What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-09 compared with 2024-11-01 · 251 added, 247 removed, 492 unchanged (50% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 27, 2024 December 29, 2023

April 4, 2025 January 3, 2025

Current assets:

7 unchanged sentences

Lease right-of-use assets 102,272 104,019

Deferred tax assets 21,554 21,297

Deferred tax assets, net 47,639 44,364

Goodwill 377,226 639,505

15 unchanged sentences

Commitments and contingencies (Refer to Note 8 - Commitments and Contingencies )

Non-controlling interest ( 78 ) ( 38 )

Stockholders’ equity

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

Preferred stock, $ 0.001 par value — 10,000 authorized and no shares issued or outstanding as of April 4, 2025 and January 3, 2025

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

42,573 shares issued and 41,683 outstanding as of September 27, 2024;

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

42,602 shares issued and 41,712 outstanding as of April 4, 2025;

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

Additional paid-in capital 342,041 339,266

Treasury stock, at cost;

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

890 common shares as of April 4, 2025 and January 3, 2025

( 13,754 ) ( 13,754 )

5 unchanged sentences

FOX FACTORY HOLDING CORP.

Condensed Consolidated Statements of Income

Condensed Consolidated Statements of Loss

(in thousands, except per share data)

For the three months ended For the nine months ended

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

For the three months ended

April 4, 2025 March 29, 2024

Net sales $ 355,030 $ 333,472

2 unchanged sentences

Operating expenses:

Goodwill impairment 262,129 —

General and administrative 37,331 37,421

3 unchanged sentences

Total operating expenses 360,266 94,283

Income from operations 18,802 41,365 46,267 148,839

(Loss) income from operations ( 250,587 ) 8,875

Interest expense 12,934 13,329

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

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

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

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

Earnings per share:

Other (income) expense, net ( 150 ) 309

Loss before income taxes ( 263,371 ) ( 4,763 )

Benefit from income taxes ( 3,637 ) ( 1,267 )

Net loss $ ( 259,734 ) $ ( 3,496 )

net loss attributable to non-controlling interest ( 40 ) —

Net loss attributable to FOX stockholders $ ( 259,694 ) $ ( 3,496 )

Net loss per share:

Basic $ ( 6.23 ) $ ( 0.08 )

5 unchanged sentences

FOX FACTORY HOLDING CORP.

Condensed Consolidated Statements of Comprehensive Income (Loss)

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

For the three months ended For the nine months ended

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

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

Other comprehensive income (loss)

For the three months ended

April 4, 2025 March 29, 2024

Net loss $ ( 259,734 ) $ ( 3,496 )

Other comprehensive (loss) income

Interest rate swap

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

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

Change in net unrealized gains ( 3,948 ) 1,502

Reclassification of net gains on interest rate swap to net earnings ( 1,907 ) ( 1,785 )

Tax effects ( 1,396 ) ( 43 )

Net change, net of tax effects ( 7,251 ) ( 326 )

Foreign currency translation adjustments 2,882 ( 2,882 )

Other comprehensive (loss) income ( 4,453 ) ( 2,704 ) ( 10,096 ) ( 4,757 )

Comprehensive income (loss) $ 327 $ 32,589 $ ( 3,405 ) $ 112,038

Other comprehensive loss ( 4,369 ) ( 3,208 )

Comprehensive loss $ ( 264,103 ) $ ( 6,704 )

comprehensive loss attributable to non-controlling interest ( 40 ) —

Comprehensive loss attributable to FOX stockholders $ ( 264,063 ) $ ( 6,704 )

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

2 unchanged sentences

(in thousands)

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

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

Shares Amount Shares Amount

1 unchanged sentence

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

Repurchases of common stock ( 378 ) — — — ( 16,077 ) — ( 9,082 ) ( 25,159 ) —

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

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

Net income — — — — — — 41,767 41,767

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

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

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

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

Other comprehensive income — — — — — 399 — 399

Net income — — — — — — 39,735 39,735

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

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

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

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

Net income — — — — — — 35,293 35,293

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

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

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

Shares Amount Shares Amount

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 )

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 28 — — — ( 580 ) — — ( 580 ) —

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

Stock-based compensation expense — — — — 3,355 — — 3,355 —

1 unchanged sentence

Net loss — — — — — — ( 259,694 ) ( 259,694 ) ( 40 )

