What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-01 compared with 2024-08-02 · 114 added, 103 removed, 218 unchanged (50% of the section changed)

32 unchanged sentences

• our ability to successfully identify, evaluate and manage potential or completed acquisitions and to benefit from such acquisitions;

• legal and regulatory developments, including the resolution of legal proceedings or regulatory or other governmental inquiries;

• legal and regulatory developments, including the resolution of legal proceedings or regulatory or other governmental inquiries, and the impact of changing emissions and other related climate change regulations in the various jurisdictions in which our products are produced, used, and/or sold;

• the cost of compliance with, or liabilities related to, environmental or other governmental regulations or changes in governmental or industry regulatory standards;

• future disruptions in the operations of our manufacturing facilities;

21 unchanged sentences

The table below summarizes our results of operations:

For the three months ended For the six months ended

(in millions) June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

For the three months ended For the nine months ended

(in millions) September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

Net sales $ 359.1 $ 331.1 $ 1,041.1 $ 1,131.7

9 unchanged sentences

Interest expense 14.2 3.5 41.4 11.4

Other (income) expense, net (0.3) 0.5 — 0.6

Other income, net (0.5) (0.9) (0.5) (0.3)

Income before income taxes 5.0 38.8 5.3 137.8

(Benefit) provision for income taxes (0.4) 8.1 (1.6) 17.5

Provision (benefit) for income taxes 0.3 3.5 (1.4) 21.0

Net income $ 4.8 $ 35.3 $ 6.7 $ 116.8

1 unchanged sentence

The following table sets forth selected statement of income data as a percentage of net sales for the periods indicated:

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 100.0 % 100.0 % 100.0 % 100.0 %

9 unchanged sentences

Interest expense 4.0 1.0 4.0 1.0

Other (income) expense, net (0.1) 0.1 — 0.1

Other income, net (0.1) (0.3) — —

Income before income taxes 1.4 11.7 0.5 12.2

(Benefit) provision for income taxes (0.1) 2.0 (0.2) 2.2

Provision (benefit) for income taxes 0.1 1.1 (0.1) 1.9

Net income 1.3 % 10.7 % 0.6 % 10.3 %

*Percentages may not foot due to rounding.

Three months ended June 28, 2024 compared to three months ended June 30, 2023

Three months ended September 27, 2024 compared to three months ended September 29, 2023

Consolidated net sales

For the three months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

Net sales $ 359.1 $ 331.1 $ 28.0 8.5 %

Total net sales for the three months ended June 28, 2024 decreased $52.2 million, or 13.0%, compared to the three months ended June 30, 2023.

The decrease in net sales is primarily due to product mix and higher interest rates impacting industry and consumer demands and the ongoing bike channel inventory recalibration, offset by the inclusion of $41.6 million in net sales from Marucci that was acquired in November 2023.

Total net sales for the three months ended September 27, 2024 increased $28.0 million, or 8.5%, compared to the three months ended September 29, 2023.

The increase in net sales is primarily due to the inclusion of $49.6 million in net sales from Marucci that was acquired in November 2023, and a $27.9 million increase in bike sales, partially offset by a shift in product mix, higher interest rates impacting industry and consumer demands, and higher inventory levels at dealerships.

Although bike sales improved compared to prior year, the ongoing channel inventory recalibration and, to a lesser extent, lower end consumer demand remain headwinds.

Cost of sales

For the three months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

Cost of sales $ 251.6 $ 223.9 $ 27.7 12.4 %

Cost of sales for the three months ended June 28, 2024 decreased $31.2 million, or 11.6%, compared to the three months ended June 30, 2023.

The decrease in cost of sales was primarily due to our decreased sales.

Our gross margin decreased 110 basis points to 31.8% for the three months ended June 28, 2024 as compared to the same prior fiscal year period primarily due to a shift in our product line mix and reduced operating leverage on lower volume, partially offset by increased efficiencies at our North American facilities.

Cost of sales for the three months ended September 27, 2024 increased $27.7 million, or 12.4%, compared to the three months ended September 29, 2023.

The increase in cost of sales and a decrease in gross margin of 250 basis points to 29.9% for the three months ended September 27, 2024 as compared to the same prior fiscal year period are primarily due to a shift in our product line mix and reduced operating leverage on lower volume.

