What changed in this filing

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Item 9A. Controls and Procedures

2025-02-28 compared with 2024-02-23 · 607 added, 444 removed, 965 unchanged (52% of the section changed)

3 unchanged sentences

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management, under the direction and with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 29, 2023.

Based on the evaluation of our disclosure controls and procedures as of December 29, 2023, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Based on the evaluation of our disclosure controls and procedures as of January 3, 2025, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Report on Internal Control Over Financial Reporting

6 unchanged sentences

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 29, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended January 3, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

10 unchanged sentences

OTHER INFORMATION

The following information is being included in this Item 9B in lieu of filing such information on a Current Report on Form 8-K under Item 5.02.

Departure of Directors or Certain Officers;

Election of Directors;

Appointment of Certain Officers;

Compensatory Arrangements of Certain Officers.

On February 25, 2025, the Compensation Committee of the Board of Directors of the Company adopted a form of performance share unit award agreement (the “Form of PSU Agreement”) for use in connection with the Fox Factory Holding Corp.

2022 Omnibus Plan.

The foregoing description of the Form of PSU Agreement is qualified in its entirety by the full text of the Form of PSU Agreement, a copy of which is filed as Exhibit 10.37 to this Annual Report on Form 10-K.

Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements

During the three months ended December 29, 2023, none of our officers or directors (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933) .

During the three months ended January 3, 2025, none of our officers or directors (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act) .

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

1 unchanged sentence

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required by this Item regarding our directors and executive officers is incorporated by reference to the sections of our proxy statement to be filed with the SEC in connection with our 2024 Annual Meeting of Stockholders (the “Proxy Statement”) entitled “Election of Class II Directors” and “Corporate Governance.”

Information required by this Item regarding our directors and executive officers is incorporated by reference to the sections of our proxy statement to be filed with the SEC in connection with our 2025 Annual Meeting of Stockholders (the “Proxy Statement”) entitled “Election of Class III Directors” and “Corporate Governance.”

Information required by this Item regarding our corporate governance, including our audit committee and code of ethics, is incorporated by reference to the sections of the Proxy Statement entitled “Corporate Governance” and “The Board of Directors.”

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Reports of Independent Registered Public Accounting Firm (PCAOB ID Number:

Consolidated Balance Sheets as of December 29, 2023 and December 30, 2022 72

Consolidated Statements of Income for the years ended December 29, 2023, December 30, 2022 and December 31, 2021 73

Consolidated Statements of Comprehensive Income for the years ended December 29, 2023, December 30, 2022 and December 31, 2021 74

Consolidated Statements of Stockholders’ Equity for the years ended December 29, 2023, December 30, 2022 and December 31, 2021 75

Consolidated Statements of Cash Flows for the years ended December 29, 2023, December 30, 2022 and December 31, 2021 76

Consolidated Balance Sheets as of January 3, 2025 and December 29, 2023 74

Consolidated Statements of Income for the years ended January 3, 2025, December 29, 2023 and December 30, 2022 75

Consolidated Statements of Comprehensive Income for the years ended January 3, 2025, December 29, 2023 and December 30, 2022 76

Consolidated Statements of Stockholders’ Equity for the years ended January 3, 2025, December 29, 2023 and December 30, 2022 77

Consolidated Statements of Cash Flows for the years ended January 3, 2025, December 29, 2023 and December 30, 2022 78

Notes to Consolidated Financial Statements 80

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and (iv) Compass Group Diversified Holdings LLC, as the Equityholders’ Representative 8-K 001-36040 November 3, 2023

Amended and Restated Certificate of Incorporation 10-Q 001-36040 September 19, 2013

Amended and Restated Bylaws 10-Q 001-36040 September 19, 2013

Second Amended and Restated Certificate of Incorporation 10-Q 001-36040 August 4, 2023

Second Amended and Restated Bylaws 8-K 001-36040 August 1, 2024

Form of Common Stock Certificate S-1 333-189841 July 8, 2013

9 unchanged sentences

Dennison 8-K 001-36040 July 1, 2019

Executed Separation and Release Agreement, dated April 4, 2023, by and between Fox Factory Holding Corp.

and Scott Humphrey 8-K 001-36040 April 3, 2023

Employment Agreement by and between Fox Factory, Inc.

and Richard T.

Winters, dated June 29, 2019.

8-K 001-36040 August 10, 2020

Amendment to the Amended and Restated Employment Agreement, by and between Fox Factory Holding Corp.

3 unchanged sentences

Amendment to the Amended and Restated Employment Agreement, by and between Fox Factory, Inc.

and Richard T.

Winters, dated August 5, 2020.

8-K 001-36040 August 10, 2020

Amendment to the Amended and Restated Employment Agreement, by and between Fox Factory, Inc.

and Christopher J.

1 unchanged sentence

8-K 001-36040 August 10, 2020

Second Amendment to the Employment Agreement, by and between Fox Factory, Inc.

and Richard T.

Winters, dated August 5, 2022.

8-K 001-36040 August 8, 2022

2023 Policy Regarding Terms Applicable to Restricted Stock Unit and Performance Share Unit Award Agreements in the Event of Qualified Retirement X

2023 Policy Regarding Terms Applicable to Restricted Stock Unit and Performance Share Unit Award Agreements in the Event of Qualified Retirement 10-K 001-36040 February 23, 2024

Sixth Amended and Restated Non-Employee Director Compensation Policy, effective January 1, 2022.

10-K 001-36040 February 23, 2024

Form of Indemnification Agreement, by and between Fox Factory Holding Corp.

5 unchanged sentences

Form of Employee Restricted Stock Unit Award Agreement for Non-Employee Directors under 2022 Omnibus Plan (U.S.) 8-K 001-36040 May 6, 2022

Form of Restricted Stock Unit Award Agreement under 2022 Omnibus Plan (U.S.) X

Form of Performance Share Unit Award Agreement under the 2022 Omnibus Plan X

Form of Restricted Stock Unit Award Agreement under 2022 Omnibus Plan (U.S.) 10-K 001-36040 February 23, 2024

Form of Performance Share Unit Award Agreement under the 2022 Omnibus Plan 10-K 001-36040 February 23, 2024

Form of Performance Share Unit Award Agreement under the 2022 Omnibus Plan 8-K 001-36040 March 21, 2024

Form of Revenue Growth Performance Share Unit Award Agreement under the 2022 Omnibus Plan 8-K 001-36040 March 21, 2024

First Incremental Facility Amendment, dated November 14, 2023, by and among Fox Factory Holding Corp., Bank of America, N.A., Wells Fargo Bank, National Association and PNC Bank, National Association 8-K 001-36040 November 15, 2023

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Fletcher, dated May 24, 2021 10-Q 001-36040 August 4, 2023

Second Amendment to Credit Agreement and First Amendment to Guaranty and Security Agreement, dated June 5, 2024 10-Q 001-36040 August 2, 2024

Third Amendment to Credit Agreement, dated July 31, 2024 10-Q 001-36040 November 1, 2024

Amendment to Pilot Agreement, dated September 25, 2024 10-Q 001-36040 November 1, 2024

Fourth Amendment to the Credit Agreement, dated December 20, 2024.

8-K 001-36040 December 20, 2024

Form of EBITDA Performance Share Unit Award Agreement under 2022 Omnibus Plan X

Insider Trading Policy X

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended X

Clawback Policy X

Clawback Policy 10-K 001-36040 February 23, 2024

101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document X

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/s/ Dennis C.

Schemm, Chief Financial Officer and Treasurer

(Principal Financial and Accounting Officer & Duly Authorized Signatory)

Schemm, Chief Financial Officer

(Principal Financial Officer & Duly Authorized Signatory)

February 27, 2025 By:

13 unchanged sentences

/s/ Dennis C.

Schemm Chief Financial Officer and Treasurer February 22, 2024

Schemm (Principal Financial and Accounting Officer)

Schemm Chief Financial Officer February 27, 2025

Schemm (Principal Financial Officer)

/s/ Dudley W.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In conducting our assessment of the effectiveness of its internal control over financial reporting, we have excluded Custom Wheel House, LLC (“Custom Wheel House”) and Marucci Sports, LLC (“Marucci”) acquired in 2023, which are included in our 2023 consolidated financial statements.

Custom Wheel House and Marucci respectively constituted approximately 6.7% and 29.2% of total assets as of December 29, 2023, approximately 4.5% and 1.1% of total revenues, and approximately (1.4)% and (2.6)% of net earnings for the year then ended.

In making its assessment of internal control over financial reporting, management used criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).

Based on the evaluation, our management concluded that its internal control over financial reporting was effective as of December 29, 2023.

Based on the evaluation, our management concluded that its internal control over financial reporting was effective as of January 3, 2025.

Grant Thornton LLP, the independent registered public accounting firm that audited the Company’s consolidated financial statements, issued an attestation report on the Company’s internal control over financial reporting, which is included elsewhere in this Annual Report on Form 10-K.

3 unchanged sentences

/s/ Dennis C.

Chief Financial Officer and Treasurer

Chief Financial Officer

Report of Independent Registered Public Accounting Firm

3 unchanged sentences

We have audited the accompanying consolidated balance sheets of Fox Factory Holding Corp.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 29, 2023 and December 30, 2022, the related consolidated statements of income, comprehensive income, stockholder’s equity, and cash flows for each of the three years in the period ended December 29, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 29, 2023 and December 30, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 29, 2023, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 29, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 22, 2024 expressed an unqualified opinion.

(a Delaware corporation) and subsidiaries (the “Company”) as of January 3, 2025 and December 29, 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended January 3, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January 3, 2025 and December 29, 2023, and the results of its operations and its cash flows for each of the three years in the period ended January 3, 2025, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of January 3, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 27, 2025 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

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(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Net realizable value of inventory

2 unchanged sentences

We identified the net realizable value of inventory for certain product categories as a critical audit matter.

The principal consideration for our determination that the net realizable value of inventory represents a critical audit matter is that the assessment of the valuation of inventory is complex and includes an estimate of forecasted demand.

The principal consideration for our determination that the net realizable value of inventory represents a critical audit matter is that the assessment of the net realizable value of inventory is complex and includes an estimate of forecasted demand.

The demand estimate is subjective and requires the Company to consider significant assumptions such as economic conditions, technology changes, and new product introductions, which are subject to significant uncertainty and therefore require significant auditor judgement.

