Fox Factory Holding Corp. (NASDAQ: FOXF), a leading manufacturer of performance-defining products for specialized vehicles, saw its stock soar 6.16% in after-hours trading on Thursday. The surge came after the company reported solid fourth-quarter results, with revenue growth and improving margins, despite a slight decline in profitability.

For the quarter ended January 3, 2025, Fox Factory's net sales rose 6.1% year-over-year to $352.8 million, beating analyst estimates. This growth was driven by a 33.3% increase in the Specialty Sports Group segment, partially offset by declines in the Aftermarket Applications Group and Powered Vehicles Group segments.

While the company recorded a net loss of $0.1 million, or breakeven on a per-share basis, its gross margin improved by 120 basis points to 28.9% compared to the prior-year period. The company also reported a sequential improvement in EBITDA margins across its segments, reflecting the positive impact of ongoing operational initiatives.

Mike Dennison, Fox Factory's Chief Executive Officer, highlighted the company's progress in strengthening partnerships, streamlining operations, and improving working capital management. These efforts contributed to a $63 million debt paydown in the fourth quarter, showcasing the company's focus on cash flow generation and balance sheet strength.

"As we navigate through uneven end market conditions in 2025, we are committed to delivering improvements in both EBITDA margins and free cash flow generation through our focus on operational excellence and network optimization," Dennison stated.

For the fiscal year 2025, Fox Factory provided guidance for net sales in the range of $1.385 billion to $1.485 billion and adjusted earnings per diluted share between $1.60 and $2.60. The company also expects to achieve a full-year adjusted tax rate of 15% to 18%.

Investors appear to have responded positively to Fox Factory's fourth-quarter performance, acknowledging the company's efforts to drive operational improvements and its solid outlook for the upcoming fiscal year. As the company continues to execute its strategic initiatives and capitalize on growth opportunities, further positive momentum in its stock price could follow.