What changed in this filing

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Item 1. Financial Statements

2024-11-01 compared with 2024-08-02 · 165 added, 130 removed, 574 unchanged (34% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

June 28, 2024 December 29, 2023

September 27, 2024 December 29, 2023

Current assets:

21 unchanged sentences

Revolver 210,000 370,000

Term A Loan, less current portion 539,833 359,242

Term Loans, less current portion 534,144 359,242

Other liabilities 94,343 69,459

2 unchanged sentences

Stockholders’ equity

Preferred stock, $ 0.001 par value — 10,000 authorized and no shares issued or outstanding as of June 28, 2024 and December 29, 2023

Preferred stock, $ 0.001 par value — 10,000 authorized and no shares issued or outstanding as of September 27, 2024 and December 29, 2023

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

42,572 shares issued and 41,682 outstanding as of June 28, 2024;

42,573 shares issued and 41,683 outstanding as of September 27, 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 June 28, 2024 and December 29, 2023

890 common shares as of September 27, 2024 and December 29, 2023

( 13,754 ) ( 13,754 )

Accumulated other comprehensive income 3,398 9,041

Accumulated other comprehensive (loss) income ( 1,055 ) 9,041

Retained earnings 875,594 878,086

5 unchanged sentences

(in thousands, except per share data)

For the three months ended For the six months ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

For the three months ended For the nine months ended

September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

Net sales $ 359,121 $ 331,117 $ 1,041,084 $ 1,131,683

9 unchanged sentences

Interest expense 14,228 3,466 41,422 11,405

Other (income) expense, net ( 311 ) 536 ( 2 ) 560

Other income, net ( 456 ) ( 878 ) ( 458 ) ( 318 )

Income before income taxes 5,030 38,777 5,303 137,752

(Benefit) provision for income taxes ( 371 ) 8,095 ( 1,638 ) 17,473

Provision (benefit) for income taxes 250 3,484 ( 1,388 ) 20,957

Net income $ 4,780 $ 35,293 $ 6,691 $ 116,795

9 unchanged sentences

(in thousands)

For the three months ended For the six months ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

For the three months ended For the nine months ended

September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

Net income $ 4,780 $ 35,293 $ 6,691 $ 116,795

1 unchanged sentence

Interest rate swap

Change in net unrealized gains, net of tax effects of $( 277 ) and $( 320 ) for the three and six months ended June 28, 2024, respectively, and $ 210 and $( 361 ) for the three and six months ended June 30, 2023, respectively

Change in net unrealized gains, net of tax effects of $( 1,339 ) and $( 1,659 ) for the three and nine months ended September 27, 2024, respectively, and $( 79 ) and $( 440 ) for the three and nine months ended September 29, 2023, respectively

( 5,161 ) 782 ( 3,363 ) 970

8 unchanged sentences

(in thousands)

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

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

Shares Amount Shares Amount

10 unchanged sentences

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

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

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

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

Shares Amount Shares Amount

12 unchanged sentences

Balance - June 28, 2024 42,573 $ 42 890 $ ( 13,754 ) $ 335,834 $ 3,398 $ 870,863 $ 1,196,383

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 1 — — — ( 68 ) — — ( 68 )

Purchase and retirement of common stock — — — — — — ( 49 ) ( 49 )

Stock-based compensation expense — — — — 465 — — 465

Other comprehensive loss — — — — — ( 4,453 ) — ( 4,453 )

Net income — — — — — — 4,780 4,780

Balance - September 27, 2024 42,574 $ 42 890 $ ( 13,754 ) $ 336,231 $ ( 1,055 ) $ 875,594 $ 1,197,058

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

2 unchanged sentences

(in thousands)

For the six months ended

June 28, 2024 June 30, 2023

For the nine months ended

September 27, 2024 September 29, 2023

OPERATING ACTIVITIES:

16 unchanged sentences

Accrued expenses and other liabilities 11,318 ( 7,265 )

