Q1 2025 Fox Factory Holding Corp Earnings Call

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Unknown Executive: Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Fox Factory Holding Corp's first quarter 2025 earnings conference call. At this time, all participants are in a listen only mode. A question answer session will follow the formal presentation. Please note this conference is being recorded.

Speaker Change: Good afternoon, ladies and gentlemen, and thank you for standing by welcome to Fox Factory holding Corp, first quarter 2025 earnings Conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: And the answer session will follow the formal presentation. Please note. This conference is being recorded I'd now like to turn the conference over to Toby merchant Chief Legal Officer at Fox Factory holding Corp. Thank you Sir you may begin.

Toby Merchant: I'd now like to turn the conference over to Toby Merchant, Chief Legal Officer at Fox Factory Holding Corp. Thank you, sir. You may begin. Thank you.

Speaker Change: Thank you good afternoon, and welcome to Fox Factory's first quarter 2025 earnings Conference call I'm joined today by Mike Dennison, Chief Exec Executive Officer, and Dennis Schemm, Chief Financial Officer, and President of the aftermarket applications group.

Toby Merchant: Good afternoon and welcome to Fox Factory's first quarter 2025 earnings conference call. I'm joined today by Mike Dennison, Chief Executive Officer, and Dennis Schemm, Chief Financial Officer and President of the Aftermarket Applications Group. First, Mike will provide business updates and then Dennis will review the quarterly results and outlook.

Mike Dennison: First Mike will provide business updates and then Dennis will review the quarterly results and outlook.

Toby Merchant: Mike will then provide some closing remarks before we open up the call for your questions.

Mike Dennison: Mike will then provide some closing remarks before we open up the call for your questions.

Toby Merchant: By now, everyone should have access to the earnings release which went out earlier this afternoon. If you have not had a chance to review the release, it's available on the Investor Relations portion of our website at www.investor.ridefox.com Please note that, throughout this call, we will refer to Fox Factory as FOX or the Company Before we begin, I would like to remind everyone that the prepared remarks contain forward-looking statements within the meaning of federal securities laws and management may make additional forward-looking statements in response to your question. Such statements involve a number of known and unknown risks and uncertainties, many of which are outside the company's control and can cause future results, performance, or achievements to differ materially from the results, performance, or achievements expressed or implied by such forward-looking statements.

Mike Dennison: By now everyone should have access to the earnings release, which went out earlier this afternoon.

Speaker Change: You have not had a chance to review the release, it's available on the Investor Relations portion of our website at Investor Dot right Fox Dot com.

Speaker Change: Please note that throughout this call, we will refer to Fox factory as Fox or the company.

Speaker Change: Before we begin I would like to remind everyone that the prepared remarks contain forward looking statements within the meaning of federal Securities laws and management may make additional forward looking statements in response to your questions.

Speaker Change: Such statements involve a number of known and unknown risks and uncertainties many of which are outside the company's control and can cause future results performance or achievements to differ materially from the results performance or achievements expressed or implied by such forward looking statements.

Toby Merchant: The important factors and risks that could cause or contribute to such differences are detailed in the company's quarterly reports on Form 10-Q and in the company's latest annual report on Form 10-K, each filed with the Securities and Exchange Commission. Investors should not place undue reliance on the company's forward-looking statements, and 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, where appropriate in today's prepared remarks and within our earnings release, we will refer to certain non-GAAP financial measures to evaluate our business, including adjusted gross profit, adjusted gross margin, adjusted operating expenses, adjusted net income, adjusted earnings per diluted share, adjusted EBITDA, and adjusted EBITDA margin, as we believe these are useful metrics that allow investors to better understand and evaluate the company's core operating performance and trends.

Speaker Change: Factors and risks that could cause or contribute to such differences are detailed in the company's quarterly reports on Form 10-Q and in the Companys latest annual report on Form 10-K, each filed with the Securities and Exchange Commission.

Speaker Change: Investors should not place undue reliance on the company's forward looking statements, 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.

Speaker Change: In addition, where appropriate in today's prepared remarks and within our earnings release, we will refer to certain non-GAAP financial measures to evaluate our business, including adjusted gross profit adjusted gross margin.

Adjusted operating expenses adjusted net income adjusted earnings per diluted share adjusted EBITDA and adjusted EBITDA margin. As we believe these are useful metrics that allow investors to better understand and evaluate the companys core operating performance and trends reconciliations.

Toby Merchant: Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are included in today's earnings release, which has also been posted to our website.

Speaker Change: These non-GAAP financial measures to their most directly comparable GAAP financial measures are included in today's earnings release, which has also been posted to our website.

Mike Dennison: And with that, it is my pleasure to turn the call over to our CEO, Mike Dennison. Thank you. Thanks, Toby. And thanks to everyone for joining today's I'm pleased to report that we delivered a solid start to 2025, with first quarter sales coming in above expectations at $355 million, representing growth of 6.5% over the prior year. and Adjusted Earnings Per Share of $0.23, which was in line with our expectations. Importantly, our plan called for meaningful sequential improvements across our businesses, particularly in gross margin. And to that end, I'm pleased that we delivered a 200 basis point sequential increase in gross margin to $30.99.

Speaker Change: And with that it is my pleasure to turn the call over to our CEO Mike Dennison.

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Speaker Change: Thanks, Debbie and thanks to everyone for joining today's call.

Speaker Change: I'm pleased to report that we delivered a solid start to 2025 with first quarter sales coming in above expectations at 355 million representing growth of six 5% over the prior year and adjusted earnings per share of 23 cents, which was in line with our expectations Importantly, our plan called for.

Speaker Change: A meaningful sequential improvements across our businesses, particularly in gross margin and to that end I am pleased that we delivered a 200 basis points sequential increase in gross margin to 39%.

Mike Dennison: The operational improvements and strategic cost management initiatives we outlined during the fourth quarter are well underway, with many of the actions completed and starting to deliver results across all three businesses. which was illustrated by continued strong sequential adjusted even a margin improvements in both our PVG and AAG segments. This progress, combined with revenue growth on a year-over-year basis across the segments, underscores the balance between cost management and a relentless focus on new product development. While external market conditions remain uneven across many of our product lines, we're meeting our financial commitments through disciplined execution on the factors within our control.

Speaker Change: The operational improvements and strategic cost management initiatives, we outlined during the fourth quarter are well underway with many of the actions completed and starting to deliver results across all three businesses.

Speaker Change: Which was illustrated by continued strong sequential adjusted EBITDA margin improvements in both our PPG and AEG segments. This progress combined with revenue growth on a year over year basis across the segments underscores the balance between cost management and a relentless focus on new product development.

Speaker Change: While external market conditions remain uneven across many of our product lines, we're meeting our financial commitments through disciplined execution on the factors within our control.

Mike Dennison: This has become all the more important in the current environment overshadowed by Our cost optimization strategy, which began last fall, is helping us be more nimble in addressing near-term challenges and positioning us for sustained margin improvement and enhanced free cash flow generation as we progress through the year. And while our near-term focus is on financial performance improvement, we remain committed to investing in innovation, which underpins everything we do here at Fox, and is the basis by which we are creating meaningful customer engagements with our performance-defining, race-winning products. Building on the momentum from last quarter, we're making significant strides in the four key initiatives we have discussed in prior calls, which are driving tangible, sequential improvements across our businesses.

Speaker Change: This has become all the more important in the current environment overshadowed by tariffs.

Speaker Change: Our cost optimization strategy, which began last fall and it's helping us be more nimble and addressing near term challenges and positioning us for sustained margin improvement and enhanced free cash flow generation as we progressed through the year.

Speaker Change: And while our near term focus is on financial performance improvement, we remain committed to investing in innovation, which underpins everything we do here at Fox and is the basis by which we are creating meaningful customer engagements with our performance defining race winning products.

Speaker Change: Building on the momentum from last quarter, we're making significant strides in our four key initiatives. We have discussed in prior calls which are driving tangible sequential improvements across our businesses.

Speaker Change: First.

Speaker Change: Simplifying and consolidating our footprint.

Mike Dennison: Simplifying and consolidating our footprint. We've now completed the closure of one of our three Taiwan facilities. with cost benefits expected to materialize beginning in Q2. This strategic move temporarily impacted overhead absorption in SSG in the first quarter, but sets the stage for improved margins going forward, without materially compromising our capacity for growth as the cycle advances. Our teams continue to make progress optimizing our global manufacturing presence with additional footprint consolidation efforts under way. Second, portfolio optimization. We're making targeted improvements to our product mix, focusing resources on our highest performing items and strategic growth categories. This disciplined approach contributed to our overall gross margin improvement and is helping us allocate capital more efficiently while maintaining our innovation edge.

Speaker Change: We've now completed the closure of one of our three Taiwan facilities with cost benefits expected to materialize beginning in Q2.

Speaker Change: This strategic move temporarily impacted overhead absorption in SSG in the first quarter, but sets the stage for improved margins going forward without materially compromising our capacity for growth as the cycle advances.

Speaker Change: Our teams continue to make progress optimizing our global manufacturing presence with additional footprint consolidation efforts underway.

Speaker Change: Second portfolio optimization.

Speaker Change: We're making targeted improvements to our product mix focusing resources on our highest performing items and strategic growth categories. This disciplined approach contributed to our overall gross margin improvement and that's helping us allocate capital more efficiently, while maintaining our innovation edge.

Mike Dennison: We continue to launch new products at record levels across our businesses, which is not only supporting near-term revenue stabilization, but also setting us up for long-term growth and expansion. Third, working capital management. We've continued to work on improving our supply chain practice. both in terms of ensuring proper inventory of high demand products as well as our broader sourcing strategies in light of the current tariff dynamic. and fourth, our cost reduction program. While the full impact of these actions will progressively build throughout 2025 toward our goal of realizing $25 million of cost savings across G&A and cost of goods within 2025, the actions taken to date give us confidence that more substantial benefits will materialize beginning in the second quarter and carry through the balance of Importantly, these actions represent more than just cost.

Speaker Change: We continue to launch new products at record levels across our businesses, which is not only supporting near term revenue stabilization.

Speaker Change: But also setting us up for long term growth and expansion.

Speaker Change: Third.

Speaker Change: Working capital management.

Speaker Change: We've continued to work on improving our supply chain practices. Both in terms of ensuring proper inventory of high demand products as well as our broader sourcing strategies in light of the current tariff dynamics at play.

Speaker Change: And fourth our cost reduction program, while the full impact of these actions will progressively build throughout 2025 towards our goal of realizing 25 million of cost savings across G&A and cost of goods within 2025, the actions taken to date give us confidence that more substantial benefits will materialize beginning.

Speaker Change: In the second quarter and carry through the balance of the year.

Speaker Change: Importantly, these actions represent more than just cost cutting, thereby strategically repositioning our business to operate more efficiently and offset temporary pressures from market conditions and tariffs.

Mike Dennison: They're about strategically repositioning our business to operate more efficiently and offset temporary pressures from market conditions. Combined with our strategic approach to diversify our business across segments, products, channels, and geographies, we're creating a resilient organization that can win even while extraneous market dynamics remain challenging.

Speaker Change: Combined with our strategic approach to diversify our business across segments products channels and geographies, we're creating a resilient organization that can win even while extraneous market dynamics remain challenging.

Speaker Change: And now turning to our segment performance.

Mike Dennison: And now turning to our segment performance. In our Powered Vehicles group, first quarter net sales were $122.1 million, representing an increase of 3.4% over the prior year quarter. This growth was primarily due to the expansion of our motorcycle business, which offset lower industry demand in our traditional power sports product line.

Speaker Change: And our powered vehicles group first quarter net sales were $122 1 million, representing an increase of three 4% over the prior year quarter.

Speaker Change: This growth was primarily due to the expansion of our motorcycle business, which offset lower industry demand in our traditional power sports product lines.

Mike Dennison: We were pleased to see our segment adjusted EBITDA margin improve sequentially by 50 basis points to 11.8% given strong cost controls and cost improvement. In the automotive sector, we're seeing signs of stabilization as premium truck OEMs work through Model Your Changeover. Our premium truck category continues to demonstrate resilience, even as the broader market remains constant. Tariff impacts on future demand are yet to be known. However, we believe the premium vehicle category is more insulated than the broader market.

Speaker Change: We were pleased to see our segment adjusted EBITDA margin improved sequentially by 50 basis points to 11, 8% given strong cost controls and cost improvement actions.

In the automotive sector, we're seeing signs of stabilization as premium truck Oems worked through model year Changeovers are premium truck category continues to demonstrate resilience, even as the broader market remains cautious.

Speaker Change: Tariff impacts on future demand are yet to be known however, we believe the premium vehicle category is more insulated than the broader market.

Speaker Change: Our return on motorcycles is long overdue and particularly exciting for our team given this is where it all started 50 years ago with Bob box in his garage.

Mike Dennison: Our return to motorcycles was long overdue, and particularly exciting for our team, given this is where it all started 50 years ago with Bob Fox and his... We already have a great roster of marquee customers with expansion to new customers planned for the future. These new motorcycle relationships are helping offset softness in other areas of power sports and demonstrate the enduring value of the Fox brand as the standard across any performance category. In our aftermarket applications group, we deliver both top-line growth and significant margin expansion, with net sales increasing 9.9% to $111.9 million from $101.9 million in a prior year period.

Speaker Change: We already have a greater a great roster of marquee customers with expansion to new customers plan for the future.

Speaker Change: These new motorcycle relationships are helping offset softness in other areas of power sports and demonstrate the enduring value of the Fox brand as the standard across any performance category.

Speaker Change: In our aftermarket applications group, we delivered both top line growth and significant margin expansion, while net with net sales increasing nine 9% to $111 9 million from 101 9 million.

Speaker Change: In the prior year period, the growth was driven by higher operating sales and increased demand for aftermarket products.

Mike Dennison: The growth was driven by higher upfitting sales and increased demand for aftermarket Like PVG, AAG has also improved adjusted EBITDA margin, delivering 15.2%, which represents a sequential step-up of 330 basis points and a cumulative improvement of 590 basis points since Q3 of 2025. The progress on margin improvement reflects the hard work of the entire AEG team to stay focused on executing the strategy while delivering improved profitability on our journey to return to best-in-class performance. The improvements we are seeing in AEG reflect a more targeted approach with our dealers, an improved vehicle mix which is better aligned to customer demand.

Speaker Change: Like PV G. E. G has also improved adjusted EBITDA margin, delivering 15, 2%, which represents a sequential step up of 330 basis points and a cumulative improvement of 590 basis points since Q3 of 2024.

Speaker Change: The progress on margin improvement reflects the hard work of the entire EG team to stay focused on executing our strategy, while delivering improved profitability on our journey to return to best in class profitability.

Speaker Change: The improvements we are seeing in AG reflect a more targeted approach with our dealers and improved vehicle mix, which is better aligned to customer demand, while high interest rates and elevated inventory levels continued to pose challenges to the broader market our ability to drive revenue and margin expansion in this environment speaks to our strategic focus and improved execution.

Mike Dennison: While high interest rates and elevated inventory levels continue to pose challenges to the broader market, our ability to drive revenue and margin expansion in this environment speaks to our strategic focus and improved execution. Our aftermarket components business continues to show strong performance with sustained growth in wheels and lift kits, reflecting the strength of our product pipeline and the ongoing work in our sales and marketing.

Speaker Change: Our aftermarket components business continues to show strong performance with sustained growth in wheels, and lift kits, reflecting the strength of our product pipeline and the ongoing work in our sales and marketing programs.

Mike Dennison: Importantly, the 1 plus 1 equals 3 strategy continues to enable AAG to deliver best-in-class product solutions to our enthusiast customers across all types of power vehicle platforms. creating sustainable value that builds on the intrinsic strength of our brand. In our specialty sports group, we delivered a top-line growth with net sales increasing 6.6% to $121 million from $113.5 million in a prior year period. Growth was strong across our bike business especially, as we are seeing early signs of normalizing inventory levels across the categories that we lead. Our Marucci business was stronger than forecasted as well, lifted by early success with new product launches and increased demand for our torpedo batch.

Importantly, the one plus one equals three strategy continues to enable AEG to deliver best in class product solutions to our enthusiast customers across all types of powered vehicle platforms, creating sustainable value that builds on the intrinsic strength of our brand portfolio.

Speaker Change: Yes.

Speaker Change: In our specialty sports group, we delivered a topline growth with net sales, increasing six 6% to $121 million from $113 5 million in the prior year period.

Speaker Change: Growth was strong across our bike business, especially as we're seeing early signs of normalizing inventory levels across the categories that we lead.

Speaker Change: Our marucci business was stronger than forecasted as well.

Speaker Change: Lifted by early success with new product launches and increased demand for our torpedo bets.

Mike Dennison: SSG segment adjusted to EBITDA margins decreased to 19.3%, which represents a temporary sequential decline from the 4th quarter of 2020. This EBITDA margin compression was anticipated in our outlook and primarily reflects seasonality, lower overhead absorption, and investments in product engineering.

Speaker Change: SSG segment, adjusted EBITDA margins decreased to 19, 3%, which represents a temporary sequential decline from the fourth quarter of 320 basis points.

Speaker Change: This EBIT margin compression was anticipated in our outlook and primarily reflects seasonality lower overhead absorption and investments in product engineering during.

Mike Dennison: During the quarter, we completed the consolidation of one of our three facilities in Taiwan to improve our utilization and drive lower overhead costs going forward. We expect to begin realizing the financial benefits of this consolidation in Q2. The year-over-year growth in SSG illustrates the success of our innovation strategy in both bike and baseball where new products and category expansion are increasing our addressable market by bringing our performance-defining technology to more enthusiasts, both seasoned veterans and new entrants. In Maroochee, we're making excellent progress as MLB's official BAT partner. We're seeing tremendous market interest in products, including the recent Fervor over the Torpedo Bat.

Speaker Change: During the quarter, we completed the consolidation of one of our three facilities in Taiwan to improve our utilization and drive lower overhead costs going forward.

Speaker Change: We expect to begin realizing the financial benefits of this consolidation in Q2.

Speaker Change: The year over year growth in SSG illustrates the success of our innovation strategy in both bike and baseball, where new products and category expansion or increasing our addressable market by bringing our performance defining technology to more enthusiast, both seasoned veterans and new entrants and marucci, we're making excellent progress as MLR.

Speaker Change: <unk> official bad partner, we're seeing tremendous market interest in products, including the recent ferber over the torpedo bad.

Mike Dennison: All of this, in large part, because of our relationship with the MLB, who has expanded our outreach capabilities to spread the word on Marucci Invictus and our ability to innovate in diamond spades. The Torpedo Bat serves as an example of a Halo product that creates enhanced consumer awareness for baseball and our brand's collectors. People who didn't follow baseball are now talking about baseball, and players at all levels want to use what their heroes use, creating a powerful connection between our brand and our community. While the first quarter didn't enjoy the benefit of a bat launch such as CaddX last year, we continued to build momentum through strategic investments in both baseball and our rapidly emerging softball business.

Speaker Change: All of this in large part because of our relationship with MLB, who has expanded our outreach capabilities to spread the word on rucci, invictus and our ability to innovate and diamond sports.

Speaker Change: The torpedo bat serves as an as an example of a halo product that creates enhanced consumer awareness for baseball and our brands collectively.

Speaker Change: People, who didn't follow baseball are now talking about baseball and players at all levels. Once you use with their heroes use creating a powerful connection between our brand and our customers.

Speaker Change: While the first quarter didn't enjoy the benefit of a bad launch such as Capex last year, we continued to build momentum through strategic investments in both baseball and are rapidly emerging softball business recently, we relaunched azure, a new fast pitch softball, bat, which is taking the market by storm and causing us to be sold out temporarily.

Mike Dennison: Recently we launched Azura, a new fast-pitched softball bat which is taking the market by storm and causing us to be sold out temporarily across numerous models. The softball market offers a large new opportunity, and we're in the very early innings of creating meaningful markets. By leveraging our combined Fox and Marucci engineering expertise, we're accelerating product innovations across premium performance brands.

Speaker Change: [noise] across numerous models.

Speaker Change: The softball market offers a large new opportunity and we're in the very early innings of creating meaningful market share by leveraging our combined Fox in Marucci engineering expertise, we are accelerating product innovations across premium performance brands, creating a stronger more resilient group of businesses that can capture additional growth over the long term.

Mike Dennison: creating a stronger, more resilient group of businesses that can capture additional growth over the long term.

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Speaker Change: Yeah.

Mike Dennison: Finally, I'll share some high-level comments on our outlook, which Dennis will review in more detail. Based on our first quarter performance, second quarter to date trending results, our latest forecast from our partners across all segments, and the current view of tariff implications on our supply chains, we are reaffirming our full year 2025 guidance. While we anticipate continued challenges in the broader market environment, our expectation still provides top and bottom line improvement year on year as we progress through the balance of 2025, with the benefits of our cost optimization initiatives becoming more tangible in the second quarter and building strength in the second half.

Speaker Change: Finally, I will share some high level comments on our outlook, which Dennis will review in more detail.

Dennis Schemm: Based on our first quarter performance second quarter to date trending results our latest forecast from our partners across all segments and their current view of tariff implications on our supply chains, we are reaffirming our full year 2025 guidance.

Dennis Schemm: While we anticipate continued challenges in the broader market environment, our expectation still provides top and bottom line improvement year on year as we progress through the balance of 2025 with the benefits of our cost optimization initiatives, becoming more tangible in the second quarter and building strength in the second half.

Mike Dennison: On tariffs, our teams are continuously analyzing the latest developments closely. And we're implementing mitigation strategies across, including cost reductions, commodity index-based adjustments, and price increases where appropriate. While our manufacturing footprint is well-positioned relative to these policy shifts, we recognize the potential for broader industry impacts and are working hard to be able to adapt accordingly.

Dennis Schemm: On tariffs our teams are continuously analyzing the latest developments closely and we're implementing mitigation strategies across including cost reductions commodity index based adjustments and price increases where appropriate while our manufacturing footprint is well positioned relative to these policy shifts we recognize the potential for <unk>.

Dennis Schemm: Our industry impacts and are working hard to be able to adapt accordingly.

Dennis Schemm: It is worth mentioning that we maybe August and many already.

Mike Dennison: It is worth mentioning that we, well, it may be obvious to many already.

Mike Dennison: We cannot control or predict consumer confidence in general, and our guidance doesn't contemplate any potential significant recessionary impacts associated with a longer-term tariff headwind, nor the potential long-term disruption of other companies' supply chains as they attempt to adjust their strategies to mitigate these issues. As we look ahead, we remain focused on what we can control, operational efficiency, innovation, and strategic growth initiatives that will drive long-term value for a shareholder. Our team continues to demonstrate resilience and adaptability, and I'm confident in our ability to build on sequential improvements we've delivered this quarter. positioning us to restore our best-in-class adjusted EBITDA margin profile.

Dennis Schemm: We cannot control or predict consumer confidence in general and our guidance doesn't contemplate any potential significant recessionary impacts associated with the longer term tariff headwind north potential long term disruption of other company supply chains as they attempt to adjust their strategies to mitigate these issues.

Dennis Schemm: As we look ahead, we remain focused on what we can control operational efficiency innovation and strategic growth initiatives that will drive long term value for our shareholders.

Dennis Schemm: Our team continues to demonstrate resilience and adaptability and I'm confident in our ability to build on sequential improvements we've delivered this quarter.

Dennis Schemm: <unk> us to restore our best in class adjusted EBITDA margin profile.

Dennis Schemm: And with that, I'll turn the call over to Dennis. Thanks, Mike, and good afternoon, everyone. I'll begin by discussing our first quarter financial results and then move to our discussion on the balance sheet, cash flow, and capital allocation strategy before concluding with a review of our guidance.

Dennis Schemm: And with that I'll turn the call over to Dennis.

Dennis Schemm: Thanks, Mike and good afternoon, everyone I'll begin by discussing our first quarter financial results and then move to our discussion on the balance sheet cash flow and capital allocation strategy before concluding with the review of our guidance.

Dennis Schemm: Q1 results total consolidated net sales in the first quarter of fiscal 2025 were $355 million, an increase of six 5% versus sales of $333 5 million in the same quarter last year, primarily reflecting growth across all segments.

Dennis Schemm: Q1 Results. Total consolidated net sales in the first quarter of fiscal 2025 were $355 million, an increase of 6.5%, versus sales of $333.5 million in the same quarter last year, primarily reflecting growth across all segments Our gross margin was 30.9% in the first quarter of 2025, consistent with the same quarter last year. Adjusted gross margin, which excludes the effects of amortization of acquired inventory valuation markup, was 30.9% compared to 32.3% in the prior year quarter, primarily because of the significant mix shift to power sports and away from automotive OE offset by our cost reduction initiative.

Dennis Schemm: Our gross margin was 39% in the first quarter of 2025, consistent with the same quarter last year.

Dennis Schemm: Adjusted gross margin, which excludes the effects of amortization of acquired inventory valuation markup was 39% compared to 32, 3% in the prior year quarter, primarily because of the significant mix shift to power sports and away from automotive OE offset by our cost.

Dennis Schemm: <unk> initiatives.

Dennis Schemm: Our sequential gross margin and adjusted gross margin increased 200 basis points and 170 basis points, respectively, supported by realization of our cost reduction initiative. Total operating expenses were $360 million, primarily impacted by a non-cash goodwill impairment charge of $262 million. The impairment was triggered by the decline in our stock. Excluding this impact are adjusted operating expenses as a percentage of net sales decreased approximately 30 basis points to 23.8% in the first quarter of 2025 compared to 24.1% in the same period last year. The company's tax benefit was $3.6 million in the first quarter of fiscal 2025, compared to a tax benefit of $1.3 million in the same period last year.

Dennis Schemm: Our sequential gross margin and adjusted gross margin increased 200 basis points and 170 basis points, respectively supported by realization of our cost reduction initiatives total operating expenses were $360 million, primarily impacted by a noncash goodwill impairment charge of 260.

Dennis Schemm: $2 million.

Dennis Schemm: The impairment was triggered by the decline in our stock price.

Dennis Schemm: Excluding this impact our adjusted operating expenses as a percentage of net sales decreased approximately 30 basis points to 23, 8% in the first quarter of 2025 compared to 24, 1% in the same period last year.

Dennis Schemm: The Companys tax benefit was $3 6 million in the first quarter of fiscal 2025 compared to a tax benefit of $1 3 million in the same period last year net loss in the first quarter of fiscal 2025 was $259 7 million or negative $6 in 'twenty.

Dennis Schemm: Net loss in the first quarter of fiscal 2025 was $259.7 million, or negative $6.23 per diluted share, compared to negative $3.5 million, or minus $0.08 per diluted share in the same period last year, primarily due to the goodwill impairment. Our adjusted net income was $9.8 million, or $0.23 per diluted share, compared to $11.9 million, or $0.29 per diluted share, in the first quarter last year. Adjusted EBITDA was $39.6 million for the first quarter of fiscal 2025 compared to $40.4 million in the same quarter last year. Adjusted EBITDA margin was 11.2% in the first quarter of 2025 compared to 12.1% in the first quarter of fiscal 2024.

Dennis Schemm: <unk> per diluted share compared to negative $3 5 million or minus eight cents per diluted share in the same period last year, primarily due to the goodwill impairment. Our adjusted net income was $9 8 million or <unk> 23 per diluted share compared to 11.

Dennis Schemm: <unk> 9 million or 29 cents per diluted share in the first quarter last year.

Dennis Schemm: Adjusted EBITDA was $39 6 million for the first quarter of fiscal 2025 compared to $40 4 million in the same quarter last year.

Dennis Schemm: Adjusted EBITDA margin was 11, 2% in the first quarter of 2025 compared to 12, 1% in the first quarter of fiscal 2020 for the decrease in the adjusted EBITDA margin was primarily driven by the mix shift in PPG from automotive OEM power sports offset by our continuous improvement effort.

Dennis Schemm: The decrease in the adjusted EBITDA margin was primarily driven by the mix shift in PBG from automotive OE to power sports, offset by our continuous improvement efforts.

Dennis Schemm: Moving to the balance sheet and cash flows for the first quarter ended April four 2025 inventory rose by $4 1 million or 1% compared to fiscal 2024 year end driven by purposeful increases to strengthen stocking positions in our aftermarket businesses within AEG to support.

Dennis Schemm: Moving to the balance sheet and cash flows. For the first quarter ended April 4, 2025, inventory rose by 4.1 million or 1% compared to fiscal 2024 year end, driven by purposeful increases to strengthen stocking positions in our aftermarket businesses within AAG to support demand and to build inventory in advance of the tariff impact. While we have driven down our prepaids and other current assets by over $26 million from Q4, largely due to the benefit of our AAG Chassis Inventory Optimization plans, overall working capital increased compared to the prior quarter due to the typical season builds from Q4 to Q1.

Dennis Schemm: Demand and to build inventory in advance of the tariff impact.

Dennis Schemm: While we have driven down our prepaid and other current assets by over $26 million from Q4, largely due to the benefit of our AG chassis inventory optimization plans overall working capital increased compared to the prior quarter due to the typical season builds from Q4 to Q1 I.

Dennis Schemm: I'd like to stress that working capital will continue to be an area of focus for us as we continue to focus on improving cash flow. Our revolver balance of April 4, 2025 was $163 million versus $153 million as of January 3, 2025. And our term loan balance was $547 million versus $552 million on January 3, 2025 net of loan fees. As we have mentioned during the past few calls, optimizing our capital allocation strategy with a focus on paying down debt is our number one priority for capital allocation. We continue to see a clear path to reducing our net leverage to approximately three times by year end.

Dennis Schemm: I'd like to stress that working capital will continue to be an area of focus for us as we continue to focus on improving cash flow our revolver balance at April four 2025 was $163 million versus $153 million as of January three 2025, and our term loan balance was $547 million versus.

Dennis Schemm: $552 million on January three 2025 net of loan fees.

Dennis Schemm: As we have mentioned during past few calls optimizing our capital allocation strategy with a focus on paying down debt is our number one priority for capital allocation.

Dennis Schemm: We continued to see a clear path to reducing our net leverage to approximately three times by year end.

Dennis Schemm: Now moving to the outlook for the second quarter and the full year 2025. We are reaffirming our guidance for the full fiscal year 2025, which reflects sales in the range of $1.385 billion to $1.485 billion, adjusted earnings per diluted share in the range of $1.60 to $2.60, and a full-year adjusted effective tax rate in the range of 15% to 18%. Underpinning our full-year guidance are several key assumptions that remain unchanged, including continued growth in AAG, a gradually stabilizing environment in PBG and bike, with performance consistent with 2024 levels in terms of absolute dollars. Continued momentum in Maroochee benefiting from our new MLB partnership taking effect and our upcoming schedule of exciting new bat launches both in softball and in baseball.

Dennis Schemm: Now moving to the outlook for the second quarter and the full year 2025.

Dennis Schemm: We are reaffirming our guidance for the full fiscal year 2025, with which reflects sales in the range of $1 385 billion to $1 48, 5 billion adjusted earnings per diluted share in the range of $1 60 to $2 60.

Dennis Schemm: And our full year adjusted effective tax rate in the range of 15% to 18%.

Dennis Schemm: Underpinning our full year guidance, our several key assumptions that remain unchanged, including continued growth in E. G.

Dennis Schemm: Gradually stabilizing environment, and PPG and bike with performance consistent with 2024 levels in terms of absolute dollars.

Dennis Schemm: Continued momentum in Maruti benefiting from our new MLB partnership taking effect and our upcoming schedule of exciting new bat launches, both in softball and baseball.

Dennis Schemm: Revenue and margin improvement weighted toward the second half of 2025 as OE customers normalized channel inventory and production schedules, and we've progressively realized benefits from our $25 million cost-out reduction plan. We continue to expect 30 to 35% of the savings to impact our first half earnings weighted towards the second quarter and the remainder coming in the second half. For the second quarter of fiscal 2025, we expect sales in the range of $340 million to $360 million and adjusted earnings per diluted share in the range of $0.32 to $0.62. Importantly, our guidance includes consideration for the direct effects of net cost impacts from the ongoing tariff developments, though the impact of tariff policies on consumer demand remains uncertain.

Dennis Schemm: Revenue and margin improvement weighted towards the second half of 2025 as OE customers normalized channel inventory and production schedules and we progressively realized benefits from our $25 million cost out reduction plan.

Dennis Schemm: We continue to expect 30% to 35% of the savings to impact our first half earnings weighted towards the second quarter and the remainder coming in the second half for the second quarter of fiscal 2025, we expect sales in the range of $340 million to $360 million and adjusted earnings per diluted share.

Dennis Schemm: And the range of 32 to.

Dennis Schemm: To 62 cents.

Dennis Schemm: Importantly, our guidance includes consideration for the direct effects of net cost impacts from the ongoing tariff developments.

Dennis Schemm: Impact of tariff policies on consumer demand remains uncertain.

Dennis Schemm: Overall, new and expanded tariffs will continue to pose significant challenges for our industry. We have quantified the potential gross impact of tariffs to be in the range of $50 million on a full year basis, which is approximately 5% of our cost of goods sold. So we clearly have exposure to terrorists, but I would add that our exposure is a relatively better position compared to others in our industry. Our team has been working hard to identify and action mitigation strategies, many of which, including supply chain mitigation and targeted pricing actions, are already underway. So as you consider our guidance reiteration today, I'd mention that we came into 2025 with a plan that was conservative given the broader macro uncertainty.

Dennis Schemm: Overall, new and expanded tariffs will continue to pose significant challenges for our industries. We have quantified the potential gross impact of tariffs to be in the range of $50 million on a full year basis, which is approximately 5% of our cost of goods sold.

Dennis Schemm: So we clearly have exposure to tariffs, but I would add that our exposure is relatively better position compared to others in our industry.

Dennis Schemm: Our team has been working hard to identify in action mitigation strategies, many of which including supply chain mitigation and targeted pricing actions are already underway. So as you consider our guidance reiteration today I'd mentioned that we came into 2025 with a plan that was conservative given the broader macro.

Dennis Schemm: Uncertainty while tariffs werent explicitly included in that build given the uncertainty at the time the wide range in EPS, we provided particularly at the lower end incorporated enough flexibility to accommodate various scenarios, including these tariffs effects are prudent planning approach combined with our <unk>.

Dennis Schemm: While tariffs weren't explicitly included in that build, given the uncertainty at the time, the wide range in EPS we provided, particularly at the lower end, incorporated enough flexibility to accommodate various scenarios, including these tariffs effects. Our prudent planning approach combined with our mitigation strategies and cost reduction initiatives gives us confidence in reiterating our full year guidance despite these headwinds. While we remain cautious about the near-term market environment given ongoing industry headwinds and tariffs, we are encouraged by the sequential margin improvements we've seen in both our AAG and PVG segments. These improvements, coupled with top-line growth across all three segments and the conviction in our new product launches in Marucci and Victor.

Dennis Schemm: Mitigation strategies and cost reduction initiatives gives us confidence in reiterating our full year guidance. Despite these headwinds while we while we remain cautious about the near term market environment, given the ongoing industry headwinds and tariffs.

Dennis Schemm: We are encouraged by the sequential margin improvements we've seen in both our AG and <unk> segments. These.

Dennis Schemm: These improvements coupled with top line growth across all three segments and our conviction in our new product launches and Maruti Invictus give us confidence in our ability to execute our operating plan and deliver on our financial commitments for the year, our strategic focus remains on improving margins and enhancing free cash.

Dennis Schemm: Give us confidence in our ability to execute our operating plan and deliver on our financial commitments for the year. Our strategic focus remains on improving margins and enhancing free cash flow generation through a comprehensive cost optimization and operational excellence initiative.

Dennis Schemm: <unk> generation through a comprehensive cost optimization and operational excellence initiatives. These initiatives along with our commitment to working capital efficiency position us well to strengthen our balance sheet and create long term value for our shareholders.

Dennis Schemm: These initiatives, along with our commitment to working capital efficiency, position us well to strengthen our balance sheet and create long-term value for our shareholders.

Mike Dennison: Mike, back to you for closing remarks. Thanks, Dennis. Our first quarter results demonstrate the early benefits of our strategic initiatives across all segments. As Dennis noted, the sequential margin improvements in PVG and AAG, coupled with strong SSG growth, validate our operational focus and execution. Our diversified portfolio provides multiple growth avenues despite uneven market conditions. The cost optimization actions we've taken are already delivering results and will continue building momentum through 2025. We remain focused on the core of our business, delivering premium, performance-defining products that resonate with enthusiasts while creating sustainable value for our shareholders.

Speaker Change: Back to you for closing remarks.

Mike Dennison: Thanks, Dennis our first quarter results demonstrate the early benefits of our strategic initiatives across all segments as Dennis noted the sequential margin improvements in PV G&A AG, coupled with strong SSG growth validate our operational focus and execution our diversified portfolio provides multiple growth avenues.

Speaker Change: Right uneven market conditions.

Speaker Change: The cost optimization actions, we've taken and are already delivering results and we will continue building momentum through 2025.

Speaker Change: We remain focused on the core of our business delivering premium performance defining products that resonate with enthusiasts, while creating sustainable value for our shareholders in closing.

Mike Dennison: In closing, I am incredibly proud of the Fox team. Our people have shown dedication, focus, creativity, and endless amounts of energy to continue to deliver on our objectives. With as much market volatility, customer chaos, and growing unease as exists today, it would be easy for the teams to lose focus, patience, and commitment. In a time when it is incredibly difficult to predict next year, let alone next quarter, we continue to remain resilient and optimistic about our ability to win. I couldn't ask for anything more as their leader.

Speaker Change: Im incredibly proud of the Fox team.

Speaker Change: Our people have shown dedication focus creativity and endless amounts of energy to continue to deliver on our objectives with as much market volatility customer chaos and growing unease as exists today it would be easy for the teams to lose focus patience and commitment in a time when it is incredibly difficult to predict next.

Speaker Change: Year, let alone next quarter.

Speaker Change: We continue to remain resilient and optimistic about our ability to win I couldn't ask for anything more as their leader with that operator. Please open the call for questions.

Unknown Executive: With that, operator, please open the call for questions. At this time, if you would like to ask a question, please press the star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. And once again, that is star 1 to ask a question.

Speaker Change: At this time, if you'd like to ask a question. Please press star one on your telephone keypad, you may remove yourself from the queue at any time by pressing star two and once again that is star one to ask a question. We will go first to James Duffy with Stifel. Please go ahead.

James Duffy: We'll go first to James Duffy with Stiefel. Please go ahead. Thank you. Hi, guys. Very nice execution against a really wild backdrop here.

James Duffy: Hi, Thank you hi.

Speaker Change: Hi, guys.

James Duffy: Sanjay I'm going against a really wild backdrop here I have two questions for you on the demand front and then a balance sheet question.

James Duffy: I have two questions for you on the demand front and then a balance sheet question.

Mike Dennison: Starting on the demand side, Mike, can you maybe speak to an update of what you're hearing from your bicycle OEM partners with respect to expectations for tariff influence on their business, any sort of pricing actions they might take and what they're hearing from their dealership partners? Yeah, Jim, good question. You know, it's a spectrum right across our OEM customers in bike, from the small folks to the much bigger folks. And it's also a spectrum from American based companies, Asian based companies and European based companies. So we're seeing a pretty wide degree of response to, you know, all the macro inventory levels as well as tariffs.

Speaker Change: Starting on the demand side, Mike can you maybe speak to an update of what you're hearing from your bicycle OEM partners with respect to expectations for tariff influence on their business any sort of pricing actions they might take and what they're hearing from their dealers.

James Duffy: Dealership partners.

James Duffy: Yes, Jim Good question, it's a spectrum right across our OEM customers and bike from the small folks to the much bigger folks and it's also a spectrum from American based companies Asian based companies and European based company. So we're seeing a pretty wide degree of.

James Duffy: Response to all the macro inventory.

James Duffy: Inventory levels as well as tariffs.

Mike Dennison: And so it's different levels of, you know, confidence. In general, we haven't seen any of the bike companies take down demand as a function of tariffs or as a function of a lessening consumer appetite for bikes. So the positive is, we haven't seen anything to the negative. We do see some companies faring slightly better in the environment as you would. And of course, in Europe, you know, Europe is a whole different answer or discussion than the US is. So on the whole, we're very confident or very positive on what we've seen so far. I think it's the early days.

James Duffy: So it's different levels of <unk>.

James Duffy: Confidence in general we haven't seen any of the bike companies take down demand is a function of tariffs or is a function of a lessening consumer appetite for Mike. So the positive is we havent seen anything thats. The negative we do see some companies very slightly better and the environment as you would and of <unk>.

James Duffy: In Europe, Europe, as a whole different answer or discussion than the U S. So on the whole. We're very confident are very positive on what we've seen so far I think it's still early days I mean, let's get into Q3 and Q4 to see how the back half of the year.

James Duffy: I mean, let's get into, you know, Q3 and Q4 to see how the back half of the year looks. But we're benefiting from some great product launches and from some pretty enthusiastic customers right now, and we're kind of riding that wave. Great, I appreciate that perspective.

James Duffy: Looks.

James Duffy: We're benefiting from some great product launches and from some pretty enthusiastic customers right now are kind of riding that wave.

Speaker Change: Great I appreciate that perspective.

James Duffy: I wanted to ask on the upfitting business, very encouraging to see growth there.

Speaker Change: I wanted to ask on the updating business very encouraging to see growth there can.

Mike Dennison: Can you call out some of the key drivers and give us an update on what you're seeing with dealer relationships and how you're thinking about prospects for that upfitting business in coming quarters? Yeah, a lot of that is execution and starts at the product level. So getting the right products in the market, you know, there is consumer demand, but you've gotten, Jim, I've said this before, you know, to you, you've got to make sure you're delivering the right products at the right price point in our outfit business. And the team has done a I've done a great job making sure that we're delivering those products.

Speaker Change: Can you call out some of the key drivers and give us an update on what youre seeing with dealer relationships.

Speaker Change: How youre thinking about prospects for that uptake business in coming quarters.

Speaker Change: Yeah, a lot of that is execution and it starts at the product level, so getting the right products in the market. There is consumer demand, but you've gotten Jim I've said this before to you you've got to make sure youre delivering the right products at the right price point in that business and the team has done I have done a great job.

Speaker Change: Making sure that we're delivering those products.

Mike Dennison: The dealer count and adding new dealers has also helped us, so we've got a few factors kind of working in our favor as we enter this year. We've gotten a better mix of Shelby's, I'd say as well, with better Lariat's out of Ford. So all in all, between product mix, better execution, better sales strategy, and better dealer development, we're seeing that in the numbers.

Speaker Change: Did the dealer count and adding new dealers has also helped us. So we've got a few factors kind of working in our favor.

Speaker Change: As we entered this year.

Speaker Change: And we've gotten a better mix of Shelby's, I'd say as well with better Larry it's out of forward. So all in all between product mix better execution, better sales strategy and better dealer development.

Speaker Change: We're seeing that in the numbers.

James Duffy: Great to see and kudos to the team for that.

Great.

James Duffy: Kudos to the team for that and then Dennis just one for you I think both you and I are watching the balance sheet closely you made great progress on the prepaid.

James Duffy: And then Dennis, just one for for you. I think both you and I are watching the balance sheet closely. You made great progress on the pre page. I'm hoping you can speak in more detail to the quality of your inventory. Can you maybe size the advanced build contributions and speak to any opportunities for inventory to be potentially be a source of cash in coming quarters? Yeah, that's a great question. And so working capital is, you know, one of my top priorities for 2025. Free cash flow is the other for sure. And so when we are thinking about inventory, we were very, very purposeful, strategic about where those builds would occur.

James Duffy: Hoping you can speak in more detail to the quality of your inventory can you maybe size the advanced build contributions and speak to any opportunities for inventory to be potentially be a source of cash in coming quarters.

Dennis Schemm: Yes, that's a great question and so working capital is one of my top priorities for 2025 free cash flow is the other for sure and so when we are thinking about inventory. We are very very purposeful strategic about where those builds would occur and we were pinpointed.

Dennis Schemm: And we were pinpointed in getting more stocking position, favorable stocking positions for aftermarket businesses, particularly in sport truck, ride tech, custom wheelhouse, and making sure that we had the right levels of inventory to support that demand there. As we move forward, we're going to continue to look for opportunities to right size and optimize across the businesses. So I feel really, really good about the focus. And you know, that's one of the things that Mike keeps pointing out is the focus that the teams are more focused than ever before, on free cash flow generation, and improving EBITDA margin percent.

Dennis Schemm: And then getting more stocking position favorable stocking positions for our aftermarket businesses, particularly in sport truck right Tech custom wheelhouse, and making sure that we have the right levels of inventory to support that demand there as we move forward, we're going to continue to look for opportunities to rightsize and optimize across the businesses.

Dennis Schemm: I feel really really good about the focus and that's one of the things that Mike keeps pointing out as a focus.

Dennis Schemm: The teams are more focused than ever before on free cash flow generation.

Dennis Schemm: And improving EBITDA margin percent and so it's great to see that showing up in our sequential results.

James Duffy: And so it's great to see the showing up in the sequential results.

James Duffy: Excellent. Thank you, guys. Best of luck. Hey, Jim.

Jim: Excellent. Thank you guys best of luck, Hey, Jim Hey, Jimmy you can't get off the call with honest and congratulations on your retirement youre going to be missed.

Mike Dennison: Hey, Jim, you can't get off the call without us saying congratulations on your retirement. You're going to be missed, my friend. You're going to be missed. Oh, thank you so much. Yeah, it's been a pleasure to work with you. I very much appreciate your support for the franchise. With Peter giving continuity, you can expect Stiefel's coverage remains strong. Well, we hope to talk to you along the way, so don't be a stranger. Very good. I look forward to staying in touch. Thanks, Mike.

Jim: Alright. Thank you so much yeah, it's been a pleasure to work with you I very much appreciate your support for the franchise with Peter given continuity you can expect.

Jim: Stifel has coverage remains strong.

Jim: Well, we hope to talk to you along the way so don't be a stranger.

Jim: Very good and I look forward to staying in touch.

Unknown Executive: And next we'll go to Larry Solow with CJS Securities. Please go ahead. Yes, hi, it's Pete Lucas for Larry. You guys covered a lot of my questions.

Speaker Change: And next we'll go to Larry Solow with CJS Securities. Please go ahead.

Speaker Change: Yes, Hi, it's Pete Lucas for Larry.

Speaker Change: You guys covered a lot of my questions. Just I guess curious about your efforts outside of the United States. A few quarters back you highlighted some of the international opportunities in particular on the auto OEM and up fitting side. Just wondering if you had any updates on that front in terms of new product development and OEM partnerships or anything we should know about there.

Pete Lucas: Just, I guess, curious about your efforts outside of the United States. A few quarters back, you highlighted some of the international opportunities, in particular on the auto OEM and upfitting side.

Mike Dennison: Just wondering if you had any updates on that front in terms of new product development, OEM partnerships, or anything we should know about there? Yeah, I mean, a lot of continued development in that area. Obviously, we've been focused on what's happening in the US as well. So a lot of focus in the US. But, you know, one of the things that's interesting, Peter, is that as you think about like wheels as an example, wheels are a tariffed item coming from Asia to the US. What what's helped us is the fact that our method wheel business in the custom wheelhouse.

Speaker Change: <unk>.

Speaker Change: Yes, I mean, a lot of continued development in that area. Obviously, we've been focused on what's happening in the U S. As well so a lot of folks in the us, but you know one of the things Thats interesting Peter.

Speaker Change: And as you think about like wheels, as an example wheels or a tariff to item coming from Asia to the U S.

Speaker Change: What what's helped US is the fact that our method wheel business and the custom wheelhouse business is an international business and we can sell wheels. Both here in the U S and in Australia Middle East and other places so.

Mike Dennison: is an international. And we can sell wheels both here in the U.S. and in Australia, Middle East and other places. So having the ability to expand and grow globally has been a nice step up for us in ability to have diversification geographically. Also, one of our biggest growing bike customers is a Chinese company. So expanding our relationships even in China, which is a difficult conversation right now as you can imagine, but expanding those relationships gives us that diversity. So whether it's an upfitted truck, a wheel, baseball bats in Japan, which are booming, or even the bike business in China, we absolutely are leveraging that international growth to help offset any issues here in the U.S.

Speaker Change: and other places. So, having the ability to expand and grow globally has been a nice step up for us in a ability to have diversification geographically.

Also, one of our biggest growing bike customers.

is a Chinese company.

Speaker Change: So, expanding our relationships even in China, which is a difficult conversation right now, as you can imagine, but expanding those relationships gives us a diversity. So, whether it's an upfitted truck, a wheel, baseball bats in Japan which are booming.

Speaker Change: or even the bike business in China, we absolutely are leveraging that international growth to help offset any issues here at home.

Pete Lucas: Great, thanks.

Pete Lucas: And then just one last follow up.

Speaker Change: Great, thanks, and then just one last follow up. I'm just wondered any updates on the Gainesville plant, anything special going on there?

Pete Lucas: Just wondered any updates on the Gainesville plant? Anything special going on there? just to basically just general update. Yeah, you know, one thing I'll call out, and it wasn't in a prepared remarks or one that I had thought of until you just asked the question, but you know, one of the things about tariffs is insourcing or resourcing production back to the U.S. from offshore, and one of the things the team in Gainesville has done a fantastic job on is moving that insourcing up by about 1,000 basis points from 60% to 70% on machine parts moved into Gainesville.

Basically just general updates.

Mike Dennison: So, you know, that ability to move inside our four walls versus doing it outside of our four walls has been a really important, not tied to tariffs, it was actually happening naturally and organically before tariffs, but that change over the last year is significant for our ability to respond and support our customers without some of the So, Gainesville's doing well, you know, we recently moved Toyota to Gainesville and it's going fantastic. So, you know, from my perspective...

Moved into Gainesville, so, you know, that ability to move...

Speaker Change: Inside our four walls versus doing it outside of our four walls has been a really important, not tied to tariffs. It was actually happening naturally and organically before tariffs, but that change over the last year is significant for our ability to respond and support our customers without...

Speaker Change: Some of the significance of tariffs. So, Gainesville is doing well. You know, we've recently moved Toyota to Gainesville and it's going fantastic. So, you know, from my perspective,

Mike Dennison: It's been a long road getting Gainesville to where it is now, but I'm really proud of the team for making it. Yeah, and it's a great point because one of the things that you saw in the numbers, we talked about the significant mix shift in that impact on gross profit. Well, sequentially, however, you saw the team improve 50 basis points. quarter to quarter, that is exactly the cost improvement work that Mike is talking about and it's flowing through. Extremely helpful. Thanks. I'll jump back in the queue. Thank you.

Speaker Change: I've spent a long road getting Gainesville to now to where it is now, but I'm really proud of the team for making that progress.

Speaker Change: Yeah, and it's a great point because one of the things that you saw in the numbers, we talked about the significant mixed shift in that impact on Gross Profit. Well sequentially, however, you saw the team improve 50 basis points.

Speaker Change: Quarter to Quarter. That is exactly the cost improvement work that Mike is talking about and it's flowing through.

They're extremely helpful, thanks. I'll jump back in the queue.

Michael Schwartz: And next we'll go to Michael Schwartz with Truist Securities.

Michael Schwartz: Please go ahead. Hey, guys. Good evening. Maybe just to touch on the tariffs. I know there's a ton of uncertainty, and I appreciate you guys kind of framing the gross impact. But as we look at 2025, just a little more color on your ability to absorb or offset that. I would assume that we're talking probably a half-year impact, so maybe $25 million-ish on a gross basis. Maybe just run through how exactly you're going to go about offsetting that. Yeah, I mean, that's about a hour long conversation, Mike. So let me give you the highlights and see if we can cover as much as we can.

Hey guys, good evening. Maybe, maybe just a...

Speaker Change: Maybe just a touch on the tariff and I know there's a ton of uncertainty and...

Speaker Change: So the 20 maybe 25 million ish on a gross basis. Maybe just run through You know how exactly you're going to go about offsetting that

Speaker Change: Yeah, I mean, that's about an hour long conversation, Mike, so let me give you the highlights and see if we can cover as much as we can. You know, it's different by business. So, you know, whether it's PVG or our customer health businesses I mentioned earlier or baseball.

Mike Dennison: You know, it's by it's different by business. So you know, whether it's PVG, or our custom wheelhouse business, as I mentioned earlier, or baseball, you really have kind of three different strategies, and probably 20 different actions associated But on the whole, you know, some of it comes down to commodity price index changing. So, you know, aluminum tariffs are a function of commodity indexing. That flows through to our OEMs. You know, we're working with our OEMs to mitigate as much of that as possible. And it's not an easy conversation, so don't get me wrong. It's not like we just change the price tomorrow and off we go.

Speaker Change: You really have kind of three different strategies and probably 20 different actions associated with those different businesses.

Speaker Change: But on the whole, some of it comes down to commodity price index changing, so aluminum tariffs or a function of commodity indexing, that flows through our OEMs.

Speaker Change: We're working with our OEMs to mitigate as much of that as possible, and it's not an easy conversation, so don't get me wrong, it's not like we just change the price tomorrow and off we go, but those conversations are happening, we're having some good success with those OEMs as we work through that aluminum tariff issue.

Mike Dennison: But those conversations are happening. We're having some good success with those OEMs as we work through that aluminum tariff issue. Some of it's insourcing or resourcing, as I mentioned earlier. That work is longer in duration to get done, but obviously it's something that we had started before tariffs and will continue to drive. In baseball, we started a manufacturing facility in Taiwan, not us, it's a partner of ours that has a manufacturing facility, so we've moved some baseball bats to Taiwan. We've also moved some finishing of baseball bats in both composites and aluminum to both Baton Rouge and to Scottsdale, so we actually moved some of that onshore to reduce some of the impact.

Speaker Change: Some of it's in sourcing or resourcing as I mentioned earlier that work is longer in duration to get done but obviously it's something that we have started before tariffs and we'll continue to drive

Speaker Change: Baton Rouge and Disgustdale. So, we actually moved some of that onshore to reduce some of the impact of tariffs in that scenario.

Mike Dennison: In wheels, we had already had a strategy to move a good chunk of our wheel business outside of China to other locations in Asia. Wheel manufacturing is predominantly an Asian activity. It doesn't happen here in the U.S., so it would be hard to move that onshore. But a lot of that work started before the tariffs, as I mentioned, and we'll continue to drive it going forward. So from a supply chain and manufacturing footprint, again, keep in mind, most of our manufacturing as you know, is in the U.S. or, you know, on the continent. We're not sitting too bad, and we've done a lot of really hard work.

Speaker Change: Wheel of Manufacturing is predominantly an Asian activity. It doesn't happen here in the US, so it would be hard to move that on short.

Speaker Change: and a lot of that work has started before the terrorist, as I mentioned, and will continue to drive it going forward. So, from a supply chain and manufacturing footprint, again, keep in mind, most of our manufacturing footprint, as you know, is in the U.S. or on the continent.

Mike Dennison: very well against moving as much as they can and mitigating as much as they can. They'll continue to do that work. We're in early innings of this game. As you know, we're in the first inning and we need to get through eight more. So far, you know, very positive. The second half of the tariff thing is really not about supply chain and manufacturing, it's about how does your brand withstand tariffs, how does that hold up, or your set of brands, and then how does the consumer demand look. Consumer demand I'm not going to spend much time talking about because as you mentioned and we all know, it's pretty hard to call the ball on consumer demand.

Speaker Change: They all continue to do that. We're early innings of this game. As you know, we're the first inning and we need to get through more.

Speaker Change: So far, you know, very positive and will have accomplished your success.

Mike Dennison: We'll have to wait and see what inflationary issues occur, what recessionary issues occur. We're not going to try to contemplate that, but our brand strength really resonates here in the U.S. with being, whether it's Maruji, Victus, Fox, or others. It's very much an American brand story, and I think we get the benefit of that American brand story with our... So, we're seeing some tailwinds associated with that.

Speaker Change: of those kinds of things. So we're not going to try to contemplate that, but our brand strength really resonates here in the US with being whether it's Maruji, Victus, Fox, or others.

Speaker Change: Very much an American brand story, and I think we get the benefit of that American brand story with our enthusiasts and our customers, so we're seeing some tail wind associated with that.

Speaker Change: as we move through this. So, again, yeah, at the gross level, a pretty big number. Not something we take lightly, but a lot of work by a lot of people in this company to try to drag that number down. And we'll keep working it, and we'll keep you guys, you know, a praise of how we're doing, quarter by quarter as we go through.

Mike Dennison: and we'll keep working it and we'll keep you guys, you know, appraised of how we're doing quarter by quarter.

Thanks for listening.

Michael Schwartz: Okay, that's super helpful.

Speaker Change: Okay, that's super helpful. And then second question, just I know I'm going to get this question so I'm just going to ask it. Given that you came in above the high end of your revenue range, did you see any discernible, maybe pull forward in the corner from people trying to buy ahead of tariffs, to buy ahead of price increases?

Michael Schwartz: And then second question, just I know I'm going to get this question. So I'm just going to ask it.

Michael Schwartz: Given that you came in above the high end of your revenue range, did you see any discernible maybe pull forward in the quarter from people trying to buy ahead of tariffs to buy ahead of price increases? Great question. No, not really. I mean, we saw a few pull-ins, but they were really tie-border product launches. You know, we've got a lot of product launches this year, and they tend to sometimes sit right around quarters in, you know, pivoting from one quarter to another. And we saw some of that, you know, power happen more maybe in Q1 versus Q2.

Speaker Change: Great question. No, not really. I mean, we saw a few pull-ins, but they were really tied more to product launches. You know, we've got a lot of product launches this year, and they tend to sometimes sit right around quarters in, you know, pivoting from one quarter to another.

Mike Dennison: But on the whole, not a lot of buying ahead of anything. So, you know, maybe we see that in Q2. I haven't seen it yet, but maybe we see that in Q2 as we get closer to kind of that second half of the year, where maybe more tariff impact could be. But so far, no, we're feeling pretty good about where we are.

Speaker Change: But, so far? No, we're feeling pretty good about where we are.

Michael Schwartz: Awesome. Thank you.

Awesome. Thank you.

Anna Glaessgen: Perfect, and next we'll go to Anna Glaessgen with B. Reilly Securities. Please go ahead. Good afternoon. Thanks for taking my question. I'd like to piggyback on Mike's question, touching on tariffs, thinking about the indirect impact for further down the supply chain from you. Within the bike business, are you generally within Asia shipping within Taiwan and then therefore subject to that reciprocal tariff down the line? Or your partners are? Or is there anything to note that's being shipped from China? No, nothing significantly shipped from China. In the bike business, you know, we deliver to our OEMs on the island.

Speaker Change: Perfect, and next we'll go to Anna Glaessgen with B. Riley Securities. Please go ahead.

Anna Glaskin: Good afternoon, thanks for taking my question. I'd like to piggyback on Mike's question, touching on tarot.

Anna Glaskin: Thinking about the indirect impact for further down the supply chain from you within the bike business.

Speaker Change: Are you generally within Asia, shipping within Taiwan, and then therefore subject to that reciprocal tariff down the line? Or your partners are, or is there anything to note that's being shipped from China?

Speaker Change: No, nothing significantly shipped from China. In the bike business, you know, we delivered our OEMs.

Speaker Change: on the island. So then the OEMs typically bring it across either Europe or the U.S. and obviously the tariff conversation is very different, but you're talking about Europe or the U.S. where we have a little bit more direct tariff impact would be in our aftermarket businesses. In that scenario, we've actually done a pretty good job of building inventory and advance of the tariff to give us some buffer.

Mike Dennison: So then the OEMs typically bring it across to either Europe or the U.S. And obviously the tariff conversation is very different, whether you're talking. Europe Review. Where we have a little bit more direct tariff impact would be in our aftermarket businesses. In that scenario, we've actually done a pretty good job of building inventory in advance of the tariffs to give us some buffer. And all that's factored into our thinking for the back half of this year. But generally speaking, you know, we work with our OEMs to help them be successful in this environment, more so than a direct.

Speaker Change: and all that's factored into our thinking for the back half of this year. But generally speaking, we work with our oliums to help them be successful in this environment more so than a direct impact

Mike Dennison: Got it. Thanks. And then within the prepared remarks, you talked about improving the product mix and that helping margin. Can you elaborate a little bit more on if that was a few rationalization or shifting the mix and if that was concentrated to any one segment? across the segments. You know, as part of our cost initiatives and as part of our look at the business to make sure we're driving the most profitable parts of our business and allocating capital to the most profitable parts of our business. We spend a lot of time looking at our catalogs and the different things that we're doing.

Speaker Change: Got it. Thanks. And then within the prepared remarks, you talked about improving the product mix and that helping margin. Can you elaborate a little bit more on if that was a few rationalization or shifting the mix and if that was concentrated to any one segment?

Speaker Change: Allocating Capital, the most profitable parts of our business. We spend a lot of time looking at our catalogs and the different things that we're doing. And really focusing on, you know, if we're going to innovate and if we're going to spend the money for innovation, let's make sure it's at the right product level and serving the right consumer demand.

Mike Dennison: And really focusing on, you know, if we're going to innovate and if we're going to spend the money for innovation, let's make sure it's at the right product level and serving the right consumer demand. So it's pretty much across the board. I would say there's, you know, some highlights both in PVD and the vehicle makeup in bike. You know, some of our product launches happening in Q1 and Q2 are at the very high end of the range, probably higher than we've been before in some of our forks, in some of our new technologies. So, you know, we're really focusing on that kind of ultra premium level right now, and that seems to be serving us well.

Speaker Change: So it was pretty much across the board. I would say there's some highlights both in PVD and the vehicle makeup in bike. Some of our product launches happening in Q1 and Q2 are at the very high end of the range. Probably higher than we've been before in some of our forks and some of our new technologies. So...

Speaker Change: You know, we're really focusing on that kind of ultra premium level right now and that seems to be serving as well and then just broader expansion of portfolio and things like, you know, wheels where we have the raised wheel category now not just the method wheel category so you know trying to create a more diversified product portfolio on the higher end of the different brands and platforms giving us some [inaudible]

Anna Glaessgen: And then just broader expansion of portfolio and things like, you know, wheels, where we have the raised wheel category now, not just the method wheel category. So, you know, trying to create a more diversified product portfolio on the higher end of the different brands and platforms. giving us some ability to pivot and move as we kind of go through this, you know, volume. Great, thanks guys.

Speaker Change: some ability to pivot and move as we can go through this volatility.

Great, thanks guys.

Unknown Executive: Thank you.

Thank you.

Bret Jordan: Next we'll go to Bret Jordan with Jeffreys, please go ahead. Hey, guys, good afternoon. On the PVG side, I think last quarter, you called out a lot of motorcycle manufacturers you're now doing business with maybe BMW and Triumph and I think Ducati and you've mentioned the motorcycle businesses up. How much of the PVG growth was sort of infill orders with new customers on that motorcycle side. selling, you know, sort of organic sales. Best way to answer that, Bret, is on the automotive side, as as forecasted, so we had forecasted a bit of a lower automotive quarter, just from a standard, not not because of tariffs, obviously, we didn't have tariffs back in our original forecast anyway.

Speaker Change: Next, we'll go to Bret Jordan with Jeffries. Please go ahead.

Brett Jordan: Hey, good guy. Hey, guys. Good afternoon. On the PVG side, I think last quarter, you called out a lot of motorcycle manufacturers. You're now doing business with maybe VMW and Triumph, but I think you Kai, and you mentioned the motorcycle businesses off. How much of the PVG growth was...

Brett Jordan: sort of infill orders with new customers on that motorcycle side versus selling, you know, sort of organic sales growth.

Brett Jordan: Best way to answer that, Bret, is on the automotive side.

Brett Jordan: As forecasted, so we had forecasted a bit of a lower automotive quarter just from a stand, not because of tariffs obviously we didn't have tariffs back in our original forecast anyway.

Mike Dennison: But we expected the Q1 to be a little lighter on the automotive side. So you have that piece. And then on the power sport side, we continue, we expected continued softness and saw it in power sports. So that has not disappointed, if you will, probably the wrong word to use. But that's what I'll use. It's gotten softer as expected. And and really motorcycle has offset more than offset some of that softness in power sports. So, you know, automotive was kind of right where we thought it would be. Power Sports was soft as we expected it to be.

Brett Jordan: But we expected the Q1 to be able to lighter on the automotive side [inaudible]

Brett Jordan: So you have that piece and then on the power sports side, we expected continued softness inside in power sports so that has not disappointed, if you will, probably the wrong word to use but that's what I'll use, it's gotten softer as expected and really motorcycle has offset.

Mike Dennison: And motorcycle picked up the difference, especially in in that space.

Mike Dennison: Aftermarket was up. So our aftermarket businesses, as you can imagine, you know, when when when interest rates are high, and people can't buy new trucks, they tend to fix the trucks they've got. And so aftermarket tends to do well in that it did well in forcing q q1. And we expected to do pretty well in q2.

Brett Jordan: They tend to fix the trucks they've got. And so aftermarket tends to do well in that, it did well in force in Q1, and we expect it to do pretty well in Q2 as well.

Speaker Change: Okay, and then we can remind us of the seasonality of our Ritchie, you know, I sort of didn't imagine it would sell in as the start of baseball season and peak early, but it is that doesn't seem to be the case that you call that bikes were the strong piece of SSG.

is, you know, how do we think about...

Speaker Change: Yeah, you've got seasonality a little bit wrong. Keep in mind, seasonality is a function of kind of the seasons of baseball or softballs and maybe, but it's also about the seasonality of product lunches. And most of the time, you launch like our Azura bat as an example.

Speaker Change: Early launches get out there on the field, get them in players' hands and things like that and that happens in kind of Q1, Q2, probably majority Q2.

when baseball season starts

Mike Dennison: Okay, and we're talking a lot about the benefit of being able to market with MLB as the as the official bat. And obviously, that MLB marketing would start with the season, it doesn't, your sales don't really tie or line up necessarily with that MLB season sponsorship. Not necessarily. The MLB sponsorship does a lot for us, and that starts obviously early in the season, Q1, but that's at the player level, the pro level. We're already very invested. We have 56% market share with the pros, so our relationship into the MLB season is fairly baked even before Q1.

Speaker Change: Okay, we're talking a lot about the benefit of being able to market it with MLB as the as the official bat. And obviously that MLB marketing would start with the season. It doesn't your sales don't really tie or line up necessarily with that MLB season sponsorship. Thank you.

Speaker Change: Not necessarily the MLB sponsorship does a lot for us and that starts obviously early in the season Q1 but that's at the player level the pro level we're already very invested you know we have 56% market share with the pros so our relationship into the MLB season is fairly baked even before Q1.

Mike Dennison: And what MLB is really helping us is not only create that brand awareness at the MLB level, it's pushing it all the way down into our Little League businesses and even, frankly, into softball. So we're using that leverage to help us grow those businesses, and as we go through the season of MLB and filling the orders for bats at the stadium level, a whole different business profile, which is more souvenir-based, that starts to pick up steam as we go into the year. So preseason, not so big. You get them in the main season, Q2, Q3, and then finally in Q4 we're...

Speaker Change: and what MLB is really helping us is not only create that brand awareness at the MLB level, is pushing it all the way down into our little league of businesses and even frankly into softball. So, you know, we're using that leverage to help us grow those businesses, and as we go through the season of MLB and filling the orders for bats at the stadium level, all different, all different business profile, which is more souvenir based, that starts to pick up steam as we get, you know,

as we go into the year. So start, you know, [inaudible]

Speaker Change: Pre-season, not so big. You get them in the main season, Q2, Q3, and then finally in Q4 with the, you know, October , kind of a different conversation. But early in Q1, not as big of an effect. What's interesting about it, and I'll just throw this out there. What's interesting about Q1?

Mike Dennison: October, kind of a different conversation. But early in Q1, not as big of an effect.

Mike Dennison: What's interesting about, and I'll just throw this out there, what's interesting about Q1 was the demand we saw with the torpedo bat almost instantaneously. Like an overnight, all of a sudden it was a whole new ballgame. That was not expected, frankly, and we pivoted pretty hard to fulfill that demand as it came across. Obviously, we didn't expect the Yankees to do what they did to create all that positive noise for us, but the team did well and pivoted, and that did drive some demand. Doesn't make legacy inventory obsolete though, right? doesn't does not and not every player is going to go to a torpedo bat so you know there's there's a few that seem to do really well with them but there's a lot that still uses all the rest of our wood bats.

Was

Speaker Change: The man we saw with the torpedo bat almost instantaneously, like an overnight all of a sudden there was a whole new ballgame excuse the pun that that was

Speaker Change: Not expected, frankly, and we pivoted pretty hard to fulfill that demand as it came across. Obviously, we didn't expect the Yankees to do what they did to create that all that positive noise for us, but the team did well and pivoted, and that did drive some demand in Cuba.

Doesn't make legacy inventory obsolete, though, all right?

Speaker Change: It does not, and not every player is going to go to a torpedo bat. So, you know, there's a few that seem to do really well with them, but there's a lot that still uses all the rest of our wood beds.

All right, thanks

Bret Jordan: Thank you.

Scott Stember: And next we'll go to Scott Stember with Ross MKM. Please go ahead. Good afternoon. Thanks for taking the time, guys. Yeah, certainly back to, I guess, Bret's question, I guess, trying to parse out SSG in the quarter. Could you just size up which one grew faster? Maybe give us just some rates, just trying to get a sense of the direction of each one of them, at least coming out of the first quarter. Yeah, we don't want to give out necessarily rates on each individual product line. But I would tell you that both of them actually surprised us to our forecast, so that both of them beat the forecast to the upside.

Scott Stimber: Thank you and next we'll go to Scott Stember with Roth MKM, please go ahead.

Good afternoon, thanks for taking my time guys.

Scott Stimber: Scott? Yes, certainly back to, I guess, a Bret's question, I guess, trying to parse out SSG in the quarter. Could you just size up which one grew faster, maybe give us just some rates? Just trying to get a sense of the direction of each one of them, at least coming out in the first quarter.

Scott Stimber: Yeah, we don't want to give out necessarily rates on each individual product line, but I would tell you that bike, you know, both of them actually surprised us to our forecast so that both of them beat the forecast to the upside.

Mike Dennison: Bike had a really good revenue quarter. really impressed with what we saw. And I think that points to, Scott, some stabilization that we've been looking for for a long time. We've talked a lot for a lot of quarters about looking for stability in bike and, you know, potentially recovery. You know, right now I'm comfortable saying stability is where we are. We've stabilized and we'll start talking recovery as we get into Q2, Q3, and Q4. But a real, you know, a real good quarter for us on the bike side and the team was smiling. It's been a while, so it was really nice to see the team.

Bye, bye Kennon at a really good revenue quarter.

Scott Stimber: really impressed with what we saw it. I think that points to…

in bike and potentially recovery.

Scott Stimber: You know, right now I'm comfortable saying stability is where we are, where we've stabilized and we'll start talking recovery as we get into Q2, Q3 and Q4.

Scott Stimber: Got a real, you know, a real good quarter for us on the bike side, and the team was...

Scott Stimber: Smiling. It's been a while, so it was really nice to see the team.

Mike Dennison: We've had a positive view over the rest of the year and the product launches that we've got coming. really impressed with the bike business. And again, Marucci, you know, we expected it to be a down quarter because we didn't have the Cad-X launch in the Q1 period. That's a big launch, hard to overcome that. The year-on-year comp is pretty tough. But with some of the other launches they had, and with the Torpedo Bat and some other things, they did a real nice job beating their numbers. And, you know, that business continues to grow and expand throughout the year.

Scott Stimber: with some positive view of the rest of the year and the product launches that we've got coming.

It's a really impressive bike business. And again, Marucci.

Scott Stimber: But with some of the other launches they had, and with the torpedo bat and some other things, they did a real nice job beating their numbers.

Mike Dennison: So we're really optimistic about the Marucci business and that team, including Victus and Lizard Skins and Bomb Bats. So, you know, nothing negative to report there at all, just kind of a difference in timing of product launch.

Scott Stimber: and Bombats, so, you know, nothing negative a report there at all, just kind of a difference in timing of product launches.

Mike Dennison: And then on the bike side, what are you hearing as far as retail for your, I guess, the higher end mountain bike market? What are you hearing as far as the pull through? Obviously, you guys are getting back to a better sell in situation, but how's that being pulled through? You know, our bike, like I said, our bike business in Q1 was good. Our conversations with our OEMs were very positive. Man, I don't want to get out ahead of my skis. I think it's too early to start to, you know, call a victory. I think too many quarters in the past we thought we were there or thought we were close to there and we weren't.

Scott Stimber: And then on the bike side, what are you hearing as far as this retail for your, I guess the higher-end mountain bike market? What are you hearing as far as the pull-through?

Scott Stimber: You know, our bike, like I said, our bike business in Q1 was good. Our conversations with our OEMs are very positive. Man, I don't want to get out ahead of my skis. I think it's too early to start to, you know, call a victory that on bike.

Scott Stimber: I think too many quarters in the past we thought we were there or thought we were close to there and we weren't so give us the benefit of the doubt to have another quarter or two in our pocket before we say you know that we've

Mike Dennison: So, give us the benefit of the doubt to have another quarter or two in our pocket before we say... you know, won the game. Got it.

You know, one, the game still to speak [inaudible]

www.mytrendyphone.co.uk

Mike Dennison: And then last question on the lower priced fork that you have in the market, how it's performing? I know this is a pretty big year for that launch, right? Yeah, I mean, that started last year, and it's suspension. So it's fork and shocks in kind of that entry premium space. And you know, that that's done well for us, we've expanded our share, we didn't have any share in that space. So any, any growth, there's good growth. And we're continuing to push forward in that space to expand our relationships with our OEMs. I think you'll see it can, you know, it's fairly, that was probably more linear in its growth curve than a lot of other businesses, because it's just starting from zero.

Scott Stimber: God, and then last question on the lower priced fork that you have in the market, how it's performing and all this is a pretty big year for that launch, right?

Scott Stimber: That's done well for us. We've expanded our share. We didn't have any share in that space. So any growth there is good growth and we're continuing to push forward in that space to expand our relationships with our OEMs. I think you'll see it can, you know, it's fairly...

Scott Stimber: That was probably more linear in its growth curve than a lot of other businesses because it's just starting from zero and just every model you're picking up a bit more and more spec.

Mike Dennison: And just every model year picking up a bit more and more spec. So, you know, we, we expect good things out of that part of the business over the course of 2025 model year 2026. And we'll just continue to push that forward. Got it.

Scott Stimber: So, yeah, we expect good things out of that part of the business over the course of 2025, model your 2026 and we'll just continue to push that forward.

Got it, that's all I have, thank you.

Scott Stember: That's all I have. Thank you.

Thank you.

Unknown Executive: Thank you and that concludes our question and answer session.

Speaker Change: Thank you and that concludes our question and answer session. I would like to now turn the call back over to Mike Dennison for concluding remarks.

Mike Dennison: I would like to now turn the call back over to Mike Dennison for a concluding remark. Thanks everybody, appreciate the time today and have a good evening and we'll talk soon.

Speaker Change: Thanks everybody, appreciate the time today and have a good evening and we'll talk soon.

Unknown Executive: This does conclude the Fox Factory Holding Corporation's first quarter 2025 earnings call. You may now disconnect your line and have a great day.

Speaker Change: This does conclude the Fox Factory Holding Corporation's first quarter 2025 earnings call you may now disconnect your line and have a great day.

Unknown Executive: Go to Beadaholique.com for all of your beading supply needs!

Speaker Change: [music].