Q2 2026 Fox Factory Holding Corp Earnings Call

August 6, 2026

Operator 3: Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Fox Factory Holding Corp.'s Q2 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I would now like to turn the conference over to Toby Merchant, Chief Legal Officer at Fox Factory Holding Corp. Thank you, sir. You may begin.

Operator: Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Fox Factory Holding Corp's Q2 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I would now like to turn the conference over to Toby Merchant, Chief Legal Officer at Fox Factory Holding Corp. Thank you, sir. You may begin.

Speaker #1: formal presentation. Please note this conference is being are in a listen-only mode. conference over to Toby Merchant, Chief Legal Officer at FOX FACTORY HOLDING CORP.

Speaker #1: You may begin.

Toby Merchant: Thank you. Good afternoon, and welcome to Fox Factory's Q2 2026 earnings conference call. I'm joined today by Mike Dennison, Chief Executive Officer, and Dennis Schemm, Chief Financial Officer. First, Mike will provide business updates, then Dennis will review the quarterly results and outlook. Mike will then provide some closing remarks before we open up the call for your questions. 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 investor.ridefox.com. Please note that throughout this call, we will refer to Fox Factory as Fox or the company.

Toby Merchant: Thank you. Good afternoon, and welcome to Fox Factory's Q2 2026 Earnings Conference Call. I'm joined today by Mike Dennison, Chief Executive Officer, and Dennis Schemm, Chief Financial Officer. First, Mike will provide business updates, then Dennis will review the quarterly results and outlook. Mike will then provide some closing remarks before we open up the call for your questions.

Speaker #2: welcome to FOX FACTORY's second quarter 2026 earnings conference call. I'm joined today by Mike Dennison, Chief Executive Officer, and Dennis Schemm, Chief Financial Officer.

Speaker #2: welcome to FOX FACTORY's second quarter 2026 earnings conference call. I'm joined today by Mike Dennison, Chief Executive Officer, and Dennis Schemm, Chief Financial Officer. First, Mike will provide business updates and then Dennis will review the quarterly results and outlook.

Speaker #2: Welcome to FOX FACTORY's second quarter 2026 earnings conference call. I'm joined today by Mike Dennison, Chief Executive Officer, and Dennis Schemm, Chief Financial Officer. First, Mike will provide business updates, and then Dennis will review the quarterly results and outlook. Thank you.

Speaker #2: Mike will then provide some closing remarks before we open up the call for your questions. By now, everyone should have access to the earnings release, which went out earlier this afternoon.

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 investor.ridefox.com. Please note that throughout this call, we will refer to Fox Factory as Fox or the company.

Speaker #2: If you have not had a chance to review the release, it's available on the investor relations portion of our website at investor.ridefox.com. Please note that throughout this call, we will refer to FOX FACTORY as FOX or the company.

Speaker #2: Before we begin, I would like to remind everyone that to prepare 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.

Toby Merchant: 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. 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. 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 the company's latest annual report on Form 10-K, each filed with the Securities and Exchange Commission.

Speaker #2: 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: 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.

Speaker #2: 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 the company's latest annual report on Form 10-K, each filed with the Securities and Exchange Commission.

Toby Merchant: 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 the company's latest annual report on Form 10-K, each filed with the Securities and Exchange Commission.

Speaker #2: Investors should not place undue reliance on the company's forward-looking statements and accept 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.

Toby Merchant: 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. 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. We believe these are useful metrics that allow investors to better understand and evaluate the company's core operating performance and trends. 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 on our website.

Speaker #2: 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.

Toby Merchant: 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.

Speaker #2: adjusted gross margin, adjusted operating expenses, adjusted net income, adjusted earnings per diluted share, adjusted EBITDA, and adjusted EBITDA margin. We believe these are useful metrics that allow investors to better understand and evaluate the company's core operating performance and trends.

Toby Merchant: We believe these are useful metrics that allow investors to better understand and evaluate the company's core operating performance and trends. 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 on our website. With that, it is my pleasure to turn the call over to our CEO, Mike Dennison.

Speaker #2: 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 on our website.

Speaker #2: And with that, it is my pleasure to turn the call over to our CEO, Mike Dennison.

Toby Merchant: With that, it is my pleasure to turn the call over to our CEO, Mike Dennison.

Speaker #3: Thanks, Toby. And thanks to everyone joining the call today. We delivered second quarter revenue of $358.1 million. At the high end of our guided range, an adjusted EBITDA of 45.5 million.

Michael C. Dennison: Thanks, Toby, and thanks to everyone joining the call today. We delivered Q2 revenue of $358.1 million at the high end of our guided range and adjusted EBITDA of $45.5 million, approximately $5 million above the high end of our range. While revenue was at the high end of our expectations, it stepped down sequentially, which was expected and consistent with our guidance, reflecting portfolio optimization associated with the Phoenix operations divestiture, as well as the discrete timing of shipments we flagged last quarter and lower F-150 volume tied to the aluminum supply disruption. The takeaway is significant. Revenue growth is returning, and our outlook for the balance of the year is a continued step-up from original expectations. A revised view of revenue for the H2 will be detailed later by Dennis.

Mike Dennison: Thanks, Toby, and thanks to everyone joining the call today. We delivered Q2 revenue of $358.1 million at the high end of our guided range and adjusted EBITDA of $45.5 million, approximately $5 million above the high end of our range.

Speaker #3: Approximately $5 million above the high end of our range. While revenue was at the high end of our expectations, it stepped down sequentially, which was expected and consistent with our guidance.

Mike Dennison: While revenue was at the high end of our expectations, it stepped down sequentially, which was expected and consistent with our guidance, reflecting portfolio optimization associated with the Phoenix operations divestiture, as well as the discrete timing of shipments we flagged last quarter and lower F-150 volume tied to the aluminum supply disruption.

Speaker #3: Reflecting portfolio optimization associated with the Phoenix operations shipments we flagged last quarter, and lower F-150 volume tied to the aluminum supply disruption. But the takeaway is significant.

Mike Dennison: The takeaway is significant. Revenue growth is returning, and our outlook for the balance of the year is a continued step-up from original expectations. A revised view of revenue for the H2 will be detailed later by Dennis.

Speaker #3: Revenue growth is returning, and our outlook for the balance of the year is a continued step up from original expectations. A revised view of revenue for the back half will be detailed later by Dennis.

Speaker #3: Revenue growth is critical not just for the diversification of partnerships and the addition of new markets, but also for what it brings to our factories and operations in terms of productivity.

Michael C. Dennison: Revenue growth is critical not just for the diversification of partnerships and the addition of new markets, but what it brings to our factories and operations with productivity. Our investment in R&D and product roadmaps for the last couple of years has negatively impacted results short term, but has set us up for a more constructive forecast in the H2 of 2026, as well as meaningful growth in 2027 and beyond. In addition, our profit optimization program is on schedule. We captured more than $25 million of gross savings in the H1. We remain confident in our expectations to deliver approximately $50 million of gross savings this year. Roughly $10 million of phase I carryover and approximately $40 million from phase II, consistent with the framework we laid out in February.

Mike Dennison: Revenue growth is critical not just for the diversification of partnerships and the addition of new markets, but what it brings to our factories and operations with productivity. Our investment in R&D and product roadmaps for the last couple of years has negatively impacted results short term, but has set us up for a more constructive forecast in the H2 of 2026, as well as meaningful growth in 2027 and beyond.

Speaker #3: Our investment in R&D and product roadmaps over the last couple of years has negatively impacted results in the short term, but has set us up for a more constructive forecast in the back half of '26, as well as meaningful growth in '27 and beyond.

Speaker #3: In addition, our profit optimization program is on schedule. We in the first half, and we remain confident in our expectations to deliver approximately $50 million of gross savings this year, roughly $10 million of phase one carryover, and approximately $40 million from phase two, consistent with the framework we laid out in February.

Mike Dennison: In addition, our profit optimization program is on schedule. We captured more than $25 million of gross savings in the H1. We remain confident in our expectations to deliver approximately $50 million of gross savings this year. Roughly $10 million of phase I carryover and approximately $40 million from phase II, consistent with the framework we laid out in February.

Speaker #3: Profit optimization is necessary in the current macro environment because while we do everything we can do internally, the macro issues continue to work against us.

Michael C. Dennison: Profit optimization is necessary in the current macro environment because, while we do everything we can do internally, the macro issues continue to work against us. On our last call, I flagged that steel and aluminum costs were moving higher, with pressure building in Q2. That pressure came in ahead of what we planned. Escalating geopolitical conflict has pushed commodity prices, including fuel, ocean and inland freight rates, higher. Carrier surcharges, as well as added expedite freight and rerouting costs, drive friction in our channels. We remain focused on what we control and are pleased with the progress we've made on margin expansion through early realization of these initiatives. From a market served, we are encouraged by the stabilization emerging in powersports and bike, two important businesses for Fox Factory.

Mike Dennison: Profit optimization is necessary in the current macro environment because, while we do everything we can do internally, the macro issues continue to work against us. On our last call, I flagged that steel and aluminum costs were moving higher, with pressure building in Q2. That pressure came in ahead of what we planned. Escalating geopolitical conflict has pushed commodity prices, including fuel, ocean and inland freight rates, higher.

Speaker #3: On our last call, I flagged that steel and aluminum costs were moving higher, with pressure building in the second quarter. That pressure came in ahead of what we planned.

Speaker #3: Escalating geopolitical conflict has pushed commodity prices, including fuel, ocean, and inland freight rates, higher. And carrier surcharges, as well as added expedite freight and rerouting costs, drive friction in our channels.

Mike Dennison: Carrier surcharges, as well as added expedite freight and rerouting costs, drive friction in our channels. We remain focused on what we control and are pleased with the progress we've made on margin expansion through early realization of these initiatives. From a market served, we are encouraged by the stabilization emerging in powersports and bike, two important businesses for Fox Factory.

Speaker #3: We remain focused on what we control, and are pleased with the progress we've made on margin expansion through early realization of these initiatives. From a market served, we are encouraged by the stabilization emerging in power sports and bike.

Speaker #3: Two important businesses for FOX. On the portfolio, we continue to evaluate every business we own against the same three criteria that led to our decision operations.

Michael C. Dennison: On the portfolio, we continue to evaluate every business we own against the same three criteria that led to our decision to divest our Phoenix operations: alignment with our brands, synergy with our core competencies, and an ability to deliver accretive margins and durable cash flows. Where a business or program does not meet those thresholds, we are taking action. Any cash proceeds from these activities will go directly to debt reduction. With that, let me walk through our segments. PVG delivered net sales of USD 124.2 million in Q2, a slight increase year-over-year. Sequentially, revenue stepped down from a Q1 that, as we flagged in May, benefited from shipment timing in that quarter. As expected, segment margins were down from Q1, given our forecasted product mix in the quarter.

Mike Dennison: On the portfolio, we continue to evaluate every business we own against the same three criteria that led to our decision to divest our Phoenix operations: alignment with our brands, synergy with our core competencies, and an ability to deliver accretive margins and durable cash flows. Where a business or program does not meet those thresholds, we are taking action.

Speaker #3: Alignment with our brands, synergy with our core competencies, and an ability to deliver creative margins and durable cash flows. Where a business or program does not meet those thresholds, we are taking action.

Speaker #3: Any cash proceeds from these activities will go directly to debt reduction. With that, let me walk through our segments. PVG delivered net sales of $124.2 million in the second quarter, a slight increase year over year.

Mike Dennison: Any cash proceeds from these activities will go directly to debt reduction. With that, let me walk through our segments. PVG delivered net sales of USD 124.2 million in Q2, a slight increase year-over-year. Sequentially, revenue stepped down from a Q1 that, as we flagged in May, benefited from shipment timing in that quarter. As expected, segment margins were down from Q1, given our forecasted product mix in the quarter.

Speaker #3: Sequentially, revenue stepped down from a first quarter—that is, we flagged in May—benefited from shipment timing in that quarter, as expected, segment margins were down from the first quarter given our forecasted product mix in the quarter.

Speaker #3: In power sports, which grew 22.5% in the second quarter, and 28% in the first half year over year, our OEM customers have worked through much of the channel inventory imbalance that weighed on the industry.

Michael C. Dennison: In powersports, which grew 22.5% in Q2 and 28% in H1 year-over-year, our OEM customers have worked through much of the channel inventory imbalance that weighed on the industry. We believe we remain well-positioned across all of the major OEMs in the category. Although we continue to monitor the underlying retail environment in close collaboration with our customers, we have greater confidence that powersports can continue to be a stabilizing force for us through the balance of the year. On the automotive side, our premium truck OE business performance reflects the timing of shipments against continued aluminum supply chain and production issues that our automotive OEMs are facing. While we anticipated seeing some relief during Q2, aluminum supply remains a constraint for the production of F-150 trucks. In addition, supply chain issues at Toyota also reduced our forecast for high-demand vehicles in the quarter.

Mike Dennison: In powersports, which grew 22.5% in Q2 and 28% in H1 year-over-year, our OEM customers have worked through much of the channel inventory imbalance that weighed on the industry. We believe we remain well-positioned across all of the major OEMs in the category. Although we continue to monitor the underlying retail environment in close collaboration with our customers, we have greater confidence that powersports can continue to be a stabilizing force for us through the balance of the year.

Speaker #3: We believe we remain well-positioned across all of the major OEMs in the category. Although we continue to monitor the underlying retail environment in close collaboration with our customers, we have greater confidence that power sports can continue to be a stabilizing force for us through the balance of the year.

Speaker #3: On the automotive side, our premium truck OE business performance reflects the timing of shipments against continued aluminum supply chain and production issues that our automotive OEMs are facing.

Mike Dennison: On the automotive side, our premium truck OE business performance reflects the timing of shipments against continued aluminum supply chain and production issues that our automotive OEMs are facing. While we anticipated seeing some relief during Q2, aluminum supply remains a constraint for the production of F-150 trucks. In addition, supply chain issues at Toyota also reduced our forecast for high-demand vehicles in the quarter.

Speaker #3: While we anticipate seeing some relief during Q2, aluminum supply remains a constraint for the production of F-150 trucks. In addition, supply chain issues at Toyota also reduced our forecast for high-demand vehicles in the quarter.

Speaker #3: The most compelling commentary for PVG is not about the puts and takes of Q2. It is about the awards we have won so far this year, which begin to hit our P&L in late Q4 of 2026 and add meaningful upside in '27.

Michael C. Dennison: The most compelling commentary for PVG is not about the puts and takes of Q2. It is about the awards we have won so far this year, which begin to hit our P&L in late Q4 of 2026 and add meaningful upside in 2027. As you know, we have been extremely focused on R&D within PVG. These efforts include applications ranging from our traditional light truck market to vehicles that cover rough terrain and space, and plenty of applications in between. I want to take a few seconds to talk about what we have achieved. So far this year, we have launched 12 new vehicle fitments, including the expansion of our aftermarket Live Valve offerings. Our industrial business unit in PVG is also building a robust pipeline of products and services, which we expect to make public by early 2027.

Mike Dennison: The most compelling commentary for PVG is not about the puts and takes of Q2. It is about the awards we have won so far this year, which begin to hit our P&L in late Q4 of 2026 and add meaningful upside in 2027. As you know, we have been extremely focused on R&D within PVG.

Speaker #3: As you know, we have been extremely focused on R&D within PVG. These efforts include applications ranging from our traditional light truck market to vehicles that cover rough terrain and space.

Mike Dennison: These efforts include applications ranging from our traditional light truck market to vehicles that cover rough terrain and space, and plenty of applications in between. I want to take a few seconds to talk about what we have achieved. So far this year, we have launched 12 new vehicle fitments, including the expansion of our aftermarket Live Valve offerings. Our industrial business unit in PVG is also building a robust pipeline of products and services, which we expect to make public by early 2027.

Speaker #3: And plenty of applications in between. I want to take a few seconds to talk about what we have achieved. So far this year, we have launched 12 new vehicle fitments, including expansion of our aftermarket live valve offerings.

Speaker #3: Our industrial business unit in PVG is also building a robust pipeline of products and services which we expect to make public by early 2027.

Speaker #3: In the UTV sector, Kawasaki announced this week their newest vehicle, the Terex H2. With our advanced chassis control system, which is a fully integrated electronically controlled linkage solution.

Michael C. Dennison: In the UTV sector, Kawasaki announced this week their newest vehicle, the Teryx H2, with our advanced chassis control system, which is a fully integrated, electronically controlled linkage solution. The end links working together as one integrated unit in combination with our Live Valve shock package, providing, we believe, the best driving experience from both a performance and safety perspective. The adoption of our proprietary ECU continues to grow as well, with three distinct OEMs now incorporating it into their halo models. This milestone clearly demonstrates our ability to deliver enhanced value beyond what has traditionally been a mechanical passive solution. Earlier this week, Polaris also launched their new RZR Pro R Boost, which utilizes our 3.0 Live Valve X2 series shocks.

Mike Dennison: In the UTV sector, Kawasaki announced this week their newest vehicle, the Teryx H2, with our advanced chassis control system, which is a fully integrated, electronically controlled linkage solution. The end links working together as one integrated unit in combination with our Live Valve shock package, providing, we believe, the best driving experience from both a performance and safety perspective. The adoption of our proprietary ECU continues to grow as well, with three distinct OEMs now incorporating it into their halo models.

Speaker #3: The N-Lynx working together as one integrated unit in combination with our live valve shock package providing we believe the best driving experience from both a performance and safety perspective.

Speaker #3: The adoption of our proprietary ECU continues to grow as well. With three distinct OEs, now incorporating it into their halo models. This milestone clearly demonstrates our ability to deliver enhanced value beyond what has traditionally been a mechanical passive solution.

Mike Dennison: This milestone clearly demonstrates our ability to deliver enhanced value beyond what has traditionally been a mechanical passive solution. Earlier this week, Polaris also launched their new RZR Pro R Boost, which utilizes our 3.0 Live Valve X2 series shocks.

Speaker #3: Earlier this week, Polaris also launched their new RZR Pro R-Boost, which utilizes our 3.0 Live Valve X2 Series shocks. In automotive, we were awarded a new vehicle with an existing OEM that will drive meaningful volume in 2028.

Michael C. Dennison: In automotive, we were awarded a new vehicle with an existing OEM that will drive meaningful volume in 2028, continuing to expand that customer portfolio with Fox in a meaningful way. We also recently received a new award in the electric vehicle market. This was an entirely new automotive OEM for Fox and incorporates our advanced technology on an autonomous vehicle. This represents a significant step in our journey. This product should begin shipping at the tail end of 2026 and drive incremental volume in 2027. All of the above supports our belief that we can continue to grow our brand in traditional markets, as well as develop novel applications using our software-defined technology, delivering significant incremental revenue over the next several years in PVG.

Mike Dennison: In automotive, we were awarded a new vehicle with an existing OEM that will drive meaningful volume in 2028, continuing to expand that customer portfolio with Fox in a meaningful way. We also recently received a new award in the electric vehicle market. This was an entirely new automotive OEM for Fox and incorporates our advanced technology on an autonomous vehicle.

Speaker #3: Continuing to expand that customer portfolio with FOX in a meaningful way. We also recently received a new award in the electric vehicle market. This was an entirely new automotive OEM for FOX and incorporates our advanced technology on an autonomous vehicle.

Speaker #3: This represents a significant step in our journey. This product should begin shipping at the tail end of '26 and drive incremental volume in 2027.

Mike Dennison: This represents a significant step in our journey. This product should begin shipping at the tail end of 2026 and drive incremental volume in 2027. All of the above supports our belief that we can continue to grow our brand in traditional markets, as well as develop novel applications using our software-defined technology, delivering significant incremental revenue over the next several years in PVG.

Speaker #3: All of the above supports our belief that we can continue to grow our brand in traditional markets as well as develop novel applications using our software-defined revenue over the next several years in PVG.

Speaker #3: AAG delivered net sales of $109.6 million a decrease of 4% year over year, reflecting an impact of approximately $5.5 million from the divestiture of our Phoenix operations.

Michael C. Dennison: AAG delivered net sales of $109.6 million, a decrease of 4% year over year, reflecting an impact of approximately $5.5 million from the divestiture of our Phoenix operations, partially offset by strength in our aftermarket products businesses. Excluding the divestiture impact, the segment grew modestly year over year, even with the reduction in Ford F-150 volumes in PVG. AAG adjusted EBITDA dollars were up with the segment margin improving approximately 70 basis points year over year and roughly 500 basis points sequentially. Our aftermarket components business grew year on year with categories like Custom Wheelhouse, RideTech, and Sport Truck continuing to benefit from product launches and consistent demand. At the current interest rate levels, we are seeing aspirational customers who can't afford to buy new trucks pivot to investing in the trucks they already have, and that plays directly to our diversified aftermarket portfolio.

Mike Dennison: AAG delivered net sales of $109.6 million, a decrease of 4% year over year, reflecting an impact of approximately $5.5 million from the divestiture of our Phoenix operations, partially offset by strength in our aftermarket products businesses. Excluding the divestiture impact, the segment grew modestly year over year, even with the reduction in Ford F-150 volumes in PVG. AAG adjusted EBITDA dollars were up with the segment margin improving approximately 70 basis points year over year and roughly 500 basis points sequentially.

Speaker #3: Partially offset by strength in our aftermarket products businesses. Excluding the divestiture impact, the segment grew modestly year over year, even with the reduction in Ford F-150 volumes in PVD.

Speaker #3: AAG adjusted EBITDA dollars were up with the segment margin improving approximately 70 basis points year over year and roughly 500 basis points sequentially. Our aftermarket components business grew year on year with categories like custom wheelhouse, ride tech, and sport truck, continuing to benefit from product launches and consistent demand.

Mike Dennison: Our aftermarket components business grew year on year with categories like Custom Wheelhouse, RideTech, and Sport Truck continuing to benefit from product launches and consistent demand. At the current interest rate levels, we are seeing aspirational customers who can't afford to buy new trucks pivot to investing in the trucks they already have, and that plays directly to our diversified aftermarket portfolio.

Speaker #3: At the current interest rate levels, we are seeing aspirational customers who can't afford to buy new trucks pivot to investing in the trucks they already have, and that plays directly to our diversified aftermarket portfolio.

Speaker #3: There is still significant work ahead to optimize our legacy upfit business and operations, supply chain, marketing, and sales. However, our new OEM-driven customization programs continue to build through the second quarter.

Michael C. Dennison: There is still significant work ahead to optimize our legacy upfit business and operations, supply chain, marketing, and sales. However, our new OEM-driven customization programs continued to build through Q2. As a reminder, this is a new market strategy in collaboration with our OEMs, which utilizes our size and scale to support their aligned objectives in premium semi-custom upfitting. We're able to leverage the OEM's marketing, sales channels, and booking systems to support our dealers. This process relieves meaningful complexity and cost for Fox relative to marketing and sales, and the kits are menu-driven and well-defined, so they flow through our production quickly and absorb overhead expenses. It also aligns Fox tightly to the innovation cycle of these large OEMs as they expand their premium vehicle roadmaps.

Mike Dennison: There is still significant work ahead to optimize our legacy upfit business and operations, supply chain, marketing, and sales. However, our new OEM-driven customization programs continued to build through Q2. As a reminder, this is a new market strategy in collaboration with our OEMs, which utilizes our size and scale to support their aligned objectives in premium semi-custom upfitting.

Speaker #3: As a reminder, this is a new market strategy in collaboration with our OEMs. Which utilizes our size and scale to support their aligned objectives in premium semi-custom upfitting.

Speaker #3: We're able to leverage the OEM's marketing, sales channels, and booking systems to support our dealers. This process relieves meaningful complexity and cost for FOX relative to marketing and sales, and the kits are menu-driven and well-defined, so they flow through our production quickly and absorb overhead expenses.

Mike Dennison: We're able to leverage the OEM's marketing, sales channels, and booking systems to support our dealers. This process relieves meaningful complexity and cost for Fox relative to marketing and sales, and the kits are menu-driven and well-defined, so they flow through our production quickly and absorb overhead expenses. It also aligns Fox tightly to the innovation cycle of these large OEMs as they expand their premium vehicle roadmaps.

Speaker #3: It also aligns FOX tightly to the innovation cycle of these large OEMs as they expand their premium vehicle roadmaps. Further, that program also feeds our ability to target new dealers.

Michael C. Dennison: Further, that program also feeds our ability to target new dealers, which remains a long-term growth opportunity as we work to rebuild this business. Finally, on the industry-wide aluminum supply disruption affecting Ford's F-150 platforms, which is an important chassis across several of our product lines, that disruption continued to weigh on volume in the Q2. Based on the latest OEM production schedules, we now have planned production, which should hit our factories in early to mid-September. That revised timing is reflected in the outlook Dennis will walk through. SSG delivered net sales of $124.3 million, a decrease of 9.4% year over year and an increase of 12.5% sequentially. For bike, we knew this would be a tough year-over-year comp given the order pull forward the industry experienced last year, and the sequential step up reflects a normal seasonal improvement in bike that we expected.

Mike Dennison: Further, that program also feeds our ability to target new dealers, which remains a long-term growth opportunity as we work to rebuild this business. Finally, on the industry-wide aluminum supply disruption affecting Ford's F-150 platforms, which is an important chassis across several of our product lines, that disruption continued to weigh on volume in the Q2. Based on the latest OEM production schedules, we now have planned production, which should hit our factories in early to mid-September.

Speaker #3: Which remains a long-term growth opportunity as we work to rebuild this business. Finally, on the industry-wide aluminum supply disruption affecting Ford's F-150 platforms, which is an important chassis across several of our product lines, that disruption continued to weigh in volume in the second quarter.

Speaker #3: Based on the latest OEM production schedules, we now have planned production that should hit our factories in early to mid-September. That revised timing is reflected in the outlook Dennis will walk through.

Mike Dennison: That revised timing is reflected in the outlook Dennis will walk through. SSG delivered net sales of $124.3 million, a decrease of 9.4% year over year and an increase of 12.5% sequentially. For bike, we knew this would be a tough year-over-year comp given the order pull forward the industry experienced last year, and the sequential step up reflects a normal seasonal improvement in bike that we expected.

Speaker #3: SSG delivered net sales of $124.3 million a decrease of 9.4% year over year and an increase of 12.5% sequentially. For Bike, we knew this would be a tough year over year comp given the order pull forward the industry experienced last year.

Speaker #3: And the sequential step-up reflects a normal seasonal improvement in Bike that we expected. The segment margin held essentially flat year over year, even with revenue down 9.4%, which speaks to the cost discipline efforts.

Michael C. Dennison: Segment margin held essentially flat year over year, even with revenue down 9.4%, which speaks to the cost discipline efforts. While we are pleased with the gradual improvement in channel inventory, near-term demand signals are mixed as consumers remain cautious overall but aggressively pursue new technologies and brands. We continue to make progress on those new customer relationships and product expansion, particularly in categories like e-bike. We're benefiting from our relationships with new players and the disruptive technologies they're bringing to market, which is a stabilizing force in an otherwise volatile market. Fox continues to maintain a leadership position in the premium bicycle suspension market as industry demand stabilizes following several years of elevated inventory and market disruption. Looking ahead, we remain focused on investing in the technologies that we believe will drive the next phase of growth.

Mike Dennison: Segment margin held essentially flat year over year, even with revenue down 9.4%, which speaks to the cost discipline efforts. While we are pleased with the gradual improvement in channel inventory, near-term demand signals are mixed as consumers remain cautious overall but aggressively pursue new technologies and brands. We continue to make progress on those new customer relationships and product expansion, particularly in categories like e-bike.

Speaker #3: While we are pleased with the gradual improvement in channel inventory, near-term demand signals are mixed as consumers remain cautious overall but aggressively pursue new technologies and brands.

Speaker #3: We continue to make progress on those new customer relationships and product expansion, particularly in categories like e-bike. We're benefiting from our relationships with new players and the disruptive technologies they're bringing to market.

Mike Dennison: We're benefiting from our relationships with new players and the disruptive technologies they're bringing to market, which is a stabilizing force in an otherwise volatile market. Fox continues to maintain a leadership position in the premium bicycle suspension market as industry demand stabilizes following several years of elevated inventory and market disruption. Looking ahead, we remain focused on investing in the technologies that we believe will drive the next phase of growth.

Speaker #3: Which is a stabilizing force in an otherwise volatile market. FOX continues to maintain a leadership position in the premium bicycle suspension market as industry demands stabilizes following several years of elevated inventory and market disruption.

Speaker #3: Looking ahead, we remain focused on investing in the technologies that we believe will drive the next phase of growth. These include their emerging 32-inch cross-country platform where FOX has been working closely with industry partners to develop next-generation suspension solutions as well as the rapidly evolving e-mountain bike market.

Michael C. Dennison: These include the emerging 32-inch cross-country platform, where Fox has been working closely with industry partners to develop next-generation suspension solutions, as well as the rapidly evolving e-mountain bike market. Continued advances in motor, battery, and integrated drivetrain technologies are creating new opportunities to improve the riding experience. We believe Fox is well-positioned to capitalize through our premium suspension portfolio and our motor-agnostic integration strategy. While these initiatives are having a measure to business impact in the immediate term, they reinforce our technology leadership and position the business to benefit as these categories continue to develop. On Marucci, softball continues to be a bright spot. We believe our new products are resonating, and softball is becoming an increasingly important contributor to the broader Marucci business, which we believe is directly correlated to the innovation investments we've made over the past couple of years.

Mike Dennison: These include the emerging 32-inch cross-country platform, where Fox has been working closely with industry partners to develop next-generation suspension solutions, as well as the rapidly evolving e-mountain bike market. Continued advances in motor, battery, and integrated drivetrain technologies are creating new opportunities to improve the riding experience.

Speaker #3: Continued advances in motor, battery, and integrated drivetrain technologies are creating new opportunities to improve the riding experience. And we believe FOX is well-positioned to capitalize through our premium suspension portfolio and our motor, agnostic integration strategy.

Mike Dennison: We believe Fox is well-positioned to capitalize through our premium suspension portfolio and our motor-agnostic integration strategy. While these initiatives are having a measure to business impact in the immediate term, they reinforce our technology leadership and position the business to benefit as these categories continue to develop. On Marucci, softball continues to be a bright spot.

Speaker #3: While these initiatives are having a major business impact in the immediate term, they reinforce our technology leadership and position the business to benefit as these categories continue to develop.

Speaker #3: On Maruchi, softball continues to be a bright spot. We believe our new products are resonating and softball is becoming an increasingly important contributor to the broader Maruchi business, which we believe is directly correlated to the innovation investments we've made over the last couple of years.

Mike Dennison: We believe our new products are resonating, and softball is becoming an increasingly important contributor to the broader Marucci business, which we believe is directly correlated to the innovation investments we've made over the past couple of years.

Speaker #3: To the obvious question, while we review the strategic path for this business long-term, we are running this business for hard right now. Our team is fully engaged in our product roadmap and we're excited about what's coming in the back half with new product launches.

Michael C. Dennison: To the obvious question, while we review the strategic path for this business long term, we are running this business hard right now. Our team is fully engaged on the product roadmap, and we're excited about what's coming in the back half with new product launches. In summary, revenue landed at the high end of our guide. Adjusted EBITDA came in above the high end, and our cost programs are tracking. Our militant focus on product development and new markets in core businesses is setting up Fox for meaningful growth and increased profitability as these projects reach production. This performance, as well as the operating discipline that is central to our plans, gives us the conviction to increase our revenue guidance in the back half and tighten our adjusted EBITDA outlook today, even as commodity, freight, and fuel costs stay elevated and step up further in the H2.

Mike Dennison: To the obvious question, while we review the strategic path for this business long term, we are running this business hard right now. Our team is fully engaged on the product roadmap, and we're excited about what's coming in the back half with new product launches. In summary, revenue landed at the high end of our guide. Adjusted EBITDA came in above the high end, and our cost programs are tracking.

Speaker #3: In summary, revenue landed at the high end of our guide, adjusted EBITDA came in above the high end, and our cost programs are tracking.

Speaker #3: Our militant focus on product development and new markets and core businesses is setting up FOX for meaningful growth and increased profitability as these projects reach production.

Mike Dennison: Our militant focus on product development and new markets in core businesses is setting up Fox for meaningful growth and increased profitability as these projects reach production. This performance, as well as the operating discipline that is central to our plans, gives us the conviction to increase our revenue guidance in the back half and tighten our adjusted EBITDA outlook today, even as commodity, freight, and fuel costs stay elevated and step up further in the H2. With that, I will turn the call over to Dennis to walk through the financial details.

Speaker #3: This performance, as well as the operating discipline that is central to our plans, gives us the conviction to increase our revenue guidance in the back half and tighten our adjusted EBITDA outlook today.

Speaker #3: Even as commodity, freight, and fuel costs stay elevated and step up further in the second half. With that, I'll turn the call over to Dennis to walk through the financial details.

Michael C. Dennison: With that, I will turn the call over to Dennis to walk through the financial details.

Speaker #2: Thanks, Mike. I will begin by discussing our second quarter financial results, followed by our balance sheet, cash flow, and capital allocation strategy, before concluding with a review of our outlook.

Dennis Schemm: Thanks, Mike. I will begin by discussing our Q2 financial results, followed by our balance sheet, cash flow, and capital allocation strategy before concluding with a review of our outlook. Total consolidated net sales in Q2 of fiscal 2026 were $358.1 million, a decrease of 2.9% sequentially and a decrease of 4.5% versus the prior year period. Gross margin was 30.6%, compared to 31.2% in Q2 last year. The decline reflects three drivers: shifts in our product line mix, higher external input costs, including tariffs, commodities, freight, and fuel, partially offset by cost savings realization. Non-tariff inflation is the piece that has moved since we set our framework in February. As Mike stated, we are absorbing significant distribution-related expenses to protect customer delivery schedules, as well as higher steel and aluminum costs due to the Middle East conflict.

Speaker #2: Total consolidated net sales in the second quarter of fiscal 2026 were $358.1 million, a decrease of 2.9% sequentially and a decrease of 4.5% versus the prior year period.

Speaker #2: Gross margin was 30.6% compared to 31.2% in the second quarter last year. The decline reflects three drivers: shifts in our product line mix, higher external input cost, including tariffs, commodities, freight, and fuel, partially offset by cost savings realization.

Dennis Schemm: The decline reflects three drivers: shifts in our product line mix, higher external input costs, including tariffs, commodities, freight, and fuel, partially offset by cost savings realization. Non-tariff inflation is the piece that has moved since we set our framework in February. As Mike stated, we are absorbing significant distribution-related expenses to protect customer delivery schedules, as well as higher steel and aluminum costs due to the Middle East conflict.

Speaker #2: Non-tariff inflation is the piece that has moved since we set our framework in February. As Mike stated, we were absorbing significant distribution-related expenses to protect customer delivery schedules, as well as higher steel and aluminum costs due to the Middle East conflict.

Speaker #2: In total, incremental input cost inflation is running nearly $20 million above the assumptions in our full-year plan. This is not a change in our cost program.

Dennis Schemm: In total, incremental input cost inflation is running nearly $20 million above the assumptions in our full-year plan. This is not a change in our cost program. It is a change in the environment that program is operating in. Adjusted operating expenses were $78.5 million, or 21.9% of net sales, down from $83.5 million or 22.3% of net sales in the year-ago period. Compared to Q1 of this year, we drove a sequential reduction of $7 million or a 130 basis point improvement as a percentage of sales. That includes a sequential reduction in unallocated corporate expense of approximately $1.5 million. We realized significant phase II savings in the quarter, which has us at more than $25 million of gross savings against our approximately $50 million goal halfway through the year. Net realization has been compressed by costs outside of our control.

Speaker #2: It is a change in the environment that the program is operating in. Adjusted operating expenses were $78.5 million, or 21.9% of net sales, down from $83.5 million, or 22.3% of net sales, in the year-ago period.

Speaker #2: Compared to the first quarter of this year, we drove a sequential reduction of $7 million or a 130 basis point improvement as a percentage of sales.

Speaker #2: That includes a sequential reduction in unallocated corporate expense of approximately $1.5 million. We realized significant phase two savings in the quarter, which has us at more than 25 million of gross savings against our approximately $50 million goal halfway through the year.

Dennis Schemm: That includes a sequential reduction in unallocated corporate expense of approximately $1.5 million. We realized significant phase II savings in the quarter, which has us at more than $25 million of gross savings against our approximately $50 million goal halfway through the year. Net realization has been compressed by costs outside of our control.

Speaker #2: Net realization has been compressed by costs outside of our control. We expect that compression to ease in the second half as we anniversary last year's tariffs and the second half waiting of phase two savings comes through, not because we are assuming commodity, freight, or fuel costs come down.

Dennis Schemm: We expect that compression to ease in the H2 as we anniversary last year's tariffs and the H2 waiting of phase II savings comes through, not because we are assuming commodity, freight, or fuel costs come down. Our effective tax rate was 36% in the quarter compared to the 21% federal statutory rate, primarily attributable to the impact of discrete items in proportion to lower levels of pre-tax income. For the full year, we continue to expect an effective tax rate in the range of 15% to 18% as those discrete impacts normalize against a higher H2 pre-tax income base. Adjusted net income was $15.5 million, or $0.37 per diluted share, compared to $16.6 million or $0.40 per diluted share in Q2 last year. Adjusted EBITDA was $45.5 million and included approximately $2 million of IEEPA tariff refunds.

Speaker #2: Our effective tax rate was 36% in the quarter compared to the 21% federal statutory rate primarily attributable to the impact of discrete items in proportion to lower levels of pre-tax income.

Speaker #2: For the full year, we continue to expect an effective tax rate in the range of 15% to 18% as those discrete impacts normalize against a higher second half pre-tax income base.

Dennis Schemm: For the full year, we continue to expect an effective tax rate in the range of 15% to 18% as those discrete impacts normalize against a higher H2 pre-tax income base. Adjusted net income was $15.5 million, or $0.37 per diluted share, compared to $16.6 million or $0.40 per diluted share in Q2 last year. Adjusted EBITDA was $45.5 million and included approximately $2 million of IEEPA tariff refunds.

Speaker #2: Adjusted net income was $15.5 million, or $0.37 per diluted share, compared to $16.6 million, or $0.40 per diluted share, in the second quarter last year.

Speaker #2: Adjusted EBITDA was 45.5 million and included approximately $2 million of IEPA tariff refunds. Even when excluding these proceeds, which weren't factored into our plan, I'm pleased that we exceeded our guidance range.

Dennis Schemm: Even when excluding these proceeds, which weren't factored into our plan, I'm pleased that we exceeded our guidance range. Adjusted EBITDA margin was 12.7%, or approximately 12.2% excluding the tariff refund, which compares to 9.7% in Q1, an improvement of approximately 250 basis points sequentially on an apples-to-apples basis ex tariff refund. Moving to the balance sheet and cash flows. Cash and cash equivalents grew $7 million to $61.3 million compared to Q1 end. Total debt was $667.7 million at quarter end, down $20.5 million sequentially from Q1 and down $5.8 million from year end. Net debt declined by approximately $9 million year to date. As of 3 July, our net leverage ratio, as calculated under our credit agreement, was 3.7 times against the five times covenant established within the amendment we completed in May.

Speaker #2: Adjusted EBITDA margin was 12.7%, or approximately 12.2% excluding the tariff refund. This compares to 9.7% in the first quarter—an improvement of approximately 250 basis points sequentially on an apples-to-apples basis, excluding the tariff refund.

Speaker #2: Moving to the balance sheet and cash flows. Cash and cash equivalents grew 7 million to 61.3 million compared to quarter one end. Total debt was $667.7 million at quarter end, down 20.5 million sequentially from the first quarter and down 5.8 million from year end.

Dennis Schemm: Cash and cash equivalents grew $7 million to $61.3 million compared to Q1 end. Total debt was $667.7 million at quarter end, down $20.5 million sequentially from Q1 and down $5.8 million from year end. Net debt declined by approximately $9 million year to date. As of 3 July, our net leverage ratio, as calculated under our credit agreement, was 3.7 times against the five times covenant established within the amendment we completed in May.

Speaker #2: Net debt declined by approximately 9 million year-to-date. As of July 3rd, our net leverage ratio as calculated under our credit agreement was 3.7 times, against the five times covenant established within the amendment we completed in May.

Speaker #2: I would note that year-to-date, net debt reduction is below where we expect to finish the year. The first half reflects seasonal working capital build and the cash impacts of first half tariffs.

Dennis Schemm: I would note that year-to-date net debt reduction is below where we expect to finish the year. The H1 reflects seasonal working capital build and the cash impacts of H1 tariffs. We improved our cash conversion cycle by approximately 12 days year-over-year, and days inventory on hand improved to approximately 136 days from approximately 150 days a year ago. Both metrics demonstrate our efforts to improve working capital efficiency. We also maintained our disciplined approach to capital spending with Q2 capital expenditures of approximately $4.1 million, or roughly 1.1% of revenues, and the H1 capital expenditures of $9.5 million or 1.3% of revenues. Combined with the EBITDA contribution expected from our cost out programs and our continued focus on working capital, we expect meaningful progress on debt reduction as we move through the balance of the year. Moving on to our outlook.

Speaker #2: We improved our cash conversion cycle by approximately 12 days year-over-year. And days inventory on hand improved to approximately 136 days from approximately 150 days a year ago, both metrics demonstrate our efforts to improve working capital efficiency.

Speaker #2: We also maintained our disciplined approach to capital spending with second quarter capital expenditures of approximately 4.1 million or roughly 1.1% of revenues. And the first half capital expenditures of 9.5 million or 1.3% of revenues.

Dennis Schemm: We also maintained our disciplined approach to capital spending with Q2 capital expenditures of approximately $4.1 million, or roughly 1.1% of revenues, and the H1 capital expenditures of $9.5 million or 1.3% of revenues. Combined with the EBITDA contribution expected from our cost out programs and our continued focus on working capital, we expect meaningful progress on debt reduction as we move through the balance of the year. Moving on to our outlook.

Speaker #2: Combined with the EBITDA, contribution expected from our cost-out programs and our continued focus on working capital we expect meaningful progress on debt reduction as we move through the balance of the year.

Speaker #2: Now, moving on to our outlook. Based on our first half performance and the continued execution of our cost-out programs, we are raising our full-year net sales guidance and narrowing our adjusted EBITDA guidance.

Dennis Schemm: Based on our H1 performance and the continued execution of our cost out programs, we are raising our full year net sales guidance and narrowing our adjusted EBITDA guidance. We now expect net sales in the range of $1.42 billion to $1.47 billion and adjusted EBITDA in the range of $176 million to $196 million. The mechanics of the net sales raise are straightforward. Our H1 net sales of approximately $727 million came in ahead of the plan, underlining the guidance we issued during our Q4 call. We are carrying that outperformance through and holding the H2 roughly in line with last year's H2, excluding divested operations. On what this does to our margin framework, we are narrowing our adjusted EBITDA dollar range to better reflect the mix and inflation dynamics we've discussed.

Speaker #2: We now expect net sales in the range of 1.42 billion to 1.47 billion and adjusted EBITDA in the range of 176 million to 196 million.

Speaker #2: The mechanics of the net sales raise are straightforward. Our first half net sales of approximately 727 million came in ahead of the plan underlining the guidance we issued during our fourth quarter call.

Speaker #2: We are carrying that outperformance through and holding the second half roughly in line with last year's second half, excluding divested operations. On what this does to our margin framework, we are narrowing our adjusted EBITDA dollar range to better reflect the mix and inflation dynamics we've discussed.

Dennis Schemm: We are carrying that outperformance through and holding the H2 roughly in line with last year's H2, excluding divested operations. On what this does to our margin framework, we are narrowing our adjusted EBITDA dollar range to better reflect the mix and inflation dynamics we've discussed.

Speaker #2: When taken with our higher sales expectation, the implied full-year margin moves to a range of approximately 12.4 to 13.3% compared with the roughly 13.1 to 14.3% implied in February.

Dennis Schemm: When taken with our higher sales expectation, the implied full year margin moves to a range of approximately 12.4% to 13.3%, compared with the roughly 13.1% to 14.3% implied in February. Our commitment to adjusted EBITDA dollars is essentially unchanged, with our $176 to $196 million range representing growth of approximately 5% to 16% over fiscal 2025 on roughly flat revenue. Capital expenditures are expected to be approximately 2% of revenues, and our tax rate is expected to be in the range of 15% to 18% for the full year. Looking ahead to the H2 of the year, we expect to deliver incremental margin improvement driven by the H2 weighting of our phase two cost optimization initiatives, the anniversary of last year's tariff implementation, and the pricing and surcharge recovery actions now in motion with our OEM and channel partners.

Speaker #2: Our commitment to adjusted EBITDA dollars is essentially unchanged with our 176 to 196 million range representing growth of approximately 5 to 16% over fiscal 2025 on roughly flat revenue.

Speaker #2: Capital expenditures are expected to be approximately 2% of revenues, and our tax rate is expected to be in the range of 15% to 18% for the full year.

Dennis Schemm: Capital expenditures are expected to be approximately 2% of revenues, and our tax rate is expected to be in the range of 15% to 18% for the full year. Looking ahead to the H2 of the year, we expect to deliver incremental margin improvement driven by the H2 weighting of our phase two cost optimization initiatives, the anniversary of last year's tariff implementation, and the pricing and surcharge recovery actions now in motion with our OEM and channel partners.

Speaker #2: Looking ahead to the second half of the year, we expect to deliver incremental margin improvement driven by the second-half weighting of our phase two cost optimization initiatives.

Speaker #2: The anniversary of last year's tariff implementation and the pricing and surcharge recovery actions now in motion with our OEM and channel partners. We are reaffirming our cost savings commitment for 2026 of approximately $50 million.

Dennis Schemm: We are reaffirming our cost savings commitment for 2026 of approximately $50 million. On external costs, persistence at current levels is our baseline rather than our downside case. We are not underwriting relief in commodities, freight, or fuel any more than we are underwriting an end market recovery. If those costs ease, that is upside to the plan rather than a requirement of it. Both our Q3 and full year ranges assume commodity, freight, and fuel costs remain at or near elevated levels for the balance of the year. On top of that, those ranges absorb nearly $20 million of incremental inflation beyond our original plan, approximately $15 million of which we anticipate in the H2. This is the quantification of the pressure we flagged in the Q1.

Speaker #2: On external costs, persistence at current levels is our baseline rather than our downside case. We are not underwriting relief in commodities, freight, or fuel anymore than we are underwriting an end market recovery.

Speaker #2: If those costs ease, that is upside to the plan rather than a requirement of it. Both our third quarter and full-year ranges assume commodity, freight, and fuel costs remain at or near elevated levels for the balance of the year.

Dennis Schemm: Both our Q3 and full year ranges assume commodity, freight, and fuel costs remain at or near elevated levels for the balance of the year. On top of that, those ranges absorb nearly $20 million of incremental inflation beyond our original plan, approximately $15 million of which we anticipate in the H2. This is the quantification of the pressure we flagged in the Q1.

Speaker #2: On top of that, those ranges absorb nearly 20 million of incremental inflation beyond our original plan, approximately 15 of which we anticipate in the second half.

Speaker #2: This is the quantification of the pressure we flagged in the first quarter. One related note on tariffs. We may become eligible to recover as much as 8 million of additional tariff costs previously incurred under the IEPA framework.

Dennis Schemm: One related note on tariffs: We may become eligible to recover as much as $8 million of additional tariff costs previously incurred under the IEEPA framework. The timing and amount of any recovery are uncertain. A portion of any amounts recovered may be shared with our commercial counterparties, and we have not included any recovery in our outlook. For the Q3 of fiscal 2026, we expect net sales in the range of $355 million to $380 million and adjusted EBITDA in the range of $46 million to $54 million. That range implies an adjusted EBITDA margin of approximately 13% to 14%, up from the 12.2% we delivered in the Q2, excluding tariff refunds.

Speaker #2: The timing and amount of any recovery are uncertain. A portion of any amounts recovered may be shared with our commercial counterparties. And we have not included any recovery in our outlook.

Speaker #2: For the third quarter of fiscal 2026, we expect net sales in the range of 355 million to 380 million and adjusted EBITDA in the range of 46 million to 54 million.

Dennis Schemm: For the Q3 of fiscal 2026, we expect net sales in the range of $355 million to $380 million and adjusted EBITDA in the range of $46 million to $54 million. That range implies an adjusted EBITDA margin of approximately 13% to 14%, up from the 12.2% we delivered in the Q2, excluding tariff refunds.

Speaker #2: That range implies an adjusted EBITDA margin of approximately 13% to 14%, up from the 12.2% we delivered in the second quarter, excluding tariff refunds.

Speaker #2: Our third quarter outlook reflects the sequential timing benefit of the Marucci product launches that shifted out of the second quarter and a normalization of bike volume tied to the supplier disruption, partially offset by the continued impact of chassis supply constraints in our autos-related businesses.

Dennis Schemm: Our Q3 outlook reflects the sequential timing benefit of the Marucci product launches that shifted out of the Q2 and a normalization of bike volume tied to the supplier disruption, partially offset by the continued impact of chassis supply constraints in our autos-related businesses. I would note that the Marucci launches also fell in the Q3 last year, so this is a sequential benefit rather than a year-over-year one. The Q4, which is implied by the full year and Q3 ranges we have given, our outlook reflects the full run rate of our phase II actions, a full quarter of favorable tariff comparisons, and the seasonal mix of our portfolio. That build through the H2 is deliberate and is what our cost program was designed to deliver. To summarize, our cost programs are executing on plan, and our balance sheet health is improving.

Speaker #2: I would note that the Marucci launches also fell in the third quarter last year, so this is a sequential benefit rather than a year-over-year one.

Speaker #2: On the fourth quarter, which is implied by the full year and third quarter ranges we have given, our outlook reflects the full run rate of our Phase Two actions, a full quarter of favorable tariff comparisons, and the seasonal mix of our portfolio that builds through the back half is deliberate.

Dennis Schemm: The Q4, which is implied by the full year and Q3 ranges we have given, our outlook reflects the full run rate of our phase II actions, a full quarter of favorable tariff comparisons, and the seasonal mix of our portfolio. That build through the H2 is deliberate and is what our cost program was designed to deliver. To summarize, our cost programs are executing on plan, and our balance sheet health is improving. We remain confident in our full year outlook, with margin expansion weighted to the H2. With that, Mike, back to you for closing remarks.

Speaker #2: And it is what our cost program was designed to deliver. To summarize, our cost programs are executing on plan and are balance sheet health is improving.

Speaker #2: We remain confident in our full-year outlook with margin expansion weighted to the second half. With that, Mike, back to you for closing remarks.

Dennis Schemm: We remain confident in our full year outlook, with margin expansion weighted to the H2. With that, Mike, back to you for closing remarks.

Speaker #1: Thanks, Dennis. In closing, I want to leave you with three messages. First, the plan is working where we can control it. Two quarters in, we have taken 7 million of adjusted operating expense out sequentially.

Michael C. Dennison: Thanks, Dennis. In closing, I want to leave you with three messages. First, the plan is working where we can control it. Two quarters in, we have taken $7 million of adjusted operating expense out sequentially, expanded adjusted EBITDA margin 300 basis points sequentially, and captured more than $25 million of gross savings against a $50 million commitment. Second, we are committed to offsetting higher input costs, including commodities like aluminum, freight, and fuel, and supply chain issues like the F-150 chassis, which have continued to challenge us year to date. We have sized both, and we have absorbed them in our outlook. Third, we are raising our revenue outlook and tightening our adjusted EBITDA commitment consistent with the view from our customers and our end markets. I want to thank our team for their execution and discipline through a demanding period.

Mike Dennison: Thanks, Dennis. In closing, I want to leave you with three messages. First, the plan is working where we can control it. Two quarters in, we have taken $7 million of adjusted operating expense out sequentially, expanded adjusted EBITDA margin 300 basis points sequentially, and captured more than $25 million of gross savings against a $50 million commitment.

Speaker #1: Expanded adjusted EBITDA margin by 300 basis points sequentially, and captured more than $25 million of gross savings against a $50 million commitment. Second, we are committed to offsetting higher input costs, including commodities like aluminum, freight, and fuel, and supply chain issues like the F-150 chassis, which have continued to challenge us year to date.

Mike Dennison: Second, we are committed to offsetting higher input costs, including commodities like aluminum, freight, and fuel, and supply chain issues like the F-150 chassis, which have continued to challenge us year to date. We have sized both, and we have absorbed them in our outlook.

Speaker #1: We have sized both, and we have absorbed them in our outlook. Third, we are raising our revenue outlook and tightening our adjusted EBITDA commitment consistent with the view from our customers and our end markets.

Mike Dennison: Third, we are raising our revenue outlook and tightening our adjusted EBITDA commitment consistent with the view from our customers and our end markets. I want to thank our team for their execution and discipline through a demanding period. We remain focused on developing the best products across our broad portfolio to enable our enthusiasts to do what they love. With that, operator, please open the call for questions.

Speaker #1: I want to thank our team for their execution and discipline through a demanding period. We remain focused on developing the best products across our broad portfolio to enable our enthusiasts to do what they love.

Michael C. Dennison: We remain focused on developing the best products across our broad portfolio to enable our enthusiasts to do what they love. With that, operator, please open the call for questions.

Speaker #1: With that operator, please open the call for questions.

Speaker #3: Thank you. If you'd like to ask a question, press star one on your keypad. To leave the queue at any time, press star two.

Operator 3: Thank you. If you'd like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question. Our first question today comes from Peter McGoldrick with Stifel. Your line is open.

Operator: Thank you. If you'd like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question. Our first question today comes from Peter McGoldrick with Stifel. Your line is open.

Speaker #3: Once again, that is star one to ask a question. Our first question today comes from Peter McGoldrick with Stiefel. Your line is open.

Speaker #4: Hi guys. Thanks for taking my question and congratulations on the good results. I was hoping you could get some more air time to the upfitting business.

Peter McGoldrick: Hey, guys. Thanks for taking my question, and congratulations on the good results. I was hoping you could give some more air time to the upfitting business. As we think about the change towards the new model, can you help us think about the mix of business between the legacy upfitting and the new business? How should we think about the volumes moving through the system and your expectations as we look into the H2?

Speaker #4: As we think about the change towards the new model, can you help us think about the mix of business between the legacy upfitting and the new business?

Speaker #4: And how should we think about the volumes moving through the system and your expectations as we look into the back half?

Speaker #5: Yeah, Peter, this is Mike. Good question. So, when you think about the mix, our primary business model is still the core upfitting business that we've run for a number of years.

Michael C. Dennison: Yeah, Peter, it's Mike. Good question. When you think about the mix, our primary business model is still the core upfitting business that we've run for a number of years. That is still our primary go-to-market strategy. The benefit of these relationships with OEMs in a different format is what they bring to us from dealer engagement, because the marketing and sales effort is actually driven by the OEM, not by Fox. It's also the absorption in our factories. While that volume has less content typically on it versus what we would normally do in our custom upfit business, it drives a lot of absorption, a lot of productivity through the factory, and allows us to unburden some of the costs associated with go-to-market that we would normally have in our custom business.

Mike Dennison: Yeah, Peter, it's Mike. Good question. When you think about the mix, our primary business model is still the core upfitting business that we've run for a number of years. That is still our primary go-to-market strategy. The benefit of these relationships with OEMs in a different format is what they bring to us from dealer engagement, because the marketing and sales effort is actually driven by the OEM, not by Fox.

Speaker #5: So that is still our primary go-to-market strategy. The benefit of these relationships with OEMs in a different format is what they bring to us from dealer engagement because the marketing and sales effort is actually driven by the OEM, not by FOX.

Speaker #5: It's also the absorption in our factories. So while that volume has less content typically on it versus what we would normally do in our custom upfit business, it drives a lot of absorption, a lot of productivity through the factory, and allows us to unburden some of the costs associated with go-to-market that we would normally have in our custom business.

Mike Dennison: It's also the absorption in our factories. While that volume has less content typically on it versus what we would normally do in our custom upfit business, it drives a lot of absorption, a lot of productivity through the factory, and allows us to unburden some of the costs associated with go-to-market that we would normally have in our custom business.

Speaker #5: So the mix is still going to be heavily weighted towards custom and what we've always done. Our traditional business, if you will. The new business provides a lot of dealer growth, a lot of dealer engagement that we would otherwise do on our own, and allows us to absorb in our factories.

Michael C. Dennison: The mix is still going to be heavily weighted towards custom and what we've always done, our traditional business, if you will. The new business provides a lot of dealer growth, a lot of dealer engagement that we would otherwise do on our own, and allows us to absorb in our factories. It's an important part of the business, even though it's a smaller part of the mix.

Mike Dennison: The mix is still going to be heavily weighted towards custom and what we've always done, our traditional business, if you will. The new business provides a lot of dealer growth, a lot of dealer engagement that we would otherwise do on our own, and allows us to absorb in our factories. It's an important part of the business, even though it's a smaller part of the mix.

Speaker #5: So it's an important part of the business, even though it's a smaller part of the mix.

Speaker #1: Okay. And then, Dennis, I've got one for

Peter McGoldrick: Okay, Dennis, I got one for you. At the midpoint of guidance, we're still looking at a steep ramp in the EBITDA margin into Q4, as implied by your guidance. You pointed to some visibility to the easing costs, the phase 2 cost out, surcharge recovery. Can you help bucket the items that matter as we bridge to get to the Q4 EBITDA margin guidance?

Speaker #4: you. At the midpoint of guidance, we're still looking at a steep ramp in the EBITDA margin into the fourth quarter as implied by your guidance.

Speaker #4: You pointed to some visibility to the easing costs, the phase two cost out, surcharge recovery, but can you help bucket the items that matter as we bridge to get to the fourth quarter EBITDA margin guidance?

Speaker #2: No, that's a really good question, Peter, and thanks for that. Yeah, as we start to step up, we're going from that 12.2% to 13.6% in Q3, and then from Q3 to Q4, it's around a 15.6% EBITDA margin where we end the year.

Dennis Schemm: Yeah, that's a really good question, Peter, and thanks for that. As we start to step up, we're going from that 12.2% to 13.6% in Q3. From Q3 to Q4, it's around a 15.6% EBITDA margin where we end the year. Relative to that, clearly, one of the bigger drivers is the net release of the cost savings programs. As we anniversary those tariffs in H1, we get more of the fall through. This was exactly how this was designed. That fall through is a big part of that in Q3. Including revenue contributions and margin contributions from Marucci's bat launch, which was delayed from Q2 to Q3, we're really excited about that. As well as we had bike timing delays on the supply chain issues that we suffered in Q2.

Speaker #2: Relative to that, I mean, clearly one of the bigger one of the bigger drivers is the net release of the cost savings programs. And so as we anniversary those tariffs in the first half of the year, we get more of the fall through.

Dennis Schemm: As we anniversary those tariffs in H1, we get more of the fall through. This was exactly how this was designed. That fall through is a big part of that in Q3. Including revenue contributions and margin contributions from Marucci's bat launch, which was delayed from Q2 to Q3, we're really excited about that. As well as we had bike timing delays on the supply chain issues that we suffered in Q2.

Speaker #2: This was exactly how this was designed. And so that fall through is a big part of that in Q3. And then including revenue contributions and margin contributions from Marucci's bat launch which was delayed from Q2 to Q3.

Speaker #2: So we're really excited about that. As well as we had bike timing delays on the supply chain issues that we suffered in Q2. And so then when you move from Q3 into Q4, you're really dealing now with PBD recovery in the sense of those F-150 chassis really coming in into play.

Dennis Schemm: When you move from Q3 into Q4, you're really dealing now with PBD recovery in the sense of those F-150 chassis really coming into play, further margin from Marucci as well into that hot season for Q4 and the Christmas timeframe. Those would be your other drivers moving into Q4.

Speaker #2: Further margin from Marucci as well into that hot season for Q4 and the Christmas timeframe. So those would be your other drivers moving into Q4.

Speaker #4: Very helpful. Thank you. And good luck.

Peter McGoldrick: Very helpful. Thank you and good luck.

Speaker #2: Thank you.

Dennis Schemm: Thank you.

Speaker #3: Thank you. Our next question comes from Anna Glasgon with the Riley Securities. Your line is now open.

Operator 3: Thank you. Our next question comes from Anna Glaessgen with B. Riley Securities. Your line is now open.

Operator: Thank you. Our next question comes from Anna Glaessgen with B. Riley Securities. Your line is now open.

Speaker #6: Hi. Good afternoon. Thanks for taking my questions. I'd love to start with bikes and disaggregating that within SSG. You gave a lot of helpful color on the call.

Anna Glaessgen: Hi. Good afternoon. Thanks for taking my questions. I'd like to start with bikes and disaggregating that within SSG. You gave a lot of helpful color on the call, but maybe could you unpack what's embedded in guidance through H2? Should we be expecting bikes to be growing? I know on the one hand, you talked about stabilization in the business, but also talked about some mixed demand signals as we're still in the recovery phase. I guess if you could characterize what inning of recovery we're in and how far away you think we are from seeing more reliable growth within the industry. Thanks.

Anna Glaessgen [Senior Analyst: Hi. Good afternoon. Thanks for taking my questions. I'd like to start with bikes and disaggregating that within SSG. You gave a lot of helpful color on the call, but maybe could you unpack what's embedded in guidance through H2? Should we be expecting bikes to be growing?

Speaker #6: But maybe could you unpack what's embedded in guidance through the back half? Should we be expecting bikes to be growing and I know on the one hand you talked about stabilization in the business, but also talked about some mixed demand signals as we're still in the recovery phase.

Anna Glaessgen [Senior Analyst: I know on the one hand, you talked about stabilization in the business, but also talked about some mixed demand signals as we're still in the recovery phase. I guess if you could characterize what inning of recovery we're in and how far away you think we are from seeing more reliable growth within the industry. Thanks.

Speaker #6: I guess, if you could characterize what kind of recovery we're in, and how far away you think we are from seeing more reliable growth within the industry.

Speaker #6: Thanks.

Speaker #2: Great, great question, Anna. Relative to bike, what we are absolutely pleased about is the durability of this business. It continues to perform year after year now, being very stable.

Dennis Schemm: Great question, Anna. Relative to bike, what we are absolutely pleased about is the durability of this business. It continues to perform year after year now, being very stable. We're expecting it to be extremely stable with prior year. Not expecting growth, but we're expecting strong margins there for the entire year, essentially. We should see a pickup in Q3 relative to the bike side of things and then just leveling off as normal seasonality would go in Q4.

Speaker #2: And so we're expecting it to be extremely stable with prior year. So not expecting growth, but we're expecting strong margins there for the entire year.

Speaker #2: Essentially. And so we should see a pickup in Q3 relative to the bike side of things and then just leveling off as normal seasonality would go in Q4.

Speaker #4: Yeah. And as Mike,

Michael C. Dennison: Yeah, Anna, this is Mike. I think that was good. I think I would add, one of the benefits of our bike business, because we're in the premium space, is it creates more predictability. As we come through the process of all the last years of volatility and inventory issues that you're well aware of, that predictability driven by the premium nature of our product offering has enabled us to really stabilize the business, as I mentioned in my prepared comments, and gives us a better view of Q3 and Q4, which we're real happy to see.

Mike Dennison: Yeah, Anna, this is Mike. I think that was good. I think I would add, one of the benefits of our bike business, because we're in the premium space, is it creates more predictability. As we come through the process of all the last years of volatility and inventory issues that you're well aware of, that predictability driven by the premium nature of our product offering has enabled us to really stabilize the business, as I mentioned in my prepared comments, and gives us a better view of Q3 and Q4, which we're real happy to see.

Speaker #5: I would I would I think that was good. And I think I would add, one of the benefits of our bike business, because we're in the premium space, is it creates more predictability.

Speaker #5: So as we come through the process of all the last years of volatility and inventory issues that you're well aware of, that predictability driven by the premium nature of our product offering has enabled us to really stabilize the business, as I mentioned in my prepared comments, and gives us a better view of Q3 and Q4, which we're real happy to see.

Speaker #5: In addition, one of the things that's volatile in the business in a good way is that the new product launches especially around e-bike and drivetrain technology, battery technology, motor technology, customers and partners that we're engaged with has enabled us to attract new consumers, new entrants into the space, and drive demand.

Michael C. Dennison: In addition, one of the things that's volatile in the business in a good way is that the new product launches, especially around e-bike and drivetrain technology, battery technology, motor technology. Customers and partners that we're engaged with has enabled us to attract new consumers, new entrants into the space, and drive demand. In a lot of these cases, this product is sold out, which is something we haven't seen in bike for quite some time. The benefit of seeing demand in some of these product offerings gives us a lot of optimism relative to where this business is going, and the predictability and stability of the business helps us really understand the forecast.

Mike Dennison: In addition, one of the things that's volatile in the business in a good way is that the new product launches, especially around e-bike and drivetrain technology, battery technology, motor technology.

Mike Dennison: Customers and partners that we're engaged with has enabled us to attract new consumers, new entrants into the space, and drive demand. In a lot of these cases, this product is sold out, which is something we haven't seen in bike for quite some time. The benefit of seeing demand in some of these product offerings gives us a lot of optimism relative to where this business is going, and the predictability and stability of the business helps us really understand the forecast.

Speaker #5: So in a lot of these cases, this product is sold out, which is something we haven't seen in bike for quite some time. So the benefit of seeing demand in some of these product offerings gives us a lot of optimism relative to where this business is going and the predictability and stability of the business helps us really understand the forecast.

Speaker #6: Got it, thanks. And then, following up on that, you've been breaking out the margins by segment for a couple of years now. We know, obviously, bikes have historically been really high margin, but there's been some noise within the segment as Marucci has been layered on.

Anna Glaessgen: Got it. Thanks. Following up on that, you've been breaking out the margins by segment for a couple of years now. We know, obviously, bikes historically have been really high margin, but there's been some noise within the segment as Marucci's been layered on. Could you maybe help us with what the incremental margin could be if we got a little bit more sustainable growth within that segment?

Anna Glaessgen [Senior Analyst: Got it. Thanks. Following up on that, you've been breaking out the margins by segment for a couple of years now. We know, obviously, bikes historically have been really high margin, but there's been some noise within the segment as Marucci's been layered on. Could you maybe help us with what the incremental margin could be if we got a little bit more sustainable growth within that segment?

Speaker #6: Could you maybe help us with what the incremental margin could be if we got a little bit more sustainable growth within that segment?

Speaker #2: Yeah. As we continue to grow, I mean, clearly bike and the combination of Marucci both is what we're expecting to see grow during the second half.

Dennis Schemm: Yeah. As we continue to grow, clearly, bike and the combination of Marucci both is what we're expecting to see grow during the H2. When we see those two come together, those will start to climb and be a very strong margin profile for us going through Q3 and Q4, because we are expecting both to step up here in Q3, Marucci will continue to grow into Q4 as well. We feel really good about SSG moving forward through the H2 of the year.

Speaker #2: When we see those two come together, those will start to climb and be a very strong margin profile for us going through Q3 and Q4 because we are expecting both to step up here in Q3.

Speaker #2: And then Marucci will continue to grow into Q4 as well. So we feel really good about SSG moving forward through the second half of the year.

Speaker #6: Great. Thanks, Ben.

Anna Glaessgen: Great. Thanks, guys.

Anna Glaessgen [Senior Analyst: Great. Thanks, guys.

Speaker #3: Thank you. Our next question comes from Craig Kennison with Baird. Your light is now open.

Operator 3: Thank you. Our next question comes from Craig Kennison with Baird. Your line is now open.

Operator: Thank you. Our next question comes from Craig Kennison with Baird. Your line is now open.

Speaker #4: Hey, good afternoon. Thanks for mentioned a new bat hitting in Q3 from Marucci. Maybe just give us an update on the latest in sporting goods in general and how order patterns are looking.

Craig Kennison: Good afternoon. Thanks for taking my question. You mentioned a new bat hitting in Q3 from Marucci. Give us an update on the latest in sporting goods in general and how order patterns are looking. I know there was a delay in Q2 orders.

Craig Kennison [Senior Analyst: Good afternoon. Thanks for taking my question. You mentioned a new bat hitting in Q3 from Marucci. Give us an update on the latest in sporting goods in general and how order patterns are looking. I know there was a delay in Q2 orders.

Speaker #4: I know there was a delay in Q2 orders.

Speaker #2: Yeah, the delay in Q2 is driven by us, to make sure that we could launch the bat with the right level of inventory in the channels.

Michael C. Dennison: The delay in Q2 was driven by us to make sure that we could launch the bat with the right level of inventory in the channels, with an improved level of inventory in the channels. We delayed that launch ourselves to really create the best opportunity to have a great bat launch with heavier volume. As you know, sporting goods is a place where inventory is a problem. New product is your best bet against the inventory challenge. Getting these launches out really gives us a chance to reach a consumer with a product that's inspiring and motivates them to spend money. That's why we've pushed out the launch from Q2 to Q3. We want to give it the most air time it can get, and we're pretty confident what it can do in Q3 and Q4.

Mike Dennison: The delay in Q2 was driven by us to make sure that we could launch the bat with the right level of inventory in the channels, with an improved level of inventory in the channels. We delayed that launch ourselves to really create the best opportunity to have a great bat launch with heavier volume.

Speaker #2: With an improved level of inventory in the channels. So we delayed that launch ourselves to really create the best opportunity to have a great bat launch with heavier volume.

Speaker #2: So as you know, sporting goods is a place where inventory is a problem. New product is your best bet against the inventory challenge. And so getting these launches out really gives us a chance to reach a consumer with a product that's inspiring and motivates them to spend money.

Mike Dennison: As you know, sporting goods is a place where inventory is a problem. New product is your best bet against the inventory challenge. Getting these launches out really gives us a chance to reach a consumer with a product that's inspiring and motivates them to spend money. That's why we've pushed out the launch from Q2 to Q3. We want to give it the most air time it can get, and we're pretty confident what it can do in Q3 and Q4.

Speaker #2: So that's why we've pushed out the launch from Q2 to Q3. We want to give it the most airtime it can get. And we're pretty confident in what it can do in Q3 and Q4.

Speaker #4: Yeah. Thanks, Mike. Maybe just, I guess, help me explain. If there's inventory is a problem, I know innovation is the answer, but you still have to let the other stuff clear.

Craig Kennison: Thanks, Mike. Help me explain. If inventory is a problem, I know innovation is the answer, but you still have to let the other stuff clear. Is that not right?

Craig Kennison [Senior Analyst: Thanks, Mike. Help me explain. If inventory is a problem, I know innovation is the answer, but you still have to let the other stuff clear. Is that not right?

Speaker #4: Is that not right?

Speaker #2: Yeah. We saw a lot of that in Q1 and Q2. We saw it in our margin profiles and discounting and trying to move those bats.

Michael C. Dennison: We saw a lot of that in Q1 and Q2. We saw it in our margin profiles and in discounting and trying to move those bats. We definitely have to do the hard work of the inventory cleanup while we're doing the work of innovation and driving new bat launches. You're absolutely right, Craig. It's a blend between the two activities, and you got to kind of use the brake and gas pedal at the same time to do them both. It's a tricky environment. We've experienced it before in other parts of our business, and it'll take us some time to work through it for sure in the Marucci space.

Mike Dennison: We saw a lot of that in Q1 and Q2. We saw it in our margin profiles and in discounting and trying to move those bats. We definitely have to do the hard work of the inventory cleanup while we're doing the work of innovation and driving new bat launches. You're absolutely right, Craig.

Speaker #2: So we definitely have to do the hard work of the inventory cleanup while we're doing the work of innovation and driving new bat launches.

Speaker #2: So you're absolutely right, Craig. It's a blend between the two activities. And you got to kind of use the break and gas pedal at the same time to do them both.

Mike Dennison: It's a blend between the two activities, and you got to kind of use the brake and gas pedal at the same time to do them both. It's a tricky environment. We've experienced it before in other parts of our business, and it'll take us some time to work through it for sure in the Marucci space.

Speaker #2: So it's a tricky environment. We've experienced it before. In other parts of our business. And it'll take us some time to work through it for sure in the merchant space.

Speaker #4: And then maybe just add some color on the softball market, please.

Craig Kennison: maybe just add some color on the softball market, please.

Craig Kennison [Senior Analyst: Maybe just add some color on the softball market, please.

Speaker #2: Yeah. I mean, softball is new for us. That was one of the things that we invested in heavily over the last couple of years to build that team and to build our abilities and product offering to support that part of the sport.

Michael C. Dennison: Yeah. Softball is new for us. That was one of the things that we invested in heavily over the last couple of years to build that team and to build our abilities and product offering to support that part of the sport. It's grown significantly. At the beginning of this year, we've talked about it in prior earnings calls. It continues to grow, and we outpace growth in most other sectors of Marucci with what we've done in softball, both college, pre-college, and even adult slow pitch softball, which is crazy enthusiast market for sure.

Mike Dennison: Yeah. Softball is new for us. That was one of the things that we invested in heavily over the last couple of years to build that team and to build our abilities and product offering to support that part of the sport. It's grown significantly. At the beginning of this year, we've talked about it in prior earnings calls. It continues to grow, and we outpace growth in most other sectors of Marucci with what we've done in softball, both college, pre-college, and even adult slow pitch softball, which is crazy enthusiast market for sure.

Speaker #2: It's grown significantly. At the beginning of this year, we've talked about it in prior earnings calls. It continues to grow. And we outpace growth in most other sectors of Marucci with what we've done in softball, both college pre-college, and even adult slow pitch softball, which is crazy, crazy enthusiast market for sure.

Speaker #4: Thank you.

Craig Kennison: Thank you.

Craig Kennison [Senior Analyst: Thank you.

Speaker #3: Thank you. Our next question will come from Scott Stember with Roth Capital. Your line is open.

Operator 3: Thank you. Our next question will come from Scott Stember with ROTH MKM. Your line is open.

Operator: Thank you. Our next question will come from Scott Stember with ROTH MKM. Your line is open.

Speaker #7: Good afternoon. Or evening. And thanks for taking my questions as well. Question on Marucci. I know we're talking about the bats for a while and the movement into softball to some of these other areas.

Scott Stember: Good afternoon or evening, and thanks for taking my questions as well. Question on Marucci. I know we're talking about the bats for a while and the movement into softball to some of these other areas, could you talk about how some of the non-baseball bat things are doing within Marucci, whether it's the Hitters Warehouse or the Major League contract or maybe even the grips business. How is that stuff doing?

Speaker #7: But could you talk about how some of the non-baseball bat things are doing within Marucci, whether warehouse, or major league contract, or maybe even the grips business?

Speaker #7: How is that stuff doing?

Speaker #2: Yeah. So lizard skins. I'll start with the last one you mentioned, which is lizard skins. That's doing fantastic. I mean, we're really, really proud of what that team has done.

Michael C. Dennison: Yeah. Lizard Skins, I'll start with the last one you mentioned, which is Lizard Skins. That's doing fantastic. We're really proud of what that team's done. We've moved the warehousing and distribution of that business to Baton Rouge to make it more optimized. That's helping us on the cost basis and more productivity and efficiency in our warehouse. That's good. The end market demand is really strong across Lizard Skins as that expands into lots of sports beyond baseball, of course, and it's even in our bike business. We like that business a lot. The rest of the business is, you look at what's working really well in Marucci around things like gloves and some of our other business verticals, if you will. Quite strong. Probably more softness in some parts around shoes and some of the other things that we do in Marucci.

Mike Dennison: Yeah. Lizard Skins, I'll start with the last one you mentioned, which is Lizard Skins. That's doing fantastic. We're really proud of what that team's done. We've moved the warehousing and distribution of that business to Baton Rouge to make it more optimized. That's helping us on the cost basis and more productivity and efficiency in our warehouse. That's good.

Speaker #2: We've moved the warehousing and distribution of that business to Baton Rouge to make it more optimized. That's helping us on the cost basis and more productivity and efficiency in our warehouse.

Speaker #2: So that's good. The end market demand is really strong across lizard skins as that expands into lots of sports beyond baseball, of course. And it's even in our bike business.

Mike Dennison: The end market demand is really strong across Lizard Skins as that expands into lots of sports beyond baseball, of course, and it's even in our bike business. We like that business a lot. The rest of the business is, you look at what's working really well in Marucci around things like gloves and some of our other business verticals, if you will. Quite strong. Probably more softness in some parts around shoes and some of the other things that we do in Marucci. We're trimming those back as we really focus on the things that work the best.

Speaker #2: So we like that business a lot. The rest of the business is you look at what's working really well in Marucci around things like gloves and some of our other business verticals, if you will.

Speaker #2: Quite strong. We probably saw more softness in some parts around shoes and some of the other things that we do in Marucci, so we're trimming those back because we really focus on the things that work the best.

Michael C. Dennison: We're trimming those back as we really focus on the things that work the best.

Speaker #5: Yeah. But the big drivers, again, is going to be baseball. And it's going to be softball. And having a lot of success internationally with Japan as well.

Dennis Schemm: Yeah. The big drivers, again, is going to be baseball, going to be softball and having a lot of success internationally with Japan as well.

Dennis Schemm: The big drivers, again, is going to be baseball, going to be softball and having a lot of success internationally with Japan as well.

Speaker #2: Yeah, I think the way to think about it is: if you win in BATS, you win across the board. If you're not winning in BATS, you're going to struggle.

Michael C. Dennison: Yeah. I think the way to think about it is if you win in bats, you win across the board. If you're not winning in bats, you're going to struggle. Our MLB relationship, by the way, you asked about that, too, very good.

Mike Dennison: I think the way to think about it is if you win in bats, you win across the board. If you're not winning in bats, you're going to struggle. Our MLB relationship, by the way, you asked about that, too, very good. Through the All-Star Game, the Home Run Derby, we did fantastic. It was a proud moment for the team.

Speaker #2: Our MLB relationship, by the way—you asked about that, too—is very good. And through the All-Star Game and the Home Run Derby, we did fantastic.

Dennis Schemm: Right.

Michael C. Dennison: Through the All-Star Game, the Home Run Derby, we did fantastic. It was a proud moment for the team.

Speaker #2: It was a proud moment for the team.

Speaker #4: Got it. And then on the tariff environment, looking past IEPA refunds, obviously a lot of changes. We've seen some replacement with the 232s and now the 301s.

Scott Stember: Got it. On the tariff environment, looking past IEEPA refunds, obviously a lot of changes. Have some replacement with the 232s and now the 301s. Could you just give us what the net go forward narrative is on tariffs heading into the back half of the year and into next year?

Scott Stember: Got it. On the tariff environment, looking past IEEPA refunds, obviously a lot of changes. Have some replacement with the 232s and now the 301s. Could you just give us what the net go-forward narrative is on tariffs heading into the back half of the year and into next year?

Speaker #4: Could you just give us what the net go-forward narrative is on tariffs, heading into the back half of the year and into next year?

Speaker #5: Yeah. I mean, the tariff environment clearly we've anniversaried a lot of that, right? So I believe we talked about 80 million annual impact, direct, indirect, and then we netted this down to around 40 million, just through so much work from our teams on the operation side, supply chain, etc.

Dennis Schemm: Yeah. The tariff environment, clearly we've anniversaried a lot of that. Right? I believe we talked about $80 million annual impact, direct, indirect, and then we netted this down to around $40 million just through so much work from our teams on the operations side, supply chain, et cetera. Going forward, Obviously tariffs just continue to some degree, and slightly benefiting Marucci near year-end as well, just because of some of the changes that had cycled through.

Dennis Schemm: The tariff environment, clearly we've anniversaried a lot of that. Right? I believe we talked about $80 million annual impact, direct, indirect, and then we netted this down to around $40 million just through so much work from our teams on the operations side, supply chain, et cetera. Going forward, Obviously, tariffs just continue to some degree, and slightly benefiting Marucci near year-end as well, just because of some of the changes that had cycled through.

Speaker #5: And so going forward, we are expecting those obviously tariffs just continue to some degree. And slightly benefiting Marucci near year-end as well. Just because of some of the changes that had cycled through.

Speaker #2: If we're through the majority of the changes in tariffs, if there's not a lot of additional volatility, as you go into '27, tariffs effectively become fairly priced into our products and our markets.

Michael C. Dennison: If we're through the majority of the changes in tariffs, if there's not a lot of additional volatility, as you go into 2027, tariffs effectively become fairly priced into our products and our markets. Tariffs become a lesser factor on a go-forward basis relative to impact to the P&L on any quarterly or annual level. Eventually, you get all these things baked into your model, and you get it into your pricing, and you get it into your customer relationships, and eventually it gets into the consumer pricing model. It's a lesser factor for us to talk about on these calls.

Mike Dennison: If we're through the majority of the changes in tariffs, if there's not a lot of additional volatility, as you go into 2027, tariffs effectively become fairly priced into our products and our markets. Tariffs become a lesser factor on a go-forward basis relative to impact to the P&L on any quarterly or annual level. Eventually, you get all these things baked into your model, and you get it into your pricing, and you get it into your customer relationships, and eventually it gets into the consumer pricing model. It's a lesser factor for us to talk about on these calls.

Speaker #2: So tariffs become a lesser factor on a go-forward basis. Relative to impact the P&L on any quarterly or annual level. So you eventually you kind of get all these things baked into your model.

Speaker #2: And you get it into your pricing. And you get it into your customer relationships. And eventually it gets into the consumer pricing model. And then it's a lesser factor for us to talk about on these calls.

Speaker #4: Got it. And then if you're taking the same talk about the 20 million of incremental input costs and your current right sizing plan right now, how much of that is built into pricing for '27?

Scott Stember: Got it. If you've taken the same talk about the $20 million of incremental input costs, and your current rightsizing plan right now, how much of that is built into pricing for 2027?

Speaker #5: So very little would be built in now because that's so fresh. And right now, the teams are taking a look at that. And they'll be building their plans as we move into further into the back half of the year.

Dennis Schemm: Very little would be built in now because that's so fresh, and right now the teams are taking a look at that. They'll be building their plans as we move further into the back half of the year, and that's when a lot of the customer conversations will start to occur, and pricing changes would have to be made. Quite frankly, we'll continue our operational prowess and look for the cost outs as well. Yeah, inflation is very persistent. It's tricky. We are doing everything we can, heads down every single day, trying to offset the inflation that continues to come at us.

Speaker #5: And that's when a lot of the customer conversations will start to occur. And pricing changes would have to be made. And quite frankly, we'll continue our operational prowess and look for the cost outs as well.

Speaker #5: And so yeah, inflation is very persistent. It's tricky. And we are doing everything we can heads down every single day trying to offset the inflation that continues to come at us.

Speaker #2: And I think the way to think about that too is you don't want to you have to break it into the pieces where you're seeing the inflation.

Michael C. Dennison: I think the way to think about that too is you have to break it into the pieces where you're seeing the inflation. If it's a temporary inflation because of a shipping channel, that's fairly transient. If you're thinking about a commodity index increase, that can be stickier, and those things are easier to price through to end customers, especially on the OEM side. Those, not so much a factor necessarily in a 2027 outlook. If freight rates, if container rates, if fuel costs stayed significantly higher, you'd need to think about changes you can make in your supply chain structure, changes in your routing on a more permanent basis. Those things we'll figure out between Q3 and Q4. They tend to be a little bit less sticky over the long haul, and therefore not as time sensitive relative to those customer conversations.

Mike Dennison: I think the way to think about that too is you have to break it into the pieces where you're seeing the inflation. If it's a temporary inflation because of a shipping channel, that's fairly transient. If you're thinking about a commodity index increase, that can be stickier, and those things are easier to price through to end customers, especially on the OEM side. Those, not so much a factor necessarily in a 2027 outlook.

Speaker #2: If it's a temporary inflation because of a shipping channel, that's fairly transient. If you're thinking about a commodity index increase, that can be stickier.

Speaker #2: And those things are easier to price through to end customers, especially in the OEM side. So those not so much a factor necessarily in a '27 outlook.

Speaker #2: If freight rates, if container rates, if fuel costs stayed significantly higher, you'd need to think about changes you can make in your supply chain structure—changes in your routing on a more permanent basis.

Mike Dennison: If freight rates, if container rates, if fuel costs stayed significantly higher, you'd need to think about changes you can make in your supply chain structure, changes in your routing on a more permanent basis. Those things we'll figure out between Q3 and Q4. They tend to be a little bit less sticky over the long haul, and therefore not as time sensitive relative to those customer conversations.

Speaker #2: Those things we'll figure out between Q3 and Q4. They tend to be a little bit less sticky over the long haul. And therefore not as time-sensitive relative to those customer conversations.

Speaker #4: Gotcha. That's all I have. Thank you.

Scott Stember: Gotcha. That's all I got. Thank you.

Speaker #1: Thank you. We'll go next to Larry Solo with CJS Securities. Your line is now open.

Operator 3: Thank you. We'll go next to Larry Solow with CJS Securities. Your line is now open.

Operator: Thank you. We'll go next to Larry Solow with CJS Securities. Your line is now open.

Speaker #6: Yeah. Hi, it's Pete Lucas for Larry. Just for AAG, can you update us on any progress with diversification into other platforms outside of Ford, Toyota, and Ram? Is there anything we should be focused on there?

Peter Lukas: Yeah. Hi, it's Peter Lukas for Larry. Just for AAG, can you update us on any progress with diversification into other platforms outside of Ford, Toyota, and Ram, if there's anything we should be focused on there?

Pete Lukas: Hi, it's Pete Lukas for Larry. Just for AAG, can you update us on any progress with diversification into other platforms outside of Ford, Toyota, and Ram, if there's anything we should be focused on there?

Michael C. Dennison: Good question, Pete. Most of our diversification is really coming through these new partnerships with predominantly Ford and Stellantis today. Those are significant, and those have been a really strong collaboration between us and the OEMs. That not only helps us with our, like what I talked about before, relative to absorption, go to market, but also on the vehicle set. Whereas we would've been predominantly in a few different products within, let's say, a Stellantis relationship, that's expanded now beyond that to other vehicles, the same with Ford. That's pretty exciting because that takes us into places, into vehicles, into relationships that we didn't necessarily have before. That diversification is really compelling, probably more so than adding additional OEM brands to the mix, if that makes sense.

Mike Dennison: Good question, Pete. Most of our diversification is really coming through these new partnerships with predominantly Ford and Stellantis today. Those are significant, and those have been a really strong collaboration between us and the OEMs. That not only helps us with our, like what I talked about before, relative to absorption, go to market, but also on the vehicle set.

Speaker #2: Most of our diversification, good question, Pete. Most of our diversification is really coming through these new partnerships with predominantly Ford and Stellantis today. Those are significant.

Speaker #2: And those have been a really strong collaboration between us and the OEMs. That not only helps us with our what I talked about before relative to absorption, go-to-market, but also on the vehicle set.

Speaker #2: So whereas we would have been predominantly in a few different products within, let's say, a Stellantis relationship, that's expanded now beyond that to other vehicles the same with Ford.

Mike Dennison: Whereas we would've been predominantly in a few different products within, let's say, a Stellantis relationship, that's expanded now beyond that to other vehicles, the same with Ford. That's pretty exciting because that takes us into places, into vehicles, into relationships that we didn't necessarily have before. That diversification is really compelling, probably more so than adding additional OEM brands to the mix, if that makes sense.

Speaker #2: So that's pretty exciting because that takes us into places into vehicles, into relationships that we didn't necessarily have before. And that diversification is really compelling.

Speaker #2: Probably more so than adding additional OEM brands to the mix, if that makes sense.

Speaker #6: Yes. Thanks. And then just on bikes, you normally launch next year's models in Q2. Did that occur this time?

David Brown: Yes. Thanks. Just on bikes, you normally launch next year's models in Q2. Did that occur this time?

Pete Lukas: Yes. Thanks. Just on bikes, you normally launch next year's models in Q2. Did that occur this time?

Speaker #2: It did. Yep.

Michael C. Dennison: It did. Yep.

Mike Dennison: It did. Yep.

Speaker #6: Perfect. That'll do it.

David Brown: Perfect.

Pete Lukas: Perfect. That'll do it.

Michael C. Dennison: It was-

David Brown: That'll do it.

Speaker #2: Yep. Thanks, Pete.

Michael C. Dennison: Yep. Thanks, Pete.

Mike Dennison: Yep. Thanks, Pete.

Speaker #6: Thanks.

David Brown: Thanks.

Pete Lukas: Thanks.

Speaker #1: Thank you. At this time, there are no further questions in queue. I will now turn the meeting back to Mike Denison for any additional or closing remarks.

Operator 3: Thank you. At this time, there are no further questions in queue. I will now turn the meeting back to Mike Dennison for any additional or closing remarks.

Operator: Thank you. At this time, there are no further questions in queue. I will now turn the meeting back to Mike Dennison for any additional or closing remarks.

Speaker #2: Thanks, everybody. Have a good evening. Talk to you soon.

Michael C. Dennison: Thanks, everybody. Have a good evening. Talk to you soon.

Mike Dennison: Thanks, everybody. Have a good evening. Talk to you soon.

Operator 3: This does conclude the Fox Factory Holding Corporation's Q2 2026 earnings call. You may now disconnect your line and have a great day.

Operator: This does conclude the Fox Factory Holding Corporation's Q2 2026 Earnings Call. You may now disconnect your line and have a great day.

Q2 2026 Fox Factory Holding Corp Earnings Call

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