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Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-02-28 · 216 added, 161 removed, 323 unchanged (54% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations, generally, as of and for fiscal years 2024 and 2023 should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Annual Report in Form 10-K.

The following discussion and analysis of our financial condition and results of operations, generally, as of and for fiscal years 2025 and 2024 should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K.

For discussion related to the results of operations and changes in financial condition for fiscal year 2024 compared to fiscal year 2023 refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our fiscal year 2024 Form 10-K, which was filed with the SEC on February 28, 2025.

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We design, engineer, manufacture and market performance-defining products and systems for customers worldwide.

Our premium brands on performance-defining products and systems are used primarily on bikes, side-by-sides, on-road vehicles with and without off-road capabilities, off-road vehicles and trucks, motorcycles, ATVs, snowmobiles, and specialty vehicles and applications.

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

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

Virtually all of our revenues were from our product sales.

Miscellaneous sources of revenue such as service-related repair work and the associated sale of parts represented less than 2% of our sales in each of the years ended January 3, 2025, December 29, 2023 and December 30, 2022.

We have determined that we operate in three reportable segments:

Virtually all of our revenue was from our product sales.

Miscellaneous sources of revenue such as service-related repair work and the associated sale of parts represented less than 2% of our sales in each of the years ended January 2, 2026, January 3, 2025 and December 29, 2023.

We determined that we operate in three reportable segments:

PVG, AAG, and SSG.

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• powered vehicles, including side-by-sides, certain on-road vehicles with and without off-road capabilities, off-road vehicles and trucks, ATVs, snowmobiles, specialty vehicles and applications, including military, motorcycles, and commercial trucks;

• aftermarket applications, mainly consisting of products for off-road vehicles and trucks, side-by-sides, on-road vehicles with or without off-road capabilities, specialty vehicles and applications as well as lift kits and components with our shock products and aftermarket accessory packages for use in trucks;

• specialty sports products, which consist primarily of bike suspension, component products, and gear and equipment for baseball and softball.

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For the fiscal years ended

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

January 2, 2026 January 3, 2025 December 29, 2023

Powered Vehicles Group 33 % 33 % 36 %

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Our international sales, however, do not necessarily reflect the location of the end users of our products as many of our products are incorporated into bikes that are assembled at international locations and then shipped back to the U.S.

We estimate, based on our internal projections and assumptions, that approximately one-third of the end users of our bike products are located outside the U.S.

For the fiscal years ended

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

January 2, 2026 January 3, 2025 December 29, 2023

North America 76 % 79 % 77 %

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Losses in market share or a decline in the overall market of our OEM customers or the discontinuance by our OEM customers of their products that incorporate our products could negatively impact our business and our results of operations.

Some of our power sports OEM customers are currently facing challenges, which could impact demand for our products and contribute to fluctuations in sales.

Additionally, bike continues to recover from the inventory channel recalibration, which may affect sales and overall demand in the near term.

See “Risks Related to Our Business and Operations” within Item 1A.

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To further penetrate the aftermarket channel, we intend to selectively add additional dealers and distributors in certain geographic markets, expand our internal sales force and strategically increase the number of aftermarket specific products and services that we offer for existing vehicle platforms.

In addition, we believe international expansion represents a significant opportunity for us and we intend to selectively increase infrastructure investments and focus on identified geographic regions.

In the fourth quarter of 2021, we completed the construction of an approximately 336,000 square foot state-of-the-art facility in Hall County, Georgia (the “Gainesville Facility”), to diversify our manufacturing platform and provide additional long-term capacity to support growth in our Powered Vehicles Group.

The Gainesville Facility is being used for manufacturing, warehousing, distribution and office space.

From time to time, we have experienced, and may continue to experience, warranty costs and claims relating to our products.

In the ordinary course of business, we reserve for such costs and claims in our financial statements.

There is a risk, however, that in the future we will experience higher than expected warranty costs and claims, as well as other related costs.

Please read “Risks Related to Our Business and Operations - Product recalls, and significant product repair and/or replacement due to product warranty costs and claims have had, and in the future, could have, a material adverse impact on our business” within Item 1A.

From time to time, we have experienced, and may continue to experience, inventory risks, including excess, obsolete, or slow-moving inventory, as well as warranty costs and claims relating to our products.

In the ordinary course of business, we reserve for these matters in our financial statements.

There is a risk, however, that in the future we will experience higher than expected inventory adjustments or write-downs, warranty costs and claims, as well as other related costs.

Please read “Risks Related to Our Business and Operations - If we inaccurately forecast demand for our products or inaccurately predict OEM and dealer destocking and restocking cycles and production schedules, we may manufacture insufficient or excess quantities or our manufacturing costs could increase, which could adversely affect our business ” and “ Product recalls, and significant product repair and/or replacement due to product warranty costs and claims have had, and in the future, could have, a material adverse impact on our business ” within Item 1A.

Risk Factors of this Annual Report on Form 10-K.

From time to time, we evaluate our portfolio of businesses and may pursue divestitures of non‑core or underperforming operations as part of our strategy to focus on higher‑growth, higher‑margin areas.

Divestitures may result in transitional costs, potential loss of revenue, and other financial impacts during and after the separation, including possible gains or losses on disposal depending on the structure and timing of the transaction.

These transactions can also create operational risks, including disruption to employees and customers and reliance on transition services arrangements for a period of time.

We continue to assess opportunities to streamline our portfolio and allocate capital and management attention to areas that best support our strategic objectives.

We intend to evaluate selective potential acquisition opportunities for performance-defining products and technologies that we believe will help us extend our performance-defining product platform.

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trade policies and global tariffs.

The new presidential administration has expanded tariffs on steel, aluminum, and derivative products, imposed new tariffs on imports from China, Hong Kong, Mexico, and Canada, and proposed a shift toward reciprocal tariffs.

The current presidential administration expanded tariffs on steel, aluminum, and derivative products, imposed new tariffs on imports from China, Hong Kong, Mexico, and Canada, and proposed a shift toward reciprocal tariffs.

These changes create uncertainty in global trade, potentially increasing our material costs, disrupting our supply chain, and affecting our pricing strategies.

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These services are typically recognized as revenue when the service is performed;

• Tariff surcharges:

consist of amounts billed to customers to recover tariff costs and are recorded as revenue when the associated products are recognized as revenue;

• Shipping and handling fees:

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Cost of sales

The cost of sales includes the cost of purchased parts and manufactured products (raw materials consumed, the cost to procure materials, labor costs, including wages, and employee benefits, and factory overhead to produce finished goods or products), including:

Cost of sales includes the cost of purchased parts and manufactured products (raw materials consumed, the cost to procure materials, labor costs, including wages, and employee benefits, and factory overhead to produce finished goods or products), including:

• the costs to inspect and repair products;

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• warranty costs associated with the repair or replacement of products under warranty;

• reductions in the cost of inventory to its net realizable value, if required, for estimated excess, obsolescence or impaired balances.

• reductions in the carrying value of inventory to its net realizable value, if required, for estimated excess, obsolescence or impaired balances.

Gross profit/gross margin

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Our operating expenses consist of the following:

• goodwill impairment;

• sales and marketing;

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• amortization of purchased intangibles;

• intangible and long-lived asset impairment.

Our goodwill impairment expense reflects non-cash charges recognized when the carrying value of goodwill exceeds its estimated fair value.

We perform a goodwill impairment assessment at least annually but may perform interim assessments in the event of a triggering event that may indicate the fair value of a reporting unit decreased below its carrying value.

During the year ended January 2, 2026, we recorded $557.3 million goodwill impairment charges as a result of our assessments.

No goodwill impairments were identified in the years ended January 3, 2025 and December 29, 2023.

Our sales and marketing expenses include costs related to our net sales, customer service and marketing personnel, including their wages, employee benefits and related stock-based compensation, and occupancy-related expenses.

Other significant sales and marketing expenses include commissions paid to outside sales representatives, promotional materials and products, our sales office costs, race support and sponsorships of events and athletes, advertising and promotions related to trade shows, and travel and entertainment.

