Stand by, your meeting is about to begin. Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Fox Factory Holding Corp.'s third quarter, 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, and please note this conference call is being recorded. I'd now like to turn the conference over to Mr. Toby Merchant, Chief Legal Officer at Fox Factory Holding Corp. Please go ahead, sir.

Thank you. Good afternoon and welcome to Fox Factories' third quarter 2026 earnings conference call. I'm joined today by Doug Grimm, interim chief executive officer, and Dennis Schemm, chief financial officer. First, Doug will provide business updates, and then Dennis will review the quarterly results and outlook. Doug 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. 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 of 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 in the company's latest annual report on Form 10-K, each filed with the securities index on the company's forward-looking statements and except as required by law, the company undertakes no obligation to update any forward-looking or other statements herein, whether as a result of new information, future events or otherwise. In addition, where appropriate in today's prepared remarks and within our earnings release, We will refer to certain non-GAAP financial measures to evaluate our business, including adjusted operating expenses, adjusted net income, adjusted earnings per diluted share, adjusted EBITDA excluding IEBA tariff refunds, and net debt. 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. And with that, it is my pleasure to turn the call over to our interim CEO, Doug Grimm.

Thanks, Toby, and good afternoon, everyone. Thank you for joining us. A great deal has happened at Fox since we last spoke in August, announced a change in leadership, and updated our outlook for the year. I recognize that is a lot for our shareholders to absorb and I appreciate the time many of you have already spent with Dennis and our team working through it. Our goal today is to give you a clear, complete picture of where the business stands, what is driving our results and how we are approaching the months ahead. Since this is my first time speaking with many of you, I'd like to start with a brief introduction. I've spent more than 40 years in operating and leadership roles across the automotive and industrial sectors, running global manufacturing businesses and leading a number of transformations and integrations along the way. Much of that career has been spent on plant floors and board in March, and I've served on the Transformation Committee since then, which has given me a close view of the profit optimization work that Dennis and the team have been driving. including where it has delivered and where I believe there's opportunity to do more. I want to acknowledge at the outset that our third quarter results fell short of the expectations we set in August. And that was the outlook we provided in October was a disappointment for our shareholders after the momentum we reported through the first half of the year. Dennis will take you through the results, the segment drivers and our outlook in detail. I'd like to use my time today to cover three things I see Fox today and the strengths we are building from and the priorities that will guide us, including the cultural shift we are driving across the entire organization. Starting with two business developments since our last call. The first is the divestiture of Marucci, which we completed on September 25th for an enterprise value of $225 million. We applied the $200 million of cash proceeds to debt reduction, which, together with the proceeds from the sale of Outside Van and the free cash flow we generated in the quarter, lowered our net leverage from 3.7 times to approximately 2.4 times. We faced with a simpler portfolio and a meaningfully stronger balance sheet. The second is the performance of our core business during the quarter. where supply disruption in powered vehicles, incremental inflation, and freight costs, and operational challenges in our upfit business all weighed on our results. I want to be clear about how we view those issues. Demand across power sports and our aftermarket brands remains healthy. Our relationships with our OEM partners are strong, and the supply disruption is temporary and being resolved. These challenges are real, but they are fixable, and we are working on each of them. And with net leverage at its lowest level in nearly three years, approximately $400 million of availability on our revolver and a credit facility that runs to 2030. We have the financial flexibility to work through this period while Gucci now divested. Fox is a more focused company centered on ride dynamics. The suspension, shocks, wheels, and related systems We provide across bike, power sports, automotive, and the aftermarket. Although a great deal of effort by our entire team has gone into refocusing our business, we recognize the work is not done. We will continuously evaluate each of our businesses against the same three criteria that guided those decisions. Alignment with the Fox brand, synergy with our engineering capabilities, and the ability to deliver accretive margins and durable cash flow. With that, I want to spend time on the great brands, great products and a great team. Our brands