Fox Factory Holding Corp.’s first-quarter adjusted earnings declined but arrived at the higher end of company guidance. Sales were up 3.9 percent, boosted by a 17.4 percent jump in Powered Vehicles Group. Sales in its Aftermarket Applications Group improved 2.9 percent, but dropped 8.7 percent in its Specialty Sports Group due to distributor and dealer inventory destocking and tough year-ago comparisons.

The Specialty Sports Group (SSG) includes FOX (bicycle suspension), Marucci (baseball/softball), Easton Cycling, Race Face, Marzocchi, Ride Concepts, and Lizard Skins.

First Quarter Fiscal 2026 Highlights

  • Net sales increased 3.9 percent year-over-year to $368.7 million, reaching the high end of guidance between $343 million to $369 million.
  • Net loss of $15.0 million, or 36 cents per diluted share, included charges associated with divestitures in its AAG segment — compared to net loss of $259.7 million, or $6.23 per diluted share, in the prior year quarter which included goodwill impairment
  • Adjusted earnings per diluted share of 18 cents, compared to 23 cents in the prior year quarter
  • Adjusted EBITDA of $35.7 million exceeded the high end of the guidance range of $27 million to $34 million
  • Reaffirming approximately $50 million of fiscal 2026 cost savings; Phase 2 actions on schedule
  • Completed the divestiture of the Phoenix, Arizona AAG operations — including the Shock Therapy, Upfit UTV, and Geiser businesses — with proceeds dedicated to debt reduction

Mike Dennison, Fox’s chief executive officer, commented, “We delivered a solid first quarter, with revenue at the high end of our guidance range and adjusted EBITDA exceeding the high end of our guidance range. The team is executing against the plan we laid out in February — taking cost out, sharpening the portfolio, and building resilience in an end-market environment that remains subdued. Phase 1 carryover benefits are flowing through as expected, Phase 2 is on schedule, and we are on track to deliver approximately $50 million in cost savings this year.”

Dennison continued, “The completion of the Phoenix divestiture during the quarter further focuses our portfolio on the core, higher-margin businesses that define Fox Factory. Combined with our disciplined approach to capital allocation and balance sheet management, these actions position us to deliver meaningful operating leverage as our end markets accelerate — and be structurally stronger across our market leading product categories.”

First Quarter 2026 Results

  • Net sales for the first quarter of fiscal 2026 were $368.7 million, an increase of 3.9 percent, as compared to net sales of $355.0 million in the first quarter of fiscal 2025. This increase reflects a $21.3 million or 17.4 percent increase in Powered Vehicles Group (“PVG”) net sales, and a $2.9 million or 2.6 percent increase in Aftermarket Applications Group (“AAG”) net sales, partially offset by a $10.5 million or 8.7 percent decrease in Specialty Sports Group (“SSG”) net sales. The increase in PVG net sales from $122.1 million to $143.4 million is mainly attributed to strengthening demand in powersports and continued momentum in the automotive aftermarket. The increase in AAG net sales from $111.9 million to $114.8 million is driven by improved performance in its upfitting product lines and stable aftermarket product sales. The decrease in SSG net sales from $121.0 million to $110.5 million primarily reflects distributor and dealer inventory destocking and a difficult prior-year comparison given the industry’s first half 2025 order pull-forward.
  • Gross margin was 28.9 percent for the first quarter of fiscal 2026, compared to gross margin of 30.9 percent in the first quarter of fiscal 2025. The decrease in gross margin was primarily driven by the net impact of tariffs and shifts in its product line mix.
  • Total operating expenses were $100.4 million, or 27.2 percent of net sales, for the first quarter of fiscal 2026, compared to $360.3 million, or 101.5 percent of net sales in the first quarter of fiscal 2025. Operating expenses decreased by $259.8 million, driven primarily by a $262.1 million goodwill impairment recorded in the first quarter of fiscal 2025. Adjusted operating expenses were $85.5 million, or 23.2 percent of net sales, in the first quarter of fiscal 2026, compared to $84.4 million, or 23.8 percent of net sales, in the first quarter of the prior fiscal year.
  • Other expense, net for the first quarter of fiscal 2026 was $9.6 million, an increase of $9.8 million from $0.1 million other income, net in the first quarter of fiscal 2025. The increase in other expense, net was primarily attributable to a $10.0 million loss on divestiture of the Phoenix, Arizona AAG operations.
  • Income tax benefit was $0.6 million in the first quarter of fiscal 2026, compared to $3.6 million in the first quarter of fiscal 2025. For the first quarter of fiscal 2026, the difference between the company’s effective tax rate of 3.9 percent and the 21 percent federal statutory rate was primarily attributable to lower pre‑tax earnings for the quarter and the tax effects recognized in connection with the sale of its Phoenix, Arizona AAG operations, including Shock Therapy, Upfit UTV, and Geiser businesses.
  • Net loss attributable to FOX stockholders in the first quarter of fiscal 2026 was $15.0 million, compared to net loss attributable to FOX stockholders of $259.7 million in the first quarter of the prior fiscal year. Net loss per diluted share for the first quarter of fiscal 2026 was $0.36, compared to net loss per diluted share of $6.23 for the first quarter of fiscal 2025; the prior year quarter included a goodwill impairment charge of $262.1 million. Adjusted net income in the first quarter of fiscal 2026 was $7.4 million, or $0.18 of adjusted earnings per diluted share, compared to adjusted net income of $9.8 million, or $0.23 of adjusted earnings per diluted share, in the same period of the prior fiscal year.
  • Adjusted EBITDA in the first quarter of fiscal 2026 was $35.7 million, exceeding the high end of its guidance range, compared to $39.6 million in the first quarter of fiscal 2025. Adjusted EBITDA margin in the first quarter of fiscal 2026 was 9.7 percent, compared to 11.2 percent in the first quarter of fiscal 2025.

