What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-03 compared with 2023-11-03 · 334 added, 219 removed, 346 unchanged (62% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 29, 2023 December 30, 2022

March 29, 2024 December 29, 2023

Current assets:

Cash and cash equivalents $ 69,583 $ 83,642

Accounts receivable (net of allowances of $ 1,374 and $ 443 at September 29, 2023 and December 30, 2022, respectively)

Accounts receivable (net of allowances of $ 969 and $ 1,158 at March 29, 2024 and December 29, 2023, respectively)

164,943 171,060

6 unchanged sentences

Goodwill 637,579 636,565

Intangibles, net 207,659 178,980

Trademarks and brands, net 271,563 273,293

Customer and distributor relationships, net 178,046 184,269

Core technologies, net 25,014 25,785

Other assets 12,768 11,525

4 unchanged sentences

Accrued expenses 101,046 103,400

Current portion of long-term debt 14,286 14,286

Total current liabilities 223,025 221,836

Line of credit 190,000 200,000

Revolver 392,000 370,000

Term A Loan, less current portion 356,144 359,242

Other liabilities 84,619 69,459

2 unchanged sentences

Stockholders’ equity

Preferred stock, $ 0.001 par value — 10,000 authorized and no shares issued or outstanding as of September 29, 2023 and December 30, 2022

Preferred stock, $ 0.001 par value — 10,000 authorized and no shares issued or outstanding as of March 29, 2024 and December 29, 2023

Common stock, $ 0.001 par value — 90,000 authorized;

43,270 shares issued and 42,380 outstanding as of September 29, 2023;

42,506 shares issued and 41,616 outstanding as of March 29, 2024;

42,844 shares issued and 41,954 outstanding as of December 29, 2023

1 unchanged sentence

Treasury stock, at cost;

890 common shares as of September 29, 2023 and December 30, 2022

890 common shares as of March 29, 2024 and December 29, 2023

( 13,754 ) ( 13,754 )

5 unchanged sentences

FOX FACTORY HOLDING CORP.

Condensed Consolidated Statements of Income

Condensed Consolidated Statements of (Loss) Income

(in thousands, except per share data)

For the three months ended For the nine months ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

For the three months ended

March 29, 2024 March 31, 2023

Net sales $ 333,472 $ 399,851

9 unchanged sentences

Interest expense 13,329 3,521

Other (income) expense, net ( 878 ) ( 1,441 ) ( 318 ) 3,067

Income before income taxes 38,777 64,136 137,752 180,584

Provision for income taxes 3,484 13,365 20,957 28,265

Net income $ 35,293 $ 50,771 $ 116,795 $ 152,319

Earnings per share:

Other expense, net 309 24

(Loss) Income before income taxes ( 4,763 ) 51,145

(Benefit) Provision for income taxes ( 1,267 ) 9,378

Net (loss) income $ ( 3,496 ) $ 41,767

(Loss) Earnings per share:

Basic $ ( 0.08 ) $ 0.99

5 unchanged sentences

FOX FACTORY HOLDING CORP.

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Statements of Comprehensive (Loss) Income

(in thousands)

For the three months ended For the nine months ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

Net income $ 35,293 $ 50,771 $ 116,795 $ 152,319

Other comprehensive (loss) income

Interest rate swap, net of tax effects ( 281 ) 2,563 ( 2,219 ) 9,296

For the three months ended

March 29, 2024 March 31, 2023

Net (loss) income $ ( 3,496 ) $ 41,767

Other comprehensive loss

Interest rate swap

Change in net unrealized gain, net of tax effects of $( 43 ) and $( 571 ), respectively

1,459 ( 2,000 )

reclassification of net gain on interest rate swap to net earnings ( 1,785 ) ( 1,063 )

Net change, net of tax effects ( 326 ) ( 3,063 )

Foreign currency translation adjustments ( 2,882 ) 611

Other comprehensive (loss) income ( 2,704 ) ( 1,528 ) ( 4,757 ) 1,449

Comprehensive income $ 32,589 $ 49,243 $ 112,038 $ 153,768

Other comprehensive loss ( 3,208 ) ( 2,452 )

Comprehensive (loss) income $ ( 6,704 ) $ 39,315

The accompanying notes are an integral part of these condensed consolidated financial statements.

7 unchanged sentences

Stock-based compensation expense — — — — 5,701 — — 5,701

Other comprehensive income — — — — — 4,743 — 4,743

Net income — — — — — — 48,050 48,050

Balance - April 1, 2022 43,039 $ 42 890 $ ( 13,754 ) $ 346,328 $ 9,619 $ 606,849 $ 949,084

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 114 — — — ( 2,950 ) — — ( 2,950 )

Stock-based compensation expense — — — — 4,061 — — 4,061

Other comprehensive loss — — — — — ( 2,452 ) — ( 2,452 )

Net income — — — — — — 41,767 41,767

Balance - July 1, 2022 43,153 $ 42 890 $ ( 13,754 ) $ 347,439 $ 7,853 $ 660,347 $ 1,001,927

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 4 — — — ( 325 ) — — ( 325 )

Stock-based compensation expense — — — — 4,289 — — 4,289

Other comprehensive loss — — — — — ( 1,528 ) — ( 1,528 )

Net income — — — — — — 50,771 50,771

Balance - September 30, 2022 43,157 $ 42 890 $ ( 13,754 ) $ 351,403 $ 6,325 $ 711,118 $ 1,055,134

The accompanying notes are an integral part of these condensed consolidated financial statements.

Balance - March 31, 2023 43,193 42 890 ( 13,754 ) 359,785 12,330 805,844 1,164,247

Common Stock Treasury Additional paid-in capital Accumulated other comprehensive income Retained earnings Total stockholders’ equity

2 unchanged sentences

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 40 — — — ( 1,315 ) — — ( 1,315 )

Purchase and retirement of common stock ( 378 ) — — — ( 16,077 ) — ( 9,082 ) ( 25,159 )

Stock-based compensation expense — — — — 3,906 — — 3,906

Other comprehensive loss — — — — — ( 3,208 ) — ( 3,208 )

Net income — — — — — — 41,767 41,767

Net loss — — — — — — ( 3,496 ) ( 3,496 )

Balance - March 29, 2024 42,506 42 890 ( 13,754 ) 334,860 5,833 865,508 1,192,489

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 51 — — — ( 3,063 ) — — ( 3,063 )

Stock-based compensation expense — — — — 4,483 — — 4,483

Other comprehensive income — — — — — 399 — 399

Net income — — — — — — 39,735 39,735

Balance - June 30, 2023 43,244 $ 42 890 $ ( 13,754 ) $ 361,205 $ 12,729 $ 845,579 $ 1,205,801

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 26 — — — ( 945 ) — — ( 945 )

Stock-based compensation expense — — — — 3,858 — — 3,858

Other comprehensive loss — — — — — ( 2,704 ) — ( 2,704 )

Net income — — — — — — 35,293 35,293

Balance - September 29, 2023 43,270 $ 42 890 $ ( 13,754 ) $ 364,118 $ 10,025 $ 880,872 $ 1,241,303

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

For the nine months ended

September 29, 2023 September 30, 2022

For the three months ended

March 29, 2024 March 31, 2023

OPERATING ACTIVITIES:

Net income $ 116,795 $ 152,319

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income $ ( 3,496 ) $ 41,767

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:

