Fox Factory Sinks to $109.6M Loss as Marucci Sale Clears $263.5M Debt

Fox Factory Holding Corp. (NASDAQ: FOXF) reported a third-quarter fiscal 2026 net loss attributable to stockholders of $109.6 million, or $2.61 per diluted share, on net sales of $338.4 million for the quarter ended October 2, 2026, the company announced on November 5, 2026. The loss includes a $121.3 million charge tied to the September 25, 2026 divestiture of Marucci Sports. Adjusted net income, which strips out that charge, came in at $22.7 million, or $0.54 per diluted share.

Context — why Fox Factory's Marucci exit matters now

The company closed the Marucci Sports sale on September 25, 2026 and applied the proceeds straight to debt. That single decision reshaped the balance sheet: total debt fell to $397.4 million from $673.5 million at the start of fiscal 2026, a $276.1 million reduction. Net debt dropped $263.5 million to $352.0 million over the same span.

Management framed the move as a portfolio simplification. Interim Chief Executive Officer Doug Grimm said the divestment "simplified our portfolio, increased our focus on our core product offerings and allowed us to substantially reduce our debt." The company also cut its net leverage ratio to roughly 2.4x, down more than a full turn from the end of the second quarter.

Grimm was candid about the operating backdrop. He cited "a supply disruption in Powered Vehicles, higher input costs and operational challenges in our Aftermarket Applications' upfit business" as the pressures the company had flagged in its October update.

The quarter lands against a broader backdrop of elevated freight, commodity and fuel costs that the company says continue to weigh on gross margin. Fox Factory's Phase 2 profit optimization program targets roughly $50 million of gross realized savings in fiscal 2026; the company captured about $41 million of that in the first nine months, but says external cost increases largely offset the benefit.

What triggered the sharper loss line was accounting, not cash. The $121.3 million loss on divestitures pushed total operating expenses to $205.2 million, or 60.6% of net sales, versus $99.4 million and 26.4% a year earlier. Adjusted operating expenses, which exclude that charge, actually fell to $68.7 million from $85.7 million.

Data — what the numbers show

Net sales fell 10.1% year over year to $338.4 million from $376.4 million. That figure includes roughly $33 million of Marucci revenue booked before the divestiture closed.

Segment performance diverged sharply. Aftermarket Applications Group net sales dropped 20.4% to $93.8 million from $117.8 million, driven by limited chassis availability for upfit operations, macroeconomic pressure on dealers and consumers, and lost revenue from divested businesses. Specialty Sports Group net sales fell 14.4% to $113.6 million from $132.7 million, largely reflecting Marucci's smaller contribution — $33.0 million versus $49.2 million a year earlier — plus order timing and bike-channel destocking.

Powered Vehicles Group was the lone bright spot, with net sales up 4.1% to $131.0 million from $125.9 million. Powersports demand drove a 28.8% increase within that segment, partially offset by weaker autos-related product lines.

Metric	Q3 FY2026	Q3 FY2025
Net sales	$338.4M	$376.4M
Gross margin	31.5%	30.4%
Adjusted EBITDA	$50.4M	$44.4M
Adjusted EBITDA margin	14.9%	11.8%
Net loss per diluted share	$2.61	$0.02
Adjusted EPS	$0.54	$0.23

Adjusted EBITDA of $50.4 million includes roughly $12 million of IEEPA tariff refunds. Without that one-time benefit, the figure would have been closer to $38 million.

Through the first nine months of fiscal 2026, net sales totaled $1,065.2 million, down 3.7% from the prior-year period. Nine-month adjusted EBITDA was $131.6 million versus $133.3 million, with margins essentially flat at 12.4% against 12.1%.

Analysis — what it means for markets and sectors

The headline loss is a balance-sheet event, not an operating collapse. The $121.3 million divestiture charge is non-cash and one-time. What matters for equity holders is the deleveraging: net debt is down $263.5 million, and the 2.4x net leverage ratio gives Fox Factory more room to absorb the input-cost pressure management flagged.

The concern is that adjusted profitability depends heavily on items that may not repeat. The $12 million IEEPA tariff refund in the quarter and $14 million across the first nine months are one-time recoveries. Strip those out and the underlying earnings power looks thinner than the reported adjusted figures suggest. Management acknowledged this by guiding fiscal 2026 adjusted EBITDA both including and excluding the refunds.

Sector exposure runs through the powersports and outdoor-recreation complex. Fox Factory supplies shocks, suspension and components to powered-vehicle and bicycle OEMs, so weakness in bike-channel destocking and dealer demand has read-through to the broader specialty-retail and powersports supply chain. The 28.8% powersports growth within PVG suggests that end market is holding up better than autos or bikes.

The counter-argument: inventory is improving. Days inventory on hand fell to roughly 122 days from approximately 148 days a year earlier, and inventory dropped $54.4 million from the start of the year. That suggests the destocking drag on SSG and AAG could ease in coming quarters.

Positioning-wise, the stock's story has shifted from growth to repair. Investors focused on use metrics and free cash flow will find the deleveraging story constructive; those watching the core operating margin will note that external costs remain elevated and guidance reflects no relief.

Outlook — what to watch next

For the fourth quarter of fiscal 2026, the company expects net sales of $287 million to $313 million and adjusted EBITDA of $25 million to $30 million. Fourth-quarter guidance excludes Marucci.

For the full fiscal year, Fox Factory narrowed its adjusted EBITDA outlook to $143 million to $148 million, excluding roughly $14 million of IEEPA tariff refunds already received. Including those refunds, the range is $157 million to $162 million. Full-year net sales guidance sits at $1.35 billion to $1.38 billion.

The company said it has received the majority of the IEEPA tariff refunds it expects and does not assume any additional refunds in the outlook. Guidance reflects input costs at current levels, including aluminum, steel and freight inflation, and assumes no further increases.

Fox Factory continues to evaluate strategic alternatives for other assets to ensure alignment with profitability standards. Any further divestiture announcement would be the next catalyst to watch, alongside fourth-quarter results and whether the $50 million Phase 2 savings target is fully realized.

Frequently Asked Questions

What does the Marucci Sports divestiture mean for Fox Factory shareholders?

The September 25, 2026 sale removed a business that contributed roughly $33 million in quarterly revenue, but it generated about $200 million in proceeds that went directly to debt reduction. Total debt fell $276.1 million from the start of fiscal 2026, and net use dropped to approximately 2.4x. The trade-off is a smaller revenue base but a cleaner balance sheet.

Why did Fox Factory's net loss widen so much compared to last year?

The loss was driven by a $121.3 million non-cash charge on divestitures, primarily tied to Marucci. This pushed operating expenses to 60.6% of net sales. Excluding that charge, adjusted operating expenses actually declined to $68.7 million from $85.7 million, and adjusted net income rose to $22.7 million from $9.9 million a year earlier.

What is the IEEPA tariff refund and why does it matter for Fox Factory's results?

Fox Factory received approximately $12 million in IEEPA tariff refunds in the third quarter and $14 million across the first nine months of fiscal 2026. These one-time recoveries boosted adjusted EBITDA and gross margin. The company's full-year guidance separates adjusted EBITDA with and without these refunds, since it does not expect additional refunds going forward.

Bottom Line

Fox Factory's $109.6 million loss is an accounting artifact of the Marucci sale; the real story is $263.5 million of debt reduction and a narrower full-year EBITDA guide.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.