Balance Sheet Summary
As of April 3, 2026, the company had cash and cash equivalents of $53.9 million, compared to $58.0 million as of January 2, 2026. Inventory was $375.1 million as of April 3, 2026, compared to $388.6 million as of January 2, 2026. As of April 3, 2026, accounts receivable and accounts payable were $209.1 million and $143.4 million, respectively, compared to $190.7 million and $141.4 million, respectively, as of January 2, 2026. Prepaids and other current assets were $126.3 million as of April 3, 2026, compared to $108.4 million as of January 2, 2026. Goodwill was $83.6 million as of April 3, 2026, compared to $83.6 million as of January 2, 2026. Total debt was $688.2 million as of April 3, 2026 compared to $673.5 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. At quarter-end, the company’s net leverage covenant was comfortably within the prior threshold.

The decrease in cash and cash equivalents was mainly due to changes in working capital, debt payments, and capital expenditures, partially offset by proceeds from its revolver. Inventory decreased by $13.5 million, driven by divested inventory. The increase in accounts receivable is due to higher sales in the fiscal quarter ended April 3, 2026 compared to the fiscal quarter ended January 2, 2026 and timing of collections. The increase in accounts payable reflects the timing of vendor payments. The increase in prepaids and other assets is mainly attributable to receivables arising from the divestiture of its Phoenix, Arizona AAG operations.

Progress on Phase 2 Profit Optimization Initiative
Fox Factory said it continues to execute against the multi-phase profit optimization strategy first outlined in its fourth quarter fiscal 2025 earnings release, which targets approximately $50 million of realized savings in fiscal 2026. This includes approximately $10 million of carryover benefit from the Phase 1 program completed in fiscal 2025 and approximately $40 million of incremental savings from Phase 2 actions initiated earlier this year. Phase 2 comprises three strategic elements: business line rationalization to exit operations that are not accretive from a margin perspective; 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.

The company’s first quarter results reflect early contribution from these initiatives. As part of this broader effort, the company completed the divestiture of its Phoenix, Arizona AAG operations during the first quarter — including the Shock Therapy, Upfit UTV, and Geiser businesses — with proceeds dedicated to debt reduction. The company continues to evaluate strategic alternatives for its other non-core assets to ensure the portfolio aligns with the company’s profitability standards and strategic objectives.

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

  • Net sales in the range of of $343 million to $365 million
    Adjusted EBITDA in the range of $32 million to $40 million

For the fiscal year 2026, the company is reaffirming its previously issued guidance:

  • Net sales in the range of $1.328 billion to $1.416 billion
    Adjusted EBITDA in the range of $174 million to $203 million

Image courtesy Fox Factory