What changed in this filing

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Item 1A. Risk Factors

2025-05-09 compared with 2024-11-01 · 41 added, 31 removed, 15 unchanged (83% of the section changed)

Work stoppages or other disruptions, including those that involve our customers, could adversely affect our operating results.

A portion of our goods move through ports on the coasts of the U.S.

We have a global supply chain, and we import products from our third-party vendors and our Fox Taiwan facility into the U.S.

largely through these ports.

Dockworkers, none of whom are our employees, must offload freight from ships arriving at these ports.

We do not control the activities of these employees or seaports, and we could suffer supply chain disruptions due to any disputes, capacity shortages, slowdowns, or shutdowns that may occur, as was experienced in February 2015, in relation to certain ports on the West Coast of the U.S.

Most recently, the International Longshoremen’s Association (“ILA”), which negotiates on behalf of 45,000 dockworkers at three dozen ports from Maine to Texas and collectively handles about half of seaborne imports into the U.S., began a member strike due to disagreements with the United States Maritime Alliance.

While the ILA strike was suspended after two days and dockworkers returned to ports following an improved wage offer and tentative agreement with the United States Maritime Alliance, the parties continue to negotiate on a long-term agreement.

The 2015 strike lasted longer than we forecasted, and any similar labor dispute in the future or any slowdown or stoppage relating to the ongoing labor agreement negotiations, including the reinstatement of a strike by the ILA, could potentially have a negative effect on both our financial condition and results of operations.

Further, the improved wage offer outlined in the tentative agreement with the ILA could increase import and export

Additionally, the Baltimore Francis Scott Key bridge accident in March 2024 leading to the suspension of activity in the Port of Baltimore caused rerouting of shipping vessels, which may create congestion and delays in other ports, including certain East Coast ports through which we import products, increase fuel costs for shipping, and have long-standing impacts on supply chains in the retail and manufacturing industries.

While the Port of Baltimore opened to maritime traffic on June 10, 2024, the bridge that is not expected to be rebuilt until late 2028 and further work to clear out wreckage and maintenance of the port may continue to cause delays in the Port of Baltimore and other East Coast ports where activities are rerouted.

The incident has also raised concerns regarding deteriorating infrastructure throughout the U.S., which may further cause shipping delays and harm results of operation as such infrastructure is replaced or updated with new safety measures.

Furthermore, the ongoing effects of the COVID-19 pandemic increased uncertainty for global supply chains, as port congestion and shipping container shortages have become exacerbated, which could adversely affect our operating results.

Work stoppages, labor disputes, and other disruptions involving our customers or otherwise could also adversely affect our operating results.

For example, the United Auto Workers Union (“UAW”) 2023 strike impacted Ford Motor Company, General Motors, and Stellantis after the UAW was unable to reach a deal with the three automakers.

Automotive OEMs are some of the largest customers of our powered vehicle suspension products.

Recently, the UAW again threatened strikes against one of Ford Motor Company’s units and Stellantis, though Ford and the UAW reached a tentative agreement prior to any strike activity by workers.

The 2023 UAW strike may have lingering effects that could continue to impact the automotive industry.

Any such lingering effects may adversely impact our own business, financial condition, or results of operation.

Any future strikes, including the threatened 2024 UAW strikes and including any strikes against our customers, are highly unpredictable and may negatively affect our business.

The ultimate impact on our business, financial position, and results of operations will depend on factors beyond our control, including the duration and scope of labor strikes.

policies related to global trade and tariffs could have a material adverse effect on our results of operations.

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imposed tariffs of 25% on steel and 10% on aluminum, with only a handful of countries exempt from the increase.

Throughout the Trump Administration, the U.S.

The new Trump administration recently enhanced these measures by increasing the tariff on aluminum to 25%, expanding the products on which the tariffs will be assessed to include derivative products containing steel or aluminum, and terminating all countrywide exemptions and the product specific exemption process.

Throughout the first Trump administration, the U.S.

and China imposed a variety of tariffs on most goods traded between the two countries.

This included the imposition of tariffs on a substantial number of Chinese-origin goods resulting from the U.S.

investigation of Chinese theft of U.S.

intellectual property under Section 301 of the Trade Act of 1974, which the Biden administration continued and increased for a number of products.

and the European Union also imposed tariffs on each other’s products stemming from a dispute at the World Trade Organization related to aircraft.

The Biden administration and U.S.

Congress have created significant uncertainty about their review of tariffs and future relationships between the U.S.

Congress created significant uncertainty about their review of tariffs and future relationships between the U.S.

and other countries with respect to regulations.

Since taking office, the new Trump administration has implemented various new strategies regarding tariffs.

President Trump invoked the International Emergency Economic Powers Act to impose 25% tariffs on products from Mexico and 25% tariffs on products from Canada (with a lower 10% tariff on Canadian energy and energy resources) but exempted from the tariffs those products that are entitled to preferential treatment under the United States-Mexico-Canada Agreement.