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

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 67 — — — ( 1,229 ) — — ( 1,229 )

Purchase and retirement of common stock — — — — — — ( 52 ) ( 52 )

Stock-based compensation expense — — — — 2,203 — — 2,203

Other comprehensive loss — — — — — ( 2,435 ) — ( 2,435 )

Net income — — — — — — 5,407 5,407

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

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

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

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

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

Net income — — — — — — 4,780 4,780

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

Balance - April 4, 2025 42,602 $ 42 890 $ ( 13,754 ) $ 342,041 $ ( 4,145 ) $ 615,710 $ 939,894 $ ( 78 )

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

2 unchanged sentences

(in thousands)

For the nine months ended

September 27, 2024 September 29, 2023

For the three months ended

April 4, 2025 March 29, 2024

OPERATING ACTIVITIES:

Net income $ 6,691 $ 116,795

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

Net loss $ ( 259,734 ) $ ( 3,496 )

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

Goodwill impairment 262,129 —

Depreciation and amortization 21,989 20,451

4 unchanged sentences

Amortization of deferred gains on prior swap settlements ( 783 ) ( 1,063 )

Proceeds from interest rate swap settlements

Loss on disposal of property and equipment 632 22

7 unchanged sentences

Accrued expenses and other liabilities ( 8,968 ) ( 1,270 )

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

Net cash (used in) provided by operating activities 680 9,352

INVESTING ACTIVITIES:

Purchases of property and equipment ( 7,180 ) ( 9,907 )

Acquisitions of businesses, net of cash acquired — ( 5,041 )

Acquisition of other assets, net of cash acquired — ( 350 )

Purchases of property and equipment ( 32,087 ) ( 32,048 )

Net cash used in investing activities ( 7,180 ) ( 15,298 )

2 unchanged sentences

Payments on revolver ( 27,000 ) ( 48,000 )

Proceeds from issuance of debt 200,000 —

Repayment of term debt ( 6,071 ) ( 3,571 )

1 unchanged sentence

Repurchases from stock compensation program, net ( 580 ) ( 1,315 )

Deferred debt issuance/modification costs ( 855 ) —

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

Net cash provided by (used in) financing activities 3,349 ( 7,886 )

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 78 ( 227 )

6 unchanged sentences

(in thousands)

For the nine months ended

For the three months ended

SUPPLEMENTAL CASH FLOW INFORMATION:

September 27, 2024 September 29, 2023

April 4, 2025 March 29, 2024

Cash paid during the period for:

Income tax payment $ 24,641 $ 42,017

Income tax payment (refund) $ 3,052 $ ( 586 )

Interest $ 12,405 $ 14,790

9 unchanged sentences

Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies - Fox Factory Holding Corp.

(the “Company”) designs, engineers, manufactures, and markets performance-defining products and systems for customers worldwide.

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

(the “Company”) designs, engineers, manufactures, and markets premium products and systems that deliver championship-level performance for customers worldwide.

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

7 unchanged sentences

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

Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended December 29, 2023 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on February 23, 2024.

Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended January 3, 2025 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on February 27, 2025.

In management’s opinion, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are of a normal and recurring nature, that are necessary for a fair presentation of financial results for the interim periods presented.

1 unchanged sentence

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

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

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

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

For 2025 and 2024, the Company’s fiscal year will end or has ended on January 2, 2026 and January 3, 2025, respectively.

The 12-month periods ended January 2, 2026 and January 3, 2025, will include or have included 52 and 53 weeks, respectively.

The three-month periods ended April 4, 2025 and March 29, 2024 each included 13 weeks.

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

All intercompany transactions and balances have been eliminated in consolidation.

Summary of Significant Accounting Policies - There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 29, 2023, as filed with the SEC on February 23, 2024 that had a material impact on our condensed consolidated financial statements and related notes.

Summary of Significant Accounting Policies - There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended January 3, 2025, as filed with the SEC on February 27, 2025 that had a material impact on our condensed consolidated financial statements and related notes.

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

7 unchanged sentences

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

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

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

Revenues generated from custom upfit packages from the 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.

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 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 the Outside Van and Upfit UTV subsidiaries generally include the vehicle chassis, of which the Company has the risks and rewards of ownership and are recognized over-time as work is performed based on actual costs incurred.