5 unchanged sentences

• We performed a retrospective review by comparing previous demand forecasts to actual usage during the year for a sample of items.

• We compared selected 2024 estimated demand to actual customer sales orders and forecasted demand information as provided by the sales and operations team in order to test the accuracy of demand information included in the calculation.

• We compared estimated demand for selected inventory items to actual customer sales orders and forecasted demand information as provided by the sales and operations team in order to test the accuracy of demand information included in the calculation.

• We tested the design and operating effectiveness of controls related to the forecasted demand for the Company’s products as well as management’s review of the net realizable value of inventory.

Valuation of acquired intangible assets

As described further in Note 1 and Note 18 to the consolidated financial statements, the Company completed the acquisitions of Custom Wheel House, LLC (“Custom Wheel House”) and Marucci Sports, LLC (“Marucci”) on March 3, 2023 and November 14, 2023 for total purchase price consideration of $129.8 million and $567.2 million, respectively.

The Company allocated the purchase price to the assets acquired and liabilities assumed based on their respective fair values, including to identified intangible assets.

We identified the determination of fair value for the acquired customer and distributor relationships, tradenames and developed technologies as a critical audit matter.

The principal consideration for our determination that the valuation of the intangible assets represents a critical audit matter include the complexity associated with the intangibles due to the significant estimation uncertainty in the Company’s determination of the fair values.

The significant estimation uncertainty was primarily due to the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired businesses, including future revenue growth rates, certain profitability measures, royalty rates, customer attrition rates and discount rates.

Auditing these assumptions requires a high degree of auditor judgment and an increased extent of effort, including the need to involve our valuation specialists.

Our audit procedures related to the determination of assumptions used in the fair value of certain acquired intangible assets in the acquisitions included the following, among others:

• We evaluated the appropriateness of the forecasted revenue growth rates and certain profitability measures by (1) comparing forecasted revenue growth rates and certain profitability measures to forecasted industry growth rates and available market data and (2) comparing forecasted revenue growth rates and certain profitability measures to historical growth rates of the acquired entities.

• We utilized a specialist to evaluate key inputs and assumptions used to determine fair value.

Our specialist compared the royalty rates used to royalty rates derived from publicly available data for comparable companies, compared the estimated customer attrition rates used to historical customer retention data of the acquired companies, and compared the discount rates used to independently developed discount rates derived from publicly available data for comparable companies.

• We tested the design and operating effectiveness of controls related to the selection and review of the methods and assumptions used in determining fair value.

Realizability of foreign tax credits

As discussed in Note 1 to the consolidated financial statements, deferred tax assets and liabilities are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income.

Valuation allowances are provided when necessary to reduce net deferred tax assets to an amount that is more likely than not to be realized.

We identified the realizability of deferred tax assets relating to the Company’s foreign tax credits as a critical audit matter.

The principal considerations for our determination that the realizability of deferred tax assets relating to the Company’s foreign tax credits represents a critical audit matter are the significance of the Company’s foreign tax credits and the use of forecasted profitability by jurisdiction and source.

The forecasts, including future sales and expenses by jurisdiction, are subject to a high level of estimation uncertainty and subjectivity.

Additionally, realizability depends on continued implementation of a tax planning strategy.

As a result, significant auditor judgment is necessary to evaluate management’s judgments and assumptions.

Our audit procedures related to the realizability of deferred tax assets relating to the Company’s foreign tax credtis included the following, among others:

• We considered the applicability of the Company’s international transfer pricing arrangements as it relates to the Company’s ability to utilize foreign tax credits.

• We tested the accuracy of the underlying data used in the forecasts by agreeing the baseline 2024 results for selected jurisdictions to general ledger balances.

• We evaluated the appropriateness of the assumptions supporting the future revenue growth rate by jurisdiction.

• We evaluated management’s assumptions with respect to anticipated relief from withholding on intercompany charges paid by selected jurisdictions for consistency and credibility.

• We tested the design and operating effectiveness of controls related to the generation and review of the forecasts and assumptions that underpin the assessment of the realizability of deferred tax assets relating to the Company’s foreign tax credits.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2008.

San Francisco, California

San Jose, California

February 27, 2025

4 unchanged sentences

We have audited the internal control over financial reporting of Fox Factory Holding Corp.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 29, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 29, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 29, 2023, and our report dated February 22, 2024 expressed an unqualified opinion on those financial statements.

(a Delaware corporation) and subsidiaries (the “Company”) as of January 3, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 3, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended January 3, 2025, and our report dated February 27, 2025 expressed an unqualified opinion on those financial statements.

Basis for opinion

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We believe that our audit provides a reasonable basis for our opinion.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Custom Wheel House, LLC (“Custom Wheel House”), a wholly-owned subsidiary, whose financial statements reflect total assets and revenues constituting 6.7 and 4.5 percent, respectively, and also does not include the internal control over financial reporting of Marucci Sports, LLC (“Marucci”), a wholly-owned subsidiary, whose financial statements reflect total assets and revenues constituting 29.2 and 1.1 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended December 29, 2023.

As indicated in Management’s Report, Custom Wheel House and Marucci were acquired during 2023.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Custom Wheel House and Marucci.

Definition and limitations of internal control over financial reporting

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/s/ GRANT THORNTON LLP

San Francisco, California

San Jose, California

February 27, 2025

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(in thousands, except par value)

December 29, 2023 December 30, 2022

January 03, 2025 December 29, 2023

Current assets:

Cash and cash equivalents $ 71,674 $ 83,642

Accounts receivable (net of allowances of $ 1,158 and $ 443 at December 29, 2023 and December 30, 2022, respectively)

Accounts receivable (net of allowances of $ 1,848 and $ 1,158 at January 3, 2025 and December 29, 2023, respectively)

165,827 171,060

4 unchanged sentences

Lease right-of-use assets 104,019 84,317

Deferred tax assets 21,297 57,339

Deferred tax assets, net 44,364 21,297

Goodwill 639,505 636,565

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Accrued expenses 91,427 103,400

Current portion of long-term debt 24,286 14,286

Total current liabilities 259,780 221,836

Line of credit 370,000 200,000

Long-term debt, less current portion 373,528 —

Revolver 153,000 370,000

Term Loans, less current portion 527,775 359,242

Other liabilities 90,611 69,459

2 unchanged sentences

Commitments and Contingent Liabilities )

Non-controlling interest ( 38 ) —

Stockholders’ equity

Preferred stock, $ 0.001 par value — 0 authorized and no shares issued or outstanding as of December 29, 2023 and December 30, 2022

Preferred stock, $ 0.001 par value — 10,000 authorized and no shares issued or outstanding as of January 3, 2025 and December 29, 2023

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

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

42,574 shares issued and 41,684 outstanding as of January 3, 2025;

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 December 29, 2023 and December 30, 2022

890 common shares as of January 3, 2025 and December 29, 2023

( 13,754 ) ( 13,754 )

Accumulated other comprehensive income 9,041 14,782

Accumulated other comprehensive (loss) income (“AOCI”) 224 9,041

Retained earnings 875,404 878,086

6 unchanged sentences

For the fiscal years ended

December 29, 2023 December 30, 2022 December 31, 2021

January 3, 2025 December 29, 2023 December 30, 2022

Net sales $ 1,393,921 $ 1,464,178 $ 1,602,491

11 unchanged sentences

Income before income taxes 1,012 138,663 233,764

Provision for income taxes 17,817 28,486 24,563

(Benefit) provision for income taxes ( 5,500 ) 17,817 28,486

Net income $ 6,512 $ 120,846 $ 205,278

net loss attributable to non-controlling interest ( 38 ) — —

Net income attributable to Fox stockholders $ 6,550 $ 120,846 $ 205,278

Earnings per share:

9 unchanged sentences

For the fiscal years ended

December 29, 2023 December 30, 2022 December 31, 2021

January 3, 2025 December 29, 2023 December 30, 2022

Net income $ 6,512 $ 120,846 $ 205,278

Other comprehensive (loss) income

Other comprehensive income (loss)

Interest rate swap

Change in net unrealized gain, net of tax effects of $( 1,303 ), $ 4,226 , and $( 1,130 ), respectively

( 473 ) 18,001 3,692

reclassification of net gain on interest rate swap to net earnings ( 6,775 ) ( 3,177 ) ( 48 )

Change in net unrealized gain 6,418 830 13,775

Reclassification of net gain on interest rate swaps to net earnings ( 8,460 ) ( 6,775 ) ( 3,177 )

Tax effects ( 466 ) ( 1,303 ) 4,226

Net change, net of tax effects ( 2,508 ) ( 7,248 ) 14,824

Foreign currency translation adjustments, net of tax effects of $ 0 , $ 0 , and $ 673 , respectively

1,507 ( 4,918 ) 164

Foreign currency translation adjustments ( 6,309 ) 1,507 ( 4,918 )

Other comprehensive (loss) income ( 8,817 ) ( 5,741 ) 9,906

Comprehensive income $ 115,105 $ 215,184 $ 167,626

Comprehensive (loss) income $ ( 2,305 ) $ 115,105 $ 215,184

comprehensive loss attributable to non-controlling interest ( 38 ) — —

Comprehensive (loss) income attributable to Fox stockholders $ ( 2,267 ) $ 115,105 $ 215,184

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

1 unchanged sentence

Consolidated Statements of Stockholders’ Equity

(in thousands, except per share amounts)

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

(in thousands)

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

Shares Amount Shares Amount

Balance - January 1, 2021 42,692 $ 42 890 $ ( 13,754 ) $ 336,834 $ 1,068 $ 394,981 $ 719,171

Balance - December 31, 2021 43,010 $ 42 890 $ ( 13,754 ) $ 344,119 $ 4,876 $ 558,799 $ 894,082 $ —

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 150 — — — ( 4,231 ) — — ( 4,231 ) —

5 unchanged sentences

Stock-based compensation expense — — — — 16,465 — — 16,465 —

Other comprehensive income — — — — — 9,906 — 9,906

Purchase and retirement of common stock ( 428 ) — — — ( 18,163 ) — ( 6,837 ) ( 25,000 )

Other comprehensive income (loss) — — — — — ( 5,741 ) — ( 5,741 ) —

Net income — — — — — — 120,846 120,846

3 unchanged sentences

Purchase and retirement of common stock ( 378 ) — — — ( 16,077 ) — ( 9,232 ) ( 25,309 ) —