Operating expenses

For the three months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

Operating expenses:

4 unchanged sentences

Total operating expenses $ 88.7 $ 65.9 $ 22.8 34.6 %

Total operating expenses for the three months ended June 28, 2024 were $92.4 million, compared to $79.2 million for the three months ended June 30, 2023.

Total operating expenses for the three months ended September 27, 2024 were $88.7 million, compared to $65.9 million for the three months ended September 29, 2023.

General and administrative expenses increased $6.8 million, and sales and marketing expenses increased $4.6 million primarily due to the inclusion of Marucci operating expenses.

Amortization of purchased intangibles increased by $3.8 million mainly due to amortization of additional acquired intangibles.

Research and development expenses increased $7.2 million mainly due to personnel investments to support future growth and product innovation and additional benefit from a state research and development tax credit received in prior year.

Amortization of purchased intangibles increased by $4.2 million driven by amortization of additional acquired intangibles.

Income from operations

For the three months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

Income from operations $ 18.8 $ 41.4 $ (22.6) (54.6) %

As a result of the factors discussed above, income from operations for the three months ended June 28, 2024 decreased $34.2 million, or 64.8%, compared to income from operations for the three months ended June 30, 2023.

As a result of the factors discussed above, income from operations for the three months ended September 27, 2024 decreased $22.6 million, or 54.6%, compared to income from operations for the three months ended September 29, 2023.

Interest and other expense, net

For the three months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

Interest expense $ 14.2 $ 3.5 $ 10.7 305.7 %

Other (income) expense, net (0.3) 0.5 (0.8) (160.0)

Other income, net (0.5) (0.9) 0.4 (44.4)

Interest and other expense, net $ 13.7 $ 2.6 $ 11.1 426.9 %

Interest and other expense, net for the three months ended June 28, 2024 increased by $8.7 million to $13.6 million, compared to $4.9 million for the three months ended June 30, 2023.

Interest and other expense, net for the three months ended September 27, 2024 increased by $11.1 million to $13.7 million, compared to $2.6 million for the three months ended September 29, 2023.

Interest expense increased by $10.7 million due to additional debt and higher interest rates.

For the three months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

(Benefit) provision for income taxes $ (0.4) $ 8.1 $ (8.5) (104.9) %

The effective tax rates were (7.4)% and 16.9% for the three month periods ended June 28, 2024 and June 30, 2023, respectively.

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 was primarily 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 our effective tax rate of 16.9% and the 21% federal statutory rate resulted primarily from 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.

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

Provision for income taxes $ 0.3 $ 3.5 $ (3.2) (91.4) %

The effective tax rates were 5.0% and 9.0% for the three months ended September 27, 2024 and September 29, 2023, respectively.

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 three months ended September 29, 2023, the difference between our 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 a lower tax rate on foreign derived intangible income.

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

For the three months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

Net income $ 4.8 $ 35.3 $ (30.5) (86.4) %

As a result of the factors described above, our net income decreased $34.3 million, or 86.4%, to $5.4 million in the three months ended June 28, 2024 from $39.7 million for the three months ended June 30, 2023.

As a result of the factors described above, our net income decreased $30.5 million, or 86.4%, to $4.8 million in the three months ended September 27, 2024 from $35.3 million for the three months ended September 29, 2023.

Segment Review

1 unchanged sentence

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

For additional financial information related to our operating segments including the reconciliation of net income attributable to our common shareholder to adjusted EBITDA, see Note 16 – Segment Information .

For additional financial information related to our operating segments including the reconciliation of net income attributable to our common stockholders to adjusted EBITDA, see Note 16 – Segment Information .

The following table summarizes consolidated net sales and adjusted EBITDA by segment:

For the three months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

Power Vehicles Group $ 117.8 $ 140.2 $ (22.4) (16.0) %

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

Powered Vehicles Group $ 109.3 $ 123.1 $ (13.7) (11.2) %

Aftermarket Applications Group 100.3 136.0 (35.8) (26.3)

2 unchanged sentences

Adjusted EBITDA

Power Vehicles Group $ 15.9 $ 23.9 $ (8.0) (33.5) %

Powered Vehicles Group $ 8.9 $ 26.4 $ (17.5) (66.3) %

Aftermarket Applications Group 9.4 31.9 (22.5) (70.5)

3 unchanged sentences

Powered Vehicles Group

Powered Vehicles Group net sales decreased by $22.4 million, or 16.0%, due to lower industry demand in Power Sports because of higher interest rates.

