What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-08 compared with 2025-05-09 · 169 added, 83 removed, 198 unchanged (56% of the section changed)

12 unchanged sentences

Forward-looking statements contained in this Quarterly Report on Form 10-Q are subject to numerous risks and uncertainties, including but not limited to risks related to:

• changes in general economic conditions, including market and macro-economic disruptions resulting from escalating tensions between China and Taiwan, the on-going Russian war in Ukraine, the Israel-Palestine conflict, or due to growing inflation or higher interest rates, or tariffs;

• changes in general economic conditions, including market and macro-economic disruptions resulting from escalating tensions between China and Taiwan, the on-going Russian war in Ukraine, the Israel-Palestine conflict, or rising tension in the Middle East, or due to growing inflation or higher interest rates, or tariffs;

• our dependency on a limited number of suppliers for materials, product parts, and vehicle chassis could lead to an increase in material costs, disruptions in our supply chain, or reputational costs;

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• our ability to improve operating and supply chain efficiencies;

• changes in commodity, freight, and tariff costs (including tariff relief or our ability to mitigate tariffs, particularly in light of the policies of the new presidential administration and retaliatory actions in response thereto);

• changes in commodity, freight, and tariff costs (including tariff relief or our ability to mitigate tariffs, particularly in light of the policies of the current presidential administration and retaliatory actions in response thereto);

• our ability to mitigate increasing input costs through pricing or other measures;

9 unchanged sentences

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

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

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

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

19 unchanged sentences

Goodwill Impairment

During the three month period ended April 4, 2025, we recognized a non-cash goodwill impairment charge of $262.1 million within operating expenses, which impacted all reporting units.

In the first quarter of fiscal year 2025, we recognized a non-cash goodwill impairment charge of $262.1 million within operating expenses, which impacted all reporting units.

The impairment resulted from 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.

tariff policies, new and expanded tariffs enacted by the current presidential administration, and resulting sustained decline in our stock price.

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

7 unchanged sentences

While the Company believes that the estimates and assumptions used in the impairment test were reasonable, changes in key assumptions, including lower revenue growth, terminal growth rate, or increase in WACC could result in a future impairment of the reporting units.

Such charge could have a material effect on the condensed consolidated statements of income (loss) and the condensed consolidated balance sheets.

Such charge could have a material effect on the condensed consolidated statements of operations and the condensed consolidated balance sheets.

As a reasonableness check, the impairment assessment also included a comparison of the aggregate estimated fair value of the reporting units to the Company’s total market capitalization.

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The table below summarizes our results of operations:

For the three months ended

(in millions) April 4, 2025 March 29, 2024

For the three months ended For the six months ended

(in millions) July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024

Net sales $ 374.9 $ 348.5 $ 729.9 $ 682.0

8 unchanged sentences

Total operating expenses 98.5 92.4 458.7 186.7

(Loss) Income from operations (250.6) 8.9

Income (loss) from operations

18.5 18.6 (232.1) 27.5

Interest expense 14.4 13.9 27.3 27.2

Other (income) expense, net (0.2) 0.3

Loss before income taxes (263.4) (4.8)

Benefit from income taxes (3.6) (1.3)

Net loss $ (259.7) $ (3.5)

Other income, net (1.4) (0.3) (1.5) —

Income (loss) before income taxes

5.5 5.0 (257.9) 0.3

Provision (benefit) from income taxes 2.8 (0.4) (0.8) (1.6)

Net income (loss) $ 2.7 $ 5.4 $ (257.0) $ 1.9

net loss attributable to non-controlling interest — — (0.1) —

Net loss attributable to FOX stockholders $ (259.7) $ (3.5)

Net income (loss) attributable to FOX stockholders $ 2.7 $ 5.4 $ (257.0) $ 1.9

*Amounts may not foot due to rounding.