Other comprehensive income — — — — — ( 5,741 ) — ( 5,741 )

Other comprehensive income (loss) — — — — — ( 8,817 ) — ( 8,817 ) —

Net income — — — — — — 6,550 6,550 ( 38 )

Balance - December 29, 2023 42,844 $ 42 890 $ ( 13,754 ) $ 348,346 $ 9,041 $ 878,086 $ 1,221,761

Balance - January 3, 2025 42,574 $ 42 890 $ ( 13,754 ) $ 339,266 $ 224 $ 875,404 $ 1,201,182 $ ( 38 )

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

3 unchanged sentences

For the fiscal years ended

December 29, December 30, December 31,

2023 2022 2021

January 3, 2025 December 29, 2023 December 30, 2022

OPERATING ACTIVITIES:

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Amortization of deferred gains on prior swap settlements ( 4,334 ) ( 4,252 ) ( 3,177 )

(Gain) Loss on disposal of property and equipment 1,492 ( 1,740 ) ( 96 )

Proceeds from (cash paid for) interest rate swap settlements

4,026 2,522 ( 471 )

Loss (gain) on disposal of property and equipment 341 1,492 ( 1,740 )

Deferred taxes ( 23,310 ) ( 7,867 ) ( 18,445 )

9 unchanged sentences

Acquisition of businesses, net of cash acquired ( 25,785 ) ( 701,112 ) ( 714 )

Acquisition foreign exchange hedge settlement ( 1,118 ) — —

Acquisition of other assets ( 5,344 ) ( 2,432 ) ( 3,500 )

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Proceeds from line of credit, net of origination fees 189,000 400,000 602,356

Payments on line of credit ( 230,000 ) ( 404,336 ) ( 37,931 )

Proceeds from issuance of debt, net of origination fees 393,528 — —

Payments on revolver ( 406,000 ) ( 230,000 ) ( 404,336 )

Proceeds from issuance of debt 200,000 393,528 —

Repayment of term debt ( 19,286 ) ( 20,000 ) ( 382,500 )

Prepayment of term debt ( 20,000 ) — —

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

1 unchanged sentence

Repurchases from stock compensation program, net ( 2,608 ) ( 6,195 ) ( 4,231 )

Deferred debt issuance costs ( 3,354 ) — —

Deferred debt issuance/modification costs ( 3,434 ) ( 3,354 ) —

Proceeds from termination of swap agreement — — 12,270

Net cash provided by (used in) financing activities 508,979 ( 179,141 ) ( 23,776 )

Net cash (used in) provided by financing activities ( 67,328 ) 508,979 ( 179,141 )

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS ( 185 ) 1,066 2,346

8 unchanged sentences

SUPPLEMENTAL CASH FLOW INFORMATION:

December 29, 2023 December 30, 2022 December 31, 2021

January 3, 2025 December 29, 2023 December 30, 2022

Cash paid during the period for:

Income taxes $ 44,655 $ 37,493 $ 14,980

Interest, net of capitalized interest $ 21,147 $ 9,922 $ 6,384

Income tax payment $ 29,159 $ 44,655 $ 37,493

Interest $ 57,004 $ 21,147 $ 9,922

Amounts included in the measurement of lease liabilities $ 18,844 $ 14,009 $ 10,499

3 unchanged sentences

Capital expenditures included in accounts payable $ 747 $ 977 $ 2,049

(1) Includes new leases executed in the United States of America “U.S.” and acquired lease right-of-use assets from Custom Wheel House and Marucci.

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

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements

December 29, 2023

(in thousands, except per share amounts)

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

Description of the Business, Basis of Presentation and Summary of Significant Accounting Policies

9 unchanged sentences

Therefore, the financial results of certain fiscal years and quarters, which will contain 53 and 14 weeks, respectively, will not be exactly comparable to the prior and subsequent fiscal years and quarters, which contain 52 and 13 weeks, respectively.

For the fiscal years 2023, 2022 and 2021, the Company’s fiscal year ended on December 29, 2023, December 30, 2022 and December 31, 2021 and each had 52 weeks.

For the fiscal years 2024, 2023 and 2022, the Company’s fiscal year ended on January 3, 2025, December 29, 2023 and December 30, 2022 and had 53, 52, and 52 weeks, respectively.

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

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The effects of these translation adjustments are a component of other comprehensive income.

Foreign currency transaction losses of $ 1,465 , $ 3,377 , and $ 455 for the years ended December 29, 2023, December 30, 2022 and December 31, 2021, respectively, are included as a component of other income or expense.

Foreign currency transaction losses of $ 1,811 , $ 1,465 , and $ 3,377 for the years ended January 3, 2025, December 29, 2023 and December 30, 2022, respectively, are included as a component of other income or expense.

Cash and Cash Equivalents - Cash consists of cash maintained in checking or money market accounts.

All highly liquid investments purchased with an original maturity date of 90 days or less at the date of purchase are considered to be cash equivalents.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

Accounts Receivable - Accounts receivable are unsecured customer obligations which generally require payment within various terms from the invoice date.

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Payments of accounts receivable are applied to the specific invoices identified on the customer’s remittance advice or if unspecified, generally to the earliest unpaid invoices.

The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management’s best estimate of amounts that may not be collected.

The carrying amount of accounts receivable is reduced by an allowance for credit losses that reflects management’s best estimate of amounts that may not be collected.

All accounts or portions thereof deemed to be uncollectible or that may require an excessive collection cost are written off to the allowance for credit losses.

The Company records a provision for credit losses based on historical experience and a detailed assessment of the collectability of its accounts receivable.

The provision is based on how long a receivable has been outstanding, taking into account the

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

historical credit loss rate and adjusting for both current conditions and forecasts of economic conditions into that expected credit loss rate.

If circumstances change, such as higher-than-expected defaults or an unexpected material adverse change in a major customer’s ability to meet its financial obligations, the Company’s estimate of the recoverability of the amounts due could be reduced by a material amount.

The Company records the allowance for credit losses using the aging method, considering the length of time a receivable has been outstanding.

This assessment incorporates historical credit loss rates, current conditions, and reasonable and supportable forecasts of future economic conditions that may impact collectability.

Our methodology follows the expected credit loss model, which not only accounts for past events and incurred losses but also integrates forward-looking information to estimate potential credit deterioration.

If circumstances change, such as higher-than-expected defaults or an unexpected material adverse change in a major customer’s financial condition, we reassess our estimates to determine whether the recoverability of amounts due could be materially impacted.

The following table presents the activity in the allowance for credit losses:

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Allowance for credit losses:

December 29, 2023 December 30, 2022 December 31, 2021

January 3, 2025 December 29, 2023 December 30, 2022

Balance, beginning of year $ 1,158 $ 443 $ 410

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Concentration of Credit Risk - Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash and accounts receivable.

As of December 29, 2023 the Company held $ 58,979 in cash at U.S.

As of January 3, 2025 the Company held $ 63,743 in cash at U.S.

subsidiaries and $ 7,931 at subsidiaries outside the U.S.

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The following customers accounted for 10% or more of the Company’s accounts receivable balance:

December 29, 2023 December 30, 2022

January 3, 2025 December 29, 2023

Customer A 14 % 18 %

In 2024 and 2023, our sales to customer A accounted for approximately 15% and 13% of total net sales, respectively.

No other customers were individually significant in any of these periods presented.

The Company depends on a limited number of vendors to supply component parts for its products.

The Company purchased 29 %, 34 %, and 32 % of its product components for the years ended December 29, 2023, December 30, 2022 and December 31, 2021, respectively, from ten vendors.

As of December 29, 2023 and December 30, 2022, amounts due to these vendors represented 20 % and 38 % of accounts payable, respectively.

The Company purchased 26 %, 29 %, and 34 % of its product components for the years ended January 3, 2025, December 29, 2023 and December 30, 2022, respectively, from ten vendors.

As of January 3, 2025 and December 29, 2023, amounts due to these vendors represented 21 % and 20 % of accounts payable, respectively.

Inventories - Inventories are stated at the lower of actual cost (or standard cost which generally approximates actual costs on a first-in first-out basis) or net realizable value.

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Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

January 3, 2025

(in thousands)

Property and Equipment - Property and equipment are stated at cost less accumulated depreciation.

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Capitalized costs are included in property and equipment and are amortized on a straight-line basis over the estimated useful life of the software beginning when the software project is substantially complete and placed in service.

The Company capitalized $ 5,254 in internal use computer software costs during the year ended December 29, 2023.

Costs incurred during the preliminary project stage and costs for training, data conversion, and maintenance are expensed as incurred.

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Fair value is estimated based on discounted future cash flows.

No impairment charges were recorded during the years ended December 29, 2023, December 30, 2022 and December 31, 2021.

No impairment charges were recorded during the years ended January 3, 2025, December 29, 2023 and December 30, 2022.

Business Combinations - The Company accounts for acquisitions of entities that include inputs and processes and have the ability to create outputs as business combinations.

6 unchanged sentences

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

January 3, 2025

(in thousands)

Goodwill and Intangible Assets - Goodwill represents the excess of purchase price over the fair value of the net assets of businesses acquired.

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Impairments, if any, are charged directly to earnings.

We completed our most recent annual impairment test in the third quarter of 2023 at which time we had a single reporting unit for purposes of assessing goodwill impairment.

We completed our most recent annual impairment test in the third quarter of 2024 at which time we had three reporting units:

PVG, AAG, and SSG for purposes of assessing goodwill impairment.

The quantitative impairment test indicated that the fair values of our three reporting units - PVG, AAG, and SSG - exceeded their respective carrying values by 44 %, 18 %, and 38 %, respectively.

Additionally, we performed a qualitative analysis at year end and concluded that it was not more likely than not that the fair values of the reporting units were less than the carrying values.

No impairment charges have been incurred to date.

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Certain trademarks and brands are considered to be indefinite life intangibles and are not amortized but are subject to testing for impairment annually.

No impairments of intangible assets were identified in the years ended December 29, 2023, December 30, 2022 and December 31, 2021.

No impairments of intangible assets were identified in the years ended January 3, 2025, December 29, 2023 and December 30, 2022.

Self-Insurance - The Company is self-insured for its U.S.

