the full effect of tariffs during the year. This comprehensive effort, focused on footprint optimization and continuous improvement across all three operating segments, demonstrated our ability to grow revenue in challenging conditions while executing critical operational initiatives.”

Dennison continued, “Our work is far from complete, however. We are taking comprehensive actions to restore our historical adjusted EBITDA margins in the mid-to-high teens and accelerate our path to balance sheet improvement. We are fundamentally repositioning Fox Factory by engineering a more efficient foundation so we can deliver greater operating leverage as growth returns to our end markets. In response to the persistent cyclical and tariff headwinds, we have launched Phase 2 of our profit optimization strategy, which has our teams refocusing on our core, high-margin products and streamlining our operations for maximum efficiency. This includes business line rationalization, supply chain and materials cost productivity and operating expense reductions that, together, represent additional targeted savings of approximately $40 million to be realized in 2026. These aggressive actions, combined with the benefits of our 2025 actions, are designed to support margin improvement of approximately 200 basis points in 2026, despite operating in a subdued environment where revenue growth has slowed.”

Fourth Quarter 2025 Results
Net sales for the fourth quarter of fiscal 2025 were $361.1 million, an increase of 2.3 percent, as compared to net sales of $352.8 million in the fourth quarter of fiscal 2024. This increase reflects a $14.0 million or 12.5 percent increase in Aftermarket Applications Group (AAG) net sales, and a $0.5 million or 0.4 percent increase in Powered Vehicles Group (PVG) net sales, partially offset by a $6.3 million or 5.0 percent decrease in Specialty Sports Group (SSG) net sales. The increase in AAG net sales from $112.2 million to $126.2 million is driven by improved performance in our upfitting product lines and increased demand for aftermarket products; however, high interest rates, high vehicle costs, and macroeconomic conditions continue to impact dealers and consumers. The increase in PVG net sales from $116.2 million to $116.7 million is mainly attributable to the Marzocchi acquisition, largely offset by an aluminum supply chain disruption at a major original equipment manufacturer (OEM) partner, which slowed production, and by lower industry demand in automotive original equipment (OE) product lines. The decrease in SSG net sales from $124.5 million to $118.2 million reflects both lower diamond sports products and bike sales and was primarily due to OEM, distributors, and dealers reducing inventory levels in response to market-wide economic conditions.

Gross margin was 28.3 percent for the fourth quarter of fiscal 2025, compared to a gross margin of 28.9 percent in the fourth quarter of fiscal 2024. The decrease in gross margin was primarily driven by the unmitigated impact of tariffs and shifts in our product line mix.

Total operating expenses were $408.1 million, or 113.0 percent of net sales, for the fourth quarter of fiscal 2025, compared to $90.6 million, or 25.7 percent of net sales, in the fourth quarter of fiscal 2024. Operating expenses increased by $317.5 million, driven primarily by the impact of goodwill impairment (see Balance Sheet Summary below for details), intangible and long-lived asset impairment, and organizational restructuring initiatives. Adjusted operating expenses were $82.6 million, or 22.9 percent of net sales, in the fourth quarter of fiscal 2025, compared to $76.4 million, or 21.7 percent of net sales, in the fourth quarter of the prior fiscal year.

Income tax benefit was $33.0 million in the fourth quarter of fiscal 2025, compared to $4.1 million in the fourth quarter of fiscal 2024. For the fourth quarter of fiscal 2025, the difference between the company’s effective tax rate of 10.3 percent and the 21 percent federal statutory rate was primarily attributable to the impairment of non-deductible goodwill recognized during the period.

Net loss attributable to FOX stockholders in the fourth quarter of fiscal 2025 was $287.0 million, compared to net loss attributable to FOX stockholders of $0.1 million in the fourth quarter of the prior fiscal year. Net loss per diluted share for the fourth quarter of fiscal 2025 was $6.86, compared to earnings per diluted share of $0.00 for the fourth quarter of fiscal 2024. Adjusted net income in the fourth quarter of fiscal 2025 was $8.3 million, or $0.20 of adjusted earnings per diluted share, compared to adjusted net income of $12.8 million, or $0.31 of adjusted earnings per diluted share, in the same period of the prior fiscal year.

Adjusted EBITDA in the fourth quarter of fiscal 2025 was $35.0 million, compared to $40.4 million in the fourth quarter of fiscal 2024. Adjusted EBITDA margin in the fourth quarter of fiscal 2025 was 9.7 percent, compared to 11.5 percent in the fourth quarter of fiscal 2024.

Fiscal 2025 Results
Net sales for the year ended January 2, 2026, were $1,467.3 million, an increase of 5.3 percent compared to the year ended January 3, 2025. This increase reflects a $48.5 million or 11.5 percent increase in AAG net sales and a $26.7 million or 5.8 percent increase in PVG net sales, partially offset by a $1.9 million or 0.4 percent decrease in SSG net sales. The increase in AAG net sales from $421.5 million to $470.0 million was driven by increased demand for aftermarket products and improved performance in our upfitting product lines; 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 $461.4 million to $488.1 million is primarily due to higher sales from the Marzocchi acquisition, which offset lower industry demand in automotive OE product lines and powersports. The decrease in SSG net sales from $511.1 million to $509.2 million is mainly due to lower diamond sports products sales, partially offset by higher bike sales.