are leaders in their categories. We are a trusted innovation partner to the leading OEMs in bike, power sports and automotive and our more than 300 engineers and more than 4% of revenue we invest in R&D continue to produce compelling product roadmaps. All to say, when we look outward at our products, our technology, and our brands, Fox is first class. Fox has an established history of generating attractive, adjusted EBITDA margins over a number of years. We believe there is significant opportunity to restore that profitability through stronger execution, which is my top priority. Getting there will take more than a change in leadership. It requires a change in how we optimize it. Internally, we've been talking about this as OneFox. For too long, Fox has been managed as a collection of businesses, each working towards its own priorities. OneFox means operating as a single company with shared standards, shared accountability, and a shared commitment to delivering on what we tell our customers and our shareholders. It means using the scale of the whole company in areas such as purchasing and logistics. In practical terms, that means leaving no stone unturned. I'm going business by business and plant by plant to find where disconnects are and to put in place processes that join the monthly operating reviews that our teams hold with each of our businesses and since stepping in, have spent most of my time on the ground, in our plants, and with the people who run them. Establishing a more formal operating cadence with clear ownership of results at every level will be central to how we run Fox going forward. I've been encouraged by what I've seen so far. The people at Fox care deeply about the products they design, engineer and build, our customers and the results. They are ready for this. Let me give you a couple examples. In Powered Vehicles, I sat down with the innovation team and went through the new business pipeline and the broader slate of engineering programs underway, which reinforced my view that our product-led strategy is the right one through machine utilization. As a first step toward operating more as OneFox, I'm pleased to share that we have promoted Troy Hennigy to the new established role of Chief Technology Officer, reporting directly to me. Troy has been with Fox for more than a decade, is vice president of engineering for powered vehicles, and has worked across a broad range of product categories. He will lead our enterprise technology vision, strategy, and product roadmap, and chair our technology council, working closely with business and engineering leaders across Fox. Our products are what set us apart, and this role will help us connect the engineering strengths of our individual businesses and share what we learn across the company. The near-term work starts with you to keep up with demand this quarter. We chose to protect our customers, which meant expediting freight and running overtime, and that cost us in the quarter. We are working closely with the company to restore supply. In the meantime, we have shifted the volume to our other qualified suppliers and are adding capacity. More broadly, we are bringing our purchasing and engineering teams closer together on commodity and supplier strategy with a global view of our key suppliers and a qualified secondary source where it matters. In our upfit business, the issues are operational and we own them. I'm taking a fresh look at how we run this business from sales and dealer engagement to operations, supply chain, and chassis inventory management. We believe there is substantial opportunity here, but it will take time to show up in our results. At the same time, we continue to advance our profit optimization program to offset persistent inflation. And we are improving our operating rhythm so more of those savings reach the bottom line. We are also taking a more deliberate approach to commercial recovery. Fox makes premium, high-precision products, and our brands help elevate our customers' vehicles and create demand for them. I need to make sure we are being paid appropriately. I have worked through several periods of cost inflation in my career, and this works best when it's done thoughtfully, in partnership with customers, and consistently across the company. It is still early, but our teams have started those conversations, and we will say more when we provide our 2027 outlook in February. We will also remain focused on cash generation and debt reduction. Free cash flow will continue to go towards paying down debt, supported by a sharper focus on working capital, including inventory, chassis prepaids, and receivables, and continued discipline on capital spending, while we protect our investment in R&D. Across all of this, every business, product line, and R&D project will be measured against clear return thresholds consistent with executive incentives tied to return on invested capital and free cash flow. This framework is what will shape our 2027 plan, which the team is developing now, and we expect to share more detail on our fourth quarter call in February. Our goal for this period is straightforward. to execute with purpose, to deliver on the outlook we've set, and to put Fox in a position where the next CEO can build on a stronger operating foundation from day one. I want to see that work show up in our numbers.

