Fox Factory Holding Corp. (FOXF) Q2 2025 Earnings Call Transcript
Net Sales $374.9 million, an increase of 7.6% versus the same quarter last year, reflecting solid growth in all 3 segments.
Gross Margin 31.2% in Q2 2025 compared to 31.8% in Q2 2024, primarily due to shifts in product mix.
Adjusted Gross Margin 31.3% compared to 31.9% in the prior year period, with a sequential increase of 40 basis points supported by cost reduction initiatives.
Operating Expenses $98.5 million or 26.3% of net sales in Q2 2025 compared to $92.4 million or 26.5% of sales in Q2 2024. The increase was mainly due to higher R&D and sales and marketing expenses, as well as costs related to organizational restructuring.
Adjusted Operating Expenses Decreased 20 basis points year-over-year to 22.3% in Q2 2025.
Net Income $2.7 million or $0.07 per diluted share compared to $5.4 million or $0.13 per diluted share in Q2 2024. The decrease was due to higher tax expenses and restructuring costs.
Adjusted Net Income $16.6 million compared to $15.9 million in Q2 2024, primarily adjusted for cost reduction and restructuring expenses.
Adjusted EBITDA $49.3 million, an increase of 11.8% year-over-year, with an adjusted EBITDA margin of 13.1%, up 40 basis points from the prior year.
Working Capital Improved sequentially by 80 basis points from 31.5% of sales in Q1 to 30.7% in Q2, driven by lower inventory as a percentage of sales and inventory optimization efforts.
Revolver Balance $157 million as of July 3, 2025.
Term Loan Balance $517.5 million net of loan fees as of July 3, 2025.
Net Leverage Reduced to 3.8x in Q2 2025, with a clear path to reducing it below 3x by year-end.
Free Cash Flow Expected to generate approximately $80 million for the full year 2025.
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Consumer Stocks Show Weak Earnings Momentum, APEI and Others Rated F
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- Poor Industry Performance: Cracker Barrel Old Country Store (CBRL) and Caesars Entertainment (CZR) also received F ratings, suggesting these companies are under earnings pressure, which could negatively impact their stock performance and investor confidence.
- Market Trend Analysis: Fox Factory Holding (FOXF) and Six Flags Entertainment (FUN) also received F ratings for EPS revisions, indicating overall weak earnings momentum in the consumer sector, potentially prompting investors to reassess their portfolios.
- ETF Impact: Several consumer discretionary ETFs, such as XLY and VCR, are also affected due to the inclusion of multiple stocks with weak earnings momentum, which may influence overall market performance.
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Fox Factory Holding Corp (FOXF): This small-cap stock in the Auto & Truck Parts industry received an 86% rating, indicating strong interest based on its fundamentals and valuation, with a focus on performance-defining products for various vehicles.
Academy Sports and Outdoors Inc (ASO): A mid-cap value stock in the Retail (Specialty) industry, ASO also scored 86%, reflecting strong fundamentals and a diverse product assortment in sporting goods and outdoor recreation.
Other Notable Stocks: Mohawk Industries Inc (MHK), Nike Inc (NKE), and Deckers Outdoor Corp (DECK) are also discussed, with MHK rated at 71% and both NKE and DECK also at 71%, indicating varying levels of interest based on their fundamentals and valuations.
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Sector Movements: Energy shares increased by 1.2%, while communication services stocks saw a decline of 1.8%.
Consumer Sentiment Index: The University of Michigan's consumer sentiment index fell to 50.3 in November, down from 53.6 the previous month, missing market expectations.
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Block, Inc. Earnings Report: Block, Inc. shares fell 14.4% in pre-market trading after reporting third-quarter earnings of 54 cents per share, missing the expected 67 cents, and revenue of $6.11 billion, below the $6.312 billion estimate.
Other Notable Stock Declines: Several companies, including Treace Medical Concepts, AirSculpt Technologies, and Intellia Therapeutics, experienced significant pre-market declines, with drops ranging from 22.5% to 36.4% following disappointing financial results.
Market Guidance Adjustments: Companies like Fox Factory Holding Corp and DraftKings Inc. not only reported poor quarterly results but also lowered their future sales guidance, contributing to their stock price declines.
Fox Factory stock plummets following disappointing profit forecast
Q3 Performance: Fox Factory reported a 5% increase in net sales for Q3, but incurred a loss of $662,000, contrasting with a net income of $4.8M a year prior, largely due to increased R&D and restructuring costs.
Market Reaction: Following the disappointing results and lowered guidance, Fox Factory's shares dropped 25% to a 9-year low, reflecting investor concerns over the company's performance and outlook.
Sales Breakdown: The sales growth was driven by a 17.4% rise in aftermarket applications and a 15.1% increase in powered vehicles, but was offset by an 11.2% decline in Specialty Sports Group sales due to inventory reductions by OEMs and distributors.
Future Guidance: For the current quarter, Fox Factory anticipates net sales between $340M to $370M and adjusted earnings significantly lower than previous estimates, with FY25 projections also revised downward.
Consumer Stocks Show Weak Earnings Momentum, APEI and Others Rated F
- Earnings Momentum Assessment: As the earnings season approaches, analysis reveals that several mid to low cap consumer stocks exhibit weak earnings momentum, with American Public Education (APEI) receiving an F grade for EPS revisions, indicating significant downward pressure on analyst expectations for future earnings.