President Trump also imposed a 20% tariff on all imports from China and Hong Kong under the International Emergency Economic Powers Act.

Acting on an investigation concluded during the first Trump administration, the current Trump administration imposed tariffs of 25% on certain passenger vehicles and light trucks and parts for those vehicles.

Most recently, in April 2024, the Trump administration imposed a universal “reciprocal” tariff of 10% on all countries.

This rate was set to increase for certain countries, but the Trump administration delayed implementation of the increased rates until July 2025 to permit those countries to negotiate with the United States.

Because of retaliatory actions taken by China, the Trump administration increased the reciprocal tariff on all Chinese goods (including goods from Hong Kong and Macau) to 125%.

This is in addition to the 20% IEEPA tariff on Chinese goods.

The tariff actions by the U.S.

may result in a decrease of global trade volumes due to uncertainty, may create an administrative burden and will cause retailers to make difficult decisions as to how to pay the tariff or absorb the cost into their profit margins.

Recently, a coalition of U.S.

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trade authorities requesting the imposition of anti-dumping duties against imports of aluminum extrusions from 15 countries.

Department of Commerce began investigations based on the petitions and, following preliminary determinations, the U.S.

Customs and Border Patrol started collecting anti-dumping duty cash deposits in May 2024.

The final phase of hearings occurred in October 2024.

The International Trade Commission is expected to announce final determinations on November 12, 2024, with the issuance of orders to follow.

Because aluminum is one the primary raw materials used in the production of our products, our operating results could be adversely impacted by the imposition of duties on extruded aluminum.

While we have limited exposure to implemented tariffs at this time, any expansion in the types of tariffs implemented has the potential to negatively impact our supply chain costs and the operating performance of our customers, which in turn may negatively affect our sales, gross margin, and operating performance.

Following hearings in October 2024, the U.S.

International Trade Commission determined that the aluminum extrusions do not harm U.S.

industry and, therefore, the U.S.

Department of Commerce will not issue antidumping or countervailing duty orders for applicable countries.

While we face no immediate consequences on the import of aluminum extrusions, because the U.S.

producers challenged the USITC determination at the U.S.

Court of International Trade and aluminum is one of the primary raw materials used in the production of our products, our operating results could be adversely impacted by the future imposition of duties on extruded aluminum.

While we have exposure to implemented tariffs at this time, in regard to our supply chain and end-user demand, any expansion in the types of tariffs implemented has the potential to negatively impact our supply chain costs and the operating performance of our customers, which in turn may negatively affect our sales, gross margin, and operating performance.

Additionally, there is a risk that continued U.S.

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This has the potential to significantly impact global trade and economic conditions in many of the regions where we do business and have a material adverse effect on our results of operations.

Except as noted in this Item 1A, there have been no material changes to the risk factors described in our Form 10-K for the 2023 fiscal year ended December 29, 2023.

In addition, with respect to sourcing products and raw materials from third-party suppliers in other countries, our ability to timely or successfully import such products or those made with such raw materials may be adversely affected by changes in U.S.

As a result, products we import into the U.S.

could be held for inspection by U.S.

Customs and Border Patrol (“U.S.

CBP”) based on a suspicion of noncompliance.

Additionally, the Uyghur Forced Labor Prevention Act (“UFLPA”) empowers the U.S.

CBP to withhold release of items produced in whole or in part in countries or by companies included on the UFLPA entities list, creating a presumption that such goods were produced using forced labor.

In January 2025, the Department of Homeland Security added to the UFLPA entity list, marking the largest single expansion of the list to date, and including a large supplier of critical minerals and one of the world’s largest textile manufacturers, both linked to forced labor practices in the People’s Republic of China.

Although we do not believe that our suppliers source materials from entities included on the UFLPA for the products they sell to us or use to manufacture our products and we could be subject to penalties, fines or sanctions if any of the suppliers from which we purchase goods is found to have dealings, directly or indirectly, with entities on the ULFPA entities list.

We are committed to complying with the UFLPA and have taken significant steps to assess and mitigate risks within our supply chain.

Given the complexity and multi-tiered nature of global supply chains, achieving full traceability for every supplier and sub-supplier presents substantial challenges.

However, we are continuously working to enhance our due diligence processes, leveraging available data and supplier engagement to ensure compliance to the fullest extent possible.

While any detentions or detainments we have experienced have not resulted in any material impact on our business to date, future detentions, as result of noncompliance or in connection with forced labor enforcement (including noncompliance by or enforcement against our suppliers and manufacturers), could result in unexpected (i) delays or rejections of products scheduled for delivery to us, which could in turn affect the timing or our ability to deliver products to our customers;

(ii) supply chain disruptions and increased operating costs;

(iii) damage to our customer relationships;

and/or (iv) negative publicity that harms our reputation, any of which could have a material impact on our business and negatively affect our ultimate financial results.

Except as noted in this Item 1A, there have been no material changes to the risk factors described in our Form 10-K for the 2024 fiscal year ended January 3, 2025.

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 1A. Risk Factors