Before I get into the numbers, a word on the transition. I've worked alongside Doug on the Transformation Committee since he joined the board, and I'm energized to be working with him in this role. We are like-minded about what this business needs, operating rigor, financial discipline, and accountability. And he brings a pace to that work that I welcome. In a short time, he has already sharpened how our businesses approach pricing and plan productivity. I will begin by discussing our third quarter, followed by our balance sheet, cash flow, and capital allocation. before concluding with a review of our outlook. Starting with our results, as we outlined on October 16th, third quarter results were below our expectations, primarily due to lower sales and margin at Maroochee ahead of the closing, lower than expected sales and margins in powered vehicles, driven by a supplier disruption and the associated higher operating costs along with unfavorable mix. Operating challenges in our outfit business within softer than expected bike sales. These came against a more difficult backdrop as higher interest rates and broader macroeconomic conditions continued to weigh on dealers and consumers. Total consolidated net sales in the third quarter were $338.4 million, a decrease of 10.1% compared to the prior year period. That includes approximately $33 million from Marucci through the September 25th closing. compared to approximately $49 million in the prior year period and approximately $46 million, 31.5%, compared to 30.4% in the third quarter last year. The increase was primarily driven by IEPA tariff refunds, partially offset by shifts in our product line mix and higher external input costs including freight, commodities, and fuel. On our August call, we said incremental input cost inflation was running nearly $20 million above the assumptions in our full year plan, with approximately $15 million of that in the second half. Since then, external costs have remained elevated, and our outlook reflects input costs at current levels, including aluminum. adjusted operating expenses for $68.7 million or 20.3% of net sales, down from $85.7 million or 22.8% of net sales in the year-ago period. Compared to the second quarter, we drove a sequential reduction of $9.8 million or a 160 basis point improvement as a percentage of sales, which includes the partial quarter impact of the Marucci divestiture. That includes a sequential reduction in unallocated corporate expense. For the first nine months, we captured approximately $41 million of gross savings against our $50 million stated goal. And as Doug indicated, our profit optimization efforts continue to be a cornerstone of our operating strategy as we look to 2027. Our effective tax rate was negative 1.4% in the quarter compared to the 21% federal statutory rate, primarily attributable to lower pre-tax earnings for the quarter and the tender transactions completed during the period. Adjusted net income was $22.7 million or $0.54 per diluted share compared to $9.9 million or $0.23 per diluted share in the third quarter last year. Adjusted EBITDA was $50.4 million and included approximately $12 million of IEPA tariff refunds. Excluding these refunds, which were not factored into our outlook, adjusted EBITDA was approximately $38 million. At the low end of the preliminary shortfall versus the midpoint of that range was primarily due to the timing of cost savings, which landed later than we anticipated. Adjusted EBITDA margin was 14.9% or approximately 11.3%, excluding the tariff refunds. Turning to our segments, powered vehicles group segment net sales were $131 million, up 4.1% year-over-year, driven by strengthening demand in power sports, where net sales increased 28.8%, partially offset. Segment-adjusted EBITDA was $15 million, compared to $18.9 million in the prior year period, reflecting Thank you for joining us. Our exports grew for a third consecutive quarter as our OEM customers have worked through the channel position across the major OEMs within the high end of their product assortments. Aftermarket applications group segment net sales were 93.8 million, down 20.4% year-over-year, driven by limited chassis availability for our up-fit businesses. Macroeconomic conditions affecting dealers and consumers and the loss of revenue from divested businesses. Segment adjusted EBITDA was $8.5 million compared to $12.4 million in the prior year. The challenges in this segment are primarily concentrated in our upfit business where we still have much work to do with respect to productivity while we await a normalized Our aftermarket applications components brands, including custom wheelhouse, ride tech, and sport truck, have continued to benefit from product launches and value-seeking consumer behavior as consumers who are holding off on new trucks continue to invest in the vehicles they already own. Those brands have also continued to take price where the market allows, even as some competitors have discounted. In UpFit, our OEM partnered customization programs with Ford and Stellantis menu-driven volume that flows through our plants, and they are an important part of how we expect to improve plant utilization over time. Specialty Sports Group segment net sales were $113.6 million, down 14.4%, year-over-year, largely due to retail softness at Marucci, which included approximately $33 million of contribution in Q3 this year compared to $15.6 million compared to $27.5 million in the prior year, primarily reflecting IEPA tariff refunds recorded in the segment. Bike sales were modestly softer than we expected, reflecting order timing and channel destocking as OEMs and distributors responded to market-wide economic conditions. Bike remains a stable business for us. We continue to hold a leadership position in premium bike suspension and our relationships with new entrants in e-bike along with our motor agnostic integration approach and our work on the emerging 32-inch cross-country platform continue to position us well as the industry. Moving to the balance sheet and cash flows. Cash and cash equivalents were $45.4 million compared to $61.3 million at the end of the second quarter. Total debt was $397.4 million at quarter end, down $270.3 million sequentially from the second quarter and down $276.1 million from year end. Net debt declined by $263.5 million year-to-date. As of October 2nd, our net leverage ratio is approximately 2.0% and is down from 3.7 times at the end of the second quarter. We applied the $200 million of cash received at the closing of the Marucci sale in full to debt reduction, which shifted us into a more favorable tier of rates at the lower borrowing level and had the effect of reducing our annualized interest expense by approximately $16 million. We expect the total reduction to reach $17 million once the $25 million deferred amount payable on or before December 31 borrowings. and many more. We also maintained our disciplined approach to capital spending with third quarter capital expenditures of approximate revenues and nine month capital expenditures of $14.1 million or 1.3% of revenues. Combined with the deferred Marucci proceeds and our continued focus on working capital, we expect further progress on debt reduction in the fourth quarter. Our focus continues to be on creating value for shareholders, and we will balance continued debt reduction, high return capital investments in the business, and share repurchases as we go. We have approximately $250 million remaining under our E28. The program gives us flexibility to manage dilution from equity grants and to repurchase shares opportunistically. Now, moving on to our outlook. Today we are updating our fourth quarter outlook from October 16th and narrowing our fiscal 2026 adjusted EBITDA outlook to reflect year-to-date results. For the fourth quarter, we continue to expect net sales in the range of $287 million to $313 million and adjusted EBITDA in the range of $25 million to meet additional IEPA tariff refunds. For fiscal 2026, we continue to expect net sales in the range of $1.35 billion to $1.38 billion and now expect adjusted EBITDA in the range of $143 million to $148 million. excluding approximately $14 million of IEPA tariff refunds received in the second and third quarters or $157 million to $162 million including those refunds. Full year guidance includes Marucci results through the September 25th closing. The mechanics of the change from our August outlook are straightforward. The outlook reflects Marucci. including approximately 50 million of fourth quarter net sales that were in our prior guidance. The remainder reflects lower third quarter net sales in the businesses we continue to own. For the businesses we continue to own, our fourth quarter net sales outlook is in line with our prior underlying guidance. On what this does to our margin framework, our fourth quarter outlook reflects the divestiture of Marucci A continuation of the supply disruption and higher than anticipated inflation in freight costs in powered vehicles and continued operational challenges in our upfit business. At the segment level, we expect adjusted EBITDA margin for powered vehicles and aftermarket applications combined to be approximately flat versus the fourth quarter of 2025. We are not providing 2027 guidance today as we work with Doug on the operating plan. We expect to share more on our fourth quarter call in February. To summarize, our balance sheet is meaning and our focus is on execution and delivering the outlook we have provided today. With that, Doug, back to you for closing remarks.