FOX FACTORY HOLDING CORP.

3 unchanged sentences

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

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

Segments - We have three operating and reportable segments:

Powered Vehicles Group (“PVG”), Aftermarket Applications Group (“AAG”), and Specialty Sports Group (“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.

Goodwill, Intangible Assets, and Long-Lived Assets

Goodwill represents the excess of purchase price over the fair value of the net assets of businesses acquired.

On an annual basis, the Company performs a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill.

If the Company determines that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, it will perform a quantitative analysis;

otherwise, no further evaluation is necessary.

For the quantitative impairment test, the Company compares the fair value of the reporting unit to its carrying value, including goodwill.

The Company determines the fair value of the reporting unit based on a weighting of income and market approaches.

The income approach employs a discounted cash flow model, projecting revenue and cash flows over a multi-year period.

These projections are based on management’s estimates, historical performance trends, and industry outlooks.

These cash flows, along with a terminal value, are discounted to their present value using a weighted-average cost of capital (“WACC”) that reflects a market rate appropriate for each reporting unit.

The market approach employs multiples for public companies that reasonably compare to the reporting units.

If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired and no further testing is performed.

If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company will recognize a loss equal to the excess, limited to the total amount of goodwill allocated to that reporting unit.

Additional impairment may be recognized in connection with the write-off of associated deferred tax liabilities that are no longer needed due to the decrease in goodwill.

All impairments, if any, are charged directly to earnings.

During the three months ended April 4, 2025, the Company identified a triggering event related to adverse changes in U.S.

tariff policies, new and expanded tariffs enacted by the current presidential administration and resulting sustained decline in its stock price, and performed a quantitative impairment assessment.

Based on the results of this assessment, the Company recorded a non-cash goodwill impairment charge of $ 262,129 within operating expenses, which impacted all reporting units.

The impairment charge reflects the amount by which the carrying values of the reporting units exceeded their estimated fair values.

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

PVG AAG SSG Total

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

Impairment losses ( 51,206 ) ( 191,823 ) ( 19,100 ) ( 262,129 )

Purchase price adjustments (Refer to Note 14.

Acquisitions )

( 27 ) — — ( 27 )

Currency translation and other adjustments ( 161 ) — 38 ( 123 )

Balance as of April 4, 2025 $ 42,669 $ 66,420 $ 268,137 $ 377,226

Indefinite-lived intangible assets

Certain trademarks and trade names, including FOX and others from certain subsidiaries, are considered to be indefinite life intangibles, and are not amortized but are subject to testing for impairment annually.

Due to the triggering event as described above, the indefinite-lived intangible assets were also assessed for impairment.

The Company concluded that no indicators of impairment existed as of April 4, 2025.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands)

Finite-lived intangible assets and other long-lived assets

We assess the recoverability of identifiable finite-lived intangible assets whenever events or changes in circumstances indicate that an asset or asset group’s carrying amount may be impaired.

Impairment of certain finite-lived intangible assets, particularly customer relationships, certain trade names and core technology, is measured by comparing the carrying amount of the asset group to which the assets are assigned to the sum of the undiscounted estimated future cash flows the asset group is expected to generate.

If the asset or asset group is considered to be impaired, the amount of such impairment would be measured by the difference between the carrying amount of the asset and its fair value.

The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset is impaired or the estimated useful lives are no longer appropriate.

If indicators of impairment exist and the undiscounted projected cash flows associated with such assets are less than the carrying amount of the assets, an impairment loss is recorded to write the assets down to their estimated fair values.

Fair value is estimated based on discounted future cash flows.

Due to the triggering event as described above, the Company performed an impairment test for long-lived assets including finite-lived intangible assets and concluded that no indicators of impairment existed as of April 4, 2025.

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

1 unchanged sentence

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

Reclassifications - We reclassified certain prior period amounts within our condensed consolidated balance sheets, condensed consolidated statements of other comprehensive income, and condensed consolidated statements of cash flows.

Reclassifications - We reclassified certain prior period amounts within our condensed consolidated statements of cash flows.

The reclassifications did not have any impact on net income.

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

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

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

99 and concluded that in light of surrounding circumstances, this item would not have altered the judgement of a reasonable person relying on the Annual Report on Form 10-K.