Depreciation and amortization 20,451 13,315

Provision for inventory reserve ( 20 ) 2,944

Stock-based compensation 3,906 5,701

Amortization of loan fees 699 226

Write off of unamortized loan origination fees — 1,927

Amortization of deferred gains on prior swap settlements ( 1,063 ) ( 1,063 )

Amortization of inventory fair value step-up 4,485 3,064

Gain on disposal of property and equipment — ( 1,845 )

Loss on disposal of property and equipment 22 25

Deferred taxes 74 51

6 unchanged sentences

Accrued expenses and other liabilities ( 1,270 ) ( 7,781 )

Net cash provided by operating activities 126,685 57,035

Net cash provided by (used in) operating activities 9,352 ( 66,835 )

INVESTING ACTIVITIES:

2 unchanged sentences

Purchases of property and equipment ( 9,907 ) ( 11,118 )

Proceeds from sale of property and equipment — 3,180

Net cash used in investing activities ( 15,298 ) ( 144,336 )

FINANCING ACTIVITIES:

Proceeds from line of credit 210,000 582,356

Payments on line of credit ( 220,000 ) ( 259,336 )

Proceeds from revolver 70,000 190,000

Payments on revolver ( 48,000 ) ( 30,000 )

Repayment of term debt ( 3,571 ) —

Installment on purchase of non-controlling interest — ( 2,700 )

Purchase and retirement of common stock ( 25,000 ) —

Repurchases from stock compensation program, net ( 1,315 ) ( 2,156 )

Proceeds from termination of swap agreement — 12,270

Net cash used in financing activities ( 16,163 ) ( 54,004 )

Net cash (used in) provided by financing activities ( 7,886 ) 157,844

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS ( 227 ) ( 31 )

6 unchanged sentences

(in thousands)

For the nine months ended

For the three months ended

SUPPLEMENTAL CASH FLOW INFORMATION:

September 29, 2023 September 30, 2022

Cash paid during the period for:

Income taxes $ 42,017 $ 36,487

March 29, 2024 March 31, 2023

Cash (received) paid during the period for:

Income tax (refund) payment $ ( 586 ) $ 13,460

Interest, net of capitalized interest 14,790 5,145

4 unchanged sentences

Capital expenditures included in accounts payable $ 1,296 $ 2,388

(1) Includes new leases executed in the United States of America “U.S.”.

The accompanying notes are an integral part of these condensed consolidated financial statements.

5 unchanged sentences

Our premium brand, performance-defining products and systems are used primarily on bicycles (“bikes”), side-by-side vehicles (“side-by-sides”), on-road vehicles with and without off-road capabilities, off-road vehicles and trucks, all-terrain vehicles (“ATVs”), snowmobiles, and specialty vehicles and applications.

Some of our products are specifically designed and marketed to some of the leading cycling and powered vehicle original equipment manufacturers (“OEMs”), while others are distributed to consumers through a global network of dealers and distributors.

In addition, we also offer premium baseball and softball gear and equipment.

Throughout this Form 10-Q, unless stated otherwise or as the context otherwise requires, the “Company,” “FOX,” “Fox Factory,” “we,” “us,” “our,” and “ours” refer to Fox Factory Holding Corp.

3 unchanged sentences

Securities and Exchange Commission (“SEC”) regarding interim financial reporting.

The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

3 unchanged sentences

Fiscal Year Calendar - The Company operates on a 52-53 week fiscal year calendar.

For 2023 and 2022, the Company’s fiscal year will end or has ended on December 29, 2023 and December 30, 2022, respectively.

The twelve month periods ended December 29, 2023 and December 30, 2022, will include or have included 52 weeks.

The three and nine month periods ended September 29, 2023 and September 30, 2022 each included 13 weeks and 26 weeks, respectively.

For 2024 and 2023, the Company’s fiscal year will end or has ended on January 3, 2025 and December 29, 2023, respectively.

The 12-month periods ended January 3, 2025 and December 29, 2023, will include or have included 53 and 52 weeks, respectively.

The three-month periods ended March 29, 2024 and March 31, 2023 each included 13 weeks.

Principles of Consolidation - These condensed consolidated financial statements include the Company and its subsidiaries.

2 unchanged sentences

Revenue Recognition - Revenues are generated from the sale of performance-defining products and systems to customers worldwide.

The Company’s performance-defining products and systems are solutions that improve performance of powered vehicles and bikes.

The Company’s performance-defining products and systems are solutions that improve performance of powered vehicles, bikes, and baseball and softball gear and equipment.

Powered vehicles include side-by-sides, on-road vehicles with off-road capabilities, off-road vehicles and trucks, ATVs, snowmobiles, specialty vehicles and applications, and motorcycles.

5 unchanged sentences

Revenues generated from upfit packages generally do not include the vehicle chassis, as the Company is not the principal in this arrangement and the automotive dealer purchases the chassis directly from the OEM.

The Company is required to place a deposit on some vehicle chassis that the dealer purchases directly from the OEM, however that deposit is refunded when the chassis is sold through to the end customer.

Provisions for discounts, rebates, sales incentives, returns, and other adjustments are generally provided for in the period the related sales are recorded, based on management’s assessment of historical trends and projection of future results.

The Company is required to place a deposit on all Stellantis chassis, however that deposit is refunded when the chassis is sold through to the end customer.

For other chassis, the Company entered into floorplan financing agreements, in which the Company pays interest expense based on the duration of time the chassis stay on the Company's premises.

Revenues generated from custom upfit packages from Outside Van subsidiary generally include the vehicle chassis, of which the Company has the risks and rewards of ownership and are recognized over-time as work is performed based on actual costs incurred.

FOX FACTORY HOLDING CORP.

1 unchanged sentence

(in thousands, except per share data)

Segments - The Company has determined that it has a single operating and reportable segment:

manufacturing, sale and service of performance-defining products.

We elected as a practical expedient to not capitalize the incremental costs to obtain contracts with customers since the amortization period would have been one year or less.

Segments - The Company determined that as of the end of the first quarter of fiscal year 2024, due to the manner in which we began to operate the business to further drive long term value to our shareholders and customers, we have three operating and reportable segments.

The Company considers operating segments to be components of the Company in which separate financial information is available that is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and in assessing performance.

The chief operating decision maker for the Company is the Chief Executive Officer.

The Chief Executive Officer reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance.

Starting in March 2024, the Chief Executive Officer reviews additional financial information by operating and reportable segment for purposes of allocating resources and evaluating financial performance.

Use of Estimates - The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period.

1 unchanged sentence

therefore, actual results could differ from management’s estimates.

Reclassifications - We have reclassified certain prior period amounts within our Note 2 - Revenues for the three and nine months ended September 30, 2022 to conform to our current period presentation.

The reclassifications did not have any impact on net income or other major financial statement line items.

Certain Significant Risks and Uncertainties - The Company is subject to those risks common in manufacturing-driven markets, including, but not limited to, competitive forces, dependence on key personnel, customer demand for its products, the successful protection of its proprietary technologies, compliance with government regulations, and the possibility of not being able to obtain additional financing when needed.

Reclassifications - We reclassified certain prior period amounts within our condensed consolidated balance sheets, condensed consolidated statements of other comprehensive income, condensed consolidated statements of cash flows, and Note 2 - Revenues to conform to our current period presentation.

The reclassifications did not have any impact on net income.

As of December 29, 2023, the Company classified all of its outstanding balance of the Incremental Term A Loan as non-current based on prepaying our required quarterly amortizing principal amounts for all of fiscal 2024.

The prepayment was applied pro-rata to all future quarterly amounts instead.

The Company analyzed the materiality of this accidental misclassification of current and non-current debt using Staff Accounting Bulletin No.

99 and concluded that in light of surrounding circumstances, this item would not have altered the judgement of a reasonable person relying on the annual report.

The current and non-current debt balances as of December 29, 2023 within our condensed consolidated balance sheets in this quarterly report on form 10-Q are recast to reflect the correct classification.

The recast did not have any impact on net income.

Certain Significant Risks and Uncertainties - As of March 29, 2024, the Company is subject to those risks common in manufacturing-driven markets, including, but not limited to, competitive forces, dependence on key personnel, customer demand for its products, the successful protection of its proprietary technologies, compliance with government regulations, and the possibility of not being able to obtain additional financing when needed.

International geopolitical conflicts, including continuing tensions between Taiwan and China, the Russian invasion of Ukraine, and the Israel-Palestine conflict on the global economy, energy supplies and raw materials may prove to negatively impact the Company’s business and operations.

Fair Value Measurements and Financial Instruments - The Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, that requires the valuation of assets and liabilities required or permitted to be either recorded or disclosed at fair value based on hierarchy of available inputs as follows:

2 unchanged sentences

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The carrying amounts of the Company’s financial instruments, including cash, receivables, accounts payable, accrued liabilities and line of credit approximate their fair values due to their short-term nature.

The carrying amounts of the Company’s financial instruments, including cash, receivables, accounts payable, accrued liabilities and revolver approximate their fair values due to their short-term nature.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

Non-GAAP Financial Measures - Total adjusted EBITDA presents the sum of the results of our three operating segments and unallocated corporate expenses on a consolidated basis.

We believe that total adjusted EBITDA is an operating performance measure that measures operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets among otherwise comparable companies.

In reviewing our corporate operating results, we also believe it is important to review the aggregate consolidated performance of all of our segments on the same basis we review the performance of each of our segments and draw comparisons between periods based on the same measure of consolidated performance.

Management believes investors’ understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations.

Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations from one period to the next and would ordinarily add back items that are not part of normal day-to-day operations of our business.

By providing total adjusted EBITDA, together with reconciliations, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing strategic initiatives.

However, total adjusted EBITDA is not a measurement of financial performance under U.S.

GAAP, and our total adjusted EBITDA may not be comparable to similarly titled measures of other companies.

Total adjusted EBITDA has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S.

For example, total adjusted EBITDA:

• does not reflect the Company’s cash expenditures or requirements for capital expenditures or capital commitments;

• does not reflect changes in, or cash requirements for, the Company's working capital needs;

• does not reflect any costs related to the current or future replacement of assets being depreciated or amortized.

We also use total adjusted EBITDA:

• as a measure of operating performance to assist us in comparing our operating performance on a consistent basis because it removes the impact of items not directly resulting from our core operations;

• for planning purposes, including the preparation of our internal annual operating budgets and financial projections;

• to evaluate the performance and effectiveness of our operational strategies;

• as a basis to calculate incentive compensation payments for our key employees.

Please see Note 1 6 – Segment Information for our definition of adjusted EBITDA.

Under ASC 280, adjusted EBITDA is our measure of segment profitability and financial performance of our operating segments, and when used in this context, the term adjusted EBITDA is a financial measure prepared in accordance with U.S.

Adjusted EBITDA reported for the Company on a consolidated basis is a non-U.S.

GAAP financial measure.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

Recent Accounting Pronouncements

In September 2022, the FASB issued accounting standards update (“ASU”) 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405):

In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405):

Disclosure of Supplier Finance Program Obligations.

2 unchanged sentences

These amendments will be applied retrospectively to each period in which a balance sheet is presented, except for the disclosure of rollforward information, which will be applied prospectively.

The Company adopted the interim disclosure requirements, as applicable, during the first quarter of 2023 and will adopt the annual disclosure requirements, except for the annual rollforward, in our 2023 Annual Report on Form 10-K.

The Company adopted the interim disclosure requirements, as applicable, during the first quarter of 2023 and adopted the annual disclosure requirements, except for the annual rollforward, in the Company’s 2023 Annual Report on Form 10-K.

The Company expects to adopt the annual rollforward requirement in our 2024 Annual Report on Form 10-K.

Refer to the “Bailment Pool Arrangements” section within Note 8 - Commitments and Contingencies for further details of this adoption.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The amendments in ASU 2023-07 require disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM.

The amendments in this update also expand the interim segment disclosure requirements.

These amendments do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted and the amendments in this update are required to be applied on a retrospective basis.

The Company is currently reviewing the impact that the adoption of ASU 2023-07 may have on our consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvement to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis.

Early adoption is permitted.

The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.

FOX FACTORY HOLDING CORP.

6 unchanged sentences

The following table summarizes total net sales by product group:

For the three months ended For the nine months ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

For the three months ended

March 29, 2024 March 31, 2023

Powered Vehicles Group $ 118,113 $ 142,247

3 unchanged sentences

The following table summarizes total net sales by sales channel:

For the three months ended For the nine months ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

For the three months ended

March 29, 2024 March 31, 2023

OEM $ 137,809 $ 217,661

Aftermarket 175,485 171,090 561,133 531,397

Aftermarket/Non-OEM (1)

195,663 182,190

Total net sales $ 333,472 $ 399,851

(1) Aftermarket/non-OEM sales include sales to dealers and dealerships, distributors, sales through our websites, retail sales and various others, including Marucci’s sales within each of these.

The following table summarizes total net sales generated by geographic location of the customer:

For the three months ended For the nine months ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

For the three months ended

March 29, 2024 March 31, 2023

North America $ 284,662 $ 291,910

7 unchanged sentences

Inventory consisted of the following:

September 29, 2023 December 30, 2022

March 29, 2024 December 29, 2023

Raw materials $ 209,070 $ 217,888

4 unchanged sentences

Prepaids and other current assets consisted of the following:

September 29, 2023 December 30, 2022

March 29, 2024 December 29, 2023

Prepaid chassis deposits $ 133,825 $ 108,866

4 unchanged sentences

Property, plant and equipment, net consisted of the following:

September 29, 2023 December 30, 2022

March 29, 2024 December 29, 2023

Machinery and manufacturing equipment $ 154,136 $ 149,502

9 unchanged sentences

The Company’s long-lived assets by geographic location are as follows:

September 29, 2023 December 30, 2022

March 29, 2024 December 29, 2023

United States $ 199,491 $ 198,033

6 unchanged sentences

Accrued expenses consisted of the following:

September 29, 2023 December 30, 2022

March 29, 2024 December 29, 2023

Payroll and related expenses $ 23,425 $ 17,988

10 unchanged sentences

Activity related to warranties is as follows:

For the three months ended For the nine months ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

For the three months ended

March 29, 2024 March 31, 2023

Beginning warranty liability $ 20,001 $ 17,071

4 unchanged sentences

*All changes to warranty liability were within normal course of business.

Prior Credit Facility

In June 2019, the Company entered into a credit facility with Bank of America and other named lenders, which was periodically amended and restated and/or amended.

The credit facility was amended and restated on March 11, 2020, and further amended on June 19, 2020, and June 11, 2021 (as amended, the “Prior Credit Facility”).

The Prior Credit Facility (which was terminated on April 5, 2022 and replaced with the 2022 Credit Facility (as discussed below)), would have matured on March 11, 2025, and provided a senior secured revolving line of credit with a borrowing capacity of $ 250,000 and a term loan of $ 400,000 .

The term loan was subject to quarterly amortization payments.

2022 Credit Facility

On April 5, 2022, the Company entered into a new credit agreement with Wells Fargo Bank, National Association, and other named lenders (the “2022 Credit Facility”), and concurrently repaid in full and terminated the Prior Credit Facility.

On April 5, 2022, the Company entered into a new credit agreement with Wells Fargo Bank, National Association, and other named lenders (the “2022 Credit Facility”).

The 2022 Credit Facility, which matures on April 5, 2027, provides for revolving loans, swingline loans and letters of credit up to an aggregate amount of $ 650,000 .

2 unchanged sentences

To the extent not previously paid, all then-outstanding amounts under the 2022 Credit Facility are due and payable on the maturity date.

The Company paid $ 1,980 in debt issuance costs in connection with the 2022 Credit Facility, which were allocated to the revolver and amortized on a straight-line basis over the term of the facility.

Additionally, the Company had $ 4,473 of remaining unamortized debt issuance costs related to the Prior Credit Facility.

The Company expensed $ 1,927 of the remaining unamortized debt issuance costs and allocated $ 2,546 to the 2022 Credit Facility.

FOX FACTORY HOLDING CORP.

1 unchanged sentence

(in thousands, except per share data)

The Company paid $ 1,980 in debt issuance costs in connection with the 2022 Credit Facility, which were allocated to the line of credit and amortized on a straight-line basis over the term of the facility.

Additionally, the Company had $ 4,473 of remaining unamortized debt issuance costs related to the Prior Credit Facility.

The Company expensed $ 1,927 of the remaining unamortized debt issuance costs and allocated $ 2,546 to the 2022 Credit Facility.

The Company may borrow, prepay and re-borrow principal under the 2022 Credit Facility during its term.

2 unchanged sentences

Base rate revolving loans bear interest on the outstanding principal amount thereof at a rate per annum equal to the highest of (i) Federal Funds Rate plus 0.50 %, (ii) the rate of interest in effect for such day as publicly announced from time to time by the lender as its “prime rate”, and (iii) Adjusted Term SOFR rate for a one-month tenor plus 1.00 %, subject to the interest rate floors set forth therein, plus a margin ranging from 0.00 % to 1.00 %.

At September 29, 2023, the one-month SOFR and three-month SOFR rates were 5.32 % and 5.27 %, respectively.

At September 29, 2023, our weighted-average interest rate on outstanding borrowing was 5.31 %.

At March 29, 2024, the one-month SOFR and three-month SOFR rates were 5.32 % and 5.35 %, respectively.

At March 29, 2024, our weighted-average interest rate on outstanding borrowing was 6.93 %.

On November 14, 2023, in connection and concurrently with the closing of the Marucci acquisition, the Company entered into the First Incremental Facility Amendment (the “Amendment”) amending the 2022 Credit Facility.

The Amendment provided the Company with a term loan in an amount of $ 400,000 (the “Incremental Term A Loan”) and a delayed draw term loan in an amount of $ 200,000 (the “Delayed Draw Term Loan” and, together with the Incremental Term A Loan, the “Incremental Term Loans”), each of which are permitted under the 2022 Credit Facility, subject to satisfaction of certain conditions.

The Incremental Term A Loan was fully funded on November 14, 2023 and used to fund a portion of the consideration owed under the Marucci acquisition.

The Delayed Draw Term Loan is available to the Company from and including December 6, 2023, until the earlier of (a) May 14, 2024 and (b) the date on which the Delayed Draw Term commitments have been terminated.

Each Incremental Term Loan is subject to quarterly amortization payments of principal at a rate of 5.00 % per annum.

The Incremental Term Loans are in the form of term SOFR loans and base rate loans, at the option of the Company, and have an applicable margin ranging from 0.50 % to 1.50 % for base rate loans and 1.50 % to 2.50 % for term SOFR loans, subject to adjustment provisions.

Each Incremental Term Loan has a maturity date of April 5, 2027, consistent with the 2022 Credit Facility.

The Company paid $ 10,063 in debt issuance costs, of which $ 6,709 were allocated to the Term A Loan and $ 3,354 were allocated to the Delayed Draw Term Loan.

Loan fees allocated to the Term A Loan are amortized using the interest method over the term of the Credit Facility.

Loan fees allocated to the Delayed Draw Term Loan were deferred as an asset until the debt is drawn.

Upon the drawing of the Delayed Draw Term Loan, the fees will be reclassified to a contra-liability account and amortized over the term of the drawn debt using the interest method.

The 2022 Credit Facility is secured by substantially all of the Company’s assets, restricts the Company’s ability to make certain payments and engage in certain transactions, and requires that the Company satisfy customary financial ratios.

The Company was in compliance with the covenants as of September 29, 2023.

The following table summarizes the line of credit under the 2022 Credit Facility:

September 29, 2023 December 30, 2022

The Company was in compliance with the covenants as of March 29, 2024.

The following table summarizes the revolver under the 2022 Credit Facility:

March 29, 2024 December 29, 2023

Amount outstanding $ 392,000 $ 370,000

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Total borrowing capacity $ 650,000 $ 650,000

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

As of March 29, 2024, future principal payments for long-term debt, including the current portion, as summarized as follows:

For fiscal year March 29, 2024

2024 (remaining 9 months) $ 10,714

Total $ 376,429

Debt issuance cost ( 5,999 )

Long-term debt, net of issuance cost 370,430

current portion ( 14,286 )

Long-term debt less current portion $ 356,144

On June 11, 2021, the Company entered into a swap agreement (the “2021 Swap Agreement”) to obtain a more favorable interest rate and to manage interest rate risk exposure.

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While the outcome of these matters cannot be predicted with certainty, the Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on the Company’s results of operations, financial position or liquidity.

Legal Proceedings - From time to time, the Company is involved in legal proceedings that arise in the ordinary course of business.

Although the Company cannot assure the outcome of any such legal proceedings, based on information currently available, management does not believe that the ultimate resolution of any pending matters, either individually or in the aggregate, will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

Legal Proceedings - On February 20, 2024, a complaint alleging violations of federal securities laws and seeking certification as a class action was filed against the Company and certain of its current and former officers in the United States District Court for the Northern District of Georgia in Atlanta.

The complaint purports to seek damages on behalf of a putative class of persons who purchased the Company’s common stock between May 6, 2021 and November 2, 2023.

The complaint asserts claims under Sections 10(b) and 20 of the Securities Exchange Act and alleges that the Company made material misstatements and omissions to investors regarding demand for the Company’s products and inventory levels.

The complaint generally seeks money damages, interest, attorneys’ fees, and other costs.

The Company denies all allegations of wrongdoing, believes the plaintiffs' positions are without merit, and intends to vigorously defend itself.

The defendants have not yet had the opportunity to respond to the complaint, as plaintiff is currently seeking, under applicable law, the court’s appointment of him as lead plaintiff and appointment of his counsel as lead counsel.

Bailment Pool Arrangements - The Company has relationships with several OEM partners, including General Motors (“GM”), Ford Motor Company (“Ford”), and Chrysler to obtain truck chassis.

