FOX FACTORY HOLDING CORP 10-Q

ITEM 1. FINANCIAL STATEMENTS FOX FACTORY HOLDING CORP. Condensed Consolidated Balance Sheets (in thousands, except per share data) (unaudited) As of As of July 4, 2025 January 3, 2025 Assets Current assets: Cash and cash equivalents $ 81,451 $ 71,674 Accounts receivable (net of allowances of $ 1,033 and $ 1,848 , respectively) 185,359 165,827 Inventory 412,762 404,736 Prepaids and other current assets 66,983 85,443 Total current assets 746,555 727,680 Property, plant and equipment, net 247,471 246,393 Lease right-of-use assets 98,721 104,019 Deferred tax assets, net 48,649 44,364 Goodwill 377,366 639,505 Trademarks and brands, net 256,041 264,126 Customer and distributor relationships, net 150,540 161,585 Core technologies, net 21,655 23,154 Other assets 18,004 21,484 Total assets $ 1,965,002 $ 2,232,310 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 131,129 $ 144,067 Accrued expenses 90,596 91,427 Current portion of long-term debt 24,286 24,286 Total current liabilities 246,011 259,780 Revolver 157,000 153,000 Term Loans, less current portion 517,494 527,775 Other liabilities 85,895 90,611 Total liabilities 1,006,400 1,031,166 Commitments and contingencies (Refer to Note 8 - Commitments and Contingencies ) Non-controlling interest ( 117 ) ( 38 ) Stockholders’ equity Preferred stock, $ 0.001 par value — 10,000 authorized and no shares issued or outstanding as of July 4, 2025 and January 3, 2025 — — Common stock, $ 0.001 par value — 90,000 authorized; 42,690 shares issued and 41,801 outstanding as of July 4, 2025; 42,574 shares issued and 41,684 outstanding as of January 3, 2025 42 42 Additional paid-in capital 345,932 339,266 Treasury stock, at cost; 890 common shares as of July 4, 2025 and January 3, 2025 ( 13,754 ) ( 13,754 ) Accumulated other comprehensive income 8,045 224 Retained earnings 618,454 875,404 Total stockholders’ equity 958,719 1,201,182 Total liabilities and stockholders’ equity $ 1,965,002 $ 2,232,310 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents FOX FACTORY HOLDING CORP. Condensed Consolidated Statements of Operations (in thousands, except per share data) (unaudited) For the three months ended For the six months ended July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024 Net sales $ 374,864 $ 348,491 $ 729,894 $ 681,963 Cost of sales 257,873 237,528 503,224 467,842 Gross profit 116,991 110,963 226,670 214,121 Operating expenses: Goodwill impairment — — 262,129 — General and administrative 39,044 36,962 76,375 74,383 Sales and marketing 31,216 29,539 64,063 60,725 Research and development 17,847 14,789 34,886 29,228 Amortization of purchased intangibles 10,356 11,083 21,276 22,320 Total operating expenses 98,463 92,373 458,729 186,656 Income (loss) from operations 18,528 18,590 ( 232,059 ) 27,465 Interest expense 14,388 13,865 27,322 27,194 Other income, net ( 1,365 ) ( 311 ) ( 1,515 ) ( 2 ) Income (loss) before income taxes 5,505 5,036 ( 257,866 ) 273 Provision (benefit) from income taxes 2,800 ( 371 ) ( 837 ) ( 1,638 ) Net income (loss) $ 2,705 $ 5,407 $ ( 257,029 ) $ 1,911 Less: net loss attributable to non-controlling interest ( 39 ) — ( 79 ) — Net income (loss) attributable to FOX stockholders $ 2,744 $ 5,407 $ ( 256,950 ) $ 1,911 Earnings (net loss) per share: Basic $ 0.07 $ 0.13 $ ( 6.15 ) $ 0.05 Diluted $ 0.07 $ 0.13 $ ( 6.15 ) $ 0.05 Weighted-average shares used to compute earnings per share: Basic 41,788 41,673 41,749 41,662 Diluted 41,866 41,705 41,749 41,717 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents FOX FACTORY HOLDING CORP. Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) (unaudited) For the three months ended For the six months ended July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024 Net income (loss) $ 2,705 $ 5,407 $ ( 257,029 ) $ 1,911 Other comprehensive income (loss) Interest rate swap Change in net unrealized gains 2,130 616 ( 1,818 ) 2,118 Reclassification of net gains on interest rate swap to net earnings ( 1,097 ) ( 1,775 ) ( 3,004 ) ( 3,560 ) Tax effects 249 ( 277 ) ( 1,147 ) ( 320 ) Net change, net of tax effects 1,282 ( 1,436 ) ( 5,969 ) ( 1,762 ) Foreign currency translation adjustments 10,908 ( 999 ) 13,790 ( 3,881 ) Other comprehensive income (loss) 12,190 ( 2,435 ) 7,821 ( 5,643 ) Comprehensive income (loss) $ 14,895 $ 2,972 $ ( 249,208 ) $ ( 3,732 ) Less: comprehensive loss attributable to non-controlling interest ( 39 ) — ( 79 ) — Comprehensive income (loss) attributable to FOX stockholders $ 14,934 $ 2,972 $ ( 249,129 ) $ ( 3,732 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents FOX FACTORY HOLDING CORP. Condensed Consolidated Statements of Stockholders’ Equity (in thousands) (unaudited) 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 $ — Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 40 — — — ( 1,315 ) — — ( 1,315 ) — Purchase and retirement 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 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 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 $ — 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 - 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 ) — Stock-based compensation expense — — — — 3,355 — — 3,355 — Other comprehensive loss — — — — — ( 4,369 ) — ( 4,369 ) — Net loss — — — — — — ( 259,694 ) ( 259,694 ) ( 40 ) Balance - April 4, 2025 42,602 $ 42 890 $ ( 13,754 ) $ 342,041 $ ( 4,145 ) $ 615,710 $ 939,894 $ ( 78 ) Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 89 — — — ( 671 ) — — ( 671 ) — Stock-based compensation expense — — — — 4,562 — — 4,562 — Other comprehensive income — — — — — 12,190 — 12,190 — Net income — — — — — — 2,744 2,744 ( 39 ) Balance - July 4, 2025 42,691 $ 42 890 $ ( 13,754 ) $ 345,932 $ 8,045 $ 618,454 $ 958,719 $ ( 117 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents FOX FACTORY HOLDING CORP. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) For the six months ended July 4, 2025 June 28, 2024 OPERATING ACTIVITIES: Net (loss) income $ ( 257,029 ) $ 1,911 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Goodwill impairment 262,129 — Depreciation and amortization 43,707 40,854 Provision for inventory reserve ( 592 ) 572 Stock-based compensation 7,917 6,109 Amortization of acquired inventory step-up 342 4,485 Amortization of loan fees 2,704 1,540 Amortization of deferred gains on prior swap settlements ( 783 ) ( 2,126 ) Proceeds from interest rate swap settlements 2,224 1,434 Asset impairment 789 — Loss (gain) on disposal of property and equipment 965 ( 27 ) Deferred taxes ( 5,082 ) ( 184 ) Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable ( 15,396 ) 12,003 Inventory 1,775 ( 7,809 ) Income taxes ( 3,996 ) ( 23,172 ) Prepaids and other assets 17,572 ( 37,107 ) Accounts payable ( 19,412 ) 34,633 Accrued expenses and other liabilities ( 366 ) 2,921 Net cash provided by operating activities 37,468 36,037 INVESTING ACTIVITIES: Purchases of property and equipment ( 19,412 ) ( 21,188 ) Acquisitions of businesses, net of cash acquired — ( 5,041 ) Acquisition of other assets, net of cash acquired — ( 350 ) Net cash used in investing activities ( 19,412 ) ( 26,579 ) FINANCING ACTIVITIES: Proceeds from revolver 57,000 119,000 Payments on revolver ( 53,000 ) ( 295,000 ) Proceeds from issuance of debt — 200,000 Repayment of term debt ( 12,142 ) ( 7,143 ) Purchase and retirement of common stock — ( 25,000 ) Repurchases from stock compensation program, net ( 1,251 ) ( 2,545 ) Net cash used in financing activities ( 9,393 ) ( 10,688 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 1,114 ( 166 ) CHANGE IN CASH AND CASH EQUIVALENTS 9,777 ( 1,396 ) CASH AND CASH EQUIVALENTS—Beginning of period 71,674 83,642 CASH AND CASH EQUIVALENTS—End of period $ 81,451 $ 82,246 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Table of Contents FOX FACTORY HOLDING CORP. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) For the six months ended SUPPLEMENTAL CASH FLOW INFORMATION: July 4, 2025 June 28, 2024 Cash paid during the period for: Income tax payment $ 8,257 $ 21,548 Interest $ 25,380 $ 29,081 Amounts included in the measurement of lease liabilities $ 10,453 $ 8,953 Non-cash operating activities: Right-of-use assets obtained in exchange for lease obligations $ 2,524 $ 23,045 Non-cash investing and financing activities: Capital expenditures included in accounts payable $ 1,028 $ 1,064 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) 1. Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies - Fox Factory Holding Corp. (the “Company”) designs, engineers, manufactures, and markets premium products and systems that deliver championship-level performance 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, motorcycles, and specialty vehicles and applications. In addition, we also offer premium baseball and softball gear and equipment. Certain of our products are specifically designed and marketed to some of the leading cycling and powered vehicle original equipment manufacturers (“OEMs”), while others are distributed to consumers through a global network of dealers and distributors and through direct-to-customer channels. Throughout this Form 10-Q, unless stated otherwise or as the context otherwise requires, the “Company,” “FOX,” “Fox Factory,” “we,” “us,” “our,” and “ours” refer to Fox Factory Holding Corp. and its operating subsidiaries on a consolidated basis. Basis of Presentation - The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted (“GAAP”) in the United States of America (“U.S.” or “United States”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. 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 January 3, 2025 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on February 28, 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. Operating results for any quarter are not necessarily indicative of the results for the full fiscal year. Fiscal Year Calendar - The Company operates on a 52-53-week fiscal year calendar. 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 and six-month periods ended July 4, 2025 and June 28, 2024 each included 13 weeks and 26 weeks, respectively. 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 January 3, 2025, as filed with the SEC on February 28, 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. The Company’s performance-defining products and systems are solutions that improve performance of powered vehicles, bikes, and baseball and softball gear and equipment. Powered vehicles include side-by-sides, on-road vehicles with off-road capabilities, off-road vehicles and trucks, ATVs, snowmobiles, specialty vehicles and applications, and motorcycles. Revenue is measured based on the consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product to a customer, generally at the time of shipment. Contracts are generally in the form of purchase orders and are governed by standard terms and conditions. For larger OEMs, the Company may also enter into master agreements. Sales tax and other similar taxes are excluded from revenues. 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 Stellantis vehicle chassis, however, that deposit is refunded when the chassis is sold through to our 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. For certain upfit packages, revenue is recognized over-time as work is performed based on actual costs incurred. 9 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) We elected as a practical expedient to not capitalize the incremental costs to obtain contracts with customers since the amortization period would have been one year or less. 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 - 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. Goodwill, Intangible Assets, and Long-Lived Assets Goodwill 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. In early fiscal year 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 our 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 in the first quarter, 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. In the second quarter, the Company conducted a qualitative assessment and concluded that no impairment existed as of July 4, 2025. We will conduct our annual impairment assessment in the third quarter. 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 ) ( 144 ) — — ( 144 ) Currency translation and other adjustments 56 — 78 134 Balance as of July 4, 2025 $ 42,769 $ 66,420 $ 268,177 $ 377,366 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 impairment existed as of April 4, 2025. A qualitative assessment performed in the second quarter led to the same conclusion that no impairment existed as of July 4, 2025. 10 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) 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 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. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ from management’s estimates. Reclassifications - We reclassified certain prior period amounts within our condensed consolidated statements of cash flows to conform to our current year presentation. The reclassifications did not have any impact on net income. Certain Significant Risks and Uncertainties - As of July 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, the Israel-Palestine conflict, and rising tensions in the Middle East, 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: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: 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). 11 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) 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. Non-GAAP Financial Measures - Total adjusted EBITDA presents the sum of the results of our three operating segments and unallocated corporate expenses on a consolidated basis. We believe that total adjusted EBITDA is an operating performance measure that measures operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets among otherwise comparable companies. In reviewing our corporate operating results, we also believe it is important to review the aggregate consolidated performance of all of our segments on the same basis we review the performance of each of our segments and draw comparisons between periods based on the same measure of consolidated performance. Management provides this non-GAAP financial measure as a supplemental tool to assist investors in understanding our performance and evaluating our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations from one period to the next and would ordinarily add back items that are not part of normal day-to-day operations of our business. By providing total adjusted EBITDA, together with reconciliations, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing strategic initiatives. However, total adjusted EBITDA is not a measurement of financial performance under U.S. GAAP, and our total adjusted EBITDA may not be comparable to similarly titled measures of other companies. Total adjusted EBITDA has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. For example, total adjusted EBITDA: • does not reflect the Company’s cash expenditures or requirements for capital expenditures or capital commitments; • does not reflect changes in, or cash requirements for, the Company's working capital needs; and • does not reflect any costs related to the current or future replacement of assets being depreciated or amortized. We also use total adjusted EBITDA: • as a measure of operating performance to assist us in comparing our operating performance on a consistent basis because it removes the impact of items not directly resulting from our core operations; • for planning purposes, including the preparation of our internal annual operating budgets and financial projections; • to evaluate the performance and effectiveness of our operational strategies; and • as a basis to calculate incentive compensation payments for our key employees. Please see Note 15 – Segment Information for our definition of adjusted EBITDA. Under ASC 280, adjusted EBITDA is our measure of segment profitability and financial performance of our operating segments, and when used in this context, the term adjusted EBITDA is a financial measure prepared in accordance with U.S. GAAP. Adjusted EBITDA reported for the Company on a consolidated basis is a non-U.S. GAAP financial measure. 12 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) Recent Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in ASU 2023-07 require disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM. The amendments in this update also expand the interim segment disclosure requirements. These amendments do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and the amendments in this update are required to be applied on a retrospective basis. 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): Improvement to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures. 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. 13 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) 2. Revenues The following table summarizes total net sales by segment: For the three months ended For the six months ended July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024 Powered Vehicles Group $ 123,514 $ 117,795 $ 245,612 $ 235,908 Aftermarket Applications Group 114,144 107,129 226,058 208,981 Specialty Sports Group 137,206 123,567 258,224 237,074 Total net sales $ 374,864 $ 348,491 $ 729,894 $ 681,963 The following table summarizes total net sales by sales channel: For the three months ended For the six months ended July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024 OEM $ 173,757 $ 151,299 $ 330,078 $ 289,108 Aftermarket/Non-OEM (1) 201,107 197,192 399,816 392,855 Total net sales $ 374,864 $ 348,491 $ 729,894 $ 681,963 (1) Aftermarket/non-OEM sales include sales to dealers and dealerships, distributors, sales through our websites, retail sales and various others, including Marucci’s sales within each of these. The following table summarizes total net sales generated by geographic location of the customer: For the three months ended For the six months ended July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024 North America $ 271,676 $ 278,153 $ 543,977 $ 562,815 Europe 58,147 37,524 106,424 64,774 Asia 38,741 26,315 66,550 44,485 Rest of the world 6,300 6,499 12,943 9,889 Total net sales $ 374,864 $ 348,491 $ 729,894 $ 681,963 3. Inventory Inventory consisted of the following: July 4, 2025 January 3, 2025 Raw materials $ 249,602 $ 245,368 Work-in-process 23,110 16,519 Finished goods 140,050 142,849 Total inventory $ 412,762 $ 404,736 14 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) 4. Prepaids and Other Current Assets Prepaids and other current assets consisted of the following: July 4, 2025 January 3, 2025 Prepaid chassis deposits $ 31,217 $ 47,094 Advanced payments and prepaid contracts 22,931 26,496 Other current assets 12,835 11,853 Total prepaid and other current assets $ 66,983 $ 85,443 5. Property, Plant and Equipment, net Property, plant and equipment, net consisted of the following: July 4, 2025 January 3, 2025 Machinery and manufacturing equipment $ 190,516 $ 177,261 Building and building improvements 84,492 82,224 Leasehold improvements 42,294 40,663 Internal-use computer software 38,315 38,572 Information systems, office equipment and furniture 34,062 28,725 Transportation equipment 24,712 23,299 Land and land improvements 15,563 15,521 Total property, plant and equipment 429,954 406,265 Less: accumulated depreciation and amortization ( 182,483 ) ( 159,872 ) Total property, plant and equipment, net $ 247,471 $ 246,393 The Company’s long-lived assets by geographic location are as follows: July 4, 2025 January 3, 2025 United States $ 203,673 $ 203,937 International 43,798 42,456 Total long-lived assets $ 247,471 $ 246,393 15 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) 6. Accrued Expenses Accrued expenses consisted of the following: July 4, 2025 January 3, 2025 Payroll and related expenses $ 30,214 $ 22,504 Warranty 18,543 21,593 Current portion of lease liabilities 16,600 16,683 Accrued sales rebate 10,459 7,852 Income tax payable 5,460 9,343 Other accrued expenses 9,320 13,452 Total accrued expenses $ 90,596 $ 91,427 The Company generally provides a limited warranty for products for a one, two, or three-year period beginning on: (i) in the case of OEM sales, the date the bike or powered vehicle is purchased from an authorized OEM where the product is incorporated as original equipment on the purchased bike or powered vehicle; (ii) in the case of aftermarket/non-OEM sales, the date the product is originally purchased from an authorized dealer; or (iii) in the case of upfitting sales, the date of the retail sale to an end customer. Activity related to warranties is as follows: For the three months ended For the six months ended July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024 Beginning warranty liability $ 19,113 $ 19,327 $ 21,593 $ 20,001 Charge to cost of sales 2,679 5,546 4,147 9,489 Costs incurred ( 3,249 ) ( 4,180 ) ( 7,197 ) ( 8,797 ) Ending warranty liability $ 18,543 $ 20,693 $ 18,543 $ 20,693 *All changes to warranty liability were within normal course of business. 16 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) 7. Debt 2022 Credit Facility On April 5, 2022, the Company entered into a new credit agreement with Wells Fargo Bank, National Association, and other named lenders (the “2022 Credit Facility”). 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 . The Company may borrow, prepay, and re-borrow principal under the 2022 Credit Facility during its term. Advances under the 2022 Credit Facility can be either Adjusted Term Secured Overnight Financing Rate (“SOFR”) loans or base rate loans. SOFR rate revolving loans bear interest on the outstanding principal amount thereof for each interest period at a rate per annum equal to Term SOFR for such calculation plus 0.10 % plus a margin ranging from 1.00 % to 2.25 %. 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, 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. The Incremental Term A Loan was fully funded on November 14, 2023 and used to fund a portion of the consideration owed under the Marucci acquisition. The Delayed Draw Term Loan was available to the Company from and including December 6, 2023, until the earlier of (a) May 14, 2024 and (b) the date on which the Delayed Draw Term commitments have been terminated. Each Incremental Term Loan is subject to quarterly amortization payments of principal at a rate of 5.00 % per annum. The Incremental Term Loans are in the form of term SOFR loans and base rate loans, at the option of the Company, and have an applicable margin ranging from 0.50 % to 1.50 % for base rate loans and 1.50 % to 2.50 % for term SOFR loans, subject to adjustment provisions. Each Incremental Term Loan has a maturity date of April 5, 2027, consistent with the 2022 Credit Facility. The Company paid $ 10,063 in debt issuance costs, of which $ 6,709 were allocated to the Term A Loan and $ 3,354 were allocated to the Delayed Draw Term Loan. Loan fees allocated to the Term A Loan are amortized using the interest method over the term of the Credit Facility. Loan fees allocated to the Delayed Draw Term Loan were deferred as an asset until the debt was drawn. On May 13, 2024, the Company borrowed the full amount of $ 200,000 of the Delayed Draw Term Loan. The fees were reclassified to a contra-liability account and amortized over the term of the drawn debt using the interest method. On July 31, 2024 and December 20, 2024, the Company entered into the Third and Fourth Amendments to the 2022 Credit Facility, respectively, to secure an improved covenant profile on its capital structure to provide more flexibility given the uncertain macro environment. The Company paid $ 3,490 in loan fees for the Third and Fourth Amendments, of which $ 3,433 were allocated among the revolver and the Incremental Term Loans to be amortized over the remaining term of the 2022 Credit Facility. At 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 %. 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 July 4, 2025. 17 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) The following table summarizes the revolver under the 2022 Credit Facility: July 4, 2025 January 3, 2025 Amount outstanding $ 157,000 $ 153,000 Standby letters of credit 164 155 Available borrowing capacity 492,836 496,845 Total borrowing capacity $ 650,000 $ 650,000 As of July 4, 2025, future principal payments for term loan debt, including the current portion, are summarized as follows: For fiscal year July 4, 2025 2025 $ 12,143 2026 24,286 2027 512,143 Total $ 548,572 Debt issuance cost ( 6,792 ) Long-term debt, net of issuance cost $ 541,780 Less: current portion ( 24,286 ) Long-term debt less current portion $ 517,494 On April 5, 2022, the Company executed an interest rate swap agreement and, subsequently, on August 26, 2024, the Company entered into three additional interest rate swap agreements. Through the swap agreements, the Company hedges the variability of cash flows in interest payments associated with the first $ 500,000 of its variable rate debt. Refer to Note 9 - Derivatives and Hedging for further details. 18 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) 8. Commitments and Contingencies Indemnification Agreements - In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company or intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with directors and certain officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. While the outcome of these matters cannot be predicted with certainty, the Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on the Company’s results of operations, financial position or liquidity. Legal Proceedings - On February 20, 2024, a complaint alleging violations of federal securities laws and seeking certification as a class action was filed against the Company and certain of its current and former officers in the United States District Court for the Northern District of Georgia in Atlanta. On August 16, 2024, the plaintiff filed an amended complaint that purported to seek damages on behalf of a putative class of persons who purchased the Company’s common stock between May 6, 2021 and November 2, 2023. The amended complaint asserted claims under Sections 10(b) and 20 of the Securities Exchange Act and alleged that the Company and certain current and former officers made material misstatements and omissions to investors regarding demand for the Company’s products and its inventory levels. The amended complaint generally sought 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 and relief. The defendants moved to dismiss the second amended complaint on May 30, 2025, which plaintiff opposed on July 14, 2025. The defendants deny all allegations of wrongdoing, believe the plaintiff’s positions are without merit, and intend to vigorously defend themselves. On October 9, 2024, and October 29, 2024, two stockholder derivative complaints were filed in the United States District Court for the Northern District of Georgia against certain of the Company’s officers and its directors, with the Company named as a nominal defendant. The cases are assigned to the same judge presiding over the securities fraud class action. The complaints are premised on substantially the same factual allegations as the securities fraud class action, but in these complaints, the plaintiff claims that the Company’s officers and directors breached their fiduciary duties or otherwise engaged in wrongdoing by allowing the underlying securities fraud to occur. The court has stayed these cases pending the decision on the motion to dismiss the securities fraud litigation. The defendants deny all allegations of wrongdoing, believe the plaintiffs’ claims are without merit, and intend to vigorously defend themselves. Bailment Pool Arrangements - The Company has relationships with several OEM partners, including General Motors (“GM”), Ford Motor Company (“Ford”), and Stellantis to obtain truck chassis. For Stellantis chassis, the Company pays a cash deposit upon transfer of the chassis to the Company’s premises and records the chassis within prepaids and other current assets on the condensed consolidated balance sheets until the chassis are transferred to the dealer customer’s floor plan, at which time the cash deposit is returned to the Company. For GM and Ford, the Company has entered into floor plan financing agreements with the OEM. The Company receives an allocation of chassis and pays interest expense on the allocated value of chassis based on the duration of time they are on the Company’s premises. Bailment, which is the non-ownership transfer of the chassis from GM and Ford to the Company, ends when the vehicle is sold to an authorized dealer, or upon authorized return of the vehicle to the manufacturer. The Company does not pay a cash deposit to obtain GM and Ford chassis and accordingly it does not recognize an asset or a liability related to these chassis. Interest payments made to manufacturer-affiliated finance companies are classified as operating activities in the condensed consolidated statements of cash flows. At July 4, 2025 and January 3, 2025, the Company utilized $ 9,005 and $ 36,008 , out of a maximum of $ 38,300 and $ 36,100 of Ford allocation of chassis, and $ 31,874 and $ 10,857 , out of a maximum of $ 36,100 and $ 49,500 of GM allocation of chassis, respectively. The Company incurred interest expense related to chassis on hand of $ 1,058 and $ 482 during the three months ended July 4, 2025 and January 3, 2025, respectively and $ 1,743 and $ 856 during the six months ended July 4, 2025 and January 3, 2025 respectively. 19 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) 9. Derivatives and Hedging The Company is exposed to certain risks relating to its ongoing business operations. The primary risk managed by using derivative instruments is interest rate risk. The Company utilizes interest rate swaps to limit its exposure to interest rate risk by converting a portion of its floating-rate debt to a fixed-rate basis, thus reducing the impact of interest rate changes on future interest expense. Interest rate swaps involve the receipt of floating-rate amounts in exchange for fixed-rate interest payments based on the SOFR over the lives of the agreements without an exchange of the underlying principal amounts. 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 July 4, 2025 and January 3, 2025, the Company had the following interest rate swap contracts: July 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 July 2, 2021 April 5, 2022 $ 200,000 — 767 April 5, 2022 April 5, 2027 $ 100,000 1,739 2,650 September 20, 2024 December 26, 2025 $ 100,000 76 ( 87 ) September 20, 2024 December 25, 2026 $ 200,000 ( 82 ) 903 September 20, 2024 September 21, 2029 $ 100,000 ( 86 ) 2,219 Total $ 1,647 $ 6,468 On June 11, 2021, the Company terminated its existing swap agreement (the “2020 Swap Agreement”) and entered into an interest rate swap agreement (the “2021 Swap Agreement”) with a notional amount of $ 200,000 . On April 5, 2022, the Company terminated its 2021 Swap Agreement and entered into a new interest rate swap agreement with a notional amount of $ 100,000 . The terminated 2020 Swap Agreement and 2021 Swap Agreement 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 . The interest rate swaps are indexed to a three-month Term SOFR as defined in the agreements. The interest rate swaps met the criteria as cash flow hedges under ASC 815, Derivatives and Hedging (“ASC 815”), and are recorded to prepaids and other current assets, other assets, accrued expenses, or other liabilities on the condensed consolidated balance sheets. Refer to Note 10 - Fair Value Measurements and Financial Instruments for additional information on determining the fair value. The unrealized gains or losses, after tax, will be recorded in accumulated other comprehensive income, a component of equity, and are expected to be reclassified into interest expense on the condensed consolidated statements of income when the forecasted transactions affect earnings. As required under ASC 815, the interest rate swap contracts’ effectiveness will be assessed on a quarterly basis using a quantitative regression analysis. The unrealized gains and losses deferred to accumulated other comprehensive income resulting from the derivative instruments designated as cash flow hedges for the three and six months ended July 4, 2025 were a gain of $ 2,130 and a loss of $ 1,818 ; and for the three and six months ended June 28, 2024 were gains of $ 616 and $ 2,118 , 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 six months ended July 4, 2025 were $ 1,097 and $ 3,004 , respectively; and during the three and six months ended June 28, 2024 were $ 1,775 and $ 3,560 , respectively. The aggregate tax effects on activity in accumulated other comprehensive income associated with the derivative instruments designated as cash flow hedges during three and six months ended July 4, 2025 were a gain of $ 249 and a loss of $ 1,147 , respectively; and during the three and six months ended June 28, 2024 were losses of $ 277 and $ 320 , respectively. Over the next 12 months, the Company estimates that $ 1,647 of existing net gain in AOCI related to the interest rate swap contracts will be reclassified as a decrease to interest expense. 20 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands, except per share data) (unaudited ) 10. Fair Value Measurements and Financial Instruments 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: July 4, 2025 January 3, 2025 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Deferred Compensation Plan Investments $ 4,455 $ — $ — $ 4,455 $ 4,394 $ — $ — $ 4,394 Interest Rate Swaps — 1,815 — 1,815 — 5,685 — 5,685 Total assets measured at fair value $ 4,455 $ 1,815 $ — $ 6,270 $ 4,394 $ 5,685 $ — $ 10,079 Liabilities: Incremental Term Loans $ — $ 541,780 $ — $ 541,780 $ — $ 552,061 $ — $ 552,061 Revolver — 157,000 — 157,000 — 153,000 — 153,000 Deferred Compensation Plan Liabilities 4,434 — — 4,434 4,300 — — 4,300 Interest Rate Swaps — 168 — 168 — — — — Total liabilities measured at fair value $ 4,434 $ 698,948 $ — $ 703,382 $ 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 six months ended July 4, 2025. As of July 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. The fair values were estimated based on expected cash flows over the life of the swaps. These expected cash flows were determined using a pricing model that incorporated reasonable assumptions and available market data. The Company invests in marketable securities to mitigate the risk associated with the investment return on the non-qualified deferred compensation plan provided to executives and non-employee directors. The investments are recorded as cash and cash equivalents at their quoted market price. The corresponding deferred compensation plan liabilities are recorded at fair value based on the quoted market price of the underlying investments and are included in accrued expenses on the condensed consolidated balance sheets. 21 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands, except per share data) (unaudited ) 11. Stockholders’ Equity Share Repurchase Plan On November 1, 2023, the Company’s Board of Directors authorized a share repurchase plan for up to $ 300,000 in shares of the Company’s common stock, par value $ 0.001 per share. The share repurchase program is scheduled to expire on November 1, 2028. Repurchases of shares of common stock under the stock repurchase plan will be made in accordance with applicable securities laws and may be made under a variety of methods, which may include open market purchases. The stock repurchase program does not obligate the Company to acquire any particular amount of common stock, and it may be suspended or terminated at any time at the Company’s discretion. There were no repurchases of common stock during the six months ended July 4, 2025. During the six months ended June 28, 2024, the Company repurchased approximately 378 shares for $ 25,000 , at an average price of $ 66.03 . All repurchased shares were immediately retired. The aggregate cost of share repurchases and average price paid per share exclude 1% excise tax on share repurchases imposed as part of the Inflation Reduction Act of 2022. Common stock was reduced by the number of shares retired at $ 0.001 par value per share. The excess purchase price over par value was allocated between additional paid-in capital and retained earnings. As of July 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 six months ended July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024 Cost of sales $ 347 $ 320 $ 645 $ 556 Sales and marketing 461 292 850 667 Research and development 395 361 727 626 General and administrative 3,359 1,230 5,695 4,259 Total $ 4,562 $ 2,203 $ 7,917 $ 6,108 The Company grants both time-based and performance-based stock awards, which also include a time-based vesting feature. Compensation expense for time-based stock awards is measured at the grant date based on the closing market price of the Company’s common stock and recognized ratably over the vesting period. For performance-based stock awards, compensation expense is measured based on estimates of the number of shares ultimately expected to vest at each reporting date based on management’s expectations regarding the relevant performance criteria. 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. 22 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands, except per share data) (unaudited ) The following table summarizes the activity for the Company’s unvested restricted stock units (“RSUs”) for the six months ended July 4, 2025: Unvested RSUs Number of shares outstanding Weighted-average grant date fair value Unvested at January 3, 2025 400 $ 59.88 Granted 568 $ 25.97 Canceled ( 22 ) $ 42.82 Vested ( 173 ) $ 66.08 Unvested at July 4, 2025 773 $ 34.15 As of July 4, 2025, the Company had approximately $ 24,866 of unrecognized stock-based compensation expense related to RSUs, which will be recognized over the remaining weighted-average vesting period of approximately 2.10 years. During the six months ended July 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. The PSUs vest only upon the achievement of the applicable performance goals for the performance period and, depending on the actual achievement on the performance goals, the grantee may earn between 0 % and 200 % of the target PSUs. In fiscal year 2024, the Company issued PSUs to certain executives and non-executives based upon the Company’s performance, over a four-year performance period, against a trailing 12-month revenue target. These revenue-growth PSUs vest only upon the achievement of the applicable performance goals for the performance period, and, depending on the actual achievement on the performance goals, the grantee may earn either 0 % or 100 % of the target PSUs. 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 six months ended July 4, 2025: Unvested PSUs Number of shares outstanding Weighted-average grant date fair value Unvested at January 3, 2025 246 $ 57.00 Granted 262 $ 26.14 Canceled ( 2 ) $ 46.81 Vested — $ — Unvested at July 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. Future stock-based compensation expense for unvested PSUs could reach a maximum of $ 29,841 assuming achievement at the maximum level. The unrecognized stock-based compensation expense is expected to be recognized over a weighted average period of 1.78 years. 23 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands, except per share data) (unaudited ) 12. Earnings (Net Loss) Per Share Basic earnings per share amounts are computed by dividing earnings (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 earnings (net loss) 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 241 and 281 shares from the calculation of diluted earnings per share for the three and six months ended July 4, 2025 and 145 and 103 for the three and six months ended June 28, 2024, respectively, as these shares would have been antidilutive. Due to the net loss reported for the six months ended July 4, 2025, there were no dilutive shares included in the calculation of diluted net loss per share for the period. The following table presents the calculation of basic and diluted earnings per share: For the three months ended For the six months ended July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024 Net income (loss) attributable to FOX stockholders $ 2,744 $ 5,407 $ ( 256,950 ) $ 1,911 Weighted average shares used to compute basic earnings per share 41,788 41,673 41,749 41,662 Dilutive effect of employee stock plans 78 32 — 55 Weighted average shares used to compute diluted earnings per share 41,866 41,705 41,749 41,717 Earnings (net loss) per share: Basic $ 0.07 $ 0.13 $ ( 6.15 ) $ 0.05 Diluted $ 0.07 $ 0.13 $ ( 6.15 ) $ 0.05 24 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) 13. Income Taxes For the three months ended For the six months ended July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024 Provision (benefit) from income taxes $ 2,800 $ ( 371 ) $ ( 837 ) $ ( 1,638 ) Effective tax rates 50.9 % ( 7.4 ) % 0.3 % ( 600.0 ) % 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 unfavorable impact of discrete items in proportion to lower levels of pre-tax income. 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 the non-deductible goodwill. For the three months ended June 28, 2024, the difference between the Company’s effective tax rate of ( 7.4 )% and the 21 % federal statutory rate resulted primarily due to the favorable impact of discrete items in proportion to lower levels of pre-tax income. For the six months ended June 28, 2024, the difference between the Company’s 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. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented 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. 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. 25 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) 14. Acquisitions 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 motorcycle suspension manufacturing. The Company believes that this acquisition will be complementary to its powered vehicle businesses and will help to expand its product offerings. This transaction was accounted for as a business combination. The purchase price of Marzocchi is preliminarily 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 six months ended July 4, 2025, the Company recorded an increase of $ 135 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, translated into U.S. dollars using the exchange rate on the same date: Acquisition consideration Cash consideration, net of cash acquired $ 20,501 Total consideration at closing $ 20,501 Fair market values Accounts receivable $ 6,706 Inventory 12,097 Prepaid and other current assets 1,527 Property, plant and equipment 5,888 Trademarks and brands 1,500 Customer and distributor relationships 2,000 Goodwill 3,340 Other assets 5,650 Total assets acquired $ 38,708 Accounts payable $ 12,175 Accrued expenses 2,321 Deferred Taxes 840 Other liabilities 2,871 Total liabilities assumed $ 18,207 Purchase price allocation $ 20,501 The gross contractual accounts receivable acquired in the acquisition was $ 6,706 , all of which was expected to be collected. As of July 4, 2025, $ 6,038 of the acquired accounts receivable had been collected. This amount is translated using the exchange rate at the reporting date. 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 $ 1,765 of acquisition costs in conjunction with the Marzocchi acquisition, of which $ 289 were incurred during the six months ended July 4, 2025. These costs are classified as general and administrative expenses in the accompanying condensed consolidated statements of income. 26 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) The values assigned to the identifiable intangible assets were determined by discounting the estimated future cash flows associated with these assets to their present value. The goodwill of $ 3,340 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 tax deductible for U.S. income tax purposes due to the step-up in tax basis of acquired goodwill and a portion 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. 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 for Marzocchi for the three and six months ended July 4, 2025 amounted to $ 11,691 and $ 23,660 , respectively. The total pre-tax losses for Marzocchi for the three and six months ended July 4, 2025 amounted to $ 722 and $2,345. 15. Segment Information We manage our activities based on three operating segments: Powered Vehicles Group, Aftermarket Applications Group, and Specialty Sports Group. All of our segments design, engineer and manufacture performance-defining products and systems for customers worldwide. The following is a description of our operating segments. Powered Vehicles Group: This segment operates 2 plants in the United States and 1 plant in Italy. Our premium products sold under the FOX brand are for off-road vehicles and trucks, side-by-sides, on-road vehicles with and without off-road capabilities, ATVs, snowmobiles, specialty vehicles and applications, and commercial trucks, and the Marzocchi brand for motorcycles. These products are sold through both OEM and aftermarket channels. Aftermarket Applications Group: This segment operates 15 plants across the United States. Our range of aftermarket applications products includes premium products under the BDS Suspension, Zone Offroad, JKS Manufacturing, RT Pro UTV, 4x4 Posi-Lok, Ridetech, Tuscany, Outside Van, SCA, RTR, Fun-Haver, and Custom Wheel House brands designed for off-road vehicles and trucks, side-by-sides, on-road vehicles with or without off-road capabilities, specialty vehicles and applications, and commercial trucks. Specialty Sports Group: This segment operates 10 plants and 13 distribution facilities (12 in the United States, 4 in Taiwan, and one facility each in Australia, Canada, Germany, Japan, Sweden, Switzerland, and United Kingdom). Our bike product offerings are used on a wide range of performance mountain bikes, e-bikes, and gravel bikes under the FOX, Race Face, Easton Cycling, and Marzocchi brands. These products are sold through both OEM and aftermarket channels. Our products for diamond sports include premium baseball and softball equipment under the Marucci, Victus, Lizard Skins, and Baum Bat brands and are sold through dealers and distributors and through direct-to-customer channels. Net sales and expenses are measured in accordance with the policies and procedures described in Note 1 – Business and Summary of Significant Accounting Policies within our 2024 Form 10-K. We measure the profitability and financial performance of our operating segments based on adjusted EBITDA. Adjusted EBITDA provides a measure of our underlying segment results that is in line with our approach to risk management. We define adjusted EBITDA as net income adjusted for (a) interest expense, (b) income tax or tax benefits, (c) amortization including amortization of purchased intangibles, (d) depreciation, (e) stock-based compensation, (f) litigation and settlement related expenses, (g) organizational restructuring expenses, (h) acquisition and integration-related expenses, (i) strategic transformation costs, and (j) goodwill impairment. 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. 27 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) 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. For the three months ended For the six months ended July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024 Net sales Powered Vehicles Group $ 123,514 $ 117,795 $ 245,612 $ 235,908 Aftermarket Applications Group 114,144 107,129 226,058 208,981 Specialty Sports Group 137,206 123,567 258,224 237,074 Net sales $ 374,864 $ 348,491 $ 729,894 $ 681,963 Net income (loss) 2,705 5,407 ( 257,029 ) 1,911 Goodwill impairment — — 262,129 — Provision (benefit) from income taxes 2,800 ( 371 ) ( 837 ) ( 1,638 ) Depreciation and amortization (1) 21,449 20,403 43,188 40,854 Non-cash stock-based compensation 4,562 2,203 7,917 6,109 Litigation and settlement-related expenses 474 1,231 1,191 2,760 Other acquisition and integration-related expenses (2) 723 470 1,340 5,633 Organizational restructuring expenses (3) 3,557 413 5,170 476 Organizational restructuring related losses 392 — 1,090 — Strategic transformation costs — 822 20 1,254 Interest and other expense, net 12,631 13,554 24,716 27,192 Adjusted EBITDA $ 49,293 $ 44,132 $ 88,895 $ 84,551 Powered Vehicles Group 16,387 15,889 30,769 31,770 Aftermarket Applications Group 16,016 14,156 33,010 29,026 Specialty Sports Group 30,385 29,214 53,779 53,271 Unallocated corporate expenses ( 13,495 ) ( 15,127 ) ( 28,663 ) ( 29,516 ) Adjusted EBITDA $ 49,293 $ 44,132 $ 88,895 $ 84,551 (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 six months ended July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024 Acquisition related costs and expenses $ 276 $ 470 $ 479 $ 1,148 Purchase accounting property, plant and equipment fair value adjustment amortization 269 — 519 — Purchase accounting inventory fair value adjustment amortization 178 — 342 4,485 Other acquisition and integration-related expenses $ 723 $ 470 $ 1,340 $ 5,633 28 Table of Contents FOX FACTORY HOLDING CORP. Notes to Condensed Consolidated Financial Statements (in thousands) (unaudited ) (3) Represents expenses associated with various restructuring initiatives across the organization. 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 For the six months ended July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024 Powered Vehicles Group $ 107,127 $ 101,906 $ 214,843 $ 204,138 Aftermarket Applications Group 98,128 92,973 193,048 179,955 Specialty Sports Group 106,821 94,353 204,445 183,803 Unallocated corporate expenses 13,495 15,127 28,663 29,516 $ 325,571 $ 304,359 $ 640,999 $ 597,412 29 Table of Contents