Net cash provided by (used in) operating activities 36,037 ( 3,308 )

Net cash provided by operating activities 50,111 126,685

INVESTING ACTIVITIES:

10 unchanged sentences

Repurchases from stock compensation program, net ( 2,613 ) ( 6,163 )

Net cash (used in) provided by financing activities ( 10,688 ) 119,782

Deferred debt issuance/modification costs ( 855 ) —

Net cash used in financing activities ( 1,682 ) ( 16,163 )

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS ( 358 ) 257

6 unchanged sentences

(in thousands)

For the six months ended

For the nine months ended

SUPPLEMENTAL CASH FLOW INFORMATION:

June 28, 2024 June 30, 2023

September 27, 2024 September 29, 2023

Cash paid during the period for:

14 unchanged sentences

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

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 and through direct-to-customer channels.

Certain 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 and through direct-to-customer channels.

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.

11 unchanged sentences

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

The three and six-month periods ended June 28, 2024 and June 30, 2023 each included 13 weeks and 26 weeks, respectively.

The three and nine-month periods ended September 27, 2024 and September 29, 2023 each included 13 weeks and 39 weeks, respectively.

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

18 unchanged sentences

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.

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.

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 stockholders 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 (“CODM”) in deciding how to allocate resources and in assessing performance.

9 unchanged sentences

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.

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 on Form 10-K.

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 June 28, 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.

Certain Significant Risks and Uncertainties - As of September 27, 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.

Impacts from 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:

48 unchanged sentences

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.

The Company plans to adopt ASU 2023-07 in the Annual Report on Form 10-K for fiscal year 2024 ending January 3, 2025 and subsequent interim periods.

The adoption is not expected to have a material impact on the Company’s financial conditions and results of operations.

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

7 unchanged sentences

The following table summarizes total net sales by segment:

For the three months ended For the six months ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

For the three months ended For the nine months ended

September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

Powered Vehicles Group $ 109,336 $ 123,076 $ 345,244 $ 405,519

3 unchanged sentences

The following table summarizes total net sales by sales channel:

For the three months ended For the six months ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

For the three months ended For the nine months ended

September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

OEM $ 161,270 $ 155,632 $ 450,378 $ 570,550

4 unchanged sentences

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

For the three months ended For the six months ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

For the three months ended For the nine months ended

September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

North America $ 264,808 $ 268,703 $ 827,623 $ 864,612

4 unchanged sentences

Inventory consisted of the following:

June 28, 2024 December 29, 2023

September 27, 2024 December 29, 2023

Raw materials $ 250,696 $ 217,888

7 unchanged sentences

Prepaids and other current assets consisted of the following:

June 28, 2024 December 29, 2023

September 27, 2024 December 29, 2023

Prepaid chassis deposits $ 89,017 $ 108,866

4 unchanged sentences

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

June 28, 2024 December 29, 2023

September 27, 2024 December 29, 2023

Machinery and manufacturing equipment $ 162,925 $ 149,502

Building and building improvements 82,874 77,998

Leasehold improvements 41,798 38,115

Internal-use computer software 38,853 35,518

Information systems, office equipment and furniture 30,184 26,972

Leasehold improvements 37,434 38,115

Transportation equipment 20,896 15,505

4 unchanged sentences

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

June 28, 2024 December 29, 2023

September 27, 2024 December 29, 2023

United States $ 202,944 $ 198,033

6 unchanged sentences

Accrued expenses consisted of the following:

June 28, 2024 December 29, 2023

September 27, 2024 December 29, 2023

Payroll and related expenses $ 28,743 $ 17,988

10 unchanged sentences

Activity related to warranties is as follows:

For the three months ended For the six months ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

For the three months ended For the nine months ended

September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

Beginning warranty liability $ 20,693 $ 19,751 $ 20,001 $ 17,071

20 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 %.

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.

On November 14, 2023, in connection and concurrently with the closing of the Marucci acquisition (as discussed in Note 15 - Acquisit ions ), 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.