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

The recast did not have any impact on net income.

Certain Significant Risks and Uncertainties - As of September 27, 2024, the Company is subject to those risks common in manufacturing-driven markets, including, but not limited to, competitive forces, dependence on key personnel, customer demand for its products, the successful protection of its proprietary technologies, compliance with government regulations, and the possibility of not being able to obtain additional financing when needed.

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

Certain Significant Risks and Uncertainties - As of April 4, 2025, 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 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, Canada, Mexico and other countries, and retaliatory tariffs by these countries 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.

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

2 unchanged sentences

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

The carrying amounts of the Company’s financial instruments, including cash, receivables, accounts payable, accrued liabilities, and 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.

1 unchanged sentence

(in thousands)

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.

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.

1 unchanged sentence

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

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

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.

16 unchanged sentences

GAAP financial measure.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands)

Recent Accounting Pronouncements

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

Disclosure of Supplier Finance Program Obligations.

Under ASU 2022-04, the buyer in a supplier finance program is required to disclose sufficient information to allow a user of the financial statements to understand the program's nature, activity during the period, changes from period to period, and potential magnitude.

The guidance is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted.

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 the Company’s 2023 Annual Report on Form 10-K.

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

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

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

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

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

The Company adopted ASU 2023-07 in the Annual Report on Form 10-K for fiscal year 2024 ending January 3, 2025 and in this Quarterly Report on form 10-Q.

Refer to Note 15 – Segment Information for further details.

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

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(in thousands)

In November 2024, the FASB issued ASU 2024-03 and in January 2025, the FASB issued ASU 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which adds new disclosure requirements, including more detailed information about certain income statement expense captions and a separate disclosure for selling expenses.

The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027, with retrospective application and early adoption permitted.

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

The following table summarizes total net sales by segment:

For the three months ended For the nine months ended

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

For the three months ended

April 4, 2025 March 29, 2024

Powered Vehicles Group $ 122,098 $ 118,113

3 unchanged sentences

The following table summarizes total net sales by sales channel:

For the three months ended For the nine months ended

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

For the three months ended

April 4, 2025 March 29, 2024

OEM $ 156,321 $ 137,809

4 unchanged sentences

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

For the three months ended For the nine months ended

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

For the three months ended

April 4, 2025 March 29, 2024

North America $ 272,301 $ 284,662

3 unchanged sentences

Total net sales $ 355,030 $ 333,472

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands)

Inventory consisted of the following:

September 27, 2024 December 29, 2023

April 4, 2025 January 3, 2025

Raw materials $ 253,320 $ 245,368

2 unchanged sentences

Total inventory $ 408,786 $ 404,736

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands)

Prepaids and Other Current Assets

Prepaids and other current assets consisted of the following:

September 27, 2024 December 29, 2023

April 4, 2025 January 3, 2025

Prepaid chassis deposits $ 21,026 $ 47,094

1 unchanged sentence

Other current assets 12,916 11,853

Total $ 128,026 $ 141,512

Total prepaid and other current assets $ 59,025 $ 85,443

Property, Plant and Equipment, net

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

September 27, 2024 December 29, 2023

April 4, 2025 January 3, 2025

Machinery and manufacturing equipment $ 179,653 $ 177,261

9 unchanged sentences

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

September 27, 2024 December 29, 2023

April 4, 2025 January 3, 2025

United States $ 202,072 $ 203,937

6 unchanged sentences

Accrued expenses consisted of the following:

September 27, 2024 December 29, 2023

April 4, 2025 January 3, 2025

Payroll and related expenses $ 22,550 $ 22,504

Income tax payable — 21,743

Warranty 19,113 21,593

2 unchanged sentences

Other accrued expenses 6,398 13,452

Total $ 93,874 $ 103,400

Income tax payable 7,328 9,343

Total accrued expenses $ 80,920 $ 91,427

The Company generally provides a limited warranty for products for a one, two or three-year period beginning on:

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Activity related to warranties is as follows:

For the three months ended For the nine months ended

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

For the three months ended

April 4, 2025 March 29, 2024

Beginning warranty liability $ 21,593 $ 20,001

Charge to cost of sales 1,468 3,943

Fair value of warranty assumed in acquisition — — — 100

Costs incurred ( 3,948 ) ( 4,617 )

4 unchanged sentences

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.