Thanks, Dennis. Before we take your questions, I'd like to leave you with a few thoughts. With the sale of Marucci complete, Fox is a more focused company with a stronger balance sheet, and we will continue to prioritize debt reduction. Our fourth quarter sales outlook for the businesses we continue to own is unchanged, and the issues that affected our margins are operational ones that we are actively addressing. Our focus now is on executing against it, and keeping you informed to make Fox a company that consistently delivers on its commitments. To reiterate, we have great brands, great products, and a great team. And as one Fox, our job is to match them with the financial results this company is capable of producing once again. I'd like to thank our employees for their hard work and commitment through what has been a challenging period. I'm confident in what we can accomplish together. Before we open the line for questions, I want to share one governance update. Following its ongoing review of our governance framework, our Board has approved a plan to declassify the Board. At our 2027 Annual Meeting, we will ask stockholders to apply pursuant to a customary phase transition. The Board believes annual elections strengthen its accountability to our stockholders, and a phase transition honors the terms are stockholders elected our directors to serve. We'll provide the details in our proxy statement for the 2027 annual meeting.

Operator, please open the line for questions. Certainly. Thank you, Mr. Graham. Ladies and gentlemen, at this time, if you do have any questions, please press star one. If you find your question has been addressed, you may remove yourself from the queue by pressing star two. Peter McGoldrick with Stiefel.