- Poor Industry Performance: Cracker Barrel Old Country Store (CBRL) and Caesars Entertainment (CZR) also received F ratings, suggesting these companies are under earnings pressure, which could negatively impact their stock performance and investor confidence.
- Market Trend Analysis: Fox Factory Holding (FOXF) and Six Flags Entertainment (FUN) also received F ratings for EPS revisions, indicating overall weak earnings momentum in the consumer sector, potentially prompting investors to reassess their portfolios.
- ETF Impact: Several consumer discretionary ETFs, such as XLY and VCR, are also affected due to the inclusion of multiple stocks with weak earnings momentum, which may influence overall market performance.
Validea's Leading Consumer Discretionary Stocks Inspired by Benjamin Graham - 11/25/2025
Top Rated Consumer Discretionary Stocks: The article highlights top-rated Consumer Discretionary stocks according to Validea's Value Investor model, which is based on Benjamin Graham's deep value methodology focusing on low P/B and P/E ratios, low debt, and solid long-term earnings growth.
Fox Factory Holding Corp (FOXF): This small-cap stock in the Auto & Truck Parts industry received an 86% rating, indicating strong interest based on its fundamentals and valuation, with a focus on performance-defining products for various vehicles.
Academy Sports and Outdoors Inc (ASO): A mid-cap value stock in the Retail (Specialty) industry, ASO also scored 86%, reflecting strong fundamentals and a diverse product assortment in sporting goods and outdoor recreation.
Other Notable Stocks: Mohawk Industries Inc (MHK), Nike Inc (NKE), and Deckers Outdoor Corp (DECK) are also discussed, with MHK rated at 71% and both NKE and DECK also at 71%, indicating varying levels of interest based on their fundamentals and valuations.
Nasdaq Closes Down, Posts Weekly Decline: Fear & Greed Index Stays in 'Extreme Fear' Territory
Market Sentiment: The CNN Money Fear and Greed index indicates a slight easing in fear levels, remaining in the "Extreme Fear" zone with a reading of 21.1, compared to 18.3 previously.
Stock Performance: U.S. stocks showed mixed results, with the Nasdaq Composite declining by 0.2% and the S&P 500 and Dow also experiencing losses, while Fluor Corp. shares rose over 2% after positive quarterly results.
Economic Concerns: Investor anxiety increased as the University of Michigan's consumer sentiment index fell to its lowest since June 2022, with the subindex for current economic conditions hitting a record low since 1951.
Sector Trends: Most S&P 500 sectors closed positively, particularly energy, utilities, and real estate, while communication services and information technology sectors saw declines; investors are also awaiting earnings reports from major companies.
Nasdaq Drops More Than 100 Points as US Consumer Sentiment Declines in November
U.S. Stock Market Performance: U.S. stocks showed mixed results, with the Dow up slightly by 0.06%, while the Nasdaq fell by 0.45% and the S&P 500 dropped by 0.04%.
Sector Movements: Energy shares increased by 1.2%, while communication services stocks saw a decline of 1.8%.
Consumer Sentiment Index: The University of Michigan's consumer sentiment index fell to 50.3 in November, down from 53.6 the previous month, missing market expectations.
Notable Stock Movements: Motorsport Games Inc. shares surged by 79% after positive sales results, while AirSculpt Technologies Inc. shares plummeted by 42% due to disappointing financial results.
Block Reports Disappointing Q3 Results, Alongside Archer Aviation, DraftKings, and Other Major Stocks Declining in Friday's Pre-Market Trading
U.S. Stock Market Trends: U.S. stock futures are down, with Nasdaq futures dropping approximately 100 points, indicating a bearish market sentiment.
Block, Inc. Earnings Report: Block, Inc. shares fell 14.4% in pre-market trading after reporting third-quarter earnings of 54 cents per share, missing the expected 67 cents, and revenue of $6.11 billion, below the $6.312 billion estimate.
Other Notable Stock Declines: Several companies, including Treace Medical Concepts, AirSculpt Technologies, and Intellia Therapeutics, experienced significant pre-market declines, with drops ranging from 22.5% to 36.4% following disappointing financial results.
Market Guidance Adjustments: Companies like Fox Factory Holding Corp and DraftKings Inc. not only reported poor quarterly results but also lowered their future sales guidance, contributing to their stock price declines.
Fox Factory stock plummets following disappointing profit forecast
Q3 Performance: Fox Factory reported a 5% increase in net sales for Q3, but incurred a loss of $662,000, contrasting with a net income of $4.8M a year prior, largely due to increased R&D and restructuring costs.
Market Reaction: Following the disappointing results and lowered guidance, Fox Factory's shares dropped 25% to a 9-year low, reflecting investor concerns over the company's performance and outlook.
Sales Breakdown: The sales growth was driven by a 17.4% rise in aftermarket applications and a 15.1% increase in powered vehicles, but was offset by an 11.2% decline in Specialty Sports Group sales due to inventory reductions by OEMs and distributors.
Future Guidance: For the current quarter, Fox Factory anticipates net sales between $340M to $370M and adjusted earnings significantly lower than previous estimates, with FY25 projections also revised downward.