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 revolver and amortized on a straight-line basis over the term of the facility.

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

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

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands)

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

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

On November 14, 2023, in connection and concurrently with the closing of the Marucci acquisition (as discussed in Note 15 - Acquisit ions ), the Company entered into the First Incremental Facility Amendment (the “Amendment”) amending the 2022 Credit Facility.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands)

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

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

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

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

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

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 April 4, 2025, the one-month SOFR and three-month SOFR rates were 4.34 % and 4.35 %, respectively.

At April 4, 2025, our weighted-average interest rate on outstanding borrowing was 6.36 %.

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

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

The Company was in compliance with the covenants as of April 4, 2025.

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

September 27, 2024 December 29, 2023

April 4, 2025 January 3, 2025

Amount outstanding $ 163,000 $ 153,000

5 unchanged sentences

(in thousands)

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

For fiscal year September 27, 2024

2024 (remaining 3 months) $ 6,071

As of April 4, 2025, future principal payments for term loan debt, including the current portion, are summarized as follows:

For fiscal year April 4, 2025

2025 $ 18,214

Total $ 554,643

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

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

On March 13, 2025, the Court dismissed the amended complaint but granted Plaintiff leave to file a second amended complaint.

On April 14, 2025, Plaintiff filed a second amended complaint asserting essentially the same claims.

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

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

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

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

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

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

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

At April 4, 2025 and January 3, 2025, the Company utilized $ 28,118 and $ 36,008 , respectively, out of a maximum of $ 36,100 of Ford allocation of chassis, and $ 12,654 and $ 10,857 , respectively, out of a maximum of $ 49,500 GM allocation of chassis.

The Company incurred interest expense related to chassis on hand of $ 685 and $ 482 during the three months ended April 4, 2025 and January 3, 2025, respectively.

FOX FACTORY HOLDING CORP.

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

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

September 27, 2024 December 29, 2023

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

As of April 4, 2025 and January 3, 2025, the Company had the following interest rate swap contracts:

April 4, 2025 January 3, 2025

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

September 2, 2020 June 11, 2021 $ 200,000 $ — $ 16

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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 .

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

The terminated 2020 and 2021 Swap Agreements resulted in unrealized gains of $ 324 and $ 12,270 , respectively, at the termination dates that continued to be accounted for in accumulated other comprehensive income, or AOCI, and were fully amortized into earnings as of April 4, 2025.

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

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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 three and nine months ended September 27, 2024 were net losses of $ 5,161 and $ 3,363 , respectively;

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

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

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

The unrealized gains and losses deferred to accumulated other comprehensive income resulting from the derivative instruments designated as cash flow hedges for the three months ended April 4, 2025 and March 29, 2024 were a net loss of $ 3,948 and a gain of $ 1,502 respectively.

The reclassifications of unrealized gains from accumulated other comprehensive income into earnings related to the derivative instruments designated as cash flow hedges during the three months ended April 4, 2025 and March 29, 2024 were $ 1,907 and $ 1,785 , respectively.

The aggregate tax effects on activity in accumulated other comprehensive income associated with the derivative instruments designated as cash flow hedges during three months ended April 4, 2025 and March 29, 2024 were losses of $ 1,396 and $ 43 , respectively.

Over the next 12 months, the Company estimates that $ 4,305 will be reclassified as a decrease to interest expense related to the interest rate swap contracts.

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

September 27, 2024 December 29, 2023

April 4, 2025 January 3, 2025

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

2 unchanged sentences

Total assets measured at fair value $ 3,966 $ 613 $ — $ 4,579 $ 4,394 $ 5,685 $ — $ 10,079

Incremental Term Loans $ — $ 558,430 $ — $ 558,430 $ — $ 373,528 $ — $ 373,528

Deferred Compensation Plan Liabilities 3,997 — — 3,997 4,300 — — 4,300

Revolver — 163,000 — 163,000 — 153,000 — 153,000

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

Incremental Term Loans — 546,917 — 546,917 — 552,061 — 552,061

Total liabilities measured at fair value $ 3,997 $ 709,917 $ — $ 713,914 $ 4,300 $ 705,061 $ — $ 709,361

There were no transfers of assets or liabilities between Level 1, Level 2, and Level 3 categories of the fair value hierarchy during the three and nine months ended September 27, 2024.

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

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

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

There were no transfers of assets or liabilities between Level 1, Level 2, and Level 3 categories of the fair value hierarchy during the three months ended April 4, 2025.

As of April 4, 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 mitigates the cash flow risk associated with changes in interest rates on its variable rate debt through interest rate swap agreements.

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

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

The corresponding deferred compensation plan liabilities are recorded at fair value based on the quoted market price of the underlying investments, and included in accrued expenses on the condensed consolidated balance sheets.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

Stockholders’ Equity

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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.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

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

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

There were no repurchases of common stock during the three months ended April 4, 2025.

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

All repurchased shares were immediately retired.

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

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

As of April 4, 2025, authorized repurchases of $ 250,000 remain available to the Company.

Equity Incentive Plans

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

For the three months ended For the nine months ended

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

For the three months ended

April 4, 2025 March 29, 2024

Cost of sales $ 298 $ 236

7 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.

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

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

The following table summarizes the activity for the Company’s unvested restricted stock units (“RSUs”) for the three months ended April 4, 2025:

Unvested RSUs

Number of shares outstanding Weighted-average grant date fair value

Unvested at December 29, 2023 248 $ 100.09

Unvested at January 3, 2025 400 $ 59.88

Granted 505 $ 26.14

1 unchanged sentence

Vested ( 52 ) $ 78.73

Unvested at September 27, 2024 415 $ 59.99

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

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

During the nine months ended September 27, 2024, the Company issued performance-based restricted stock units (“PSUs”) to certain executives that represent shares potentially issuable in the future.

Unvested at April 4, 2025 843 $ 38.66

As of April 4, 2025, the Company had approximately $ 25,104 of unrecognized stock-based compensation expense related to RSUs, which will be recognized over the remaining weighted-average vesting period of approximately 2.33 years.

During the three months ended April 4, 2025, the Company issued performance-based restricted stock units (“PSUs”) to certain executives that represent shares potentially issuable in the future.

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

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

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

The following table summarizes the activity for the Company’s unvested PSUs for the three months ended April 4, 2025:

Unvested PSUs

Number of shares outstanding Weighted-average grant date fair value

Unvested at December 29, 2023 70 $ 116.54

Unvested at January 3, 2025 246 $ 57.00

Granted 262 $ 26.14

Canceled ( 2 ) $ 46.81

Unvested at September 27, 2024 278 $ 64.01

Unvested at April 4, 2025 506 $ 41.07

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

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

Future stock-based compensation expense for unvested PSUs could reach a maximum of $ 31,739 assuming achievement at the maximum level.

The unrecognized stock-based compensation expense is expected to be recognized over a weighted average period of 2.03 years.

Earnings Per Share

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

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

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

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

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

FOX FACTORY HOLDING CORP.

1 unchanged sentence

(in thousands, except per share data)

Net Loss Per Share

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

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

The Company excluded 241 and 139 shares from the calculation of diluted earnings per share for the three months ended April 4, 2025 and March 29, 2024, respectively, as these shares would have been antidilutive.

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

For the three months ended For the nine months ended

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

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

For the three months ended

April 4, 2025 March 29, 2024

Net loss $ ( 259,694 ) $ ( 3,496 )

Weighted average shares used to compute basic earnings per share 41,711 41,650

4 unchanged sentences

Diluted $ ( 6.23 ) $ ( 0.08 )

For the three months ended For the nine months ended

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

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

For the three months ended

April 4, 2025 March 29, 2024

Benefit from income taxes $ ( 3,637 ) $ ( 1,267 )

Effective tax rates 1.4 % 26.6 %

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

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

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

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

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

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

For the nine months ended September 29, 2023, the difference between the Company’s effective tax rate of 15.2 % and the 21 % federal statutory rate resulted primarily from a lower tax rate on foreign derived intangible income and benefit from the U.S.

research and development tax credit related to multiple periods.

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

For the three months ended April 4, 2025, the difference between the Company’s effective tax rate of 1.4 % and the 21 % federal statutory rate was due to the impairment impact of the non-deductible goodwill recognized during the same period.