Hey guys, thanks for taking my question. I first wanted to ask about the normalized profit level. As we think about a normalized EBITDA base heading into 2027, based on the $143 to $148 million Outlook for 26X parafree funds. How much of that is in the go-forward base so as we build our 2027 EBITDA, we're using the right framework?

Yeah, it's a great question, Peter. And right now, we are in that process of just building So it's a little early for me to get out in front of this and try to provide you with some perspective. But here's a couple points that we are absolutely committed to. Number one, we are committed to transformation and delivering more cost savings. That is not going to stop. We're also committed to delivering more commercial recovery. Thank you for joining us. getting this pricing recovery into our numbers. And so we're going to all be about continuing the cost savings. I'm not going to say it's a phase three, but we're going down that path. We're going to continue transformation. We're structural in nature so that we can really drive savings, whether the volumes are there or not. and some of these costs that we've talked about here with PDG, I would consider those to be transitory in nature in the sense that we're expediting freight, we're having to pay for temporary overtime in the plants to keep up with that volume to meet that customer demand that we talked about earlier.

So as we think about the 4Q26 revenue outlook, you offered some good qualitative backdrop. Can you help us on a year-over-year basis on the go-forward portfolio?

Thank you for joining us, Peter. It's predictable, durable. This is the lower period for them. This is traditionally Q4 is the lower period for them. But pretty much right on line with what we've been thinking. PBG continues to demonstrate growth. and to meet their growth commitments here this quarter. Again, that supply chain issue is being mediated and we feel good about our pathway there. The aftermarket applications groups with Sport Truck Ride Tech, Custom Wheelhouse, they continue to deliver predictably. Yes, the market is a little tougher. There's a little more softness there, but they continue to be reliable. And it really comes down to upfit in AAG, and it's a lot on those chassis and the dealer lock context for you. Appreciate that. Thank you.

Thank you. We'll go next now to Scott Stember with Roth Capital.

Good evening, and thanks for taking my questions. Just on power sports, looking at the truck business, if you were to look past this supplier issue, it sounds like demand is still relatively shrunk. Do you think we just quantify what the order book looks like. It may be a mix there. And the other part of the question would be, you know, you are seeing a little bit of softness, that same connect between the demand between one and the other. I know the price point's a bit higher, but maybe just talk about that.

Yeah, so order book does remain strong for PBG going into the fourth quarter. We're continuing to see power sports perform very, very strongly. It's offset by some off-road automotive weakness within PVG. But overall, that order remains really solid. I do feel good about that going into next year. Again, we'll be talking about 2027 come the Q4 update. Relative to the outfit side of business, in many ways, it's a very different market, right? Those are two very different, extremely different. We're dealing with $70,000, $80,000 price points on a lot of our RAM products, over $100,000 on the Ford products. What you're just seeing there is inflation, higher fuel costs hitting the market right now, and I think that's just causing some customers to have a pause, essentially.

Got it. Doug, you made a comment about after taking a look, there's and some obviously self-inflicted, but there's definitely FOX issues that you need to work on in AAG. Can you maybe talk about some of those so we have an idea of what to look for?

Yeah, no, thank you for the question. First of all, let me emphasize, I pretty much work in 90-day increments. That's kind of my operating style. In a 90-day plan, there's three things I'm looking at. That's operational excellence and specifically performance. Improvement in PVD, supply chain optimization, where we can do better across the business, whether it be in the aftermarket group or the power vehicle group, and then commercial recovery and working with our customers to recover on the inflation side of the business. So I'm in the accelerator as we recruit a new CEO. and so I have the opportunity to kind of get some things going here and make decisions where we need to make decisions and drive More of a standardization across the business and what we call OneFox and get the benefits of that, whether it be in purchasing, logistics, whatever it may be. Also, we promoted up Troy Henege here yesterday and into the Chief Technology Officer and a really bright... individual and executive. With Troy in that position, we are a product-led company. I want that position to be in the C-suite and really drive technology. This isn't about information technology. It's about product technology. Really focused on being the accelerator. We have great brands, great people, great products. the front and back office and get our operations in shape and do a better job on the supply chain management side. Gotcha.

That's all I have. Thanks. Thank you. We'll go next now to Larry Solo with CJS Securities.