For Chrysler chassis, the Company pays a cash deposit upon transfer of the chassis to the Company’s premises, and records the chassis within prepaids and other current assets on the condensed consolidated balance sheets until the chassis is transferred to the dealer customer’s floorplan, at which time the cash deposit is returned to the Company.

For GM and Ford, the Company has entered into floorplan financing agreements with the OEM.

For Chrysler chassis, the Company pays a cash deposit upon transfer of the chassis to the Company’s premises, and records the chassis within prepaids and other current assets on the condensed consolidated balance sheets until the chassis is transferred to the dealer customer’s floor plan, at which time the cash deposit is returned to the Company.

For GM and Ford, the Company has entered into floor plan financing agreements with the OEM.

The Company receives an allocation of chassis and pays interest expense on the allocated value of trucks based on the duration of time they are on the Company’s premises.

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Interest payments made to manufacturer-affiliated finance companies are classified as operating activities in the condensed consolidated statements of cash flows.

At September 29, 2023 and December 30, 2022, the Company had utilized $ 21,228 and $ 2,634 out of a maximum of $ 43,600 and $ 26,200 of Ford allocation of chassis, respectively, and $ 11,259 and $ 67,149 , respectively, out of a maximum of $ 100,000 GM allocation of chassis.

The company incurred $ 740 and $ 4,310 of interest expense related to chassis on hand during the three and nine months ended September 29, 2023, respectively.

Other Commitments - On November 30, 2017, the Company through FF US Holding Corp., acquired the assets of Flagship, Inc.

d/b/a Tuscany and issued a 20% interest in FF US Holding Corp.

to Flagship, Inc.

A stockholders’ agreement with Flagship, Inc.

provided the Company with a call option (the “Call Option”) to acquire the remaining 20 % of FF US Holding Corp.

at any time from November 30, 2019 through November 30, 2024 at a value that approximates fair market value.

On July 22, 2020, the Company exercised the Call Option and, pursuant to a stock purchase agreement with Flagship, Inc., the Company purchased the remaining 20 % interest for $ 24,975 payable in a combination of stock and cash.

The cash portion was settled in quarterly installment payments beginning in July 2020 through July 2022, which amounted to $ 6,556 , $ 4,550 and $ 2,700 in 2020, 2021 and 2022, respectively.

The Company paid $ 900 and $ 2,700 during the three and nine months ended September 30, 2022, respectively.

The Company had no remaining liability as of September 29, 2023.

The stock portion of 136 shares were released from escrow on a quarterly basis starting January 2021 through July 2022.

The Company released 19 and 58 shares of stock during the three and nine months ended September 30, 2022, respectively.

The Company had no remaining shares to be released as of September 29, 2023.

The exercise of the Call Option effectively canceled the put option held by Flagship, Inc.

At March 29, 2024 and December 29, 2023, the Company had utilized $ 18,371 and $ 9,036 , respectively, out of a maximum of $ 49,400 of Ford allocation of chassis, and $ 9,591 and $ 11,362 , respectively, out of a maximum of $ 100,000 GM allocation of chassis.

The Company incurred $ 214 and $ 450 of interest expense related to chassis on hand during the three months ended March 29, 2024 and December 29, 2023, respectively.

FOX FACTORY HOLDING CORP.

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Interest rate swaps involve the receipt of floating-rate amounts in exchange for fixed-rate interest payments based on the SOFR over the lives of the agreements without an exchange of the underlying principal amounts.

As of September 29, 2023 and December 30, 2022, the Company had the following interest rate swap contracts:

September 29, 2023 December 30, 2022

As of March 29, 2024 and December 29, 2023, the Company had the following interest rate swap contracts:

March 29, 2024 December 29, 2023

Effective Date Termination Date Notional Amount Unrealized Gain in AOCI Unrealized Gain in AOCI

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Refer to Note 10 - Fair Value Measurements and Financial Instruments for additional information on determining the fair value.

The unrealized gains or losses, after tax, will be recorded in accumulated other comprehensive income, a component of equity, and are expected to be reclassified into interest expense on the condensed consolidated statements of income when the forecasted transactions affect earnings.

The unrealized gains or losses, after tax, will be recorded in accumulated other comprehensive income, a component of equity, and are expected to be reclassified into interest expense on the condensed consolidated statements of (loss) income when the forecasted transactions affect earnings.

As required under ASC 815, the interest rate swap contracts’ effectiveness will be assessed on a quarterly basis using a quantitative regression analysis.

The gains and losses, net of tax, related to the effective portion of derivative instruments designated as cash flow hedges recognized in other comprehensive income for the three and nine months ended September 29, 2023 were a loss of $ 281 and $ 2,219 , respectively;

and for the three and nine months ended September 30, 2022 were a gain of $ 2,563 and $ 9,296 , respectively.

Over the next twelve months, the Company expects to recognize $ 7,167 of the $ 12,677 of unrealized gains included in accumulated other comprehensive income related to the interest rate swap contracts.

The unrealized gains and losses, net of tax, deferred to accumulated other comprehensive income resulting from the derivative instruments designated as cash flow hedges for the three months ended March 29, 2024 and March 31, 2023 were a gain of $ 1,459 and a loss of $ 2,000 , respectively.

The reclassifications of gains from accumulated other comprehensive income into earnings related to the derivative instruments designated as cash flow hedges during the three months ended March 29, 2024 and March 31, 2023 were $ 1,785 and $ 1,063 , respectively.

Over the next 12 months, the Company expects to recognize $ 6,954 of the $ 8,228 of unrealized gains included in accumulated other comprehensive income related to the interest rate swap contracts.

FOX FACTORY HOLDING CORP.

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The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the following periods:

September 29, 2023 December 30, 2022

March 29, 2024 December 29, 2023

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

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Total assets measured at fair value $ — $ 4,174 $ — $ 4,174 $ — $ 3,394 $ — $ 3,394

There were no transfers of assets or liabilities between Level 1, Level 2, and Level 3 categories of the fair value hierarchy during the three and nine month periods ended September 29, 2023.

Incremental Term A Loan $ — $ 370,430 $ — $ 370,430 $ — $ 373,528 $ — $ 373,528

Total liabilities measured at fair value $ — $ 370,430 $ — $ 370,430 $ — $ 373,528 $ — $ 373,528

There were no transfers of assets or liabilities between Level 1, Level 2, and Level 3 categories of the fair value hierarchy during the three month periods ended March 29, 2024.

As of March 29, 2024, the carrying amount of the principal under the Company’s 2022 Credit Facility - Incremental Term A Loan approximated fair value because it had a variable interest rate that reflected market changes in interest rates and changes in the Company’s net leverage ratio.

On June 11, 2021, the Company entered into the 2021 Swap Agreement to mitigate the cash flow risk associated with changes in interest rates on its variable rate debt.

3 unchanged sentences

The fair value was calculated utilizing Level 2 inputs.

Stockholders’ Equity

Share Repurchase Plan

On November 1, 2023, the Company’s Board of Directors authorized a share repurchase plan for up to $ 300,000 in shares of the Company’s common stock, par value $ 0.001 per share.

The share repurchase program is scheduled to expire on November 1, 2028.

Repurchases of shares of common stock under the stock repurchase plan will be made in accordance with applicable securities laws and may be made under a variety of methods, which may include open market purchases.

The stock repurchase program does not obligate the Company to acquire any particular amount of common stock, and it may be suspended or terminated at any time at the Company’s discretion.

During the three months ended March 29, 2024, the Company repurchased approximately 378 shares for $ 25,000 , at an average price of $ 66.03 .

All repurchased shares were immediately retired.

The aggregate cost of share repurchases and average price paid per share exclude 1% excise tax on share repurchases imposed as part of the Inflation Reduction Act of 2022.

Common stock was reduced by the number of shares retired at $0.001 par value per share.

The excess purchase price over par value was allocated between additional paid-in capital and retained earnings.

As of March 29, 2024, authorized repurchases of $ 250,000 remain available to the Company.

FOX FACTORY HOLDING CORP.

1 unchanged sentence

(in thousands, except per share data)

Stockholders’ Equity

Equity Incentive Plans

The following table summarizes the allocation of stock-based compensation in the accompanying condensed consolidated statements of income:

For the three months ended For the nine months ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

The following table summarizes the allocation of stock-based compensation in the accompanying condensed consolidated statements of (loss) income:

For the three months ended

March 29, 2024 March 31, 2023

Cost of sales $ 236 $ 242

3 unchanged sentences

Total $ 3,906 $ 5,701

The following table summarizes the activity for the Company’s unvested restricted stock units (“RSUs”) for the nine months ended September 29, 2023:

The following table summarizes the activity for the Company’s unvested restricted stock units (“RSUs”) for the three months ended March 29, 2024:

Unvested RSUs

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Vested ( 36 ) $ 121.42

Unvested at September 29, 2023 261 $ 111.00

As of September 29, 2023, the Company had approximately $ 19,744 of unrecognized stock-based compensation expense related to RSUs, which will be recognized over the remaining weighted-average vesting period of approximately 1.92 years.

During the nine months ended September 29, 2023, the Company issued performance share units (“PSUs”) to certain executives that represent shares potentially issuable in the future.

Issuance is based upon the Company’s performance, over a 3 year performance period, on certain measures including return on invested capital and free cash flow.

Unvested at March 29, 2024 307 $ 81.15

As of March 29, 2024, the Company had approximately $ 16,612 of unrecognized stock-based compensation expense related to RSUs, which will be recognized over the remaining weighted-average vesting period of approximately 2.06 years.

During the three months ended March 29, 2024, the Company issued performance-based restricted stock units (“PSUs”) to certain executives that represent shares potentially issuable in the future.

Issuance is based upon the Company’s performance, over a three -year performance period, against an adjusted EBITDA margin target.

The PSUs vest only upon the achievement of the applicable performance goals for the performance period, and, depending on the actual achievement on the performance goals, the grantee may earn between 0 % and 200 % of the target PSUs.

The company also issued PSUs to certain executives and non-executives based upon the Company’s performance, over a four-year performance period, against a trailing 12-month revenue target.

These revenue-growth PSUs vest only upon the achievement of the applicable performance goals for the performance period, and, depending on the actual achievement on the performance goals, the grantee may earn between 0 % and 100% of the target PSUs.

The fair value of PSUs is calculated based on the stock price on the date of grant assuming the performance goals will be achieved.

2 unchanged sentences

(in thousands, except per share data)

The following table summarizes the activity for the Company’s unvested PSUs for the nine months ended September 29, 2023:

The following table summarizes the activity for the Company’s unvested PSUs for the three months ended March 29, 2024:

Unvested PSUs

2 unchanged sentences

Granted 220 $ 46.81

Canceled ( 9 ) $ 119.93

Unvested at September 29, 2023 83 $ 139.95

Unvested at March 29, 2024 290 $ 63.63

The stock-based compensation expense recognized each period is dependent upon our estimate of the number of shares that will ultimately vest based on the achievement of certain performance conditions.

Future stock-based compensation expense for unvested performance-based awards could reach a maximum of $ 10,960 assuming achievement at the maximum level.

Future stock-based compensation expense for unvested PSUs could reach a maximum of $ 19,667 assuming achievement at the maximum level.

The unrecognized stock-based compensation expense is expected to be recognized over a weighted average period of 2.62 years.

For the three months ended For the nine months ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

Provision for income taxes $ 3,484 $ 13,365 $ 20,957 $ 28,265

Net (Loss) Earnings Per Share

Basic net (loss) earnings per share amounts are computed by dividing net (loss) income for the period by the weighted average number of common shares outstanding during the period.

Diluted net (loss) earnings per share amounts are computed by dividing net (loss) income for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period.

Potentially dilutive common shares include shares issuable upon the exercise of outstanding stock options and vesting of restricted stock units, which are reflected in diluted earnings per share by application of the treasury stock method.

For purpose of the diluted net loss per share calculation, the potential dilutive common shares are excluded because their effect would be antidilutive;

therefore, basic and diluted net loss per share were the same for the three months ended March 29, 2024.

The Company excluded 139 and 1 shares from the calculation of diluted net (loss) earnings per share for the three months ended March 29, 2024 and March 31, 2023, respectively, as these shares would have been antidilutive.

The following table presents the calculation of basic and diluted (loss) earnings per share:

For the three months ended

March 29, 2024 March 31, 2023

Net (loss) income $ ( 3,496 ) $ 41,767

Weighted average shares used to compute basic earnings per share 41,650 42,298

Dilutive effect of employee stock plans — 198

Weighted average shares used to compute diluted earnings per share 41,650 42,496

Earnings per share:

Basic $ ( 0.08 ) $ 0.99

Diluted $ ( 0.08 ) $ 0.98

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

For the three months ended

March 29, 2024 March 31, 2023

(Benefit) Provision for income taxes $ ( 1,267 ) $ 9,378

Effective tax rates 26.6 % 18.3 %

For the three months ended September 29, 2023, the difference between the Company’s effective tax rate of 9.0 % and the 21 % federal statutory rate was due to a benefit from the U.S.

research and development tax credit related to multiple periods and lower tax rate on foreign derived intangible income.

These benefits were partially offset by other non-deductible expenses and state taxes.

For the nine months ended September 29, 2023, the difference between the Company’s effective tax rate and the 21% federal statutory rate resulted primarily from a lower tax rate on foreign derived intangible income and benefit from the U.S.

research and development tax credit related to multiple periods.

These benefits were partially offset by other non-deductible expenses and state taxes.

For the three months ended September 30, 2022, the difference between the Company’s effective tax rate of 20.8 % and the 21% federal statutory rate resulted primarily from a lower tax rate on foreign derived intangible income, partially offset by withholding and state taxes.

For the nine months ended September 30, 2022, the difference between the Company’s effective tax rate and the 21% federal statutory rate resulted primarily from a lower tax rate on foreign derived intangible income, and the impact of the finalized U.S.

tax regulations published by the U.S.

Treasury and Internal Revenue Service on January 4, 2022.

These regulations limit the amount of newly generated foreign taxes that are creditable against U.S.

income taxes, which resulted in a release of the Company’s valuation allowance against foreign tax credits due to the Company's ability to use foreign tax credit carryforwards that had previously been reserved against.

These benefits were partially offset by withholding and state taxes.

For the three months ended March 29, 2024, the difference between the Company’s effective tax rate of 26.6 % and the 21 % federal statutory rate was due to the impact of discrete items and pre-tax loss.

For the three months ended March 31, 2023, the difference between the Company’s effective tax rate of 18.3 % and the 21% federal statutory rate resulted primarily from a lower tax rate on foreign derived intangible income, partially offset by state and foreign withholding taxes.