9 unchanged sentences

The fees were reclassified to a contra-liability account and amortized over the term of the drawn debt using the interest method.

The Company recently secured an improved covenant profile on its capital structure to provide more flexibility given the uncertain macro environment.

At June 28, 2024, the one-month SOFR and three-month SOFR rates were 5.34 % and 5.35 %, respectively.

At June 28, 2024, our weighted-average interest rate on outstanding borrowing was 7.07 %.

On July 31, 2024, the Company entered into the Third Amendment to the Credit Facility to secure an improved covenant profile on its capital structure to provide more flexibility given the uncertain macro environment.

At September 27, 2024, the one-month SOFR and three-month SOFR rates were 5.21 % and 5.33 %, respectively.

At September 27, 2024, our weighted-average interest rate on outstanding borrowing was 6.30 %.

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 June 28, 2024.

The Company was in compliance with the covenants as of September 27, 2024.

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

June 28, 2024 December 29, 2023

September 27, 2024 December 29, 2023

Amount outstanding $ 210,000 $ 370,000

5 unchanged sentences

(in thousands)

As of June 28, 2024, future principal payments for term loan debt, including the current portion, as summarized as follows:

For fiscal year June 28, 2024

As of September 27, 2024, future principal payments for term loan debt, including the current portion, are summarized as follows:

For fiscal year September 27, 2024

2024 (remaining 3 months) $ 6,071

4 unchanged sentences

Long-term debt less current portion $ 534,144

On April 5, 2022, the Company entered into a new interest rate swap agreement (the “2022 Swap Agreement”).

Through the 2022 Swap Agreement, the Company hedges the variability of cash flows in interest payments associated with $ 100,000 of its variable rate debt.

Refer to Note 9 - Derivatives and Hedging for further details of the 2022 Swap Agreement.

On April 5, 2022, the Company executed an interest rate swap agreement and, subsequently, on August 26, 2024, the Company entered into three additional interest rate swap agreements.

Through the swap agreements, the Company hedges the variability of cash flows in interest payments associated with the first $ 500,000 of its variable rate debt.

Refer to Note 9 - Derivatives and Hedging for further details.

FOX FACTORY HOLDING CORP.

6 unchanged sentences

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 Court has entered an order requiring plaintiff to file an amended complaint by August 16, 2024, and setting a briefing schedule for anticipated motion to dismiss the amended complaint.

On August 16, 2024, the plaintiff filed an amended complaint that 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 amended complaint asserts claims under Sections 10(b) and 20 of the Securities Exchange Act and alleges that the Company and certain current and former officers made material misstatements and omissions to investors regarding demand for the Company’s products and its inventory levels.

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

The defendants deny all allegations of wrongdoing, believe the plaintiff’s positions are without merit, and intend to vigorously defend themselves.

On October 15, 2024, the defendants filed a motion to dismiss the amended complaint.

Per the Court’s scheduling order, the plaintiff will file his opposition by December 13, 2024, and defendants will reply by January 13, 2025.

On October 9, 2024, and October 29, 2024, two stockholder derivative complaints were filed in the United States District Court for the Northern District of Georgia against certain of the Company’s officers and its directors, with the Company named as a nominal defendant.

The cases are assigned to the same judge presiding over the securities fraud class action.

The complaints are premised on substantially the same factual allegations as the securities fraud class action, but in these complaints, the plaintiff claims that the Company’s officers and directors breached their fiduciary duties or otherwise engaged in wrongdoing by allowing the underlying securities fraud to occur.

The defendants deny all allegations of wrongdoing, believe the plaintiffs’ claims are without merit, and intend to vigorously defend themselves.

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

For Stellantis 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 Stellantis 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 are 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.

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

Bailment, which is the non-ownership transfer of the chassis from GM and Ford to the Company, ends when the vehicle is sold to an authorized dealer, or upon authorized return of the vehicle to the manufacturer.