Powered Vehicles Group adjusted EBITDA decreased by $8.0 million, or 33.5%, driven by a decrease in gross profit, partially offset by reductions across operating expenses from our cost control efforts.

Powered Vehicles Group net sales decreased by $13.7 million, or 11.2%, due to lower industry demand in Power Sports and automotive because of higher interest rates.

Powered Vehicles Group adjusted EBITDA decreased by $17.5 million, or 66.3%, driven by a decrease in gross profit, an increase in personnel investments and additional benefit from a state research and development tax credit received in prior year.

Aftermarket Applications Group

Aftermarket Applications Group net sales decreased by $48.5 million, or 31.2%, driven by lower upfitting sales due to product mix, chassis availability, and higher interest rates impacting industry dealers and consumers.

Aftermarket Applications Group adjusted EBITDA decreased by $23.6 million, or 62.4%, mainly due to lower gross profit and reduced operating leverage on lower volume.

Aftermarket Applications Group net sales decreased by $35.8 million, or 26.3%, driven by lower upfitting sales due to product mix, higher interest rates impacting industry dealers and consumers, and higher inventory levels at dealerships.

Aftermarket Applications Group adjusted EBITDA decreased by $22.5 million, or 70.5%, mainly due to lower gross profit.

Specialty Sports Group

Specialty Sports Group net sales increased by $18.7 million, or 17.8%, primarily due to the inclusion of $41.6 million in net sales from Marucci which we acquired in November 2023, partially offset by a reduction in bike sales of $22.9 million because of the ongoing bike channel inventory recalibration and to a lesser extent, lower end consumer demand.

Specialty Sports Group adjusted EBITDA decreased by $4.9 million, or 14.4%, primarily due to a decline in gross profit driven by the ongoing bike channel inventory recalibration, to a lesser extent, lower end consumer demand, and reduced operating leverage on lower volume, offset by the inclusion of Marucci which grew year over year.

Specialty Sports Group net sales increased by $77.5 million, or 107.6%, primarily due to the inclusion of $49.6 million in net sales from Marucci, which we acquired in November 2023, and a $27.9 million increase in bike sales.

Although bike sales improved compared to prior year, the ongoing channel inventory recalibration and, to a lesser extent, lower end consumer demand remain headwinds.

Specialty Sports Group adjusted EBITDA increased by $16.8 million, or 85.3%, primarily due to an increase in gross profit driven by the inclusion of Marucci.

Unallocated corporate expenses

1 unchanged sentence

Unallocated corporate expenses decreased by $1.5 million, or 10.5%, driven by cost containment measures.

Six months ended June 28, 2024 compared to six months ended June 30, 2023

Nine months ended September 27, 2024 compared to nine months ended September 29, 2023

Consolidated net sales

For the six months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

For the nine months ended

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

Net sales $ 1,041.1 $ 1,131.7 $ (90.6) (8.0) %

Total net sales for the six months ended June 28, 2024 decreased $118.6 million, or 14.8%, compared to the six months ended June 30, 2023.

The decrease in net sales is primarily due to product mix and higher interest rates impacting industry and consumer demands and the ongoing bike channel inventory recalibration, offset by the inclusion of $101.2 million in net sales from Marucci that was acquired in November 2023.

Total net sales for the nine months ended September 27, 2024 decreased $90.6 million, or 8.0%, compared to the nine months ended September 29, 2023.

The decrease in net sales is primarily due to product mix, higher interest rates impacting industry and consumer demands, higher levels of inventory at dealerships, and the ongoing bike channel inventory recalibration, offset by the inclusion of $150.8 million in net sales from Marucci that was acquired in November 2023.

Cost of sales

For the six months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

For the nine months ended

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

Cost of sales $ 719.5 $ 759.1 $ (39.6) (5.2) %

Cost of sales for the six months ended June 28, 2024 decreased $67.4 million, or 12.6%, compared to the three months ended June 30, 2023.

The decrease in cost of sales was primarily due to our decreased sales.

Our gross margin decreased by 170 basis points to 31.4% for the six months ended June 28, 2024 as compared to the same prior fiscal year period primarily due to a shift in our product line mix and operating leverage on lower volume.

Cost of sales for the nine months ended September 27, 2024 decreased $39.6 million, or 5.2%, compared to the nine months ended September 29, 2023.

The decrease in cost of sales is primarily due to our decreased sales.

Our gross margin decreased by 200 basis points to 30.9% for the nine months ended September 27, 2024 as compared to the same prior fiscal year period is primarily due to a shift in our product line mix and operating leverage on lower volume.