We do not expect the results from any ongoing income tax audits to have a material impact on our consolidated financial condition, results of operations, or cash flows.

Related Party Transactions

On March 3, 2023, the Company acquired all of the outstanding equity interest of Custom Wheel House.

Custom Wheel House has building leases for its office facilities in California.

The buildings are owned by the former owner of Custom Wheel House, who is now an employee of the Company.

Rent expense under these leases was $ 185 for the three months ended March 29, 2024.

Acquisition of Marucci Sports LLC

On November 14, 2023, the Company, through Fox Factory, Inc., acquired 100 % of the issued and outstanding stock of Wheelhouse Holdings Inc.

("Wheelhouse") from Compass Group Diversified Holdings LLC for $ 567,236 , net of cash acquired.

Wheelhouse is the parent company of Marucci, which is an industry-leading designer, manufacturer, and distributor of premium performance baseball, softball, and other sports-related products.

Marucci also develops and licenses franchises for sports training facilities, and its customer base is primarily located in the United States and certain international markets.

The Company believes the acquisition advances FOX’s position as a diversified provider of market-leading branded products with a proven ability to win over both professional athletes and passionate consumer bases, while positioning the combined company for future profitable growth.

This transaction was accounted for as a business combination.

The purchase price of Marucci was preliminarily allocated to the assets acquired and liabilities assumed based on their estimated respective fair values as of November 14, 2023 with the excess purchase price allocated to goodwill.

During the three months ended March 29, 2024, the Company updated the purchase price allocation and recorded adjustments to net assets of $ 892 and goodwill of $ 850 .

The following table summarizes the provisional fair values of the identifiable assets acquired and liabilities assumed at the date of the acquisition:

FOX FACTORY HOLDING CORP.

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(in thousands, except per share data)

Related Party Transactions

On July 22, 2020, the Company, pursuant to a stock purchase agreement with Flagship, Inc., purchased the remaining 20 % interest of FF US Holding Corp.

for $ 24,975 payable in a combination of stock and cash.

The cash portion was settled in quarterly installment payments through July 2022.

Refer to Note 8 - Commitments and Contingencies for additional details of this agreement.

On February 17, 2023 the Company entered into a Securities Purchase Agreement with CWH Holdco, LLC (“CWH”), CWH Blocker Corp., (“Blocker”), Thompson Street Capital Partners V, L.P., and each other member of CWH to purchase all of the outstanding equity of Blocker, and thereafter Blocker acquired all of the outstanding equity interest of CWH.

CWH is the parent company of Custom Wheel House, LLC (“Custom Wheel House”).

Custom Wheel House is a designer, marketer, and distributor of high-performance wheels, performance off-road tires, and accessories, including the premier flagship brand Method Race Wheels.

The Company believes that this acquisition will be complementary to its upfitting businesses and will help to expand its product offerings.

This acquisition was financed through the Company’s existing 2022 Credit Facility.

The acquisition was closed on March 3, 2023 and accounted for as a business combination.

The purchase price of Custom Wheel House has been preliminarily allocated to the assets acquired and liabilities assumed based on their estimated respective fair values as of March 3, 2023 with the excess purchase price allocated to goodwill.

The Company’s valuation is preliminary and subject to the Company’s validation of deferred taxes.

The Company expects to amortize the acquired trade name, customer relationship and core technology assets over their expected useful lives that range between two and seven years .

The acquired goodwill represents the value of combining operations of Custom Wheel House and the Company, and is expected to be partially deductible for tax purposes.

During the nine months ended September 29, 2023, the Company updated the purchase price allocation and recorded adjustments to net assets of $ 745 , identified intangible assets of $ 4,337 , and goodwill of $ 5,082 .

The Company’s allocation of the purchase price to the net tangible and intangible assets acquired and liabilities assumed is as follows:

Acquisition consideration

Cash consideration $ 130,918

Cash consideration, net of cash acquired $ 567,092

Due to sellers 144

Total consideration at closing $ 567,236

Fair market values

Accounts receivable $ 31,268

Inventory 52,672

Other current assets 4,243

Prepaid and other current assets 1,256

Property, plant and equipment 19,257

Lease right-of-use assets 9,423

Intangibles 48,663

Trademarks and brands 174,700

Customer and distributor relationships 83,800

Core technologies 20,600

Goodwill 243,940

Other assets 583

Total assets acquired $ 637,499

Accounts payable and accrued expenses 10,783

Current portion of lease liabilities 1,694

Lease liabilities 3,024

Accounts payable $ 13,626

Accrued expenses 10,512

Other current liabilities 1,854

Deferred Taxes 37,282

Other liabilities 6,989

Total liabilities assumed $ 70,263

Purchase price allocation $ 567,236

The gross contractual accounts receivable acquired in the acquisition was $ 32,455 , of which $ 1,187 was not expected to be collected.

The amounts above represent the Company’s provisional fair value estimates related to the acquisition as of November 14, 2023.

The Company’s valuation is preliminary and subject to the Company’s validation of deferred taxes.

The Company incurred $ 3,636 of acquisition costs in conjunction with the Marucci acquisition, $ 510 of which incurred during the three months ended March 29, 2024.

These costs are classified as general and administrative expenses in the accompanying consolidated statements of (loss) income.

Additional debt issuance costs of $ 6,709 were incurred in association with financing the transaction and are amortized over the term of the Incremental Term Loan A.

Refer to Note 7 - Debt for further details.

The values assigned to the identifiable intangible assets were determined by discounting the estimated future cash flows associated with these assets to their present value.

The goodwill of $ 243,940 reflects the strategic fit of Marucci with the Company’s operations.

The weighted average amortization period of the total acquired intangible assets was 16 years.

The weighted average amortization periods of the customer and distributor relationship, trade name and trademark, and developed technology assets were 18 , 15 , and 13 years, respectively.

Goodwill is expected to have an indefinite life and will be subject to impairment testing.

The goodwill is not deductible for income tax purposes.

Marucci previously purchased intangibles in asset acquisitions with a remaining net tax basis approximating $ 57,735 , which the Company may deduct for income tax purposes.

The results of operations for Marucci have been included in the Company's consolidated statements of (loss) income since the closing date of the acquisition on November 14, 2023.

The total revenue and pre-tax income for Marucci for the three months ended March 29, 2024 amounted to $ 59,588 and $ 4,365 , respectively.

FOX FACTORY HOLDING CORP.

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(in thousands, except per share data)

The Company incurred $ 929 of transaction costs related to the acquisition of Custom Wheel House during the nine months ended September 29, 2023.

These costs are classified as general and administrative expenses in the accompanying condensed consolidated statements of income.

The results of operations for Custom Wheel House have been included in the Company's condensed consolidated statements of income since the closing date of the acquisition on March 3, 2023.

The total revenue and net income from operations for Custom Wheel House for the three months ended September 29, 2023 amounted to $ 19,331 and $ 1,296 , respectively.

The total revenue and net loss from operations for Custom Wheel House for the nine months ended September 29, 2023 amounted to $ 46,016 and $ 5,252 , respectively.

Pro-forma financial information of the combined entities is not presented due to the immaterial impact of the financial results of the acquired entity on our consolidated financial statements.