Other significant sales and marketing expenses include commissions paid to outside sales representatives, promotional materials and products, our sales office costs, third-party marketing spend, race support and sponsorships of events and athletes, advertising and promotions related to trade shows, and travel and entertainment.

Our research and development expenses consist primarily of salaries and personnel costs, including wages, employee benefits and related stock-based compensation for our engineering, research and development teams, occupancy-related expenses, fees for third party consultants, service fees, and expenses for prototype tooling and materials, travel, and supplies.

We expense research and development costs as incurred and such costs are included as research and development expenses on our consolidated statements of income.

We expense research and development costs as incurred and such costs are included as research and development expenses on our consolidated statements of operations.

Our general and administrative expenses include costs related to our executive, finance, legal, information technology, business development, human resources and administrative personnel, including wages, employee benefits and related stock-based compensation expenses.

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Our intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be fully recoverable.

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

In the year ended January 2, 2026, we recognized $8.0 million impairments of intangible assets.

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

Our intangible and long-lived asset impairment expense includes non-cash charges recognized when the carrying value of intangible and other long-lived assets is not recoverable.

When indicators of impairment are present, we assess the asset’s recoverability and, if necessary, write it down to its estimated fair value.

In the year ended January 2, 2026, we recorded total intangible and long-lived asset impairments of $13.5 million, inclusive of the $8.0 million intangible asset impairments described above.

No impairments of long-lived assets were identified in the years ended January 3, 2025 and December 29, 2023.

Income from operations

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Our effective tax rate could be affected by numerous factors such as changes in our business operations, acquisitions, investments, entry into new businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, losses incurred in jurisdictions for which we are not able to realize related tax benefits, changes in our deferred tax assets and liabilities and their valuation, changes in the laws, regulations, administrative practices, principles, and interpretations related to tax, including changes to the global tax framework and other laws and accounting rules in various jurisdictions.

For the years ended January 3, 2025, December 29, 2023 and December 30, 2022, we had effective tax rates of (543.5)%, 12.8% and 12.2%, respectively.

For the years ended January 2, 2026, January 3, 2025 and December 29, 2023, we had effective tax rates of 5.5%, (543.5)% and 12.8%, respectively.

As of January 2, 2026, our deferred tax assets included foreign tax credits of approximately $45.4 million, which begin to expire in 2028 unless utilized.

Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

As of January 3, 2025, the Company determined a valuation allowance was not needed.

The Company is implementing tax planning strategies and operational measures to support the realizability of its general category foreign tax credits and to mitigate valuation allowance risk.

As of January 2, 2026, the Company determined a valuation allowance was needed for branch foreign tax credits.

In the future, our effective tax rate could vary as we update our assessment of valuation allowances for our deferred tax assets, including those associated with credit carryforwards.

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Non-controlling interests represent the portion of income or loss and the corresponding equity attributable to third-party equity holders in certain consolidated subsidiaries that are not 100% owned by us.

NCI are presented as separate components in our consolidated statements of income to clearly differentiate between our interests and the economic interests of third parties in those entities.

Net income attributable to FOX stockholders, as reported in the consolidated statements of income, is presented net of the portion of net income (loss) attributable to non-controlling interests.

NCI are presented as separate components in our consolidated statements of operations to clearly differentiate between our interests and the economic interests of third parties in those entities.

Net (loss) income attributable to FOX stockholders, as reported in the consolidated statements of operations, is presented net of the portion of net income (loss) attributable to non-controlling interests.

In May 2024, the Company formed a joint venture, The Stable JV, LLC, whereby the Company owns a 51% membership interest.

