Fox Factory Holding Corp. (NASDAQ:FOXF) Q4 2022 Earnings Call Transcript

Scott Humphrey: Yes. It’s great question, Jim. So in the last couple of years, OEM launches, product launches, OEM capacity and supply chain, we’re pretty deemed up, I guess, use the technical term. That’s coming around now. So we are starting to see that in Q4 where the demand and the pull from the OEMs was going stronger, that continued into Q1. And I think you see a fairly linear strength in automotive OEMs throughout the entire year. I think you can see it pick up a little bit in the back half, not necessarily from a demand problem or issue. But from the standpoint that they are like on the bulk or the other supply chain issues get resolved. As those get resolved, we will be pushing even more product out to for other OEMs to support the demand. So I think it’s going to be strong all year, fairly linear could get better in the back half, if they can get some of the other issues results.

Jim Duffy: Okay, great. And then you spoke to expectations for continued strength from updating maybe touch on what you’re seeing with the Powersports business and then the aftermarket business, including Sport Truck USA?

Mike Dennison: Yes. Powersports continues to be strong. We’re still in backlog. We expect to be out of backlog. We will kind of caught up in current with our Powersports customers by Q2 sometime in Q2. We think that’s strong throughout the year. There is still a lot of demand for those products and you’re leading those reports as well, Jim. I know so you’re seeing what’s happening with players in DRP, but we feel very comfortable with kind of what we were looking at for 2023 in that space. It will level off a little bit. It was growing so fast that we expect that to come back to a more normal growth curve, but obviously, very strong. I think this is going to be a great year for our Sport Truck business between sport truck and outside vans and not fitting taking advantage of the custom warehouse acquisition.

We’re going to have new ways to go to market anywhere a combined product, even shock therapy, on our more recent acquisitions will benefit from the customs warehouse transaction. So I think all this is going to be a good deal for that, what we call kind of aftermarket applications and we will be talking a lot about that business or those businesses this year.

Jim Duffy: Great. Lastly, I wanted to ask about Custom Wheel House. I recognize you don’t get on the business. You probably don’t want to get too far ahead of yourself. But in the press release, it seemed to suggest that you saw them a reliable supplier for a number of different aspects of your business. I’m just curious about their ability to scale and ramp demand. It seems there is a lot of different avenues for the method wheels product to your distribution channels, how quickly can you get that business to a higher level?

Mike Dennison: Yes, great question. So we do think there is a lot of opportunity for integration, as I mentioned earlier and we think that this is something that we will get after the date of that deal actually gets transacted and closed. And so we’re going to be talking about that a lot in the next earnings call as we did the business integrated. My perspective on their supply chain, it’s pretty scalable. They are not the manufacturer. They use contract manufacturers, mainly in China, starting to use some in Thailand and other places. So we’re going to go do some more work on that. But we absolutely think that by, call it, the end of this year, we will put the extra capacity in place to provide those wheels through our truck and outside van business and sport truck business and the rest. So it will have an impact this year on the rest of our business. Just not sure exactly how defined we can make that yet until we get the transaction closed.

Jim Duffy: Understood. Thank you so much.