Gross margin was 30.2 percent in the year ended January 2, 2026, compared to a gross margin of 30.4 percent in the year ended January 3, 2025. Adjusted gross margin, excluding the effects of the amortization of an acquired inventory markup and organizational restructuring expenses, was 30.2 percent in the year ended January 2, 2026, compared to 30.8 percent in the year ended January 3, 2025. The decrease in adjusted gross margin is primarily driven by the impact of tariffs and shifts in our product line mix.

Total operating expenses were $966.2 million, or 65.8 percent of net sales, in the year ended January 2, 2026, compared to $365.9 million, or 26.3 percent of net sales, in the year ended January 3, 2025. Operating expenses increased by $600.3 million primarily due to the impact of goodwill impairment of $557.3 million, intangible and long-lived asset impairment of $13.5 million, organizational restructuring expenses of $12.7 million, and higher investments in research and development and sales and marketing to support future growth and product innovation. Adjusted operating expenses were $336.2 million in the year ended January 2, 2026, compared to $310.9 million in the year ended January 3, 2025.

Net loss attributable to FOX stockholders in the year ended January 2, 2026, was $544.6 million, compared to net income attributable to FOX stockholders of $6.6 million in the year ended January 3, 2025. Net loss per diluted share for the year ended January 2, 2026, was $13.03, compared to earnings per diluted share of $0.16 in fiscal 2024. Adjusted net income in the year ended January 2, 2026, was $44.6 million, or $1.06 of adjusted earnings per diluted share, compared to $55.4 million, or $1.33 of adjusted earnings per diluted share in the prior fiscal year.

Adjusted EBITDA increased to $168.4 million in the year ended January 2, 2026, compared to $167.0 million in the year ended January 3, 2025. Adjusted EBITDA margin was 11.5 percent in the year ended January 2, 2026, compared to 12.0 percent in the prior fiscal year.

Balance Sheet Summary
As of January 2, 2026, the company had cash and cash equivalents of $58.0 million, compared to $71.7 million as of January 3, 2025. Inventory was $388.6 million as of January 2, 2026, compared to $404.7 million as of January 3, 2025. As of January 2, 2026, accounts receivable and accounts payable were $190.7 million and $141.4 million, respectively, compared to $165.8 million and $135.8 million, respectively, as of January 3, 2025. Prepaids and other current assets were $108.4 million as of January 2, 2026, compared to $85.4 million as of January 3, 2025. Goodwill was $83.6 million as of January 2, 2026, compared to $639.5 million as of January 3, 2025. Total debt was $673.5 million as of January 2, 2026, compared to $705.1 million as of January 3, 2025.

The decrease in cash and cash equivalents was mainly due to capital expenditures, debt repayments, and changes in working capital. Inventory decreased by $16.1 million, driven by our strong execution of continuous improvement efforts to optimize inventory levels across the organization, particularly within PVG, which offset some of the impact from higher tariffs. The increase in accounts receivable is due to higher sales in the fiscal quarter ended January 2, 2026, compared to the fiscal quarter ended January 3, 2025, and the timing of collections. The increase in accounts payable reflects the timing of vendor payments.

Goodwill decreased after the company conducted quantitative impairment assessments in the first and fourth quarters of fiscal 2025, resulting in non-cash impairment charges. The first-quarter assessment was triggered by adverse changes to U.S. tariff policies, including new and expanded tariffs enacted by the current presidential administration, and resulting in a sustained decline in the company’s stock price. The fourth-quarter assessment was triggered by a further sustained decline in the company’s stock price.

Announces Phase 2 Profit Optimization Strategy and Strategic Alternatives Review
Building on the successful execution of its Phase 1 Profit Optimization Plan, which delivered roughly $25 million in realized savings in fiscal 2025, the company has launched Phase 2 of its Profit Optimization strategy, targeting approximately $40 million in additional savings to be realized in fiscal 2026. The combined impact of 2025 Phase 1 actions that will benefit 2026 and today’s announcement of Phase 2 actions is expected to result in approximately $50 million of realized savings in fiscal 2026. Phase 2 comprises three strategic elements: business line rationalization to exit operations that are not accretive to margins; supply chain and materials cost productivity through improved facility utilization and supplier actions; and a reduction in operating expenses across sales, marketing, and G&A functions. Concurrent with these efforts, the Board of Directors is reviewing strategic alternatives for Marucci and other non-core assets to ensure the portfolio aligns with the company’s profitability standards and strategic objectives. As part of this review, the company expects to divest its Phoenix, Arizona AAG operations, including the Upfit UTV, Geiser, and Shock Therapy businesses, by the end of the first quarter of fiscal 2026.

Outlook
For the first quarter of fiscal 2026, the company expects Net sales in the range of $343 million to $369 million, and Adjusted EBITDA in the range of $27 million to $34 million.

For the fiscal year 2026, the company expects Net sales in the range of $1.328 billion to $1.416 billion, and Adjusted EBITDA in the range of $174 million to $203 million.

Image courtesy Fox Factory