Operating expenses

For the six months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

For the nine months ended

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

Operating expenses:

4 unchanged sentences

Total operating expenses $ 275.3 $ 223.7 $ 51.6 23.1 %

Total operating expenses for the six months ended June 28, 2024 were $186.7 million, compared to $157.9 million for the six months ended June 30, 2023.

Sales and marketing expenses increased $10.5 million and general and administrative expenses increased $10.4 million primarily due to the inclusion of Marucci operating expenses and a full six months of Custom Wheel House operating expenses.

Total operating expenses for the nine months ended September 27, 2024 were $275.3 million, compared to $223.7 million for the nine months ended September 29, 2023.

General and administrative expenses increased $17.1 million and sales and marketing expenses increased $15.1 million primarily due to the inclusion of Marucci operating expenses and the full nine months of Custom Wheel House operating expenses, partially offset by our cost containment measures.

Research and development expenses increased $5.9 million driven by personnel investments to support future growth and product innovation and the inclusion of Marucci expenses.

Amortization of purchased intangibles increased by $13.4 million mainly due to amortization of additional acquired intangibles.

Income from operations

For the six months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

For the nine months ended

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

Income from operations $ 46.3 $ 148.8 $ (102.5) (68.9) %

As a result of the factors discussed above, income from operations for the six months ended June 28, 2024 decreased $80.0 million or 74.4%, compared to income from operations for the six months ended June 30, 2023.

As a result of the factors discussed above, income from operations for the nine months ended September 27, 2024 decreased $102.5 million or 68.9%, compared to income from operations for the nine months ended September 29, 2023.

Interest and other expense, net

For the six months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

For the nine months ended

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

Interest expense $ 41.4 $ 11.4 $ 30.0 263.2 %

1 unchanged sentence

Interest and other expense, net $ 40.9 $ 11.1 $ 29.8 268.5 %

Interest and other expense, net for the six months ended June 28, 2024 increased by $18.7 million to $27.2 million, compared to $8.5 million for the six months ended June 30, 2023.

Interest and other expense, net for the nine months ended September 27, 2024 increased by $29.8 million to $40.9 million, compared to $11.1 million for the nine months ended September 29, 2023.

Interest expense increased by $30.0 million to $41.4 million due to additional debt and higher interest rates.

For the six months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

For the nine months ended

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

(Benefit) provision for income taxes $ (1.4) $ 21.0 $ (22.4) (106.7) %

The effective tax rates were (620.1)% and 17.7% for the six month periods ended June 28, 2024 and June 30, 2023, respectively.

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 six months ended June 30, 2023, the difference between our effective tax rate of 17.7% and the 21% federal statutory rate resulted primarily due to a lower tax rate on foreign derived intangible income.

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

For the six months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

The effective tax rates were (26.2)% and 15.2% for the nine months ended September 27, 2024 and September 29, 2023, respectively.

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 nine months ended September 29, 2023, the difference between our 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.

For the nine months ended

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

Net income $ 6.7 $ 116.8 $ (110.1) (94.3) %

As a result of the factors described above, our net income decreased $79.6 million, or 97.7% to $1.9 million in the six months ended June 28, 2024 from $81.5 million for the six months ended June 30, 2023.

As a result of the factors described above, our net income decreased $110.1 million, or 94.3% to $6.7 million for the nine months ended September 27, 2024 from $116.8 million for the nine months ended September 29, 2023.

Segment Review

The following table summarizes consolidated net sales and adjusted EBITDA by segment:

For the six months ended

(in millions) June 28, 2024 June 30, 2023 Change ($) Change (%)

Power Vehicles Group $ 235.9 $ 282.4 $ (46.5) (16.5) %

For the nine months ended

(in millions) September 27, 2024 September 29, 2023 Change ($) Change (%)

Powered Vehicles Group $ 345.2 $ 405.5 $ (60.3) (14.9) %

Aftermarket Applications Group 309.3 430.4 (121.1) (28.1)

2 unchanged sentences

Adjusted EBITDA

Power Vehicles Group $ 31.8 $ 41.6 $ (9.8) (23.6) %

Powered Vehicles Group $ 40.7 $ 67.9 $ (27.2) (40.1) %

Aftermarket Applications Group 38.4 106.0 (67.6) (63.8)

3 unchanged sentences

Powered Vehicles Group

Powered Vehicles Group net sales decreased by $46.5 million, or 16.5%, due to lower industry demand in Power Sports because of higher interest rates.

Powered Vehicles Group adjusted EBITDA decreased by $9.8 million, or 23.6%, driven by a decrease in gross profit, partially offset by reductions across operating expenses from our cost control efforts.

Powered Vehicles Group net sales decreased by $60.3 million, or 14.9%, due to lower industry demand in Power Sports and automotive because of higher interest rates.

Powered Vehicles Group adjusted EBITDA decreased by $27.2 million, or 40.1%, mainly due to a decrease in gross profit.

Aftermarket Applications Group

Aftermarket Applications Group net sales decreased by $85.4 million, or 29.0%, driven by lower upfitting sales due to product mix, chassis availability, and higher interest rates impacting industry dealers and consumers.

Aftermarket Applications Group adjusted EBITDA decreased by $45.1 million, or 60.9%, mainly due to lower gross profit and reduced operating leverage on lower volume.

Aftermarket Applications Group net sales decreased by $121.1 million, or 28.1%, driven by lower upfitting sales due to product mix, higher interest rates impacting industry dealers and consumers, and higher inventory levels at dealerships.

Aftermarket Applications Group adjusted EBITDA decreased by $67.6 million, or 63.8%, mainly due to lower gross profit.

Specialty Sports Group

Specialty Sports Group net sales increased by $90.8 million, or 30.7%, primarily due to the inclusion of $150.8 million in net sales from Marucci, partially offset by a reduction in bike sales of $60.0 million because of the ongoing bike channel inventory recalibration and, to a lesser extent, lower end consumer demand.

Specialty Sports Group adjusted EBITDA decreased by $22.6 million, or 29.8%, primarily due to a decline in gross profit driven by the ongoing bike channel inventory recalibration, to a lesser extent, lower end consumer demand, and reduced operating leverage on lower volume, offset by the inclusion of Marucci which grew year over year.

Specialty Sports Group adjusted EBITDA decreased by $5.9 million, or 6.2%, primarily due to a decline in gross profit driven by reduced operating leverage on lower volume, offset by the inclusion of Marucci which grew year over year.

Unallocated corporate expenses

5 unchanged sentences

Risk Factors .

As of June 28, 2024, we held $17.8 million of our $82.2 million of cash and cash equivalents in accounts of our subsidiaries outside of the U.S., which we may repatriate.

As of September 27, 2024, we held $31.0 million of our $89.2 million of cash and cash equivalents in accounts of our subsidiaries outside of the U.S., which we may repatriate.

A summary of our operating, investing and financing activities is shown in the following table:

For the six months ended

(in millions) June 28, 2024 June 30, 2023

Net cash provided by (used in) operating activities $ 36.0 $ (3.3)

For the nine months ended

(in millions) September 27, 2024 September 29, 2023

Net cash provided by operating activities $ 50.1 $ 126.7

Net cash used in investing activities (42.5) (165.4)

Net cash (used in) provided by financing activities (10.7) 119.8

Net cash used in financing activities (1.7) (16.2)

Effect of exchange rate changes on cash and cash equivalents (0.4) 0.3

3 unchanged sentences

Operating activities

In the six months ended June 28, 2024, net cash provided by operating activities was $36.0 million.

Our investment in operating assets and liabilities is a result of an increase in prepaids and other assets of $35.7 million, a decrease in income taxes payable of $23.2 million, and an increase in inventory of $7.8 million, partially offset by an increase in accounts payable of $34.6 million, a decrease in accounts receivable of $12.0 million, and an increase in accrued expenses and other liabilities of $2.9 million.

The increase in prepaids and other assets is primarily due to carrying new model year chassis to meet current year production needs for the upfitting product lines and, to a lesser degree, slowing sales of older model years.

The decrease in income taxes payable is mainly due to our income tax payments.

In the nine months ended September 27, 2024, net cash provided by operating activities was $50.1 million.

Our investment in operating assets and liabilities is a result of an increase in inventory of $29.0 million, a decrease in income taxes payable of $25.3 million, and an increase in accounts receivable of $21.8 million, partially offset by an increase in accounts payable of $24.2 million, an increase in accrued expenses and other liabilities of $11.3 million, and a decrease in prepaids and other assets of $9.9 million.

The decrease in income taxes payable is mainly due to lower income tax expense and our income tax payments.

The increase in inventory is mainly due to timing and some seasonal inventory.

The change in our accounts receivable reflects an increase in our sales and the timing of customer collections.

The decrease in prepaids and other assets is primarily due to lower chassis deposits as we worked to sell through model year 2024.

The increase in accrued expenses and other liabilities is mainly due to additional leases.

The change in our accounts payable is driven by timing of inventory purchases and vendor payments.

The change in our accounts receivable reflects a decrease in our sales and the timing of customer collections.

In the six months ended June 30, 2023, net cash used in operating activities was $3.3 million.

In the nine months ended September 29, 2023, net cash provided by operating activities was $126.7 million.

Our investment in operating assets and liabilities is a result of increases in prepaids and other assets of $53.5 million primarily due to carrying more chassis to meet current year production needs for the upfitting product lines, and decreases in accounts payable of $51.4 million, income taxes payable of $20.4 million and accrued expenses and other liabilities of$7.3 million, partially offset by decreases in accounts receivable of $53.3 million and inventory of $20.4 million.

The change in our accounts receivable reflects a shift in our product line mix.

The change in our accounts receivable reflects a shift in our product line mix and the timing of customer collections.

The change in our accounts payable is driven by timing of inventory purchases and vendor payments.

2 unchanged sentences

Investing activities

In the six months ended June 28, 2024 and June 30, 2023, net cash used in investing activities consisted of $26.6 million and $156.5 million, respectively.

Investing activities for the six months ended June 28, 2024 consisted of $21.2 million of property and equipment additions, $5.0 million of cash consideration for our acquisitions and $0.4 million of cash consideration for our acquisition of other assets.

Investing activities for the six months ended June 30, 2023 consisted of $130.9 million of cash consideration for our purchase of Custom Wheel House, $23.2 million of property and equipment additions and $2.4 million in cash consideration for our purchase of other assets.

In the nine months ended September 27, 2024 and September 29, 2023, net cash used in investing activities consisted of $42.5 million and $165.4 million, respectively.

Investing activities for the nine months ended September 27, 2024 consisted of $32.1 million of property and equipment additions, $5.3 million of cash consideration for our acquisition of other assets, and $5.0 million of cash consideration for our acquisitions.

Investing activities for the nine months ended September 29, 2023 consisted of $130.9 million of cash consideration for our purchase of Custom Wheel House, $32.0 million of property and equipment additions and $2.4 million in cash consideration for our purchase of other assets.

Financing activities

In the six months ended June 28, 2024, net cash used in financing activities was $10.7 million, and consisted of the proceeds from our 2022 Credit Facility revolver of $119.0 million and draw from the Delayed Draw Term Loan of $200.0 million that were used to support our working capital, offset by payments of $295.0 million to reduce the revolver borrowings, $7.1 million repayments on our Term A Loan, $25.0 million to repurchase shares of our common stock for retirement, and payments of $2.5 million to repurchase shares of our common stock to cover withholding taxes from our stock-based compensation program.

In the six months ended June 30, 2023, net cash provided by financing activities was $119.8 million, and consisted of the proceeds from our 2022 Credit Facility of $210.0 million that were used to support our working capital and the purchase of Custom Wheel House, partially offset by payments of $85.0 million to reduce the revolver borrowings and payments of $5.2 million to repurchase shares of our common stock to cover withholding taxes from our stock-based compensation program.

In the nine months ended September 27, 2024, net cash used in financing activities was $1.7 million, and consisted of the proceeds from our 2022 Credit Facility revolver of $169.0 million and draw from the Delayed Draw Term Loan of $200.0 million that were used to support our working capital, offset by payments of $329.0 million to reduce the revolver borrowings, $13.2 million repayments on our term loans, $25.0 million to repurchase shares of our common stock for retirement, and payments of $2.6 million to repurchase shares of our common stock to cover withholding taxes from our stock-based compensation program.

In the nine months ended September 29, 2023, net cash provided by financing activities was $16.2 million, and consisted of the proceeds from our 2022 Credit Facility of $210.0 million that were used to support our working capital and the purchase of Custom Wheel House, offset by payments of $220.0 million to reduce the revolver borrowings and payments of $6.2 million to repurchase shares of our common stock to cover withholding taxes from our stock-based compensation program.

2022 Credit Facility

11 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 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%.

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%.

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.

10 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.

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.

The Company continues to work on gaining further flexibility.

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.

Material Cash Requirements

5 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 2. Management’s Discussion and Analysis