Hey, it's Lou Gigoto for Larry this evening. Dennis, just one for you and a couple for Doug, if I could. Assuming no additional asset sales going forward, how should we think about the ability to de-lever the balance sheet? And is there a target for leveraged, you know, sharing purchases or potentially, you know, waiting at this M&A?

Yeah, it's a really great question. Thanks for taking the time to get that out. You know, in many ways, Q3 was a decisive quarter. And look, not overlooking, it was a pretty big guy down for the back half. But one of the things that occurred that has been fantastic is we've taken our leverage down below three times. and so now we're sitting at two points. That opens up that full capital allocation playbook from share repurchasing, investing more in high return, CapEx, continuing to pay down debt, etc. So we're going to be looking across all three of those and trying to find the best way to create value for share owners. For 18 months, we have not had the ability to do that. This really, in my mind, is a significant achievement for this organization who has worked so tirelessly on those cost savings. This year so far, we're going to get 50. It's 25 million last year, and we're not seeing those hit the bottom line. It's all this inflation. It's the tariff cost, etc. And so, you know, we have now gotten ourselves into a place where we can execute on that entire playbook. And so, yes, it is a significantly simplified business. Shock Therapy is out. Up at UTV is out. Geyser is out. And most recently, Outside Van and Marucci. And so, it really allows us to focus on ride dynamics and and that feels like a really good place to be. So the wheel that that will generate, right? So already we're so much further improved over last year. I think we're around 65 million free cash flow year to date. That is the free cash flow wheel that's generating now from what we've done here. So hopefully that helps a little bit on how we're thinking about it moving forward.

No, it does for sure. So Doug literally led to the sale of a bunch of assets, including Marucci. In the release, you continue to mention the evaluation of alternatives and You know, looking for things to make sure that they meet the current strategic objectives. I guess, have we come to a point where we've looked at all the businesses and we've identified that there are still things that don't meet those objectives? Or are there still businesses that you haven't reviewed thoroughly to make that determination?

We're here to run the business and transform the business with the assets we got. You know, we... want to focus. We got down to the core. We're focusing on the core. You know, we got some hiccups and issues at PVG with the spring supplier and then at PVD with some of the operational issues and supply chains. So we're focused on transforming and once again be an interim. You know, I'm in the position of, you know, accelerating the business and we'll bring in a new CEO and and I'll go back to my board position and we'll, you know, look at all avenues as we continue to run the business and transform it. And my job is to, you know, set it up for the new CEO.

And along those lines, can you give us an update on the CEO search process, maybe the characteristics that you and I guess specifically does the search include both internal and external candidates?

Great question. So yes, Hydrokin Struggles has been contracted to do the search. Yes, we're looking internal and external. And we think we're going to get a lot of great candidates to take a look at this. We have amazing brands and products and people and a great team and a great history. and so we think people are really going to be attracted to it. So I'm excited to meet some people. I actually started talking to people last week and interviewing and we're moving forward and we'll be thoughtful but be expeditious in our approach and we're looking for somebody who's probably commercial savvy but has that operational effectiveness. and so we think we're going to be able to attract the right candidate and looking forward to working with the new CEO when they get on board. And is there a timeline you're looking at? You know, no timeline. We want to get to all these over the past few years. You know, for middle market businesses, you know, four to six months is probably a reasonable time frame, but we have set no timetable.

Okay, so I guess we've got you for at least two 90-day periods. Thanks very much. Here you go.

Sounds good. Thank you.

Thank you.

We'll go next now to Craig Kinison with Baird. Yeah, hey, thanks for taking my question, Doug. I wanted to ask, and you had mentioned, but what is your take on the right strategy for that business going forward?

Well, we're a leader in that market, and so I think we can continue that. We just launched the chip fuse edition of the Dodge Ram here at SEMA this week, and we're excited about that. So it has been a great business in the past, and so we know we can do it. and, you know, we've got to, you know, establish the correct chassis supply with our OEM customers. We've got some great products coming out, including also a Jeep Commando for our creativity going on and we've just got to get the execution down and make sure we're, you know, doing what we do best and utilizing our vertical integration within the company that makes, you know, Fox a great company.