1 unchanged sentence

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

At June 28, 2024 and December 29, 2023, the Company utilized $ 50,028 and $ 9,036 , out of a maximum of $ 51,100 and $ 49,400 of Ford allocation of chassis, respectively, and $ 4,238 and $ 11,362 , respectively, out of a maximum of $ 100,000 GM allocation of chassis.

The Company incurred interest expense related to chassis on hand of $ 201 and $ 450 during the three month ended June 28, 2024 and December 29, 2023, respectively, and $ 414 and $ 1,190 during the six months ended June 28, 2024 and December 29, 2023, respectively.

At September 27, 2024 and December 29, 2023, the Company utilized $ 37,398 and $ 9,036 , out of a maximum of $ 51,100 and $ 49,400 of Ford allocation of chassis, respectively, and $ 9,453 and $ 11,362 , respectively, out of a maximum of $ 49,500 and $ 100,000 GM allocation of chassis.

The Company incurred interest expense related to chassis on hand of $ 374 and $ 450 during the three months ended September 27, 2024 and December 29, 2023, respectively, and $ 789 and $ 3,359 during the nine months ended September 27, 2024 and December 29, 2023, respectively.

FOX FACTORY HOLDING CORP.

6 unchanged sentences

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 June 28, 2024 and December 29, 2023, the Company had the following interest rate swap contracts:

June 28, 2024 December 29, 2023

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

The Company hedges the variability of cash flows in interest payments associated with the first $ 500,000 of its variable rate debt through the interest rate swaps.

As of September 27, 2024 and December 29, 2023, the Company had the following interest rate swap contracts:

September 27, 2024 December 29, 2023

Effective Date Termination Date Notional Amount Unrealized Gain (Loss) in AOCI Unrealized Gain in AOCI

September 2, 2020 June 11, 2021 $ 200,000 $ 39 $ 104

1 unchanged sentence

April 5, 2022 April 5, 2027 $ 100,000 1,411 3,394

September 20, 2024 December 26, 2025 $ 100,000 ( 318 ) —

September 20, 2024 December 25, 2026 $ 200,000 ( 928 ) —

September 20, 2024 September 21, 2029 $ 100,000 ( 626 ) —

Total $ 1,467 $ 8,511

2 unchanged sentences

The terminated 2020 and 2021 Swap Agreements resulted in unrealized gains of $ 324 and $ 12,270 , respectively, at the termination dates that will continue to be accounted for in accumulated other comprehensive income, or AOCI, and amortized into earnings over the term of the associated debt instrument.

The 2022 Swap Agreement has a maturity date of April 5, 2027 and is indexed to a three-month Term SOFR (as defined in the 2022 Swap Agreement).

The 2022 Swap Agreement met the criteria as a cash flow hedge under ASC 815, Derivatives and Hedging (“ASC 815”), and is recorded to other assets or other liabilities on the condensed consolidated balance sheets.

On August 26, 2024, the Company entered into new interest rate swap agreements with an aggregate notional amount of $ 400,000 .

The interest rate swaps are indexed to a three-month Term SOFR as defined in the agreements.

The interest rate swaps met the criteria as cash flow hedges under ASC 815, Derivatives and Hedging (“ASC 815”), and are recorded to other assets or other liabilities on the condensed consolidated balance sheets.

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 (loss) 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 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 unrealized gains net of tax, deferred to accumulated other comprehensive income resulting from the derivative instruments designated as cash flow hedges for the three and six months ended June 28, 2024 were gains of $ 339 and $ 1,798 , respectively;

and for the three and six months ended June 30, 2023 were gains of $ 2,188 and $ 188 , 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 and six months ended June 28, 2024 were $ 1,775 and $ 3,560 , respectively;

and during the three and six months ended June 30, 2023 were $ 1,063 and $ 2,126 , respectively.

Over the next 12 months, the Company expects to recognize $ 5,911 of the $ 7,069 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 and nine months ended September 27, 2024 were net losses of $ 5,161 and $ 3,363 , respectively;

and for the three and nine months ended September 29, 2023 were gains of $ 782 and $ 970 , respectively.

The reclassifications of unrealized gains from accumulated other comprehensive income into earnings related to the derivative instruments designated as cash flow hedges during the three and nine months ended September 27, 2024 were $ 1,779 and $ 5,339 , respectively;

and during the three and nine months ended September 29, 2023 were $ 1,063 and $ 3,189 , respectively.

Over the next 12 months, the Company estimates that $ 9,032 will be reclassified as a decrease to interest expense related to the interest rate swap contracts.

FOX FACTORY HOLDING CORP.

3 unchanged sentences

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:

June 28, 2024 December 29, 2023

September 27, 2024 December 29, 2023

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

Interest Rate Swap $ — $ 4,078 $ — $ 4,078 $ — $ 3,394 $ — $ 3,394

Deferred Compensation Plan Investments $ 4,410 — — $ 4,410 $ 3,794 — — 3,794

Interest Rate Swaps — 1,411 — 1,411 — 3,394 — 3,394

Total assets measured at fair value $ 4,410 $ 1,411 $ — $ 5,821 $ 3,794 $ 3,394 $ — $ 7,188

1 unchanged sentence

Revolver — 210,000 — 210,000 — 370,000 — 370,000

Interest Rate Swaps — 1,872 — 1,872 — — — —

Total liabilities measured at fair value $ — $ 770,302 $ — $ 770,302 $ — $ 743,528 $ — $ 743,528

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 and six month periods ended June 28, 2024.

As of June 28, 2024, the carrying amount of the principal under the Company’s 2022 Credit Facility - Incremental Term Loans and Revolver approximated fair value because they had variable interest rates 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.

On April 5, 2022, the Company terminated its 2021 Swap Agreement and entered into the 2022 Swap Agreement.

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 months ended September 27, 2024.

As of September 27, 2024, the carrying amount of the principal under the Company’s 2022 Credit Facility - Incremental Term Loans and Revolver approximated fair value because they had variable interest rates that reflected market changes in interest rates and changes in the Company’s net leverage ratio.

The Company mitigate the cash flow risk associated with changes in interest rates on its variable rate debt through interest rate swap agreements.

Refer to Note 9 - Derivatives and Hedging for additional details of the agreement.

In accordance with ASC 815, an interest rate swap contract is recognized as an asset or liability on the condensed consolidated balance sheets and is measured at fair value.

The fair value was estimated based on expected cash flows over the life of the Swap.

In accordance with ASC 815, interest rate swap contracts are recognized as assets or liabilities on the condensed consolidated balance sheets and are measured at fair values.

The fair values were estimated based on expected cash flows over the life of the swaps.

These expected cash flows were determined using a pricing model that incorporated reasonable assumptions and available market data.

The Company invests in marketable securities to mitigate the risk associated with the investment return on the non-qualified deferred compensation plan provided to executives and non-employee directors.

The investments are recorded as cash and cash equivalents at their quoted market price.

Stockholders’ Equity

4 unchanged sentences

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.

There were no repurchases of common stock during the three months ended June 28, 2024.

During the six months ended June 28, 2024, the Company repurchased approximately 378 shares for $ 25,000 , at an average price of $ 66.03 .

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

There were no repurchases of common stock during the three months ended September 27, 2024.

During the nine months ended September 27, 2024, the Company repurchased approximately 378 shares for $ 25,000 , at an average price of $ 66.03 .

All repurchased shares were immediately retired.

2 unchanged sentences

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

As of June 28, 2024, authorized repurchases of $ 250,000 remain available to the Company.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

As of September 27, 2024, authorized repurchases of $ 250,000 remain available to the Company.

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 six months ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

For the three months ended For the nine months ended

September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

Cost of sales $ 324 $ 330 $ 880 $ 903

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The recognition of compensation expense associated with performance-based stock awards requires defined criteria for assessing achievement and judgment in assessing the probability of meeting the performance goals.