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The Company has third-party insurance coverage to limit exposure for individually significant claims.

The estimates for unpaid claims incurred as of December 29, 2023 and December 30, 2022 are $ 2,203 and $ 1,988 respectively, and are recorded within accrued expenses on the consolidated balance sheets.

The estimates for unpaid claims incurred as of January 3, 2025 and December 29, 2023 are $ 2,031 and $ 2,203 respectively, and are recorded within accrued expenses on the consolidated balance sheets.

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

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The Company is required to place a deposit on Stellantis vehicle 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.

For other chassis, the Company entered into floor plan 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 our 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.

1 unchanged sentence

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.

Cost of Sales - Cost of sales primarily consists of materials and labor expense in the manufacturing of the Company’s products sold to customers.

Cost of sales also includes provisions for excess and obsolete inventory, warranty costs, certain allocated

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

costs for facilities, depreciation and other manufacturing overhead.

January 3, 2025

(in thousands)

Cost of Sales - Cost of sales primarily consists of materials and labor expense in the manufacturing of the Company’s products sold to customers.

Cost of sales also includes provisions for excess and obsolete inventory, warranty costs, certain allocated costs for facilities, depreciation and other manufacturing overhead.

Additionally, it includes stock-based compensation for personnel directly involved with manufacturing the Company’s product offerings.

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The Company does not estimate forfeitures in recognizing stock-based compensation expense.

The fair value of the RSUs is equal to the fair value of the Company’s common stock on the grant date of the award.

The fair value of the RSUs is equal to the fair value of the Company’s common stock, that is a derivative of RSUs, on the grant date of the award.

Income Taxes - Income taxes are computed using the asset and liability method, under which deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income.

2 unchanged sentences

The Company accounts for global intangible low-taxed income (“GILTI”) in the year the tax is incurred, rather than recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years.

The net GILTI inclusion for the year ended December 29, 2023 was partially offset by foreign tax credits associated with the income.

The net GILTI inclusion for the year ended January 3, 2025 was partially offset by foreign tax credits associated with the income.

The Company recognizes the tax effects of an uncertain tax position only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date and then only in an amount more likely than not to be sustained upon review by the tax authorities.

1 unchanged sentence

Advertising - Advertising costs are expensed as incurred and recorded as sales and marketing expenses on our Consolidated Statements of Income.

Costs incurred for advertising totaled $ 6,717 , $ 4,813 , and $ 2,741 for the years ended December 29, 2023, December 30, 2022 and December 31, 2021, respectively.

Costs incurred for advertising totaled $ 10,695 , $ 6,717 , and $ 4,813 for the years ended January 3, 2025, December 29, 2023 and December 30, 2022, respectively.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

Warranties - The Company offers limited warranties on its products generally for one to three years .

4 unchanged sentences

Factors that affect the Company’s liability include the number of units, historical and anticipated rates of warranty claims, and the cost per claim.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

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

manufacturing, sale and service of performance-defining products.

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.

Reclassifications - We reclassified certain prior period amounts within our consolidated statements of other comprehensive income, consolidated statements of cash flows, and Note 2 - Revenues for the years ended December 30, 2022 and December 31, 2021 to conform to our current year presentation.

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:

PVG, AAG, and SSG.

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.

The CODM for the Company is the Chief Executive Officer.

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.

Adjusted EBITDA is utilized by the CODM to evaluate segment profitability and inform strategic decisions regarding investments, cost management, and resource allocation.

On a regular basis, the CODM reviews budget-to-actual variances for adjusted EBITDA to guide capital and personnel distribution.

During the annual budgeting and forecasting process, segment adjusted EBITDA is used by the CODM to measure segment performance and to allocate resources such as employees, financial assets, or capital.

Additionally, adjusted EBITDA is reviewed by the CODM in evaluating the efficiency of cost management strategies within each segment, ensuring that financial and operational resources are optimized and in alignment with the Company's overall strategic objectives.

Reclassifications - We reclassified certain prior period amounts within our consolidated balance sheets, consolidated statements of other comprehensive income, consolidated statements of cash flows, Note 2 - Revenues, and Note 7 - Goodwill and Intangible Assets for the year ended December 30, 2022 to conform to our current year presentation.

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

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 on Form 10-K.

The current and non-current debt balances as of December 29, 2023 within our consolidated balance sheets in this Annual Report on Form 10-K are recast to reflect the correct classification.

The recast did not have any impact on net income or earnings per share.

Fair Value Measurements and Financial Instruments - The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification 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, and accrued liabilities approximate their fair values due to their short-term nature.

As of December 29, 2023, amounts owed 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.

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

The carrying amounts of the Company’s revolver and long-term debt, excluding current portion, approximate their fair values because the interest rates vary with the market.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

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, disruptions in the operations of its or its customers’ facilities, or along its global supply chain, 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.

International geopolitical conflicts, including continuing tensions between Taiwan and China, the Russian war in 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.

Additionally, the imposition of U.S.

tariffs on China and retaliatory tariffs by China on the U.S.

may increase costs, disrupt supply chains, and impact demand for the Company’s products.

Furthermore, domestic and foreign political instability and uncertainty may create economic volatility, regulatory changes, and trade disruptions that pose additional risks to the Company’s business environment.

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 provides this non-GAAP financial measure as a supplemental tool to assist investors in understanding our performance and evaluating 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.

This measure is intended to facilitate period-to-period comparisons by excluding items that management does not view as indicative of the Company’s day-to-day operations.

By presenting adjusted EBITDA, along with reconciliations to the most directly comparable GAAP measure, we aim to support investors’ ability to analyze our results of operations and assess our progress in 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 20 – Segment Information for our definition of adjusted EBITDA.

Under ASC 280, adjusted EBITDA is the 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 Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

Recent Accounting Pronouncements - In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

9 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 adopted the annual disclosure requirements, except for the annual rollforward, in this 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.

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

Refer to the “Bailment Pool Arrangements” section within Note 12 - Commitments and Contingencies for further details of this adoption.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

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 ASU 2023-07 require disclosure of significant segment expenses that are regularly provided to the 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.

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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 adopted ASU 2023-07 in this Annual Report on Form 10-K for fiscal year 2024 ending January 3, 2025.

Refer to Significant Accounting Policies - Segments above and Note 20.

Segment Information for further details.

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

2 unchanged sentences

Early adoption is permitted.

The Company is currently evaluating the accounting standard update, but does not expect material impact on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).

ASU 2024-03 introduces enhanced income statement expense disclosure requirements.

The amendments in ASU 2023-03 require new tabular disclosures in the notes to financial statements, disaggregating specific expense categories within relevant income statement captions.

These categories include inventory purchases, employee compensation, depreciation, and intangible asset amortization.

The guidance is effective for fiscal years beginning after December 15, 2026, and must be applied prospectively.

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

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

In the second quarter of fiscal year 2023, the Company realigned its Powered Vehicles Group into the Powered Vehicles Group and the Aftermarket Applications Group to be more aligned with the Company’s end customers and drive additional focus on product development.

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All prior-period amounts have been recast to conform with the current period presentation.

The following table summarizes total net sales by product category:

The following table summarizes total net sales by segment:

For the fiscal years ended

December 29, 2023 December 30, 2022 December 31, 2021

Powered Vehicle Group $ 523,862 $ 432,388 $ 360,711

January 3, 2025 December 29, 2023 December 30, 2022

Powered Vehicles Group $ 461,403 $ 523,862 $ 432,388

Aftermarket Applications Group 421,453 551,143 489,132

3 unchanged sentences

For the fiscal years ended

December 29, 2023 December 30, 2022 December 31, 2021

January 3, 2025 December 29, 2023 December 30, 2022

OEM $ 612,679 $ 725,232 $ 909,550

Aftermarket 738,946 692,941 581,064

Aftermarket/Non-OEM (1)

781,242 738,946 692,941

Total net sales $ 1,393,921 $ 1,464,178 $ 1,602,491

(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:

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

For the fiscal years ended

December 29, 2023 December 30, 2022 December 31, 2021

January 3, 2025 December 29, 2023 December 30, 2022

North America $ 1,097,329 $ 1,127,587 $ 1,009,203

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Total net sales $ 1,393,921 $ 1,464,178 $ 1,602,491

Remaining performance obligations represent the transaction price of contracts, generally considered to be the customer's purchase order, for which work has not been performed or has been partially performed.

The Company elected to exclude remaining performance obligations with an original expected duration of one year or less.

Revenue expected to be recognized from remaining performance obligations as of December 29, 2023 for contracts with a duration more than one year was approximately $ 1,534 , all of which is expected to be recognized during fiscal years 2025 to 2027.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

Inventory consisted of the following:

December 29, 2023 December 30, 2022

January 3, 2025 December 29, 2023

Raw materials $ 245,368 $ 217,888

4 unchanged sentences

Prepaids and other current assets consisted of the following:

December 29, 2023 December 30, 2022

January 3, 2025 December 29, 2023

Prepaid chassis deposits $ 47,094 $ 108,866

4 unchanged sentences

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

January 3, 2025

(in thousands)

Property, Plant and Equipment, net

Property, plant and equipment consisted of the following:

December 29, 2023 December 30, 2022

January 3, 2025 December 29, 2023

Machinery and manufacturing equipment $ 177,261 $ 149,502

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Total property, plant and equipment, net $ 246,393 $ 237,192

Depreciation expense was $ 32,094 , $ 27,705 , and $ 22,741 for the years ended December 29, 2023, December 30, 2022 and December 31, 2021, respectively, including $ 2,916 , $ 3,787 , and $ 2,492 of internal-use software amortization for the years ended December 29, 2023, December 30, 2022 and December 31, 2021, respectively.

The Company capitalized $ 5,254 , $ 4,683 , and $5,847 in internal use computer software costs during the years ended December 29, 2023, December 30, 2022, and December 31, 2021, respectively.

Depreciation expense was $ 39,038 , $ 32,094 , and $ 27,705 for the years ended January 3, 2025, December 29, 2023 and December 30, 2022, respectively, including $ 3,949 , $ 2,916 , and $ 3,787 of internal-use software amortization for the years ended January 3, 2025, December 29, 2023 and December 30, 2022, respectively.

The Company capitalized $ 3,054 , $ 5,254 , and $ 4,683 in internal use computer software costs during the years ended January 3, 2025, December 29, 2023, and December 30, 2022, respectively.