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

For the three months ended

April 4, 2025 March 29, 2024

For the three months ended For the six months ended

July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024

Net sales 100.0 % 100.0 % 100.0 % 100.0 %

8 unchanged sentences

Total operating expenses 26.3 26.5 62.8 27.4

(Loss) Income from operations (70.6) 2.7

Income (loss) from operations 4.9 5.3 (31.8) 4.0

Interest expense 3.8 4.0 3.7 4.0

Other (income) expense, net — 0.1

Loss before income taxes (74.2) (1.4)

Benefit from income taxes (1.0) (0.4)

Net loss (73.2) % (1.0) %

Other income, net (0.4) (0.1) (0.2) —

Income (loss) before income taxes 1.5 1.4 (35.3) —

Provision (benefit) from income taxes 0.7 (0.1) (0.1) (0.2)

Net income (loss) 0.7 % 1.6 % (35.2) % 0.3 %

net loss attributable to non-controlling interest — — — —

Net loss attributable to FOX stockholders (73.1) % (1.0) %

Net income (loss) attributable to FOX stockholders 0.7 % 1.6 % (35.2) % 0.3 %

*Percentages may not foot due to rounding.

Three months ended April 4, 2025 compared to three months ended March 29, 2024

Three months ended July 4, 2025 compared to three months ended June 28, 2024

Consolidated net sales

For the three months ended

(in millions) April 4, 2025 March 29, 2024 Change ($) Change (%)

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

Net sales $ 374.9 $ 348.5 $ 26.4 7.6 %

Total net sales for the three months ended April 4, 2025 increased $21.5 million, or 6.5%, compared to the three months ended March 29, 2024.

The increase in net sales is driven by higher upfitting sales due to a shift in product mix, increased demand for aftermarket products, growth in bike sales, and the expansion of motorcycle business, which offset lower industry demand in the traditional powersports product lines.

Although, net sales increased, high interest rates impacting industry and consumer demands, high inventory levels at dealerships, the bike channel inventory recalibration, and to a lower extent, lower bike consumer demand, and impacts related to tariff policies remain headwinds.

Total net sales for the three months ended July 4, 2025 increased $26.4 million, or 7.6%, compared to the three months ended June 28, 2024.

The increase in net sales is driven by the stabilization in bike sales, increased demand for aftermarket products, and the expansion of motorcycle business, which offset lower industry demand in the automotive OE product lines.

Although, net sales increased, high interest rates impacting industry and consumer demands, high vehicle costs, and macro-economic conditions impacting dealers and consumers remain headwinds.

Cost of sales

For the three months ended

(in millions) April 4, 2025 March 29, 2024 Change ($) Change (%)

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

Cost of sales $ 257.9 $ 237.5 $ 20.4 8.6 %

Cost of sales for the three months ended April 4, 2025 increased $15.1 million, or 6.6%, compared to the three months ended March 29, 2024.

Cost of sales for the three months ended July 4, 2025 increased $20.4 million, or 8.6%, compared to the three months ended June 28, 2024.

The increase in cost of sales is mainly due to our increased sales.

Our gross margin increased 0 basis points to 30.9% for the three months ended April 4, 2025 as compared to the same prior fiscal year period primarily due to our product mix.

Our gross margin decreased 60 basis points to 31.2% for the three months ended July 4, 2025, as compared to the same prior fiscal year period, primarily due to our product mix and impact of tariffs.

Operating expenses

For the three months ended

(in millions) April 4, 2025 March 29, 2024 Change ($) Change (%)

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

Operating expenses:

Goodwill impairment $ 262.1 $ — $ 262.1 100.0 %

General and administrative $ 39.0 $ 37.0 $ 2.0 5.4 %

3 unchanged sentences

Total operating expenses $ 98.5 $ 92.4 $ 6.1 6.6 %

Total operating expenses for the three months ended April 4, 2025 were $360.3 million, compared to $94.3 million for the three months ended March 29, 2024.

During the three months ended April 4, 2025, we recognized an impairment charge of $262.1 million as a result of our quantitative assessment on goodwill.

