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FOX FACTORY HOLDING CORP (FOXF)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 2026 (fiscal quarter ended July 4, 2025): Net sales $374.9M (+7.6% y/y), GAAP EPS $0.07, adjusted EPS $0.40, adjusted EBITDA $49.3M with consolidated adjusted EBITDA margin up 40 bps to 13.1% and sequential margin improvement of 190 bps .
  • Results vs consensus: Revenue and GAAP EPS were below Wall Street (S&P Global) consensus; adjusted EBITDA was slightly below consensus as well. See “Estimates Context” for specifics.*
  • Guidance recalibration: Management initiated Q3 2025 guidance ($370–$390M revenue; $0.45–$0.65 adjusted EPS) and raised full‑year revenue range to $1.45–$1.51B while narrowing adjusted EPS to $1.60–$2.00 in Q2; guidance was further revised lower in Q3 to $1.445–$1.475B and $0.92–$1.12 adjusted EPS .
  • Catalysts: Ongoing tariff headwinds, cost‑reduction/optimization program on track, working capital improvements and deleveraging (net leverage to 3.8x) support the medium‑term margin/FCF recovery narrative .

What Went Well and What Went Wrong

What Went Well

  • Broad‑based growth and margin improvement: “$375 million in net sales, representing growth across all three segments… along with continued adjusted EBITDA margin improvement” .
  • Cost actions translating into sequential margin gains: CFO highlighted adjusted gross margin and EBITDA margin increased sequentially by 40 bps and 190 bps, respectively, driven by cost reductions .
  • Balance sheet progress: Working capital efficiency improved (30.7% LTM sales vs 31.5% in Q1), and management remains focused on paying down debt (net leverage improved to 3.8x) .

What Went Wrong

  • Tariff pressure and mix: Gross margin declined y/y to 31.2% due to product mix shifts and tariffs; adjusted gross margin fell 60 bps y/y to 31.3% .
  • EPS impacted by taxes: Effective tax rate of 50.9% drove adjusted EPS to $0.40 despite operational improvements .
  • Tariff burden increased vs initial plan: Pre‑mitigated full‑year tariff impact raised from ~$38M to up to ~$50M with larger hits in Marucci and PVG; mitigation ongoing but not yet fully offset in price/actions .

Financial Results

MetricQ2 2024Q1 2026 (Q1 FY25)Q2 2026 (Q2 FY25)
Revenue ($USD Millions)$348.5 $355.0 $374.9
Gross Margin (%)31.8% 30.9% 31.2%
Adjusted Gross Margin (%)31.9% 30.9% 31.3%
GAAP Net Income ($USD Millions)$5.4 $(259.7) (impairment) $2.7
GAAP Diluted EPS ($USD)$0.13 $(6.23) $0.07
Adjusted EPS ($USD)$0.38 $0.23 $0.40
Adjusted EBITDA ($USD Millions)$44.1 $39.6 $49.3
Adjusted EBITDA Margin (%)12.7% 11.2% 13.1%

Segment net sales

SegmentQ2 2024 ($M)Q1 2026 ($M)Q2 2026 ($M)Q2 2026 y/y
Powered Vehicles Group (PVG)$117.8 $122.1 $123.5 +4.9%
Aftermarket Applications Group (AAG)$107.1 $111.9 $114.1 +6.5%
Specialty Sports Group (SSG)$123.6 $121.0 $137.2 +11.0%

Key KPIs

KPIQ1 2026Q2 2026
Working Capital / LTM Sales (%)31.5% 30.7%
Net Leverage (x)4.1x 3.8x
Cash & Equivalents ($M)$68.6 $81.5
Inventory ($M)$408.8 $412.8
FY25 Free Cash Flow expectation ($M)~$80 ~$80

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesQ3 2025—$370M–$390M Initiated
Adjusted EPSQ3 2025—$0.45–$0.65 Initiated
Net SalesFY 2025$1.385B–$1.485B $1.45B–$1.51B Raised (midpoint)
Adjusted EPSFY 2025$1.60–$2.60 $1.60–$2.00 Lowered
Adjusted Tax RateFY 202515%–18% 15%–18% Maintained
Net SalesFY 2025 (updated in Q3)$1.45B–$1.51B $1.445B–$1.475B Lowered
Adjusted EPSFY 2025 (updated in Q3)$1.60–$2.00 $0.92–$1.12 Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2026)Previous Mentions (Q3 2025)Current Period (Q2 2026)Trend
Tariffs/macroInitial FY25 guidance included tariffs; pre‑mitigated impact contemplated up to $50M; focus on mitigation and cost controls Outlook tightened; macro headwinds and tariff costs impacting margins; preparing optimization phase two for FY26 Pre‑mitigated impact raised to ~$50M; segment tariff burden heavier in Marucci and PVG; mitigation actions underway (pricing, sourcing, insourcing) Worsening tariffs; aggressive mitigation
Working capital & leverageSeasonally higher inventory; focus on working capital; revolver $163M; delevering priority Reduced debt by $17M; continued balance sheet strengthening Working capital % improved to 30.7% from 31.5%; net leverage to 3.8x; path to <3x by year‑end Improving
Product innovation & segment mixMargin expansion in AAG and PVG; roadmap investments despite macro Strategic customer launches; SSG underperformed due to inventory lean‑downs Growth across PVG motorcycle, AAG wheels/lift kits, SSG bike stabilization; sequential and y/y growth Positive product momentum
Marucci/MLB & softballGrowth vectors: footwear, global expansion (e.g., Japan), softball entry; tariff exemptions changed, pressuring segment —Record year expected; DTC launches (Victus, Marucci Reckless); leveraging MLB halo; working to mitigate baseball tariffs (US finishing/paint) Expanding; near‑term margin pressure
Supply chain/footprintConsolidation efforts (Taiwan, IN, AZ); insourcing parts up 20%; cost sharing with OEMs Timing shifts for strategic launches; facility consolidations completed Continued footprint optimization; sourcing shifts; price actions Executing

Management Commentary

  • CEO: “Our focus on world class product innovation continues to drive growth… while our operational improvement and strategic cost management initiatives are yielding tangible results” .
  • CFO: “Sequentially, gross margin and adjusted gross margin increased 30 and 40 bps, respectively… adjusted EBITDA margin increased 190 bps” .
  • CEO: On PVG/motorcycle expansion: “More than offset the decline in powersports… increasing insourced parts by 20%… one of our biggest cost‑out opportunities in the second half” .
  • CEO: On Marucci: “We now have ~40 MLB players using our footwear… reentering fast pitch and slow pitch softball… very attractive financial profile” .
  • CFO: On tariffs and mitigation: “Updated guidance now contemplates a pre‑mitigated tariff impact of upwards of $50M… offset ~50% through countermeasures; remaining margin pressure reflected in EPS guidance” .

Q&A Highlights

  • Tariff impact distribution: AAG ~$10M, Marucci ~$15M, PVG ~$25M (pre‑mitigated); actions include warehouse consolidation, mold shifts to Mexico, insourcing raw materials .
  • Powersports/motorcycle outlook: Stabilizing inventories; interest rates key to acceleration; motorcycle business offsetting powersports softness with margins similar to powersports .
  • Bike segment: Return to growth and normalization; OEMs managing inventory conservatively to avoid destocking repeats; expecting “growth year” for bike with more normal outlook .
  • Guidance clarity: EPS narrowing due to incremental unmitigated tariffs; aggressive mitigation across segments continues .

Estimates Context

  • Q2 2026 S&P Global consensus: Revenue $383.16M*, Primary EPS $0.4625*, EBITDA $50.57M*.
  • Actual results: Revenue $374.86M, GAAP EPS $0.07, adjusted EBITDA $49.29M .
  • Interpretation: Revenue and GAAP EPS were below consensus, and adjusted EBITDA modestly below consensus; magnitude of misses tied to tariff‑driven margin pressure and a high effective tax rate .
    Note: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Tariff headwinds remain the primary earnings swing factor near term; management is executing pricing, sourcing, and insourcing to mitigate, but the burden rose vs initial plan .
  • Sequential margin improvement and working capital gains are tangible; deleveraging (3.8x → <3x target) supports equity de‑risking if execution continues .
  • PVG motorcycle expansion, AAG aftermarket strength, and SSG bike stabilization underpin top‑line resilience despite macro softness .
  • Guidance progression shows management’s willingness to recalibrate as tariffs evolve; use Q3/FY25 updates to reset models and narrow EPS ranges .
  • Watch FY25 FCF delivery (~$80M) and inventory discipline as leading indicators for FY26 margin recovery and multiple support .
  • Near‑term trading: Stock likely sensitive to tariff developments and visibility into mitigation cadence; any relief or faster cost‑out could catalyze upside on margins .
  • Medium‑term thesis: Product innovation, footprint optimization, and deleveraging can restore adjusted EBITDA margins and re‑rate the equity as macro/tariff pressures normalize .