The following table summarizes the allocation of depreciation expense in the accompanying consolidated statements of income:

For the fiscal years ended

December 29, 2023 December 30, 2022 December 31, 2021

January 3, 2025 December 29, 2023 December 30, 2022

Cost of sales $ 19,153 $ 15,040 $ 13,741

4 unchanged sentences

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

December 29, 2023 December 30, 2022

January 3, 2025 December 29, 2023

United States $ 203,937 $ 198,033

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Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

January 3, 2025

(in thousands)

An agreement is considered a lease when it gives the Company the right to substantially all of the economic benefits from an identified asset and the ability to direct its use throughout the term of the agreement.

The Company has operating lease agreements for administrative, research and development, manufacturing, and sales and marketing facilities.

These leases have remaining lease terms ranging from under one year to twenty years , some of which include options to extend the lease term for up to ten years , and some of which include options to terminate the leases within one year .

These leases have remaining lease terms ranging from under one year to twenty years , some of which include options to extend or terminate the leases.

The Company considered these options to the extent that they were reasonably certain to be exercised in determining the lease term used to establish its right-of-use assets and lease liabilities.

Certain leases are subject to annual escalations as specified in the lease agreements.

The Company considered these options in determining the lease term used to establish its right-of-use assets and lease liabilities.

These lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company elected the practical expedient related to treating lease and non-lease components as a single lease component for all of its leases and elected a policy exclusion permitting leases with an original lease term of less than one year to be excluded from the right-of-use assets and lease liabilities.

As most of the Company’s leases do not provide an interest rate, the Company used the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The weighted-average remaining lease term for the Company’s operating leases was 9.26 years and the weighted-average incremental borrowing rate was 3.30 % as of December 29, 2023.

The weighted-average remaining lease term for the Company’s operating leases was 8.84 years and the weighted-average incremental borrowing rate was 3.96 % as of January 3, 2025.

Operating lease costs consisted of the following:

For the fiscal years ended

December 29, 2023 December 30, 2022 December 31, 2021

January 3, 2025 December 29, 2023 December 30, 2022

Operating lease cost $ 21,467 $ 15,656 $ 11,209

4 unchanged sentences

Supplemental balance sheet information related to the Company’s operating leases is as follows:

Balance Sheet Classification December 29, 2023

Balance Sheet Classification January 3, 2025

Operating lease right-of-use assets Lease right-of-use assets $ 104,019

1 unchanged sentence

Non-current lease liabilities Other liabilities $ 88,168

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

Maturities of lease liabilities by fiscal year for the Company’s operating leases are as follows:

7 unchanged sentences

Lease liabilities less current portion $ 88,168

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

Goodwill and Intangible Assets

Intangible assets, excluding goodwill, are comprised of the following:

December 29, 2023

amount Accumulated

amortization Net

amount Weighted

January 03, 2025

Trademarks and brands, subject to amortization $ 233,728 $ ( 25,172 ) $ 208,556 14

13 unchanged sentences

For the fiscal years ended

December 29, December 30, December 31,

2023 2022 2021

January 3, 2025 December 29, 2023 December 30, 2022

Amortization of intangibles $ 44,528 $ 26,509 $ 21,537

Future amortization expense for finite-lived intangibles as of December 29, 2023 is as follows:

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

Future amortization expense for finite-lived intangibles as of January 3, 2025 is as follows:

For fiscal year:

3 unchanged sentences

Total expected future amortization $ 393,295

Goodwill activity consisted of the following:

Goodwill activity attributable to each reporting unit consisted of the following:

PVG AAG SSG Total

Balance as of December 29, 2023 $ 90,683 $ 257,972 $ 287,910 $ 636,565

1 unchanged sentence

Acquisitions )

3,504 1,879 — 5,383

Purchase price adjustments (Refer to Note 18.

Acquisitions )

— ( 1,608 ) ( 670 ) ( 2,278 )

Currency translation and other adjustments ( 124 ) — ( 41 ) ( 165 )

Balance as of December 29, 2023 $ 636,565

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

Balance as of January 3, 2025 $ 94,063 $ 258,243 $ 287,199 $ 639,505

Accrued Expenses

Accrued expenses consisted of the following:

December 29, December 30,

January 3, 2025 December 29, 2023

Payroll and related expenses $ 22,504 $ 17,988

7 unchanged sentences

For the fiscal years ended

December 29, December 30, December 31,

2023 2022 2021

January 3, 2025 December 29, 2023 December 30, 2022

Beginning warranty liability $ 20,001 $ 17,071 $ 15,510

3 unchanged sentences

Ending warranty liability $ 21,593 $ 20,001 $ 17,071

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

Related Party Transactions

6 unchanged sentences

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 $ 600 for the year ended December 29, 2023.

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, June 11, 2021 and December 16, 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.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

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

Rent expense under these leases was $ 371 and $ 600 for the years ended January 3, 2025 and December 29, 2023, respectively.

2022 Credit Facility

1 unchanged sentence

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 .

On April 5, 2022, the Company borrowed $ 475,000 under the 2022 Credit Facility, which was used to repay all outstanding amounts owed under the Prior Credit Facility and for general corporate purposes.

On April 5, 2022, the Company borrowed $ 475,000 under the 2022 Credit Facility, which was used to repay all outstanding amounts owed under a prior credit facility and for general corporate purposes.

Future advances under the 2022 Credit Facility will be used to finance working capital, capital expenditures and other general corporate purposes of the Company.

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 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 paid $ 1,980 in debt issuance costs in connection with the 2022 Credit Facility, which were allocated to 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, of which $ 2,546 were carried forward to the 2022 Credit Facility.

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

6 unchanged sentences

The Delayed Draw Term Loan is available to the Company for up to six months commencing on 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.

Each of the Incremental Term Loans 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.

At December 29, 2023, the one-month SOFR and three-month SOFR rates were 5.34 % and 5.36 %, respectively.

At December 29, 2023, our weighted-average interest rate on outstanding borrowing was 6.97 %.

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 December 29, 2023.

Each of the Incremental Term Loans 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 Incremental Term A Loan and $ 3,354 were allocated to the Delayed Draw Term Loan.

Loan fees allocated to the Incremental Term A Loan are amortized using the interest method over the term of the 2022 Credit Facility.

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

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

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

December 29, December 30,

January 3, 2025

(in thousands)

On May 13, 2024, the Company borrowed the full amount of $ 200,000 of the Delayed Draw Term Loan.

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

On July 31, 2024 and December 20, 2024, the Company entered into the Third and Fourth Amendments to the 2022 Credit Facility, respectively, to secure an improved covenant profile on its capital structure to provide more flexibility given the uncertain macro environment.

The Company paid $ 3,490 in loan fees for the Third and Fourth Amendments, of which $ 3,433 were allocated among the revolver and the Incremental Term Loans to be amortized over the remaining term of the 2022 Credit Facility.

At January 3, 2025, the one-month SOFR and three-month SOFR rates were 4.51 % and 4.68 %, respectively.

At January 3, 2025, our weighted-average interest rate on outstanding borrowing was 6.43 %.

The Company was in compliance with the covenants as of January 3, 2025.

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

January 3, 2025 December 29, 2023

Amount outstanding $ 153,000 $ 370,000

3 unchanged sentences

Maturity date April 5, 2027 April 5, 2027

As of December 29, 2023, future principal payments for long-term debt, including the current portion, as summarized as follows:

For fiscal year December 29, 2023

As of January 3, 2025, future principal payments for term loan debt, including the current portion, as summarized as follows:

For fiscal year January 3, 2025

2025 $ 24,286

Total $ 560,714

3 unchanged sentences

Long-term debt less current portion $ 527,775

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

Derivatives and Hedging

3 unchanged sentences

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

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

December 29, December 30,

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 January 3, 2025 and December 29, 2023, the Company had the following interest rate swap contracts:

January 3, 2025 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 $ 16 $ 104

1 unchanged sentence

April 5, 2022 April 5, 2027 $ 100,000 2,650 3,394

September 20, 2024 December 26, 2025 $ 100,000 ( 87 ) —

September 20, 2024 December 25, 2026 $ 200,000 903 —

September 20, 2024 September 21, 2029 $ 100,000 2,219 —

Total $ 6,468 $ 8,511

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

On June 11, 2021, the Company terminated its existing swap agreement (the “2020 Swap Agreement”) and entered into an interest rate swap agreement (the “2021 Swap Agreement”) with a notional amount of $ 200,000 .

On April 5, 2022, the Company terminated its 2021 Swap Agreement and entered into a new interest rate swap agreement (the “2022 Swap Agreement”) with a notional amount of $ 100,000 .

On June 11, 2021, the Company terminated its existing swap agreement (the “2020 Swap Agreement”) with an effective date of September 2, 2020 and entered into an interest rate swap agreement (the “2021 Swap Agreement”) with an effective date of July 2, 2021 and a notional amount of $ 200,000 .

On April 5, 2022, the Company terminated its 2021 Swap Agreement and entered into a new interest rate swap agreement with a notional amount of $ 100,000 with an effective date of April 5, 2022.

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 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 Consolidated Balance Sheets.

The remaining unrealized gains from the terminated agreements as of January 3, 2025 will be fully amortized during the first quarter of fiscal year 2025.

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 16.

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 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 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 and losses, net of tax, deferred to accumulated other comprehensive income resulting from the derivative instruments designated as cash flow hedges for the years ended December 29, 2023, December 30, 2022, and December 31, 2021 were a loss of $ 473 , and gains of $ 18,001 and $ 3,692 , respectively.

The reclassifications of gains from accumulated other comprehensive income into earnings related to the derivative instruments designated as cash flow hedges during the years ended December 29, 2023, December 30, 2022 and December 31, 2021 were $ 6,775 , $ 3,177 and $ 48 , respectively.

Over the next twelve months, the Company expects to recognize $ 7,279 of the $ 8,511 of unrealized gains currently included in accumulated other comprehensive income as an offset to interest expense.

The unrealized gains and losses deferred to accumulated other comprehensive income resulting from the derivative instruments designated as cash flow hedges for the years ended January 3, 2025, December 29, 2023, and December 30, 2022 were gains of $ 6,418 , and $ 830 , and a gain of $ 13,775 , respectively.