The following table summarizes the activity for the Company’s unvested restricted stock units (“RSUs”) for the six months ended June 28, 2024:

The following table summarizes the activity for the Company’s unvested restricted stock units (“RSUs”) for the nine months ended September 27, 2024:

Unvested RSUs

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Vested ( 137 ) $ 94.75

Unvested at June 28, 2024 427 $ 60.49

As of June 28, 2024, the Company had approximately $ 22,860 of unrecognized stock-based compensation expense related to RSUs, which will be recognized over the remaining weighted-average vesting period of approximately 2.22 years.

During the six months ended June 28, 2024, the Company issued performance-based restricted stock units (“PSUs”) to certain executives that represent shares potentially issuable in the future.

Unvested at September 27, 2024 415 $ 59.99

As of September 27, 2024, the Company had approximately $ 19,175 of unrecognized stock-based compensation expense related to RSUs, which will be recognized over the remaining weighted-average vesting period of approximately 2.04 years.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

During the nine months ended September 27, 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.

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

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

The following table summarizes the activity for the Company’s unvested PSUs for the six months ended June 28, 2024:

The following table summarizes the activity for the Company’s unvested PSUs for the nine months ended September 27, 2024:

Unvested PSUs

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Canceled ( 17 ) $ 52.89

Unvested at June 28, 2024 293 $ 63.50

Unvested at September 27, 2024 278 $ 64.01

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.

The Company reduced the attainment percentage during the three months ended September 27, 2024.

Future stock-based compensation expense for unvested PSUs could reach a maximum of $ 27,716 assuming achievement at the maximum level.

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

The Company excluded 145 and 103 shares from the calculation of diluted earnings per share for the three and six months ended June 28, 2024, and 17 and 5 for the three and six months ended June 30, 2023, respectively, as these shares would have been antidilutive.

The Company excluded 198 and 134 shares from the calculation of diluted earnings per share for the three and nine months ended September 27, 2024, and 3 shares for the nine months ended September 29, 2023, respectively, as these shares would have been antidilutive.

No potentially antidilutive shares were excluded from the calculation of diluted earnings per share for the three months ended September 29, 2023.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

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

For the three months ended For the six months ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

For the three months ended For the nine months ended

September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

Net income $ 4,780 $ 35,293 $ 6,691 $ 116,795

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Diluted $ 0.11 $ 0.83 $ 0.16 $ 2.75

For the three months ended For the nine months ended

September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

Provision (benefit) for income taxes $ 250 $ 3,484 $ ( 1,388 ) $ 20,957

Effective tax rates 5.0 % 9.0 % ( 26.2 ) % 15.2 %

For the three months ended September 27, 2024, the difference between the Company’s effective tax rate of 5.0 % and the 21 % federal statutory rate was due to a benefit from the U.S.

research and development tax credit, offset by the impact of discrete items on lower levels of pre-tax income, including a modification of the tax treatment of certain research and development expenditures recognized in prior years.

For the nine months ended September 27, 2024, the difference between the Company’s effective tax rate of ( 26.2 )% and the 21 % federal statutory rate was due to a benefit from the U.S.

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 of 15.2 % 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.

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.

FOX FACTORY HOLDING CORP.

1 unchanged sentence

(in thousands)

For the three months ended For the six months ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

(Benefit) provision for income taxes $ ( 371 ) $ 8,095 $ ( 1,638 ) $ 17,473

Effective tax rates ( 7.4 ) % 16.9 % ( 620.1 ) % 17.7 %

For the three months ended June 28, 2024, the difference between the Company’s effective tax rate of ( 7.4 )% and the 21 % federal statutory rate resulted primarily due to the favorable impact of discrete items in proportion to lower levels of pre-tax income.