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Results of operations

The table below summarizes our results of operations for the fiscal years ended January 3, 2025, December 29, 2023, and December 30, 2022:

The table below summarizes our results of operations for the fiscal years ended January 2, 2026, January 3, 2025, and December 29, 2023:

For the fiscal years ended

(in millions) January 3, 2025 December 29, 2023 December 30, 2022

(in millions) January 2, 2026 January 3, 2025 December 29, 2023

Net sales $ 1,467.3 $ 1,393.9 $ 1,464.2

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Operating expenses:

Goodwill impairment 557.3 — —

General and administrative 151.8 139.9 124.6

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Amortization of purchased intangibles 42.0 44.5 26.5

Intangible and long-lived asset impairment 13.5 — —

Total operating expenses 966.2 365.9 304.7

Income from operations 57.7 160.1 246.7

(Loss) income from operations (522.9) 57.7 160.1

Interest expense 53.7 54.9 19.3

Other expense, net 1.7 2.1 4.0

Income before income taxes 1.0 138.7 233.8

Other (income) expense, net (0.3) 1.7 2.1

(Loss) income before income taxes (576.3) 1.0 138.7

(Benefit) provision for income taxes (31.6) (5.5) 17.8

Net income 6.5 120.8 205.3

Net (loss) income (544.7) 6.5 120.8

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

Net income attributable to FOX stockholders $ 6.6 $ 120.8 $ 205.3

Net (loss) income attributable to FOX stockholders $ (544.6) $ 6.6 $ 120.8

*Amounts may not foot due to rounding.

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

The following table sets forth statement of operations data as a percentage of net sales for the years indicated:

For the fiscal years ended

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

January 2, 2026 January 3, 2025 December 29, 2023

Net sales 100.0 % 100.0 % 100.0 %

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Operating expenses:

Goodwill impairment 38.0 — —

General and administrative 10.3 10.0 8.5

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Amortization of purchased intangibles 2.9 3.2 1.8

Intangible and long-lived asset impairment 0.9 — —

Total operating expenses 65.8 26.3 20.8

Income from operations 4.1 10.9 15.4

(Loss) income from operations (35.6) 4.1 10.9

Interest expense 3.7 3.9 1.3

Other expense, net 0.1 0.1 0.2

Income before income taxes 0.1 9.5 14.6

Other (income) expense, net — 0.1 0.1

(Loss) income before income taxes (39.3) 0.1 9.5

(Benefit) provision for income taxes (2.2) (0.4) 1.2

Net income 0.5 8.3 12.8

Net (loss) income (37.1) 0.5 8.3

net loss attributable to non-controlling interest — — —

Net income attributable to FOX stockholders 0.5 % 8.3 % 12.8 %

Net (loss) income attributable to FOX stockholders (37.1) % 0.5 % 8.3 %

*Percentages may not foot due to rounding.

Fiscal year ended January 3, 2025 compared to fiscal year ended December 29, 2023

Consolidated net sales

For the fiscal years

(in millions) 2024 2023 Change ($) Change (%)

Total net sales $ 1,393.9 $ 1,464.2 $ (70.3) (4.8) %

Total net sales for the year ended January 3, 2025 decreased approximately $70.3 million, or 4.8%, compared to the year ended December 29, 2023.

The decrease in net sales is primarily due to product mix, chassis availability, lower industry and end consumer demand because of higher interest rates and higher inventory levels at OEMs and dealerships.

The decrease was partially offset by a full-year net sales of $192.4 from Marucci, which was acquired in November 2023, compared to net sales of $16.8 million included in prior year.

Fiscal year ended January 2, 2026 compared to fiscal year ended January 3, 2025

For the fiscal years ended

(in millions) January 2, 2026 January 3, 2025 Change ($) Change (%)

Net sales $ 1,467.3 $ 1,393.9 $ 73.4 5.3 %

Net sales for the year ended January 2, 2026 increased approximately $73.4 million, or 5.3%, compared to the year ended January 3, 2025.

The increase in net sales is primarily due to increased demand for aftermarket applications, improved performance in our upfitting product lines, and the market share gain in powersports, 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 remain headwinds.

Cost of sales

For the fiscal years

(in millions) 2024 2023 Change ($) Change (%)

For the fiscal years ended

(in millions) January 2, 2026 January 3, 2025 Change ($) Change (%)

Cost of sales $ 1,024.1 $ 970.3 $ 53.8 5.5 %

Cost of sales for the year ended January 3, 2025 decreased approximately $29.1 million, or 2.9%, compared to the year ended December 29, 2023.

The decrease in cost of sales was mainly due to our decreased sales.