The reclassifications of gains from accumulated other comprehensive income into earnings related to the derivative instruments designated as cash flow hedges during the years ended January 3, 2025, December 29, 2023 and December 30, 2022 were $ 8,460 , $ 6,775 and $ 3,177 , respectively.

The aggregate tax effects on activity in accumulated other comprehensive income associated with the derivative instruments designated as cash flow hedges during the years ended January 3, 2025, December 29, 2023 and December 30, 2022 were losses of $ 466 , $ 1,303 , and a gain of $ 4,226 , respectively.

Over the next 12 months, the Company estimates that $ 5,285 will be reclassified as a decrease to interest expense related to the interest rate swap contracts.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

Commitments and Contingent Liabilities

5 unchanged sentences

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 has not yet been served.

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 case is in preliminary stages, and the Company anticipates filing a motion to dismiss all claims.

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 monetary 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.

Plaintiff filed his opposition on December 13, 2024, and defendants filed their reply on January 13, 2025.

The motion is fully briefed and the parties await the court’s ruling.

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 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 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.

The Company does not pay a cash deposit to obtain GM and Ford chassis, and accordingly it does not recognize an asset or a liability related to these chassis.

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

At January 3, 2025 and December 29, 2023, the Company utilized $ 36,008 and $ 9,036 out of a maximum of $ 36,100 and $ 49,400 of Ford allocation of chassis, respectively, and $ 10,857 and $ 11,362 , respectively, out of a maximum of $ 49,500 and $ 100,000 GM allocation of chassis.

The Company incurred $ 1,271 and $ 4,760 of interest expense related to chassis on hand during the years ended January 3, 2025 and December 29, 2023, respectively.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

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 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 entered into floorplan 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 does not pay a cash deposit to obtain GM and Ford chassis, and accordingly it does not recognize an asset.

or a liability related to these chassis.

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

At December 29, 2023 and December 30, 2022, the Company had utilized $ 9,036 and $ 2,634 out of a maximum of $ 49,400 and $ 26,200 of Ford allocation of chassis, respectively, and $ 11,362 and $ 67,149 , respectively, out of a maximum of $ 100,000 GM allocation of chassis.

The company incurred $ 4,760 of interest expense related to chassis on hand during the year ended December 29, 2023.

January 3, 2025

(in thousands)

The following table sets forth a rollforward of GM and Ford chassis utilization for the year ended January 3, 2025:

January 3, 2025

Beginning balance:

Supplier financed chassis $ 20,398

New supplier financed chassis 298,156

Supplier financed chassis sold ( 271,689 )

Ending balance:

Supplier financed chassis $ 46,865

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.

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

to Flagship, Inc.

6 unchanged sentences

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

The Company released 58 and 78 shares during the years ended December 30, 2022 and December 31, 2021, respectively.

The Company released 58 shares during the years ended December 30, 2022.

The Company had no remaining shares to be released as of December 30, 2022.

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

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands, except per share data)

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 fiscal year ended December 29, 2023, the Company repurchased approximately 428 shares for $25,000, at an average price of $58.44.

During the fiscal years ended January 3, 2025 and December 29, 2023, the Company repurchased approximately 378 and 428 shares for $ 25,000 and $ 25,000 , at an average price of $ 66.03 and $ 58.44 , respectively.

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 December 29, 2023, authorized repurchases of $275,000 remain available to the Company.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

Equity Incentive Plans

7 unchanged sentences

Options granted under the plans have vesting periods ranging from one to ten years and expire no later than ten years from the date of grant.

As of January 3, 2025, there were no outstanding options remaining.

RSUs generally vest over a three to four-year period with equal annual installments beginning at the end of one year and the remaining vesting annually thereafter.

In addition to time-based vesting criteria, certain of our RSUs include performance-based vesting criteria.

As of December 29, 2023, there were 3,367 shares available for issuance under the 2022 Plan.

As of January 3, 2025, there were 2,872 shares available for issuance under the 2022 Plan.

The Company generally issues new shares in connection with awards under its equity incentive plans.

Stock-Based Compensation

Compensation expense related to the Company’s share-based awards for the fiscal years ended December 29, 2023, December 30, 2022, and December 31, 2021 was $ 16,465 , $ 16,351 , and $ 13,914 , respectively, all of which related to RSUs and performance share units (“PSUs”).

No compensation expense related to stock options was incurred during the fiscal years ended December 29, 2023, December 30, 2022, and December 31, 2021.

Compensation expense related to the Company’s share-based awards for the fiscal years ended January 3, 2025, December 29, 2023, and December 30, 2022 was $ 9,606 , $ 16,465 , and $ 16,351 , respectively, all of which related to RSUs and performance share units (“PSUs”).

No compensation expense related to stock options was incurred during the fiscal years ended January 3, 2025, December 29, 2023, and December 30, 2022.

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

For the fiscal years ended

December 29, December 30, December 31,

2023 2022 2021

January 3, 2025 December 29, 2023 December 30, 2022

Cost of sales $ 1,124 $ 1,179 $ 957

3 unchanged sentences

Total $ 9,606 $ 16,465 $ 16,351

As of January 1, 2021, $ 421 of stock-based compensation expense related to our executive bonus plan was included in Accrued Expenses on the Consolidated Balance Sheets.

This amount was recognized as additional paid in capital during the year ended December 31, 2021 upon the issuance of the underlying restricted stock units.

Stock-based compensation expense capitalized to inventory was not material for the years ended December 29, 2023, December 30, 2022 and December 31, 2021.

Stock-based compensation expense capitalized to inventory was not material for the years ended January 3, 2025, December 29, 2023 and December 30, 2022.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands, except per share data)

Restricted Stock Units

3 unchanged sentences

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.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

The following table summarizes RSU activity:

1 unchanged sentence

Number of shares outstanding Weighted-average grant date fair value

Unvested at January 1, 2021 450 $ 50.12

Unvested at December 30, 2021 338 $ 76.30

Granted 142 $ 95.34

9 unchanged sentences

Vested ( 137 ) $ 94.76

Unvested at December 29, 2023 247 $ 100.21

The fair value of vested RSUs was $ 15,516 , $ 15,140 and $ 27,213 for the years ended December 29, 2023, December 30, 2022 and December 31, 2021, respectively.

As of December 29, 2023, the Company had approximately $ 15,203 of unrecognized stock-based compensation expense related to RSUs, which will be recognized over the remaining weighted-average vesting period of approximately 1.79 years.

Unvested at January 3, 2025 400 $ 59.88

The fair value of vested RSUs was $ 5,837 , $ 15,516 and $ 15,140 for the years ended January 3, 2025, December 29, 2023 and December 30, 2022, respectively.

As of January 3, 2025, the Company had approximately $ 15,377 of unrecognized stock-based compensation expense related to RSUs, which will be recognized over the remaining weighted-average vesting period of approximately 1.86 years.

Performance Stock Units

During the year ended December 29, 2023, the Company issued 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.

During the year ended January 3, 2025, the Company issued 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, on certain measures including EBITDA margin.

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.

2 unchanged sentences

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

The following table summarizes the activity for the Company’s unvested PSUs for the year ended December 29, 2023:

January 3, 2025

(in thousands, except per share data)

The following table summarizes the activity for the Company’s unvested PSUs for the year ended January 3, 2025:

Unvested PSUs

Number of shares outstanding Weighted-average grant date fair value

Unvested at January 2021 — $ —

Granted 29 $ 141.46

Unvested at December 31, 2021 29 $ 141.46

7 unchanged sentences

Unvested at December 29, 2023 70 $ 116.54

Granted 232 $ 46.38

Canceled ( 26 ) $ 52.30

Vested ( 30 ) $ 118.09

Unvested at January 3, 2025 246 $ 57.00

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.

4 unchanged sentences

Number of shares outstanding Weighted-average exercise price Weighted-average remaining contractual life (years) Aggregate intrinsic value

Balance at January 1, 2021 225 $ 5.37 2 $ 22,593

Options exercised ( 192 ) $ 5.41 $ 25,751

Balance at December 31, 2021 33 $ 5.16 2 $ 5,389

3 unchanged sentences

Balance at December 29, 2023 — $ — 0 $ —

Options vested and expected to vest - December 29, 2023 — $ — 0 $ —

Options exercisable - December 29, 2023 — $ — 0 $ —

Options exercised — $ — $ —

Balance at January 3, 2025 — $ — 0 $ —

Options vested and expected to vest - January 3, 2025 — $ — 0 $ —

Options exercisable - January 3, 2025 — $ — 0 $ —

Aggregate intrinsic value represents the difference between the closing price of the Company’s common stock on NASDAQ and the exercise price of outstanding, in-the-money options.

As of December 30, 2022, stock-based compensation expense related to stock options has been fully recognized.

During the years ended December 30, 2022 and December 31, 2021, 33 , and 192 shares of common stock, respectively, were issued due to the exercise of stock options, resulting in proceeds to the Company of approximately $ 169 , and $ 1,042 , respectively.

During the year ended December 30, 2022, 33 shares of common stock, were issued due to the exercise of stock options, resulting in proceeds to the Company of approximately $ 169 .

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands, except per share data)

Earnings Per Share

4 unchanged sentences

For the fiscal years ended

December 29, December 30, December 31,

2023 2022 2021

January 3, 2025 December 29, 2023 December 30, 2022

Net income attributable to FOX stockholders $ 6,550 $ 120,846 $ 205,278

5 unchanged sentences

Diluted $ 0.16 $ 2.85 $ 4.84

The Company excluded 12 and 20 shares from the calculation of diluted earnings per share for the years ended December 29, 2023 and December 30, 2022 as these shares would have been antidilutive.

No potentially antidilutive shares were excluded from the calculation of diluted earnings per share for the year ended December 31, 2021.

The Company excluded 127 , 12 , and 20 shares from the calculation of diluted earnings per share for the years ended January 3, 2025, December 29, 2023, and December 30, 2022, respectively, as these shares would have been antidilutive.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

Provision for Income Taxes

1 unchanged sentence

For the fiscal years ended

December 29, December 30, December 31,

2023 2022 2021

January 3, 2025 December 29, 2023 December 30, 2022

Federal $ 9,464 $ 14,427 $ 33,622

6 unchanged sentences

Total deferred ( 23,178 ) ( 7,864 ) ( 21,472 )

Provision for income taxes $ 17,817 $ 28,486 $ 24,563

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

The Company’s income before provision for income taxes was subject to taxes in the following jurisdictions for the following periods:

(Benefit) provision for income taxes $ ( 5,500 ) $ 17,817 $ 28,486

The Company’s income (loss) before provision for income taxes was subject to taxes in the following jurisdictions for the following periods:

For the fiscal years ended

December 29, December 30, December 31,

2023 2022 2021

January 3, 2025 December 29, 2023 December 30, 2022

United States $ ( 13,351 ) $ 114,128 $ 197,640

1 unchanged sentence

Total income before provision for income taxes $ 1,012 $ 138,663 $ 233,764

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

The following table presents a reconciliation of the statutory federal rate and the Company’s effective tax rate for the periods presented:

For the fiscal years ended

December 29, December 30, December 31,

2023 2022 2021

January 3, 2025 December 29, 2023 December 30, 2022

Tax at federal statutory rate 21.0 % 21.0 % 21.0 %

Foreign derived income benefit ( 4.4 ) ( 6.6 ) ( 5.8 )

Research and development tax credit ( 645.2 ) ( 3.8 ) ( 2.9 )

Federal return to provision ( 2.2 ) 1.0 0.4

Foreign derived income benefit ( 263.8 ) ( 4.4 ) ( 6.6 )

Adjustments with respect to prior periods ( 243.5 ) — —

Stock-based compensation 182.1 ( 0.2 ) ( 0.5 )

GILTI 126.2 0.7 0.4

State taxes, net of federal benefit 120.6 0.8 0.6

Change in liability for unrecognized tax benefits 0.7 — ( 1.4 )

Valuation allowance on DTAs 111.5 0.3 ( 3.8 )

Executive compensation deduction limitation 20.2 0.6 0.8

Valuation allowance on foreign tax credits — ( 3.8 ) 1.1

Federal return to provision 15.8 ( 2.2 ) 1.0

Change in liability for unrecognized tax benefits ( 1.4 ) 0.7 —

Foreign withholding taxes, net of foreign tax credits — — 1.1

3 unchanged sentences

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

January 3, 2025

(in thousands)

Deferred Income Taxes

December 29, December 30,

January 3, 2025 December 29, 2023

Deferred tax assets:

4 unchanged sentences

Accrued liabilities 7,519 7,299

Interest Carryforward 5,868 —

Net operating losses 2,071 3,226

1 unchanged sentence

Interest rate swap 1,544 2,010

Stock-based compensation 385 ( 121 )

Other 2,441 3,014

9 unchanged sentences

Net deferred tax asset $ 44,364 $ 21,297

As of December 29, 2023, the Company had foreign tax credits of $ 51,232 that begin to expire in 2026, unless previously utilized.

As of December 29, 2023, the Company assessed the realizability of deferred tax assets and evaluated the need for a valuation allowance for deferred tax assets for each jurisdiction based on the framework of ASC 740.

For the year ended December 29, 2023, the valuation allowance increased by $ 413 due to a taxable loss at the Company’s UK subsidiary.

There was no valuation allowance for foreign tax credits as of December 29, 2023.

It is reasonably possible that the company could record a material adjustment to the valuation allowance in the next twelve months.

An estimate of the range cannot be made.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

As of January 3, 2025, the Company had foreign tax credits of $ 47,394 that begin to expire in 2027, unless previously utilized.

As of January 3, 2025, the Company assessed the realizability of deferred tax assets and evaluated the need for a valuation allowance for deferred tax assets for each jurisdiction based on the framework of ASC 740.

For the year ended January 3, 2025, the valuation allowance increased by $ 1,092 due to a taxable loss at the Company’s UK Thailand and Sweden subsidiaries.

It is reasonably possible that the company could record a material adjustment to the valuation allowance in the next twelve months related to the carrying value of foreign tax credits.

Unrecognized Tax Benefits

For the fiscal years ended

December 29, December 30, December 31,

2023 2022 2021

January 3, 2025 December 29, 2023 December 30, 2022

Balance - beginning of period $ 1,274 $ 119 $ 228

1 unchanged sentence

Decrease related to prior year tax positions ( 1,931 ) ( 119 ) ( 109 )

Increase (decrease) due to expiration of statute of limitations — — 1

Balance - end of period $ 29 $ 1,274 $ 119

As of December 29, 2023, the Company had $ 1,274 of unrecognized tax benefits related to certain state tax positions.

As of January 3, 2025, the Company had $ 29 of unrecognized tax benefits related to certain state tax positions.

The Company regularly engages in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions.

1 unchanged sentence

The Company’s 2020 and forward federal tax returns, state tax returns from 2018 and forward, and foreign tax returns from 2020 and forward are subject to examination by tax authorities.

In 2024, the IRS commenced an examination of our 2021 income tax return, which is ongoing.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

Fair Value Measurements and Financial Instruments

4 unchanged sentences

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

December 29, 2023 December 30, 2022

January 3, 2025 December 29, 2023

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

Interest Rate Swap $ — $ 3,394 $ — $ 3,394 $ — $ 5,087 $ — $ 5,087

Interest Rate Swaps $ — $ 5,685 $ — $ 5,685 $ — $ 3,394 $ — $ 3,394

Deferred Compensation Plan Investments 4,394 — — 4,394 3,794 — — 3,794

Total assets measured at fair value $ 4,394 $ 5,685 $ — $ 10,079 $ 3,794 $ 3,394 $ — $ 7,188

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

Incremental Term Loans — 552,061 — 552,061 — 373,528 — 373,528

Revolver — 153,000 — 153,000 — 370,000 — 370,000

Total liabilities measured at fair value $ — $ 705,061 $ — $ 705,061 $ — $ 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 years ended December 29, 2023, and December 30, 2022.

As of December 29, 2023, 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.

There were no transfers of assets or liabilities between Level 1, Level 2 and Level 3 categories of the fair value hierarchy during the years ended January 3, 2025, and December 29, 2023.

As of January 3, 2025, 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 11.

Derivatives and Hedging for additional details of the agreements.

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.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

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.

Refer to Note 11.

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 Consolidated Balance Sheets and is measured at fair value.

The fair value was calculated utilizing Level 2 inputs.

January 3, 2025

(in thousands)

Retirement Plan

1 unchanged sentence

Participants may make voluntary contributions to the 401(k) plan, limited by certain IRS restrictions.

The Company made matching contributions of $ 3,873 , $ 3,649 , and $ 2,655 for each of the years ended December 29, 2023, December 30, 2022 and December 31, 2021, respectively.

Acquisition of Sola Sport Pty Ltd.

On May 21, 2021, the Company, through its wholly owned subsidiary, Fox Factory Australia Pty Ltd., acquired substantially all the assets of Sola Sport Pty Ltd.

The acquisition was not material to the Company’s financial statements.

Acquisition of Outside Van

On May 25, 2021, the Company, through its wholly owned subsidiary, SCA, acquired 100 % of the issued and outstanding stock of Manifest Joy LLC, d/b/a Outside Van (“Outside Van”), a custom van conversion company.

The total purchase price of $ 15,275 , net of cash acquired, was allocated to the net liabilities assumed of $ 1,057 , identifiable intangibles assets of $ 5,560 and goodwill acquired of $ 10,772 based on their respective fair values as of May 25, 2021, with the excess purchase price allocated to goodwill.

The Company will amortize the acquired customer relationship and trade name assets over their expected useful lives of 1 and 10 years, respectively.

This purchase was accounted for as a business combination and was not material to the Company’s financial statements.

Acquisition of Shock Therapy Suspension, Inc.

On December 30, 2021, the Company, through its wholly owned subsidiary, Shock Therapy Suspension, Inc., acquired substantially all the assets of Shock Therapy LLC (“STS”), for $ 36,834 , net of cash acquired.

STS is a premier suspension tuning company in the off-road industry, with headquarters in Phoenix, Arizona.

This purchase price of STS is allocated to the net assets assumed of $ 5,244 , identifiable intangible assets of $ 7,086 and goodwill acquired of $ 24,504 , based on their respective fair values as of December 30, 2021.

The Company will amortize the acquired non-compete and trade name assets over their expected useful lives of 5 and 10 years, respectively.

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

This purchase was accounted for as a business combination and was not material to the Company’s financial statements.

The Company made matching contributions of $ 3,687 , $ 3,873 , and $ 3,649 for each of the years ended January 3, 2025, December 29, 2023 and December 30, 2022, respectively.

Acquisition of Custom Wheel House

5 unchanged sentences

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

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

The purchase price of Custom Wheel House is 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.

During the year ended January 3, 2025, the Company recorded an increase of $ 1,608 to net assets and a decrease of the same amount to goodwill.

The weighted average amortization period of the total acquired intangible assets was 11 years.

1 unchanged sentence

The acquired goodwill represents the value of combining operations of Custom Wheel House and the Company, $ 25,000 of which is deductible for tax purposes.

During the year ended December 29, 2023, the Company finalized the purchase price allocation and recorded adjustments to net assets of $ 7,291 , identified intangible assets of $ 4,247 , and goodwill of $ 10,693 .

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 $ 129,784

Total consideration at closing $ 129,784

Fair market values

Inventory $ 23,266

Other current assets 3,109

Property, plant and equipment 3,529

Lease right-of-use assets 4,718

Trademarks and brands 36,397

Customer and distributor relationships 10,808

Core technologies 1,548

Tangible assets acquired $ 34,622

Liabilities assumed ( 19,593 )

Intangible assets 48,753

Goodwill 66,002

Total assets acquired $ 150,985

Accounts payable and accrued expenses $ 10,783

Current portion of lease liabilities 1,693

Lease liabilities 3,024

Deferred taxes 5,701

Total liabilities assumed $ 21,201

Purchase price allocation $ 129,784

Total $ 129,784

The Company incurred $ 1,001 of transaction costs related to the acquisition of Custom Wheel House during the year ended December 29, 2023.

1 unchanged sentence

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

The total revenue and pre-tax net loss for Custom Wheel House for the year ended December 29, 2023 amounted to $ 65,558 and $ 1,630 , respectively.

The following unaudited pro forma financial information shows the combined results of operations of the Company and Custom Wheel House, as if the acquisition had occurred as of the beginning of the periods presented.