I think just to add on to what Doug said, because I think he did a good job summarizing that, I think these new relationships with Ford Custom Garage, the Ram DC650, that Ram partnership, they continue to provide the steady, consistent volumes that are really, really healthy for the output division. So we've got a lot of work to do, no doubt, but we've got a lot of things that are going well for us as well.

You mentioned chassis supply, which has been hard for you to predict and certainly something you do to have better insight into that, better visibility into chassis supply so that the business can operate on a more consistent basis.

Thank you for joining us. Thank you for joining us. that got announced. So we don't do any business with Volkswagen. So there's a lot of OEMs here in the South as well, whether it be Hyundai or or others and so we just the thing we could be doing is talking to the mega dealers and a lot of dealer consolidation over the past 10 years a lot of large mega dealers out there and we should start you know selling at the you know call it that level and get higher volume so you know we're going to you know I'm going to sit down with the business we're doing our five-year strategy plans here over the next uh Two weeks, and we're going to start going through that, you know, like I said, business by business. I've been more focused on getting out to the plants. I'll be out on the West Coast next week, and so I want to get that done, meet the people, see the people, see the products, see the plants, see what's going on in the operations, and come back and we'll strategize. Do you expect to get shipments in Q4?

Yeah, we are getting some, and they are coming in a little late, a little later than what we expected, and so this is exactly what Doug was talking about, that transition period to model year 27s. We've got 26s coming in late, model year 27s are coming in. So, look, there's been the... The retail community has been starved for F-150s, and so it's good to see them coming back. As we get them in, we feel very confident we're going to get them out the door and sold into retail.

Great.

Thank you. And we'll go next now to Anna Glaskin with B. Reilly.

Hi. Good afternoon. Thanks for taking my questions. I'd like to ask a different way. You know, on the one hand, there's been a really close focus on cutting costs in that business in the face of cost inflation, while availability and as well as macro pressure. Now that you've talked about the operational challenges in that business, on the one hand, you know, there's supply optimization and things like that that could help the margin. It also feels like the business might be requiring close investments to recatalyze that top line. How do you think about balancing sacrificing near-term margin with reaccelerating that top line, and is there a scenario in which we could see year-over-year margin compression in that business in 2027? Thanks.

I think we've got a great R&D team really focused on what the customer is looking for. Dealer lots are pretty full. You've got the high interest rate environment going on. We feel good about the R&D work coming through. Where Doug is really placing his focus is more on the standardization across these different plans. making them more effective and more efficient in their operating, how we order supplies, et cetera, getting more of a center-led hybrid opportunity across the entire Fox organization, which will help upfit as well. And so it's a lot more operational focus versus the fix, if you will, would come into it. What we're seeing on the operational side, and then Doug really focusing on some of these dealers in a different way.

Great, thanks, Dennis. And then maybe a little bit more about housekeeping. Any way to break out tariff refunds by segment? Just, we have like a pretty sizable $40 million adjusted use of office FST and just wondering if that margin level is sustainable.

Thanks. Yeah, so on the tariff side, the lower IEPA with Marucci, you know, so and I think we've discussed that. And so we've got about $14 million in refunds in total year to date. We are really not expecting much in the way of any material refund amounts in Q4 or beyond. We're going to continue to push for them where we can, but they are more hard to come by at this point.

Thank you.

Thank you. Thank you. And gentlemen, it appears we have no further questions this afternoon. Mr. Graham, I'd like to turn things back to you, sir, for any closing comments.

First of all, I'd like to let you know that I'm really excited to be here at Fox. As I'm going around to the plants and talking to them, great attitude, great capabilities. It's really exciting, and I'm really pumped to be in this position and try to help the company move in the right direction and set it up for success. Thank you for joining us. to this organization. So we have great products and I keep talking about the front of the house and the back of the house and in the front of the house it's world class. In the back of the house we're going to put this and move the ship in the right direction. So thank you very much and appreciate your support.

Thank you, Mr. Grimm, and thank you, Mr. Schemm. Again, ladies and gentlemen, this will conclude the Fox Factory Holding Corp.'s third quarter earnings call. I'd like to thank you all so much for joining us today. I wish you all a great evening.