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

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

2 unchanged sentences

(in thousands)

Related Party Transactions

On March 3, 2023, the Company acquired all of the outstanding equity interest of Custom Wheel House, LLC (“Custom Wheel House”).

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

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

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

Acquisition of Marucci Sports LLC

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

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

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

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

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

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

During the nine months ended September 27, 2024, the Company updated the purchase price allocation and recorded adjustments to net assets of $ 892 and goodwill of $ 850 .

The 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.

During the three months ended April 4, 2025, the Company recorded an increase of $ 27 to net assets and a decrease of the same amount to goodwill.

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

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands)

Acquisition consideration

Cash consideration, net of cash acquired 20,501

Due to sellers 144

Total consideration at closing $ 20,501

4 unchanged sentences

Property, plant and equipment 5,888

Lease right-of-use assets 9,423

Trademarks and brands 1,500

Customer and distributor relationships 2,000

Core technologies 20,600

Goodwill 3,448

3 unchanged sentences

Accrued expenses 2,146

Other current liabilities 1,854

Deferred Taxes 840

2 unchanged sentences

Purchase price allocation 20,501

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

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

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

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

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

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

Refer to Note 7 - Debt for further details.

The gross contractual accounts receivable acquired in the acquisition was $ 6,706 , all of which was expected to be collected.

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 $ 1,606 of acquisition costs in conjunction with the Marzocchi acquisition, of which $ 130 were incurred during the three months ended April 4, 2025.

These costs are classified as general and administrative expenses in the accompanying condensed 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 $ 243,940 reflects the strategic fit of Marucci with the Company’s operations.

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

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

The goodwill of $ 3,448 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.

The goodwill is not deductible for income tax purposes.

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

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

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

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

The goodwill is tax deductible for U.S.

income tax purposes due to the step-up in tax basis of acquired goodwill, and a portion of it is also deductible for Italian income tax purposes.

In the acquisition of Marzocchi, the Company stepped up the intangibles by $ 3,500 , which is not deductible for Italian income tax purposes.

FOX FACTORY HOLDING CORP.

1 unchanged sentence

(in thousands)

The results of operations for Marzocchi have been included in the Company's consolidated statements of income since the closing date of the acquisition on December 19, 2024.

The total revenues and pre-tax loss for Marzocchi for the three months ended April 4, 2025 amounted to $ 11,969 and $ 1,623 , respectively.

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:

We manage our activities based on three operating segments:

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

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Powered Vehicles Group:

This segment operates 2 plants in the United States.

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.

This segment operates 2 plants in the United States and 1 plant in Italy.

These products are sold through both OEM and aftermarket channels.

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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.

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

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

FOX FACTORY HOLDING CORP.

1 unchanged sentence

(in thousands)

For the three months ended For the nine months ended

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

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

For the three months ended

April 4, 2025 March 29, 2024

Powered Vehicles Group $ 122,098 $ 118,113

2 unchanged sentences

Net sales $ 355,030 $ 333,472

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

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

Net loss ( 259,734 ) ( 3,496 )

Goodwill impairment 262,129 —

Benefit from income taxes ( 3,637 ) ( 1,267 )

Depreciation and amortization (1)

21,739 20,451

Non-cash stock-based compensation 3,355 3,906

2 unchanged sentences

Organizational restructuring expenses 1,613 63

Loss on asset disposals and lease terminations related to organizational restructuring 698 —

Strategic transformation costs 20 432

6 unchanged sentences

Adjusted EBITDA $ 39,602 $ 40,419

(1) Depreciation excludes amortization for purchase accounting property, plant and equipment fair value adjustment.

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

For the three months ended For the nine months ended

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

For the three months ended

April 4, 2025 March 29, 2024

Acquisition related costs and expenses $ 203 $ 678

Purchase accounting property, plant and equipment fair value adjustment amortization 250 —

Purchase accounting inventory fair value adjustment amortization 164 4,485

Other acquisition and integration-related expenses $ 617 $ 5,163

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(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 goodwill impairment.

For the three months ended

April 4, 2025 March 29, 2024

Powered Vehicles Group $ 107,715 $ 102,232

Aftermarket Applications Group 94,921 86,983

Specialty Sports Group 97,624 89,450

Unallocated corporate expenses 15,168 14,388

$ 315,428 $ 293,053

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

What changed 10-Q

Item 1. Financial Statements