The pro forma results include the effects of the amortization of purchased intangible assets and acquired inventory and property, plant and equipment valuation step-ups, interest expense on the revolving credit facility used to finance the transaction, and the net tax benefit of the above adjustments calculated at the statutory federal tax rate of 21%.

A pro forma adjustment has been made to reflect the income taxes that would have been recorded at the federal statutory rate based on Custom Wheel House’s net income.

The pro forma results for the years ended December 29, 2023 and December 30, 2022 do not include transaction costs associated with the acquisition or transaction success bonuses as these were removed for pro forma purposes.

This pro forma data is presented for informational purposes only and does not purport to be indicative of the results of future operations or of the results that would have occurred had the acquisition taken place in the periods noted below.

The total revenue and pre-tax income for the year ended January 3, 2025 amounted to $ 75,769 and $ 8,163 , respectively.

The total revenue and pre-tax loss for the year ended December 29, 2023 amounted to $ 65,558 and $ 1,630 , respectively.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

For the fiscal years ended

December 29, 2023 December 30, 2022

Pro forma sales $ 1,475,574 $ 1,684,375

Pro forma net income attributable to FOX stockholders $ 118,341 $ 206,152

January 3, 2025

(in thousands)

Acquisition of Marucci Sports LLC

5 unchanged sentences

This transaction was accounted for as a business combination.

The purchase price of Marucci has been preliminary 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.

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

The purchase price of Marucci is 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 year ended January 3, 2025, the Company updated the purchase price allocation and recorded adjustments to net assets of $ 713 and goodwill of $ 670 .

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

Acquisition consideration

21 unchanged sentences

Purchase price allocation $ 567,236

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

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, and are subject to subsequent adjustments as additional information is obtained during the applicable measurement period.

The primary areas of estimates that are not yet finalized include certain tangible assets acquired and liabilities assumed, as well as the identifiable intangible assets.

The Company incurred $ 3,126 of acquisition costs in conjunction with the Marucci acquisition during the year ended December 29, 2023.

The Company incurred $ 3,798 of acquisition costs in conjunction with the Marucci acquisition, of which $ 672 were incurred during the year ended January 3, 2025.

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

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

Refer to Note Note 10 - Debt for further details.

Refer to Note 10 - 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 $ 244,790 reflects the strategic fit of Marucci with the Company’s operations.

The goodwill of $ 244,120 reflects the strategic fit of Marucci with the

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

Company’s operations.

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

4 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 and pre-tax loss for Marucci for the year ended December 29, 2023 amounted to $ 16,791 and $ 3,150 , respectively.

The following unaudited pro forma financial information shows the combined results of operations of the Company and Marucci, as if the acquisition had occurred as of the beginning of the periods presented.

The pro forma results include the effects of the amortization of purchased intangible assets and acquired inventory and property, plant and equipment valuation step-ups, interest expense on the term debt secured to finance the acquisition, and the net tax benefit of the above adjustments calculated at the statutory federal tax rate of 21%.

Marucci was operated as a C Corporation for federal taxation purposes.

A pro forma adjustment has been made to reflect the income taxes that would have been recorded at the federal statutory rate based on Marucci’s net income.

The pro forma results for the years ended December 29, 2023 and December 30, 2022 do not include transaction costs associated with the acquisition or the acceleration of any stock-based compensation that resulted from the transaction as these were removed for pro forma purposes.

The total revenue and pre-tax income for the year ended January 3, 2025 amounted to $ 192,372 and $ 9,989 , respectively.

The total revenue and pre-tax loss for the year ended December 29, 2023 amounted to $ 16,791 and $ 3,150 , respectively.

Acquisition of Marzocchi Suspension S.r.l.

On December 19, 2024, the Company, through Marzocchi Suspension Holding S.r.l., acquired all of the outstanding equity of Marzocchi from VRM S.P.A.

for $ 20,501 , net of cash acquired.

Marzocchi is a leader in motorbike suspension manufacturing.

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

This transaction was accounted for as a business combination.

The purchase price of Marzocchi is preliminary allocated to the assets acquired and liabilities assumed based on their estimated respective fair values as of December 19, 2024 with the excess purchase price allocated to goodwill.

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

Acquisition consideration

Cash consideration, net of cash acquired $ 20,501

Total consideration at closing $ 20,501

Fair market value

Accounts receivable $ 6,706

Inventory 12,097

Prepaids and other current assets 1,527

Property, plant, and equipment 5,888

Trademarks and brands 1,491

Customer and distributor relationships 2,000

Core technologies 12

Goodwill 3,475

Other assets 4,854

Total assets acquired $ 38,050

Accounts payable $ 12,175

Accrued expenses 2,176

Deferred tax liability 840

Other liabilities 2,358

Total liabilities assumed $ 17,549

Purchase price allocation $ 20,501

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

The amounts above represent the Company’s provisional fair value estimates related to the acquisition as of December 19, 2024, and are subject to subsequent adjustments as additional information is obtained during the applicable measurement period.

The primary areas of estimates that are not yet finalized include certain tangible assets acquired and liabilities assumed, as well as the identifiable intangible assets.

The Company incurred $ 1,476 of acquisition costs in conjunction with the Marzocchi acquisition, of which $ 999 were incurred during the year ended January 3, 2025.

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

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 $ 3,475 reflects the strategic fit of Marzocchi with the Company’s operations.

The weighted average amortization periods of the customer and distributor relationships and trade names and trademarks were 15 years.

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

In the acquisition of Marzocchi, the Company stepped up the intangibles by $ 3,503 , which is not deductible for Italian income tax purposes.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated other comprehensive income (loss):

Interest Rate Swaps Foreign Currency Translation Total

Balance as of December 30, 2022 17,770 ( 2,988 ) 14,782

Change in interest rate swaps fair value 830 — 830

Net gain reclassified to interest expense ( 6,775 ) — ( 6,775 )

Income tax provision on interest rate swaps ( 1,303 ) — ( 1,303 )

Foreign currency translation adjustments — 1,507 1,507

Balance as of December 29, 2023 10,522 ( 1,481 ) 9,041

Change in interest rate swaps fair value 6,418 — 6,418

Net gain reclassified to interest expense ( 8,460 ) — ( 8,460 )

Income tax provision on interest rate swaps ( 466 ) — ( 466 )

Foreign currency translation adjustments — ( 6,309 ) ( 6,309 )

Balance as of January 3, 2025 $ 8,014 $ ( 7,790 ) $ 224

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

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 and 1 plant in Italy.

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.

Aftermarket Applications Group:

This segment operates 15 plants across the United States.

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 10 plants and 13 distribution facilities (12 in the United States, 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 softball 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 .

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.

All transactions between reportable segments are eliminated in consolidation.

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.

Notes to Consolidated Financial Statements - Continued

January 3, 2025

(in thousands)

For the fiscal years ended

December 29, 2023 December 30, 2022

Pro forma sales $ 1,632,076 $ 1,767,902

Pro forma net income attributable to FOX stockholders $ 110,391 $ 177,081

January 3, 2025 December 29, 2023 December 30, 2022

Powered Vehicles Group $ 461,403 $ 523,862 $ 432,388

Aftermarket Applications Group 421,453 551,143 489,132

Specialty Sports Group 511,065 389,173 680,971

Net sales $ 1,393,921 $ 1,464,178 $ 1,602,491

Net income 6,512 120,846 205,278

(Benefit) provision for income taxes ( 5,500 ) 17,817 28,486

Depreciation and amortization 83,566 58,603 49,241

Non-cash stock-based compensation 9,606 16,465 16,351

Litigation and settlement-related expenses 4,329 2,724 4,222

Other acquisition and integration-related expenses (1) 8,054 19,214 1,710

Organizational restructuring expenses 3,218 3,952 —

Loss on fixed asset disposals related to organizational restructure — 1,027 —

Strategic transformation costs 1,689 — 2,769

Non-recurring property tax assessment — — 841

Interest and other expense, net 55,539 20,400 12,933

Adjusted EBITDA $ 167,013 $ 261,048 $ 321,831

Powered Vehicles Group 53,819 79,159 ( 6,163 )

Aftermarket Applications Group 51,745 126,784 130,947

Specialty Sports Group 117,811 117,766 260,101

Unallocated corporate expenses ( 56,362 ) ( 62,661 ) ( 63,054 )

Adjusted EBITDA $ 167,013 $ 261,048 $ 321,831

(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 fiscal years ended

January 3, 2025 December 29, 2023 December 30, 2022

Acquisition related costs and expenses $ 3,569 $ 6,206 $ 1,710

Purchase accounting inventory fair value adjustment amortization 4,485 13,008 —

Other acquisition and integration-related expenses $ 8,054 $ 19,214 $ 1,710

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

Foreign Currency Translation Adjustment

The following table summarizes the changes in foreign currency translation adjustments:

Foreign currency translation adjustment

Balance as of 12/31/2021 $ 1,281

Other comprehensive loss ( 4,918 )

Balance as of 12/30/2022 ( 3,637 )

Other comprehensive income 1,507

Balance as of 12/29/2023 $ ( 2,130 )

Subsequent Events

Subsequent to December 29, 2023 and up through February 15, 2024, the Company repurchased and subsequently retired approximately 378 shares of the Company’s Common Stock at a cost of approximately $ 25,000 , for an average price of $ 66.03 per share, under the Share Repurchase Program described further in Note 1 3 - Stockholders' Equity to the consolidated financial statements.

January 3, 2025

(in thousands)

Individual expenses are not a primary focus in segment-level decision-making as the CODM relies on adjusted EBITDA as the key financial metric for assessing performance and allocating resources across segments.

The following table presents the Company’s other segment items that consist of costs of sales and operating expenses excluding depreciation and amortization, non-cash stock-based compensation, litigation and settlement-related expenses, other acquisition and integration-related expenses, organizational restructuring-related expenses, strategic transformation costs, and non-recurring property tax assessment.

For the fiscal years ended

January 3, 2025 December 29, 2023 December 30, 2022

Powered Vehicles Group $ 407,584 $ 444,703 $ 438,551

Aftermarket Applications Group 369,708 424,359 358,185

Specialty Sports Group 393,254 271,407 420,870

Unallocated corporate expenses 56,362 62,661 63,054

$ 1,226,908 $ 1,203,130 $ 1,280,660

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-K

Item 9A. Controls and Procedures