Total operating expenses for the three months ended July 4, 2025 were $98.5 million, compared to $92.4 million for the three months ended June 28, 2024.

Research and development expenses and sales and marketing expenses increased $3.1 million and $1.7 million, respectively, mainly due to investments to support future growth and product innovation.

General and administrative expenses increased $2.0 million driven by our organizational restructuring initiatives.

Income from operations

For the three months ended

(in millions) April 4, 2025 March 29, 2024 Change ($) Change (%)

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

Income from operations $ 18.5 $ 18.6 $ (0.1) (0.5) %

As a result of the factors discussed above, income from operations for the three months ended April 4, 2025 decreased $259.5 million, or 2,915.7%, compared to income from operations for the three months ended March 29, 2024.

As a result of the factors discussed above, income from operations for the three months ended July 4, 2025 decreased $0.1 million, or 0.5%, compared to income from operations for the three months ended June 28, 2024.

Interest and other expense, net

For the three months ended

(in millions) April 4, 2025 March 29, 2024 Change ($) Change (%)

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

Interest expense $ 14.4 $ 13.9 $ 0.5 3.6 %

Other (income) expense, net (0.2) 0.3 (0.5) (166.7)

Other income, net (1.4) (0.3) (1.1) 366.7

Interest and other expense, net $ 13.0 $ 13.6 $ (0.6) (4.4) %

Interest and other expense, net for the three months ended April 4, 2025 decreased by $0.9 million to $12.7 million, compared to $13.6 million for the three months ended March 29, 2024.

Interest and other expense, net for the three months ended July 4, 2025 decreased by $0.6 million to $13.0 million, compared to $13.6 million for the three months ended June 28, 2024.

For the three months ended

(in millions) April 4, 2025 March 29, 2024 Change ($) Change (%)

Benefit from income taxes $ (3.6) $ (1.3) $ (2.3) 176.9 %

The effective tax rates were 1.4% and 26.6% for the three months ended April 4, 2025 and March 29, 2024, respectively.

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 our effective tax rate of 26.6% and the 21% federal statutory rate was due to the impact of discrete items and pre-tax loss.

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

Expense (benefit) from income taxes

$ 2.8 $ (0.4) $ 3.2 (800.0) %

The effective tax rates were 50.9% and (7.4)% for the three months ended July 4, 2025 and June 28, 2024, respectively.

For the three months ended July 4, 2025, the difference between the Company’s effective tax rate of 50.9% and the 21% federal statutory rate was primarily due to the unfavorable impact of discrete items in proportion to lower levels of pre-tax income.

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

For the three months ended

(in millions) April 4, 2025 March 29, 2024 Change ($) Change (%)

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

Net income $ 2.7 $ 5.4 $ (2.7) (50.0) %

As a result of the factors described above, our net loss increased $256.2 million, or 7,320.0%, to a net loss $259.7 million in the three months ended April 4, 2025 from a net loss of $3.5 million for the three months ended March 29, 2024.

As a result of the factors described above, our net income decreased $2.7 million, or 50.0%, to $2.7 million in the three months ended July 4, 2025 from net income of $5.4 million for the three months ended June 28, 2024.

Segment Review

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For the three months ended

(in millions) April 4, 2025 March 29, 2024 Change ($) Change (%)

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

Powered Vehicles Group $ 123.5 $ 117.8 $ 5.7 4.9 %

9 unchanged sentences

Powered Vehicles Group

Powered Vehicles Group net sales increased by $4.0 million, or 3.4%, due to the inclusion of $12.0 million in net sales from Marzocchi acquired in December 2024, partially offset by lower industry demand in power sports because of higher interest rates and higher inventory levels.

Powered Vehicles Group adjusted EBITDA decreased by $1.5 million, or 9.4%, primarily due to our product mix.

Powered Vehicles Group net sales increased by $5.7 million, or 4.9%, due to the inclusion of $11.7 million in net sales from Marzocchi acquired in December 2024, partially offset by lower industry demand in automotive OE product lines.

