Q2 2022 Fox Factory Holding Corp Earnings Call
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Good afternoon, ladies and gentlemen, and thank you for standing by welcome to Fox factory, holding corporations second quarter 2022 earnings Conference call.
Is your host Dave <unk>, Senior director Investor Relations and business development.
At this time, all participants are in listen only mode.
And answer session will follow the formal presentation.
I am joined today by Mike Dennison, Chief Executive Officer, and Scott Humphrey, Chief Financial Officer and Treasurer.
Mike will provide business updates and Scott will review the quarter and full year financial results and then the outlook followed by closing remarks from Mike. We will then open the call up for your questions by.
By now everyone should have access to the earnings release, which went out today at approximately 405 eastern time.
If you have not had a chance to review the release, it's available on Investor Relations portion of our website at Investor <unk> Fox Dot com.
Please note that throughout this call, we will refer to Fox factory as Fox or the company.
We begin I would like to remind everyone that the prepared remarks contain forward looking statements and management may make additional forward looking statements in response to your questions.
Such statements involve a number of known and unknown uncertainties, many of which are outside the company's control and can cause future results performance or achievements to differ significantly from the results performance or achievements expressed or implied by such forward looking statements important factors and risks that.
Could cause or contribute to such differences.
<unk> in the company's latest Form 10-Q and in the annual report on Form 10-K filed with the Securities and Exchange Commission.
Except as required by law the company undertakes no obligation to update any forward looking or other statements herein, whether as a result of new information future events or otherwise.
In addition, we had appropriate in today's prepared remarks and within our earnings release, you will refer to non-GAAP financial measures to evaluate our business. As we believe these are useful metrics that better reflect the performance of our business on an ongoing basis.
Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures.
Alluded in today's press release, which has also been posted on our website.
And with that it is my pleasure to turn the call over to our CEO Mike Dennison.
Thank you Lee and good afternoon.
I appreciate everyone, taking the time to join US for today's call I am proud to report that we delivered yet another record quarter with the highest revenue in our company's history.
These results were driven by record breaking performance in both our specialty sports and powered vehicles product groups.
We also delivered the all time highest earnings per share by successfully navigating the unpredictable and turbulent macroeconomic and operational environment.
Entering 2022.
Our team had a daunting task ahead with the challenge to deliver.
<unk> growth through optimization, and our Gainesville facility in a highly volatile macroeconomic environment.
I am happy to report continued progress in Gainesville facilities output, which produced a record number of units in Q2.
Thanks to the dedication and resilience of the entire Fox team, we crossed the 400 million Mark in quarterly revenue.
The low mark for net income and the $80 million adjusted EBITDA for the first time in our company's history.
Taking a deeper look at the numbers our second quarter sales were $406 7 million, an increase of 23, 9% compared to the second quarter of last year. This outstanding growth was driven by both our SSG NPV G product categories, which grew 28% and 21% respectively versus the same prior year period are commendable quarter.
Over quarter beat exemplifies our belief that Fox has expanded portfolio of high performance products continued to deliver a quality engineering service, which consistent results with our end consumers.
We reported an earnings per diluted share of $1 46, an increase of 20% from the same period last year on a non-GAAP adjusted basis, We reported an earnings per diluted share of $1 38, increasing 15% from the same period last year, starting with specialty Sports Group Q2, 2022 was our ninth consecutive record revenue.
This quarter, we delivered approximately $178 million sales, a 28, 1% revenue growth on a quarter over quarter basis.
We continued to optimize our capacity our productivity and our workforce in Taiwan as well as combat the increased prevalence of Covid on the island within our factories with regards to channel inventory high end mountain bike levels are still below the preferred levels and the rising popularity of E bikes is continuing to fuel demand or supply chain.
They are improving we are however, seeing the signs of a return to normal and consequently, we expect ssg's returned to more typical growth rates.
Gain in Q3 and return of seasonality in Q4 shifting to the powered vehicles group. The second quarter of 2020 fuel marked another record quarter with revenue of 229 million, which represents a 29% increase as compared to the same period last year. This is our second consecutive quarter with over $200 million revenue led by strong performance.
Operating product lines and increased efficiency and output Gainesville facility for the second half of the year, we anticipate the <unk> group will continue to grow at the current rates given the significant backlogs and our auto OE empower sport business, along with strong demand in our <unk>.
The new product lines. However.
However, we anticipate an increase in OE revenue contribution given the recent OEM launches versus the first half of the year.
This translates to a tailwind for our top line, but a headwind for margins, we plan to offset those margin headwinds through further productivity gains and Gainesville.
Recognize that we are just beginning our factory optimization journey and we will continue to make progress over the course of the next several quarters delivering a 250 to 350 basis point margin improvement as we have discussed in prior calls.
As the world is slowly migrating towards electric vehicles I am excited to share some highlights from our electric vehicle racing program with the extreme circuit.
As you May recall Fox was named the official shock provider for the extreme E series back into early Q2.
We just finished our first race in Sardinia, Italy and team feedback indicated that drivers and teams we're thrilled with the Fox upgraded suspension package.
From drivers of the cars firmly work as they should the hailing was much more predictable and safer and drivers were much more relaxed and less shaken up this improvement in performance a lot of the drivers to push the car is much harder and showcase their driving skills versus just trying to ensure that vehicles are behind the course, we're pleased to see Fox right at the forefront of as ever.
Elution and off road racing.
From a general economic standpoint, we continued to deal with inflation labor and supply chain disruptions and we believe this difficult environment will likely persist well into 2023 exacerbates our supply chain issues and lead times in general are the highly engineered precision machining components require that utilize higher grade aluminum and steel. Consequently, we will.
Continuing to leverage dynamic pricing to combat inflationary pressures demand remains healthy across most of our diversified portfolio and we believe that will remain for the balance of the year.
We will continue to strengthen our core competencies and be relentless extending our competitive differentiation. We also believe that the continued optimization of our Gainesville plant will drive some margin improvement as I discussed earlier.
Dynamic operating environment has only become more complex as the year has progressed and still this team has delivered a seven 6% revenue growth on a sequential basis.
Hence.
Want to thank each and every member of our Fox daily for their continued elevated performance.
That I will turn the call over to Scott.
Thanks, Mike Good afternoon, everyone I'll begin by going over our second quarter financial results and then review our guidance.
Sales in the second quarter of 2022 were $406 7 million, an increase of 23, 9% versus sales of $328 2 million in the second quarter of 2021.
Our specialty sports group SSG delivered a 28, 1% increase in sales compared to the second quarter of 2021, primarily due to increased demand in our OEM channels.
Moving to our powered vehicles group <unk> delivered a 29% increase in sales in the second quarter compared to the same quarter last year, primarily due to strong performance in our upstream product lines on.
On a year to date basis sales were $784 7 million an increase of 28, 7%.
This jump in sales is driven by increased demand primarily in the SSG OEM channel and strong performance from our outfitting product lines in PPG.
Fox Factory's gross margin was 35, 1% in the second quarter of 2020 to.
120 basis point increase from 33 nine in the same period of the prior year.
For the second quarter of 2022, non-GAAP adjusted gross margin increased by 120 basis points to.
To 35, 3% versus Q2 of 2021.
The increase in gross margin and non-GAAP adjusted gross margin were primarily driven by favorable product mix compared to Q2 of 2021 led by higher volume sales in our specialty sports group.
Strong performance in our up fitting product lines.
Our results were also positively impacted by increased factory efficiencies.
The increases in gross margin and non-GAAP adjusted gross margin were offset by higher inflationary pressures on all fronts, including labor costs input costs and freight costs.
Total operating expenses were $72 5 million or 17, 8% of sales in the second quarter of 2022 compared to $58 4 million or 17, 8% of sales in the second quarter of last year.
The increase in operating expenses in Q2, 2022 was primarily due to higher employee related costs higher commission costs higher facility related costs and the impact of higher incentive compensation accruals looking.
Looking at non-GAAP operating expenses as a percentage of sales our non-GAAP operating expenses increased by 60 basis points to 16, 3% in the second quarter of 2022 compared to 15, 7% in the same period in the prior year.
Focusing on operating expenses in more detail.
Sales and marketing expenses increased approximately $6 4 million in the second quarter of 2022 compared to the second quarter of 2021, primarily due to higher commissions of $2 4 million.
Research and development costs increased approximately $3 million in the second quarter of 2022 compared to the second quarter of 2021, primarily due to personnel investments to support future growth and product innovation.
General and administrative expenses increased by approximately $4 1 million in the second quarter of 2022 compared to the second quarter of 2021 due to higher employee related costs of $2 9 million as well as higher insurance and facility related costs of $2 5 million.
For the second quarter of 2022, our effective tax rate was 18, 9%.
As anticipated the rate was higher than our estimated full year 2022 range of 11% to 15%.
The higher rate was primarily due to the impact of recently finalized U S tax regulations, which limit the amount of newly generated foreign taxes that are creditable against U S income taxes and resulted an increase in foreign withholding tax as well as decreased benefits from low.
Stock based compensation.
These increases were partially offset by a lower tax rate on U S foreign derived earnings.
On a GAAP basis net income attributable to Fox in the second quarter of 2022 was $53 5 million or $1 26 per diluted share compared to $44 3 million or $1 <unk> per diluted share in the same period in the prior.
Per year.
On a year to date basis.
Net income attributable to Fox was $101 5 million or $2 40 per diluted share compared to $82 3 million or $1 94 per diluted share in the prior year period.
non-GAAP adjusted net income was $58 6 million in the second quarter of 2022, an increase of approximately $7 7 million or 15% compared to $51 million in the second quarter of last year.
We delivered $1 38 of non-GAAP adjusted earnings per diluted share in the second quarter of 2022 compared to $1 20 in the second quarter of 2021.
On a year to date basis non-GAAP adjusted net income was $114 4 million, an increase of approximately $19 million or 19, 8% compared to $95 5 million in the prior year period.
We also delivered $2 70.
non-GAAP adjusted earnings per diluted share compared to $2 25 in the prior year.
Adjusted EBITDA increased by 26, 5% to $88 1 million for the second quarter of 2022 compared to $69 7 million in the same quarter last year.
Adjusted EBITDA margin increased by 50 basis points to 21, 7% in the second quarter of 2022 compared to 21, 2% in the second quarter of 2021.
The increase in adjusted EBITDA margin in the second quarter of 2022 is primarily due to higher sales favorable product mix and increased efficiency in our Gainesville plant.
Offset by inflationary cost pressures.
On a year to date basis, adjusted EBITDA increased by 22, 9% to $159 9 million.
However, the adjusted EBITDA margin decreased by 90 basis points to 24% versus the prior year period.
Now focusing on our balance sheet for the second quarter, which ended on July one 2022 compared to our 2021 year end on December 31 2021.
We ended with cash on hand of $108 6 million compared to $179 7 million.
Accounts receivable was $195 4 million compared to $142 million.
Inventory was $349 1 million compared to $279 8 million.
Prepaid and other current assets were $267 7 million compared to $123 1 million.
And accounts payable was $161 6 million compared to $100 million.
The increase in inventory as of July one 2022 is primarily due to additional raw material purchases to mitigate risks associated with supply chain uncertainty and higher input costs.
The increase in prepaid and other assets at the end of the quarter.
Primarily driven by deposits for securing chassis for our outfitting business, which has been experiencing significant growth at.
Changes in accounts receivable and accounts payable reflect business growth as well as the timing of vendor payments.
Our net property plant and equipment increased to $194 6 million as of July one 2022 compared to $192 million at the end of fiscal year 2021, reflecting capital expenditures of $19 9 million for the year.
Lastly, our interest and other expense went up by $2 8 million versus Q2 of 2021. The primary driver of the increase was a $1 $9 million write off of the unamortized loan fees in the second quarter of fiscal year 2022.
Han refinancing of our prior credit facility.
Now turning to guidance for the third quarter of 2022, we expect sales in the range of $385 million to $405 million and non-GAAP adjusted earnings per diluted share in the range of $1 15.
To $1 35 per share for.
For the fiscal year 2022, the company expects sales in the range of one five to three 5 billion to $1 $5 65 billion and non-GAAP adjusted earnings per diluted share in the range of $5 to $5 30.
For our 2022 full year tax guidance, we still expect our tax rate to be at the higher end of the previously guided 11% to 15% range.
I'd also like to note that we're not providing guidance on GAAP EPS as it cannot be provided without unreasonable efforts due to the difficulty of actually predicting the elements necessary to provide such guidance and reconciliation.
With that I'd like to turn the call back over to Mike.
Thank you Scott I am pleased with the results of our team has produced in the second quarter. Im also encouraged that our hard work and focus on optimization of the Gainesville facility is starting to show signs of traction.
We do however, recognize this is only the beginning of our journey to deliver world class manufacturing results as.
As we enter the second half of the year.
Cognizant of the challenges ahead arising from the expected change in our product mix lingering signs of some cost pressures amplified supply chain obstacles and all of the uncertainties related to the macroeconomic environment, having said that based on the strength of our financial performance incredibly resilient and capable team members, we remain committed to stretch.
<unk> enhanced our operating model to better position the company for sustained delivery against our immediate and long term goals, thus maximizing value for our employees and shareholders.
I would now like to open the call for questions operator.
At this time, if you would like to ask a question. Please press star one now on your telephone keypad.
Withdraw yourself from the queue you May press the pound key again star one on your telephone keypad.
We will take a question from Mike Swartz, our truest your line is open.
Hey, guys good afternoon.
I just wanted to touch on guidance, maybe the implied outlook for the back half of the year it looks like you're expecting.
Your EBITDA margins to deteriorate.
In about two to 300 basis points is that we.
Mostly from the items that you talked about in terms of product mix and some of the supply chain.
Inefficiencies et cetera, I'm, just wondering if there's any type of slowdown in the <unk>.
Georgia manufacturing facility, that's embedded in that.
No Mike and Hi, this is Scott.
No I think as we mentioned the mix is a driver I'm not sure how youre getting the EBITDA percentage, but I think I think we will actually get a little bit elaborate Jos opex as well in the back half of the year.
And and.
So that should help with the EBITDA percentage, but yes, we're going to have a headwind in terms of the mix shift to more automotive OE in the back half of the year and continued growth in throughput out of Gainesville, which is a positive.
Okay great.
And then the second question was just on Mike your commentary around the bike business I'm trying to decipher if that was really any different than what you said before I think you had said you expected to return to season, a normal seasonality in the back half and it sounds like.
I'm just trying to understand in the third quarter, we're getting back to kind of that mid to high single digit growth and then what is normal seasonality for the fourth quarter should we expect that to be down year over year.
No.
Im really thinking about in Q4 is that youre going to return to when you look at the full year of 2022, Q4, usually not a big quarter in bike. So it will take a step down as the global warming.
The usual year as you recall in 2021.
There was basically no seasonality.
Actually in 2020 as well. So this is just a function of.
The bike industry tends to have a seasonally lower quarter in Q4 than Q3.
Okay, great. Thank you.
Our next question comes from Alex <unk> of Jefferies. Your line is open.
Alright.
That question.
I appreciate the color on I think George if it's already getting better for.
Can you talk about turnover and competition for labor.
On.
How about today.
About <unk> of the year.
Other than that one.
Yeah, the Labor force.
Has stabilized pretty well, so we're seeing better access to workforce.
Less turnover in the workforce that we have in Gainesville.
We see that as net positive over the led factory.
Up in efficiency and productivity clearly as you know we have skilled workers, who stay with us and we can train them over a period of time, they will help drive productivity. So we're really happy to see that change.
From prior quarters to what we saw in Q2 and going into Q3.
And we've been hearing some hearings in outdoor recreation, one Rob on the Powerpoint.
That premium segment are outperforming a little bit of softness.
The value.
Are you guys seeing that.
Performing.
Where are you.
That's in the market.
Within your product line.
Thank you guys.
Tip of the pyramid central product to Donal.
Are you seeing any of that.
<unk>.
There are product lines within that framework.
Yes, as you know the majority of our product lines are tooling fairly affluent demographic on our consumer base. So we're benefiting from that and we see the demand still much stronger than the more affluent.
Product is or the demographic is.
Silver product lines, we see a little bit more softness.
It will come down the curve into more mainstream products worldwide sport truck and left kisses will vehicle.
The majority of our products again due to the prolonged.
Definitely weather the storm better.
Great. Thanks for taking my question.
Our next question is from Jim Duffy of Stifel.
Thank you good afternoon.
Nice work on the step up in the gross margin guidance.
The factory Adjacencies you referenced it sounds like Thats concentrated in Gainesville or are you also seeing factory efficiency.
Taiwan with the new facility coming online.
Yes, Jim the efficiencies in Taiwan have been.
Onstream for US all year that team has just performed outstandingly well and Q2, you know COVID-19.
Sure.
Problem on the island.
And they found ways to work around it worked through it and still get the job done.
Is it consists of a mortgage I think Taiwan. The reason why we called it out in the commentary was around global was as you know that was a bigger challenge for us in Q1 and will step change into Q2 was really good progress for us. So we wanted to call that out we will continue to see that progress continue through the balance of the year. So we have a long way to go.
But it's nice to see the progress we made in Q2.
Great.
I wanted to ask about the up trading business as well a nice margin business for you.
<unk> shown you are seeing a really nice expansion of dealers strong selling and good afternoon to sell through but there is more inventory in the marketplace, but can you comment on the inventory position in the channel for that business and where that stands relative to what you think the opportunity is.
What you would consider to be a healthy state.
Yes, we have inventory on hand to get us into Q1 of 'twenty.
2020 for awhile, so we are well positioned much better positioned to reward this time last year.
The inventory we have is sold so we have to convert those chassis to the updated version and get them off the dealers.
And dealers are pushing us to deliver them faster.
And what we're seeing on the sell through on the dealer lot.
As good as it's done in a long time, if not better.
So we're really happy with that but we're confident that we will continue to be a very strong part of our business for the balance of the year I don't see any.
The increasing demand in that product line for us.
Great and then.
I'm, hoping you can share more about the margin profile of that business, maybe directionally, what's the premium to the corporate rate.
What's their commission structure, there or is that an offset in the SG&A line.
Steve just talk more about the margin and economics of that business that'd be helpful. Thanks.
Yes, Jim.
Well, we don't we don't specifically break out gross margin for the outfitting business, but it is nice business and yes. You are correct. There is a split into opex.
How do your commission rates for those sales and so you'll see like on a percent of revenue we had an uptick in opex.
Percentage this quarter, a small one and one of the big drivers of that is increased commission.
For the upsetting business. So yes, there is a little bit of.
Well it might be benefiting gross margin its hurting the opex line.
And Jim I would just add that that's in the aftermarket business for us.
Aftermarket type modules, which we really appreciate them relative to an OEM margins.
On the higher end.
Thank you.
Our next question is from Alex Perry of Bank of America.
Yeah.
Hi, Thanks for taking my questions and congrats on a strong quarter here.
I just wanted to ask.
Gross margin came in very strong on the quarter, maybe could you just give us a bit more sort of quantitative color on how much of a contributor the Georgia factory House Gvg side is that performing sort of ahead of your expectations. Now and then are you still sort of expecting a similar margin uplift on the pvt.
Side due to the you referred to efficiencies from Gainesville, as you talk to us.
Pat.
Yes, we still anticipate that 250 to 350 basis point improvement I think what we did in Q2 was really get us back to.
Maybe where we were last year.
As we are ramping up the facility and so we made a lot of really positive progress in the quarter, but still have some.
Significant.
The significant improvements still to come.
And we will continue to see that over the back half of the year and even into next year I would imagine.
As far as the gross margin in the quarter.
I think a couple of things on the whole, we talked a little bit about mix already but you had a really positive mixed story in Q2.
Really strong volume as you saw in SSG strong up fitting volume.
And and so as we look at the back half of the year and some programs on automotive OE kind of ramping up and so going to drive some additional sales through those percentages of those different businesses.
<unk> to gross margin are going to shift and so that's that's what gives us.
We have strong demand across the board.
But it is going to have a little bit of a headwind for us going forward here.
Perfect. That's incredibly helpful and then just.
Just sort of high level question here, what sort of how are you guys thinking about a slowdown in the overall U S consumer and sort of what's embedded in the guidance is it sort of assuming a similar.
And market trend as you've seen now and then.
Maybe you or are you not in the same sort of slowdown as other discretionary players in the space given sort of depleted inventory levels at retail over the past few years.
We think there'll be sort of a.
We are experiencing a bit of a pent up demand effect map.
Yeah.
Yes, as I said earlier I think we will see some slowness in certain parts of the product line to keep in mind that a lot of our product lines. We're in still a backlog situation. So we're still trying to meet the current demand let alone future demand. So.
That persistent for the majority of the rest of this year.
There was a little too early to make a call on total three and what might happen from a macroeconomic perspective.
For the balance of this year and most of our product lines. We will control just trying to keep up with the demand that we already have that.
That will drive I think obviously, a strong Q3 and Q4 based on the guide that Scott just gave you.
As you know, we're pretty conservative in the way, we think about the future. It will take a lot of consideration into what we think could happen from both the positive and negative perspective, we will continue to be that way and we will update guidance as we get through Q3 and have this call. It below the Q3 period.
Perfect Thats very helpful Best of luck going forward.
Thanks, Tom.
Our next question is from Ryan Sundby of William Blair. Your line is open.
Hi, I was just checking again on for Brian . Thanks for taking my question.
We've had several other companies talk about how the current economic environment has improved M&A deal flow and pricing expectation is this something that you can.
We do see M&A is starting to open up and that's good for US as you know we've been working on ethanol or trying to drive M&A for.
For over a year actually closer to two years and it's been a tough market to do.
Good solid productive M&A. So we do see that starting to improve and I think we're excited about the opportunity.
Are shaping up so hopefully get back to a more clear.
The global environment.
We'll see what happens.
On your second question was on pricing.
England pricing for our products.
Now talking about deal pricing as well.
The ideal pricing, yes, I think thats pulled back in line at least it seems to be so we'll see how that plays out but I think it's a little bit less.
Inflated than it was.
A year ago.
Great. Thank you.
And once again, if you'd like to ask a question that is star one on your telephone keypad.
We'll move next to Larry Solow CJS Securities. Your line is open.
Hey, it's Lee Jagoda for Larry Good afternoon.
Just two.
Start with the on the bike side given were.
Just at the beginning of the 23 bikes selling season.
Any early update you have on new design win momentum and maybe how that might compare to the last call.
You.
Yes, I think we still feel very strongly about our spec loans and where we're at in that in those relationships with some of those for those kind of shifted a little bit relative to timing of new model years and we can.
Cumulation of old model years, just based on the backlog that's been going on for over the last year. So I think that will continue to go on to some extent, but for the most part.
We're really happy with where we're sitting now well positioned for 2023 so.
There is nothing but positive.
Feedback to give you a kind of low relative to spec.
And then.
Truck business.
Everything Youre building now.
<unk> for us so.
Visibility to the.
Order flow at dealers today.
Currently look and wanted to walk dealerships.
Hugo ships ordered.
You are breaking up a little we'll do our best to try to answer that question.
What we're saying, we'll do again, they would take trucks as fast as we can produce a little oil produced a little capacity as we can so I think that demand will stay healthy again through the balance of this year and into next year.
That is a fairly high end of our product lines relative to truckload can cost 100, <unk> hundred $30000. So that that buyer of those vehicles is.
Is fairly affluent and I think that keeps that demand strong.
In negative pressure on sell through at this point in time, and we're doing our best to try to increase our dealer count as we tried to increase our productivity.
And producing more vehicles to date.
Any movie basis, So we'll continue to push for more dealers and to make sure that we get.
The premium positioning in those dealers to fulfill vehicles, so far that's working real well for us.
Great. Thanks very much.
Our next question comes from Craig Kennison of Baird. Your line is open.
Hey, good morning, and thanks for taking my questions as well, Mike I think in your prepared remarks towards the end you talked about being cognizant of a variety of factors, including.
Supply chain obstacles that were accelerating could you maybe just add more color to that challenge.
Yes.
Finally.
Probably less about acceleration more budgets continuation, where one of the things we're seeing is our inventory.
There remains high that's a functional long lead times, where you can get 90% of the components you need that you can't get the final 10% to complete product.
So those challenges in the supply chain, especially the power vehicle side continue and I think that will continue as I mentioned in our prepared remarks for the balance of the year I was hoping if things start to lessen relative to logistics freight and in.
And manufacturing lead times, we're starting to see some areas where the absolute hurdle.
So, let's hope that continues to improve throughout the balance of the year and we're having a different conversation in 2023, but for the purposes of forecasting the rest of this year I think we should continue to think that that will lead times. The supply chain will continue to be a challenge.
We will work through those issues in a daily basis.
Thanks, and then.
Press release, you talked about slowing hiring and spending just to get ahead of what could be a potential slowdown I am curious.
Should we anticipate any impact on your 2025 planned based on the change in your hiring strategy.
Not at all if you look back the last couple of years as Scott talked about this as well in prior earnings calls we've built a lot of infrastructure really silverado capex, we've been very.
Growth oriented and how we how we structured the company and we've seen that in the numbers over the last couple of years. So this is just a good chance for us to pause.
And think about Capex and think about head count a little bit difficult in nature. There were kind of lagging that growth I think we're really well positioned right now with the with the infrastructure, we have and the capacity. We have so so this is not about taking down any future guidance. This is really just about taking a look at see what happens.
In the economy.
And really just internally, making sure that we don't build in too far ahead of demand I think we're in great shape.
And then as you look at that 2025 plan, which I think you announced about a year ago.
Where do you feel better about your ability to execute on that and where might there be a profile to client.
We feel pretty good about that plan across the board to be honest with you what we expected to see in terms of.
Long term guidance and the different product lines is materializing as we expected. It would so we're really happy with our position relative to total $25 $2 billion in revenue and 12, 5% EBITDA I think we're tracking right in the last quarter, we saw the LIFO of improvement and progress.
That gives us even more confidence to those to those commitments.
Great. Thank you.
And this concludes our question and answer session for today I'd be happy to return the call to Mike Dennison for any concluding remarks.
Thanks, Neil as always we appreciate everyone, taking the time to join US for today's call. We look forward to talking to you again for our Q3 levels and until then have a good evening.
This does conclude the Fox factory Q2, 2022 earnings call. You May now disconnect your lines and everyone have a great day.
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