For the six months ended June 28, 2024, the difference between the Company’s effective tax rate of ( 620.1 )% and the 21 % federal statutory rate was due to the favorable impact of discrete items in proportion to lower levels of pre-tax income.

For the three months ended June 30, 2023, the difference between the Company’s effective tax rate of 16.9 % and the 21 % federal statutory rate was due to a lower tax rate on foreign derived intangible income and excess benefit related to stock-based compensation.

This benefit was partially offset by state and foreign withholding taxes.

For the six months ended June 30, 2023, the difference between the Company’s effective tax rate of 17.7 % and the 21 % federal statutory rate resulted primarily from a lower tax rate on foreign derived intangible income.

This benefit was partially offset by state and local 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.

On March 3, 2023, the Company acquired all of the outstanding equity interest of Custom Wheel House, LLC (“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 expenses under these leases were $ 186 and $ 371 for the three and six months ended June 28, 2024, and $ 180 for the three and six months ended June 30, 2023.

The buildings are owned by the former owner of Custom Wheel House, who was an employee of the Company until May 2024.

Related-party rent expenses under these leases were $ 0 and $ 371 for the three and nine months ended September 27, 2024, and $ 180 and $ 360 for the three and nine months ended September 29, 2023.

Acquisition of Marucci Sports LLC

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(“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.

Wheelhouse is the parent company of Marucci Sports, LLC (“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.

2 unchanged sentences

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 six months ended June 28, 2024, the Company updated the purchase price allocation and recorded adjustments to net assets of $ 892 and goodwill of $ 850 .

During the nine months ended September 27, 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:

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

The Company incurred $ 3,798 of acquisition costs in conjunction with the Marucci acquisition, of which $ 162 and $ 672 incurred during the three and six month ended June 28, 2024, respectively.

The Company incurred $ 3,798 of acquisition costs in conjunction with the Marucci acquisition, of which $ 672 were incurred during the nine months ended September 27, 2024, respectively.

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

9 unchanged sentences

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

The total revenue for Marucci for the three and six months ended June 28, 2024 amounted to $ 41,628 and $ 101,217 respectively.

The total pre-tax income for Marucci for the three and six months ended June 28, 2024 amounted to $ 2,507 and $ 6,872 respectively.

The total revenue for Marucci for the three and nine months ended September 27, 2024 amounted to $ 49,631 and $ 150,848 , respectively.

The total pre-tax income for Marucci for the three and nine months ended September 27, 2024 amounted to $ 4,354 and $ 11,226 , respectively.

FOX FACTORY HOLDING CORP.

8 unchanged sentences

This segment operates 2 plants in the United States.

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.

Our premium products sold under the FOX brand are 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.

13 unchanged sentences

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

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

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.

FOX FACTORY HOLDING CORP.

1 unchanged sentence

(in thousands)

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

For the three months ended For the six months ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

Power Vehicles Group $ 117,795 $ 140,196 $ 235,908 $ 282,443

For the three months ended For the nine months ended

September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

Powered Vehicles Group $ 109,336 $ 123,076 $ 345,244 $ 405,519

Aftermarket Applications Group 100,283 136,039 309,264 430,391

2 unchanged sentences

Net income 4,780 35,293 6,691 116,795

(Benefit) provision for income taxes ( 371 ) 8,095 ( 1,638 ) 17,473

Provision (benefit) for income taxes 250 3,484 ( 1,388 ) 20,957

Depreciation and amortization 20,845 14,807 61,699 43,519

6 unchanged sentences

Adjusted EBITDA $ 42,026 $ 63,654 $ 126,577 $ 222,260

Power Vehicles Group 15,889 23,882 31,770 41,540

Powered Vehicles Group 8,948 26,385 40,719 67,925

Aftermarket Applications Group 9,394 31,877 38,420 105,986

3 unchanged sentences

(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 For the six months ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

For the three months ended For the nine months ended

September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

Acquisition related costs and expenses $ 459 $ 113 $ 1,607 $ 1,817

2 unchanged sentences

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