Powered Vehicles Group adjusted EBITDA increased by $0.5 million, or 3.1%, primarily due to higher gross profit, partially offset by an increase in research and development expenses.

Aftermarket Applications Group

Aftermarket Applications Group net sales increased by $10.1 million, or 9.9%, driven by higher upfitting sales due to our product mix and increased demand for aftermarket products;

however, high interest rates impacting dealers and consumers, and high inventory levels at dealerships continue to pose challenges.

Aftermarket Applications Group net sales increased by $7.1 million, or 6.6%, driven by increased demand for aftermarket products;

however, high interest rates, high vehicle costs, and macro-economic conditions impacting dealers and consumers continue to pose challenges.

Aftermarket Applications Group adjusted EBITDA increased by $1.8 million, or 12.7%, mainly due to higher gross profit.

Specialty Sports Group

Specialty Sports Group net sales increased by $7.5 million, or 6.6%, primarily due to the growth in bike sales.

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

Specialty Sports Group adjusted EBITDA decreased by $0.7 million, or 2.9%, primarily due to our product mix.

Unallocated corporate expenses

Specialty Sports Group net sales increased by $13.6 million, or 11.0%, primarily due to the stabilization in bike sales.

Specialty Sports Group adjusted EBITDA increased by $1.2 million, or 4.1%, primarily due to higher gross profit.

Unallocated corporate expenses consist of 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.

Unallocated corporate expenses increased by $0.8 million, or 5.6%, mainly due to higher research and development expenses and sales and marketing expenses.

Unallocated corporate expenses decreased by $1.6 million, or 10.6%, mainly due to cost containment measures.

Six months ended July 4, 2025 compared to six months ended June 28, 2024

Consolidated net sales

For the six months ended

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

Net sales $ 729.9 $ 682.0 $ 47.9 7.0 %

Total net sales for the six months ended July 4, 2025 increased $47.9 million, or 7.0%, compared to the six months ended June 28, 2024.

The increase in net sales is primarily due to the stabilization in bike sales, increased demand for aftermarket products, and the expansion of motorcycle business, which offset lower industry demand in the automotive OE and power sports product lines.

Although net sales increased, high interest rates impacting industry and consumer demands, high vehicle costs, and macro-economic conditions impacting dealers and consumers remain headwinds.

Cost of sales

For the six months ended

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

Cost of sales $ 503.2 $ 467.8 $ 35.4 7.6 %

Cost of sales for the six months ended July 4, 2025 increased $35.4 million, or 7.6%, compared to the six months ended June 28, 2024.

The increase in cost of sales is primarily due to our increased sales.

Our gross margin decreased by 30 basis points to 31.1% for the six months ended July 4, 2025, as compared to the same prior fiscal year period, primarily due to shifts in our product line mix and impact of tariffs.

Operating expenses

For the six months ended

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

Operating expenses:

Goodwill impairment $ 262.1 $ — $ 262.1 N/A

General and administrative 76.4 74.4 2.0 2.7 %

Sales and marketing 64.0 60.7 3.3 5.4

Research and development 34.9 29.3 5.6 19.1

Amortization of purchased intangibles 21.3 22.3 (1.0) (4.5)

Total operating expenses $ 458.7 $ 186.7 $ 272.0 145.7 %

Total operating expenses for the six months ended July 4, 2025 were $458.7 million, compared to $186.7 million for the six months ended June 28, 2024.

During the six months ended July 4, 2025, we recognized an impairment charge of $262.1 million as a result of our quantitative assessment on goodwill triggered by adverse changes in U.S.

tariff policies, new and expanded tariffs enacted by the current presidential administration, and resulting sustained decline in our stock price.

Research and development and sales and marketing expenses increased $5.6 million and $3.3 million, respectively, due to our investments to support future growth and product innovation.

General and administrative expenses increased $2.0 million primarily on organizational restructuring initiatives.

(Loss) income from operations

For the six months ended

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

(Loss) income from operations

$ (232.1) $ 27.5 $ (259.6) (944.0) %

As a result of the factors discussed above, income from operations for the six months ended July 4, 2025 decreased $259.6 million, or 944.0%, compared to income from operations for the six months ended June 28, 2024.

Interest and other expense, net

For the six months ended

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

Interest expense $ 27.3 $ 27.2 $ 0.1 0.4 %

Other expense, net (1.5) — (1.5) NA

Interest and other expense, net $ 25.8 $ 27.2 $ (1.4) (5.1) %

Interest and other expense, net for the six months ended July 4, 2025 decreased by $1.4 million to $25.8 million, compared to $27.2 million for the six months ended June 28, 2024 due to the effect of foreign currency exchange rates.

For the six months ended

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

(Benefit) for income taxes

$ (0.8) $ (1.6) $ 0.8 (50.0) %

The effective tax rates were 0.3% and (600.0)% for the six months ended July 4, 2025 and June 28, 2024, respectively.

For the six months ended July 4, 2025, the difference between the Company’s effective tax rate of 0.3% and the 21% federal statutory rate was due to the impairment impact of non-deductible goodwill.

For the six months ended June 28, 2024, the difference between our effective tax rate of (600.0)% and the 21% federal statutory rate was due to the favorable impact of discrete items in proportion to lower levels of pre-tax income.

Net (loss) income

For the six months ended

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

Net (loss) income $ (257.0) $ 1.9 $ (258.9) (13,626.3) %

As a result of the factors described above, our net income decreased $258.9 million to a net loss of $257.0 million for the six months ended July 4, 2025 from a net income of $1.9 million for the six months ended June 28, 2024.

Segment Review

For additional financial information related to our operating segments including the reconciliation of net income attributable to our common stockholders to adjusted EBITDA, see Note 15 – Segment Information .

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

For the six months ended

(in millions) July 4, 2025 June 28, 2024 Change ($) Change (%)

Powered Vehicles Group $ 245.6 $ 235.9 $ 9.7 4.1 %

Aftermarket Applications Group 226.1 209.0 17.1 8.2

Specialty Sports Group 258.2 237.1 21.1 8.9

Net sales $ 729.9 $ 682.0 $ 47.9 7.0 %

Adjusted EBITDA

Powered Vehicles Group $ 30.8 $ 31.8 $ (1.0) (3.1) %

Aftermarket Applications Group 33.0 29.0 4.0 13.8

Specialty Sports Group 53.8 53.3 0.5 0.9

Unallocated corporate expenses (28.7) (29.5) 0.8 (2.7)

Adjusted EBITDA $ 88.9 $ 84.6 $ 4.3 5.1 %

Powered Vehicles Group

Powered Vehicles Group net sales increased by $9.7 million, or 4.1%, due to the inclusion of $23.7 million in net sales from Marzocchi acquired in December 2024, partially offset by lower industry demand in automotive OE and power sports.

Powered Vehicles Group adjusted EBITDA decreased by $1.0 million, or 3.1%, mainly due to higher research and development expenses, partially offset by an increase in gross profit.

Aftermarket Applications Group

Aftermarket Applications Group net sales increased by $17.1 million, or 8.2%, driven by increased demand for aftermarket products;

however, high interest rates, high vehicle costs, and macro-economic conditions impacting dealers and consumers continue to pose challenges.

Aftermarket Applications Group adjusted EBITDA increased by $4.0 million, or 13.8%, mainly due to higher gross profit.

Specialty Sports Group

Specialty Sports Group net sales increased by $21.1 million, or 8.9%, primarily due to the stabilization in bike sales.

Specialty Sports Group adjusted EBITDA increased by $0.5 million, or 0.9%, primarily due to an increase in gross profit.

Unallocated corporate expenses

Unallocated corporate expenses decreased by $0.8 million, or 2.7%, driven by cost containment measures.

Liquidity and Capital Resources

Our primary cash needs are to support working capital, interest on debt, employee compensation, capital expenditures, acquisitions, debt repayments, and other general corporate purposes.

Our primary cash needs are to support working capital, research and development, interest on debt, employee compensation, capital expenditures, acquisitions, debt repayments, and other general corporate purposes.

Historically, we generally financed our liquidity needs with operating cash flows, borrowings under our 2022 Credit Facility, and the issuance of common stock.

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Risk Factors .

As of April 4, 2025, we held $17.8 million of our $68.6 million of cash and cash equivalents in accounts of our subsidiaries outside of the U.S., which we may repatriate.

As of July 4, 2025, we held $19.5 million of our $81.5 million of cash and cash equivalents in accounts of our subsidiaries outside of the U.S., which we may repatriate.

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

For the three months ended

(in millions) April 4, 2025 March 29, 2024

Net cash (used in) provided by operating activities $ 0.7 $ 9.4

For the six months ended

(in millions) July 4, 2025 June 28, 2024

Net cash provided by operating activities $ 37.5 $ 36.0

Net cash used in investing activities (19.4) (26.6)

Net cash provided by (used in) financing activities 3.3 (7.9)

Net cash used in financing activities (9.4) (10.7)

Effect of exchange rate changes on cash and cash equivalents 1.1 (0.2)

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*Amounts may not foot due to rounding.

We expect that cash on hand, cash flow from operations and availability under our 2022 Credit Facility will be sufficient to fund our operations during the next 12 months from the date of this Form 10-Q and beyond.

We expect that cash on hand, cash flows from operations and availability under our 2022 Credit Facility will be sufficient to fund our operations during the next 12 months from the date of this Form 10-Q and beyond.

Operating activities

In the three months ended April 4, 2025, net cash used in operating activities was $0.7 million.

Our investment in operating assets and liabilities is a result of a decrease in accounts payable of $25.2 million, an increase in accounts receivable of $11.3 million, a decrease in accrued expenses and other liabilities of $9.0 million, an increase in inventory of $1.8 million, and a decrease in income taxes payable of $1.9 million, partially offset by a decrease in prepaids and other assets of $25.7 million.

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

In the six months ended July 4, 2025, net cash provided by operating activities was $37.5 million.

Our investment in operating assets and liabilities is a result of a decrease in accounts payable of $19.4 million, an increase in accounts receivable of $15.4 million, a decrease in income taxes payable of $4.0 million, and a decrease in accrued expenses and other liabilities of $0.4 million, partially offset by a decrease in prepaids and other assets of $17.6 million and a decrease in inventory of $1.8 million, excluding the impact of foreign currency translation.

On a reported currency basis, the change in our accounts payable is driven by timing of inventory purchases and vendor payments and foreign currency translation.

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

The decrease in accrued expenses and other liabilities is mainly due to a decrease in warranty reserve, a decrease in lease liabilities due to lease terminations, and payments for various accruals.

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

The decrease in prepaids and other assets is primarily due to lower chassis deposits driven by working capital optimization efforts.

In the three months ended March 29, 2024, net cash provided by operating activities was $9.4 million.

Our investment in operating assets and liabilities is a result of increases in prepaids and other assets of $37.3 million and decreases in accounts payable of $2.4 million, accrued expenses and other liabilities of $1.3 million, and income taxes payable of $0.8 million, partially offset by decreases in inventory of $20.0 million and accounts receivable of $5.3 million.

On a reported currency basis, inventory increased primarily due to foreign currency translation, planned inventory builds to support anticipated demand, and the impact from higher tariffs, partially offset by our efforts to optimize inventory levels.

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

Our investment in operating assets and liabilities is a result of an increase in prepaids and other assets of $37.1 million, a decrease in income taxes payable of $23.2 million, and an increase in inventory of $7.8 million, partially offset by an increase in accounts payable of $34.6 million, a decrease in accounts receivable of $12.0 million, and an increase in accrued expenses and other liabilities of $2.9 million.

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

The change in our accounts receivable reflects the timing of customer collections.

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

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

The change in accrued expenses and other liabilities is primarily due to settlements of sales rebate accruals.

The decrease in inventory reflects our continued efforts to optimize inventory levels.

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

Investing activities

In the three months ended April 4, 2025 and March 29, 2024, net cash used in investing activities consisted of $7.2 million and $15.3 million, respectively.

Investing activities for the three months ended April 4, 2025 consisted of $7.2 million of property and equipment additions.

Investing activities for the three months ended March 29, 2024 consisted of $9.9 million of property and equipment additions, $5.0 million of cash consideration for our acquisitions, and $0.4 million of cash consideration for our purchase of other assets.

In the six months ended July 4, 2025 and June 28, 2024, net cash used in investing activities was $19.4 million and $26.6 million, respectively.

Investing activities for the six months ended July 4, 2025 consisted of $19.4 million of property and equipment additions.

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

Financing activities

In the three months ended April 4, 2025, net cash used in financing activities was $3.3 million, and consisted of the proceeds from our 2022 Credit Facility revolver of $37.0 million that were used to support our working capital, offset by payments of $27.0 million to reduce the revolver borrowings, $6.1 million repayments on our term loans, and payments of $0.6 million to repurchase shares of our common stock to cover withholding taxes from our stock-based compensation program.

In the three months ended March 29, 2024, net cash used in financing activities was $7.9 million, and consisted of the proceeds from our 2022 Credit Facility of $70.0 million that were used to support our working capital, offset by payments of $48.0 million to reduce the revolver borrowings, $3.6 million quarterly repayment on our Term A Loan, $25.0 million to repurchase shares of our common stock for retirement, and payments of $1.3 million to repurchase shares of our common stock to cover withholding taxes from our stock-based compensation program.

In the six months ended July 4, 2025, net cash used in financing activities was $9.4 million, and consisted of the proceeds from our 2022 Credit Facility revolver of $57.0 million that were used to support our working capital, offset by payments of $53.0 million to reduce the revolver borrowings, $12.1 million repayments on our term loans, and payments of $1.3 million to repurchase shares of our common stock to cover withholding taxes from our stock-based compensation program.

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

2022 Credit Facility

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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%.

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%.

At July 4, 2025, the one-month SOFR and three-month SOFR rates were 4.33% and 4.34%, respectively.

At July 4, 2025, our weighted-average interest rate on outstanding borrowing was 6.41%.

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.

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

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

On May 13, 2024, the Company borrowed the full amount of $200.0 million 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.

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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 April 4, 2025.

Impact of Global Trade Actions and Tariffs

New and expanded tariffs recently announced under the Trump administration and triggered retaliatory actions by certain affected countries, and other foreign governments have introduced additional costs and uncertainty into our supply chain, which may impact our cost structure and working capital needs in the near term.

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

Recent Developments

Global Trade Actions and Tariffs - New and expanded tariffs recently announced under the Trump administration and triggered retaliatory actions by certain affected countries, and other foreign governments have introduced additional costs and uncertainty into our supply chain, which may impact our cost structure and working capital needs in the near term.

We are evaluating the potential effect on our supply chain and sourcing strategies, and while we expect some volatility in cash flows as we adjust, we believe our existing liquidity and access to the 2022 Credit Facility provide sufficient flexibility to manage these developments.

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Risk Factors of this Quarterly Report on Form 10-Q.

One Big Beautiful Bill Act - On July 4, 2025, the OBBBA was enacted in the U.S.

This legislation introduces several significant tax provisions, including the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, changes to the international tax framework, and the reinstatement of favorable tax treatment for select business provisions.

The OBBBA includes multiple effective dates, with certain provisions taking effect in 2025 and others phased in through 2027.

We have reviewed the enacted legislation and have determined that these provisions do not affect the measurement of our deferred tax assets and liabilities as of July 4, 2025.

We are currently assessing the impact on the effective tax rate for future periods.

Material Cash Requirements

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis