Fox Factory Holding Corp.

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Fox Factory Holding Corporation's first quarter 2021 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'd now like to turn the conference over to your host, Vivek Bhatgani. Director of Investor Relations and Business Development. Thank you, sir. You may begin.

Thank you. Good afternoon and welcome to Fox Factories' first quarter 2021 earnings conference call. I'm joined today by Mike Dennison, our Chief Executive Officer, and Scott Humphrey, our Chief Financial Officer and Treasurer. First, Mike will provide business updates. Then Scott will review the financial results of the quarter and then the outlook followed by closing remarks from Mike. We will then open the call up for your questions. By now, everyone should have access to the earnings release which went out today at approximately 4 or 5 Eastern Time. 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. Before we begin, I would like to remind everyone that the prepared remarks contain forward-looking statements and management may make additional forward-looking statements in response to your questions. Such statements involve a number of known and unknown uncertainties, many of which are outside the company's control and can cause future results, performance, or achievements will differ significantly from the results, performance, or achievements expressed or implied by such forward-looking statements. Important factors and risks that could cause or contribute to such differences are detailed in the company's latest Form 10-Q and in the annual report on Form 10-K filed with the Securities and Exchange Commission. Except as required by law, the company undertakes no obligation to update any forward-looking or other statements herein, whether as a result of new information, Future Events, or otherwise. and with that, it is my pleasure to turn the call over to our CEO, Mike Dennison.

Thank you, Vee, and good afternoon. We appreciate everyone taking the time to join us for today's call. For our first quarter results, I am proud to report the highest quarterly revenue in our company's history, powered by record-breaking performance in both divisions. The credit for this success can be attributed to the dedication, agility, and adaptability of our incredible team which continues to maneuver through the endless challenges associated with the current environment. Our team has executed remarkably while making sustained continuous improvements operationally. This consistent performance also reflects the continued strength of our leading brand portfolio and our team's commitment to deliver high performance products to our valued customers while still managing dynamic supply chain realities. Turning to the numbers, our first quarter sales were $281.1 million, an increase of 52.5% compared to the first quarter of last year. From a profitability perspective, we reported non-GAAP adjusted earnings per diluted share of $1.05 versus $0.52, an increase of over 100% compared to the first quarter of 2020. This staggering top and bottom line performance is further evidence that our customers can and do differentiate are premium brands from that of our competitors. The foundational drivers of our robust performance can be attributed to our expanded portfolio of high-performance products which continues to deliver on quality, engineering, and service that consistently resonates with the end consumers. Another competitive advantage behind our performance is our team's ability to effectively operate under the current dynamic supply chain environment. We recognize the unprecedented demand growth and continue to make necessary investments in products, people, technology, and while continuing to build operational discipline and a strong balance sheet. Starting with Specialty Sports Group, product sales were up 85.5% compared to the first quarter of 2020, making this SSG's highest revenue quarter ever. As I mentioned in the last earnings call, we continue to capitalize on the expanded rider base during this unprecedented restocking cycle, by leveraging strong OEM and supplier relationships. Our commitment to innovation to create performance-defining products speaks for itself as we had yet another record quarter for shock and fork unit volumes. Needless to say, we had several supply chain issues from shipping container availability to other logistical challenges. However, our team members demonstrated strong execution by successfully controlling costs and managing operations to meet our OEM's expectations. thus helping our customers manage evolving backlog and order trends. In addition, our SSG team adapted to an accelerated timeline to complete all model year 2023 sell-in tools nearly six months ahead of the typical schedule and empowering our sales team to potentially capture additional market share. Looking forward to the rest of 2021, the demand projection remains very strong. However, we are cognizant of the growing supply chain challenges, therefore we continue to work closely with our suppliers and OEM customers to identify opportunities for further collaboration and improvement. Now shifting to our Powered Vehicles Group, we posted a record revenue quarter as PVG grew 35% compared to the first quarter of 2020. A key contributor to this performance was the robust demand for our aftermarket products, including increasing dealership penetration of our upfitting business and the ongoing robust demand for our power sports products. Growth in our PVG automotive OEM business was lower than our long-term target as a result of supply chain challenges faced by our customers and the typical model year changeover at one of our major OEM customers. We see the current supply chain shortage as a byproduct of the current OEM environment, with demand generally moving into backlog versus lost business. I am also proud to report that we had fewer COVID cases in our North American facilities compared to the fourth quarter of 2020, which also enabled us to increase productivity. Our ongoing Georgia factory transition remains on track. We are closely monitoring our margins and a duplicate of costs associated with that transition for any lessons learned as we continually look to identify opportunities for margin expansion. As we have previously stated, we expect to see margin improvements in the latter half of this year. Turning to our power sports OEM partnerships, as you are aware, the power sports industry has been experiencing significant growth. To capitalize on this growth, Kawasaki introduced the Terex KRX, featuring RFox 2.5 podium live valve shocks with internal bypass. In addition, Polaris launched two new snowmobiles, the Indy XC and the Switchback XC, featuring our high-performance Fox QS3 shocks that offer easy pre-ride adjustability and deliver outstanding performance on and off the trail. This is our first major Polaris snowmobile spec win. Moving on to our accomplishments in the racing world, which is beginning to return to a more normal environment, one of the biggest races of the year, King of the Hammers, took place in Q1. Fox continued its winning legacy with wins in the grudge match with the top three podium spots, the top two unlimited trucks in the T1 Desert Challenge, and a top five sweep of the Everyman Challenge, including wins in both the 4800 and 4500 classes. In addition, Ford Performance unveiled their new Bronco 4600 race vehicle, which will run in the Ultra Force stock class. The Bronco 4600's competition-tuned high-performance off-road stability suspension features Fox coilover shocks with remote reservoirs and a Fox pneumatic bump stop on all four corners. In closing, I am very pleased with the exceptional results and a great start to the year. We recognize the pandemic is still not over and the lingering risks are challenging us in many new ways every day. However, I feel very confident that our performance-defining products, our complementary and diverse set of businesses, will help us continue to deliver strong performance in 2021. And with that, I'll turn the call over to Scott.