Subsequent Events

Marucci Sports, LLC (“Marucci”) Transaction

On November 1, 2023 the Company’s subsidiary, Fox Factory, Inc., entered into an Agreement and Plan of Merger (the “Marucci Merger Agreement”) by and among Fox Factory, Inc., Marucci Merger Sub, Inc., a wholly-owned subsidiary of Fox Factory, Inc.

(“Merger Sub), Wheelhouse Holdings Inc.

(“Wheelhouse) and Compass Group Diversified Holdings LLC, as representative of the Wheelhouse equity holders.

Pursuant to the Marucci Merger Agreement, the Merger Sub will merge with and into Wheelhouse with Wheelhouse surviving as a wholly-owned subsidiary of Fox Factory, Inc.

(the “Marucci Merger”).

Pursuant to the Marucci Merger, Fox Factory, Inc.

will acquire substantially all the issued and outstanding capital stock of Wheelhouse Holdings, Inc., the parent company of Marucci, at an enterprise value of $ 572,000 , subject to various adjustments described in the Marucci Merger Agreement.

Marucci, based in Baton Rouge, Louisiana, is a leading designer, manufacturer, and marketer of highly engineered premium wood, aluminum and composite baseball bats as well as other diamond sports products.

The Company believes that this transaction will be complementary to its technology innovation and brand value and will help to expand its product offerings.

The transaction, which is subject to various closing conditions, is expected to close in the fourth quarter of 2023.

The transaction will be financed through a term loan from an amendment to the 2022 Credit Facility.

Amendment to 2022 Credit Facility

On November 1, 2023, the Company entered into a commitment letter (the “Debt Commitment Letter”) with certain lenders party to the 2022 Credit Facility (collectively, the “Commitment Parties”) pursuant to which the Commitment Parties have agreed to provide the Company with a term loan in an amount not to exceed $ 400,000 and a delayed draw term loan in an amount not to exceed $ 200,000 (collectively, the “Incremental Term Loans”), each of which are permitted under the 2022 Credit Facility.

The Incremental Term Loans will support the Company’s capital allocation strategy, including funding a portion of the acquisition consideration owed under the Marucci transaction.

The funding of the Incremental Term Loans provided for in the Debt Commitment Letter are contingent on satisfaction of customary conditions, including, among other things, (i) the execution and delivery of the amendment to the 2022 Credit Facility and (ii) the consummation of the Marucci transaction.

The amendment to the 2022 Credit Facility will be effective on the closing date of the Marucci transaction and has not been finalized;

accordingly, the actual terms may differ from the description of such terms in the Debt Commitment Letter.

Share Repurchase Plan

On November 1, 2023, the Company’s Board of Directors authorized a share repurchase plan for up to $ 300,000 in shares of the Company’s common stock, par value $ 0.001 per share.

The share repurchase program is scheduled to expire on November 1, 2028.

Repurchases of shares of Common Stock under the stock repurchase plan will be made in accordance with applicable securities laws and may be made under a variety of methods, which may include open market purchases.

The stock repurchase program does not obligate the Company to acquire any particular amount of common stock, and it may be suspended or terminated at any time at the Company’s discretion.

Segment Information

Due in part to how we operate our business and to best serve our customers, we manage our activities based on three operating segments:

Powered Vehicles Group, Aftermarket Applications Group, and Specialty Sports Group.

All of our segments design, engineer and manufacture performance-defining products and systems for customers worldwide.

The following is a description of our operating segments.

Powered Vehicles Group:

This segment operates 2 plants in the United States of America.

Our premium products sold under the FOX brand for off-road vehicles and trucks, side-by-sides, on-road vehicles with and without off-road capabilities, ATVs, snowmobiles, specialty vehicles and applications, motorcycles, and commercial trucks.

These products are sold through both OEM and aftermarket channels.

Aftermarket Applications Group:

This segment operates 15 plants across the United States of America.

Our range of aftermarket applications products includes premium products under the BDS Suspension, Zone Offroad, JKS Manufacturing, RT Pro UTV, 4x4 Posi-Lok, Ridetech, Tuscany, Outside Van, SCA, and Custom Wheel House brands designed for off-road vehicles and trucks, side-by-sides, on-road vehicles with or without off-road capabilities, specialty vehicles and applications, and commercial trucks.

Specialty Sports Group:

This segment operates 9 plants and 13 distribution facilities (11 in the United States of America, 4 in Taiwan, and one facility each in Australia, Canada, Germany, Japan, Sweden, Switzerland, and United Kingdom).

Our bike product offerings are used on a wide range of performance mountain bikes, e-bikes and gravel bikes under the FOX, Race Face, Easton Cycling and Marzocchi brands.

These products are sold through both OEM and aftermarket channels.

Our products for diamond sports include premium baseball and soft ball equipment under the Marucci, Victus, Lizard Skins, and Baum Bat brands and are sold through dealers and distributors and through direct-to-customer channels.

Net sales and expenses are measured in accordance with the policies and procedures described in Note 1 – Business and Summary of Significant Accounting Policies within our 2023 Form 10-K.

We measure the profitability and financial performance of our operating segments based on adjusted EBITDA.

Adjusted EBITDA provides a measure of our underlying segment results that is in line with our approach to risk management.

We define adjusted EBITDA as net income adjusted for (a) interest expense, (b) income tax or tax benefits, (c) amortization including amortization of purchased intangibles, (d) depreciation, (e) stock-based compensation, (f) litigation and settlement related expenses, (g) organizational restructuring expenses, (h) acquisition and integration-related expenses, and (i) strategic transformation costs.

Adjusted EBITDA Margin is defined as adjusted EBITDA divided by net sales.

Segment asset information is not presented because it is not evaluated by the CODM at the segment level.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

The tables that follow show selected segment financial information including information for prior comparative period.

Unallocated corporate expenses are corporate overhead expenses that are not directly attributable to one of our business segments and include unallocated occupancy costs for our corporate headquarters, acquisition costs, other benefit and compensation programs, including performance-based compensation, and administrative expenses such as accounting, finance, legal, human resources, and information technology expenses.

For the three months ended

March 29, 2024 March 31, 2023

Power Vehicles Group $ 118,113 $ 142,247

Aftermarket Applications Group 101,852 138,717

Specialty Sports Group 113,507 118,887

Net sales $ 333,472 $ 399,851

Net (loss) income ( 3,496 ) 41,767

(Benefit) provision for income taxes ( 1,267 ) 9,378

Depreciation and amortization 20,451 13,315

Non-cash stock-based compensation 3,906 5,701

Litigation and settlement-related expenses 1,529 978

Other acquisition and integration-related expenses (1) 5,163 4,474

Organizational restructuring expenses 63 —

Strategic transformation costs 432 —

Interest and other expense, net 13,638 3,545

Adjusted EBITDA $ 40,419 $ 79,158

Power Vehicles Group 15,881 17,658

Aftermarket Applications Group 14,869 36,279

Specialty Sports Group 24,057 41,830

Unallocated corporate expenses ( 14,388 ) ( 16,609 )

Adjusted EBITDA $ 40,419 $ 79,158

(1) Represents various acquisition-related costs and expenses incurred to integrate acquired entities into the Company’s operations and the impact of the finished goods inventory valuation adjustment recorded in connection with the purchase of acquired assets, per period as follows:

For the three months ended

March 29, 2024 March 31, 2023

Acquisition related costs and expenses $ 678 $ 1,404

Purchase accounting inventory fair value adjustment amortization 4,485 3,070

Other acquisition and integration-related expenses $ 5,163 $ 4,474

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements