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FINANCE
Powersports Business • July 2025 • 13
Fox Factory releases first quarter financial results
Fox Factory, a designer and manufacturer of shocks and other products for specialty sports and on- and off-road vehicles, reported a 6.5 % increase in net sales for the first quarter of its fiscal year ended April 4.
Fox Factory reported net sales of $ 355 million, a 6.5 % increase, for the first quarter of its fiscal year ended April 4.( Photo: Fox Factory)
Net loss attributable to Fox stockholders in the first quarter of fiscal 2025 was $ 259.7 million, compared to net loss attributable to Fox stockholders of $ 3.5 million in the first quarter of the prior fiscal year.
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SALES INCREASE Net sales for the first quarter of the company’ s fiscal year were $ 355 million, an increase of 6.5 % compared to net sales of $ 333.5 million in the same period last year.
This increase reflects a 9.9 % increase in Aftermarket Applications Group( AAG) net sales and a 3.4 % increase in Powered Vehicles Group( PVG) net sales.
The company says the increase in AAG net sales from $ 101.9 million to $ 111.9 million was driven by higher up-fitting sales due to a shift in product mix and increased demand for aftermarket products. However, high interest rates impacting dealers and consumers, and high inventory levels at dealerships continue to pose challenges.
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PVG net sales increased from $ 118.1 million to $ 122.1 million primarily due to the expansion of the motorcycle business, which offset lower industry demand in the traditional powersports product lines.
“ Our operational improvements and strategic cost management initiatives are well underway, helping us drive strong sequential adjusted EBITDA margin improvements in both our PVG and AAG segments,” says CEO Mike Dennison.“ We expect these decisive
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actions will yield more tangible margin improvement throughout the year.”
EXPENSES AND NET LOSS Total operating expenses were $ 360.3 million, or 101.5 % of net sales, for the first quarter 2025, compared to $ 94.3 million, or 28.3 % of net sales, in the first quarter of the same period last year. Operating expenses increased by $ 266 million, driven by the impact of a decline in the company’ s perceived value.
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TARIFF IMPACT Fox says that while the impact of the tariff policies on demand remains uncertain, new and expanded tariffs are expected to continue to pose significant challenges for the industries that the company serves. Fox estimates the annual potential impact of tariffs to be in the range of $ 50 million. However, the company says it has identified countermeasures to partially offset these impacts and believes this unmitigated component can be absorbed in its current plan for 2025.
“ While end market demand remains challenging and tariffs create additional uncertainty, we expect that the actions we have taken to optimize our business will allow us to generate free cash flow this year to further improve our balance sheet,” Dennison says.
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SOLUTIONS Mid-year momentum: Strategic tax and financial planning for powersports dealers
BY BRAD STANEK & PAULINA MATEL CONTRIBUTORS
As we find ourselves midway through the year, powersports dealers have a unique opportunity to shift gears from reactive to proactive financial and tax management. The hustle of tax season may have subsided, but the need for strategic planning remains crucial. By engaging in continuous tax and financial planning, dealers can better navigate the complexities of their industry, optimize their financial outcomes, and mitigate unexpected challenges. Being proactive not only enhances your financial stability as a dealer but also positions you to capitalize on other opportunities throughout the year.
Let’ s explore how maintaining momentum in your financial and tax strategy can help, as we sit down with Craig Todderud, Tax Partner at Citrin Cooperman.
LEGISLATION POTENTIALLY AFFECTING DEALERS IN 2025
As we progress through 2025, powersports dealers should be aware of potentially significant legislative changes that could impact their operations. This year, new regulations are being introduced that may affect various aspects of dealership management, from compliance requirements to tax obligations. It’ s crucial for dealers to stay informed and prepared for these changes, particularly as more details are expected to emerge later this summer.
Note this legislation is currently a bill making its way through Congress and has not yet been enacted as law.
• Bonus depreciation reinstatement: The One Big Beautiful Bill Act( OBBBA) has reinstated 100 % bonus depreciation for property placed in service after Jan. 19, 2025. This reverses the phasedown that was set to end by 2027. Dealers must carefully time asset purchases to maximize this benefit and consider how floor plan interest may disqualify them from bonus depreciation. If floor plan interest exceeds regular business interest, eligibility may be lost.
• Increased section 179 expensing limits: The OBBBA has doubled the cap for Section 179 expensing of depreciable business property from $ 1.25 million to $ 2.5 million, with a phase-out beginning at $ 4 million. This change allows dealerships to immediately expense a larger portion of their investments in qualifying property, providing significant tax relief.
• Section 163( j) interest limitations: The OBBBA has introduced changes to Section 163( j) business interest limitations. The deduction of non-floor plan interest is currently more restricted. Since 2022, depreciation and amortization are no longer added back when calculating adjusted taxable income. Under the proposed OBBBA legislation, the 163( j) business interest limitations would revert to the pre−2022 calculation and allow for the addback of depreciation
See Stanek & Matel, Page 14
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