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

Mike Dennison: Yes, to a certain extent, Larry, but I would caution you to read too much into that because Taiwan is a very variable workforce and they were structured to adjust very quickly. We’ve already taken some of that action earlier. So we will have some headwinds because of the reduced revenue, but it’s a not a mix issue as Scott talked about.

Larry Solow: Right. And on Powered Vehicles and PBG, in particular, so 20% is your plus growth. Most of that growth, like you mentioned, is coming from the OEM side. How that just €“ the outlook for the upfitting market, which has been a real driver for growth for you guys for the last several years and obviously, the acquisition of FCA in 2020 helped that. Is that market itself €“ just looking at that market, is that €“ I know some people are concerned that that market will start to slow? How is that holding up?

Mike Dennison: It’s gone up pretty well. We have seen inventories last a little bit longer. So days of supply has gone up a little bit. But that business has been so nimble to adjust and change dealership structures and add more dealers. We actually see that as a growing business in 2023 as well. So we’re not taking our foot up the gas there with the method we as our customer warehouse acquisition there is even more we can do in that space. So we’re super excited about 2023 and that entire aftermarket applications business.

Larry Solow: Okay. And as you mentioned, it sounds like, I know 2025 is getting closer, but it feels like if the SSG recovers, you’re not too €“ that shouldn’t give point of time contract cover, obviously. And barring a multiyear recession type thing, it sounds like you’re still pretty comfortable certainly on the revenue side and hopefully, you’ve been on the margin side of getting back to sort of your targets within a couple of years or that target, which is a 25% target. Is that fair?

Mike Dennison: Yes. You said it well. I think we’re still very confident in top line in $2 billion by 2025. And we still have the plans and the actions in place and the objectives to get to the EBITDA expectation of 25%. Obviously, there is some mix issues on a short-term basis that kind of affect us there, but the improvement in Gainesville in Q4 were significant and we think we’re going to realize that 250 to 350 basis point improvement in 2023, so even helping us kind of offset the mix change, yes, Scott and I and the team are very confident in that 2025 year.

Larry Solow: Okay, great. I appreciate all the color. Thanks, guys.

Operator: Thank you. Our next question will come from Jim Duffy with Stifel. Your line is open.

Jim Duffy: Thank you. Good afternoon, guys. Few questions for you. I wanted to start on the Power Vehicle Group and assumptions in the guidance you’re expecting strong contribution from OEMs. Maybe speak to the factors contributing to that OEM strength and how that plays across the year, just to help us perhaps get some dimension of how that flows and how the mix influence might play out by quarter?