For the year ended January 3, 2025, our gross margin was 30.4% compared to 31.7% for the year ended December 29, 2023.

The decrease in gross margin for the fiscal year 2024 was primarily due to shifts in our product line mix and operating leverage on lower volume.

Cost of sales for the year ended January 2, 2026 increased approximately $53.8 million, or 5.5%, compared to the year ended January 3, 2025.

The increase in cost of sales was mainly due to our increased sales and the impact of tariffs.

For the year ended January 2, 2026, our gross margin was 30.2% compared to 30.4% for the year ended January 3, 2025.

The decrease in gross margin for the fiscal year 2025 was primarily due to the shifts in our product line mix and the impact of tariffs.

Operating expenses

For the fiscal years

(in millions) 2024 2023 Change ($) Change (%)

For the fiscal years ended

(in millions) January 2, 2026 January 3, 2025 Change ($) Change (%)

Operating expenses:

Goodwill impairment $ 557.3 $ — $ 557.3 N/A

General and administrative 151.8 139.9 11.9 8.5 %

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Amortization of purchased intangibles 42.0 44.5 (2.5) (5.6)

Intangible and long-lived asset impairment

13.5 — 13.5 N/A

Total operating expenses $ 966.1 $ 365.9 $ 600.2 164.0 %

Total operating expenses for the year ended January 2, 2026 increased approximately $600.2 million, or 164.0%, over the comparable period in 2024.

When expressed as a percentage of net sales, operating expenses increased to 26.3% of net sales for the year ended January 3, 2025, compared to 20.8% of net sales for the fiscal year ended December 29, 2023.

Within operating expenses, our sales and marketing expenses and general and administrative expenses increased by approximately $20.8 million and $15.3 million, respectively, primarily due to $24.6 million and $26.9 million higher expenses attributable to Marucci, respectively, attributed to including a full year of Marucci expenses in 2024.

The increase was partially offset by our cost containment measures.

Research and development expenses increased approximately $7.1 million driven by personnel investments to support future growth and product innovation and the inclusion of a full year of Marucci expenses.

Amortization of purchased intangible assets for the year ended January 3, 2025 increased by approximately $18.0 million as compared to the year ended December 29, 2023, primarily due to the amortization of Marucci intangible assets.

Income from operations

For the fiscal years

(in millions) 2024 2023 Change ($) Change (%)

Income from operations $ 57.7 $ 160.1 $ (102.4) (64.0) %

As a result of the factors discussed above, income from operations for the year ended January 3, 2025 decreased approximately $102.4 million, or 64.0%, compared to the year ended December 29, 2023.

When expressed as a percentage of net sales, operating expenses increased to 65.8% of net sales for the year ended January 2, 2026, compared to 26.3% of net sales for the fiscal year ended January 3, 2025.

During the fiscal year 2025, we recognized goodwill impairment charges of $557.3 million and intangible and long-lived asset impairment charges of $13.5 million as a result of our quantitative assessments on goodwill and long-lived assets 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.

General and administrative expenses increased by approximately $11.9 million primarily due to o rganizational restructuring.

Sales and marketing expenses and research and development expenses increased approximately $10.9 million and $9.1 million, respectively, driven by higher investments to support future growth and product innovation.

Amortization of purchased intangible assets for the year ended January 2, 2026 decreased by approximately $2.5 million, as compared to the year ended January 3, 2025, primarily due to certain intangible assets becoming fully amortized early in the year.

(Loss) income from operations

For the fiscal years ended

(in millions) January 2, 2026 January 3, 2025 Change ($) Change (%)

(Loss) income from operations $ (522.9) $ 57.7 $ (580.6) (1006.2) %

As a result of the factors discussed above, (loss) income from operations for the year ended January 2, 2026 decreased approximately $580.6 million compared to the year ended January 3, 2025.

Interest and other expense, net

For the fiscal years

(in millions) 2024 2023 Change ($) Change (%)

For the fiscal years ended

(in millions) January 2, 2026 January 3, 2025 Change ($) Change (%)

Interest expense $ 53.7 $ 54.9 $ (1.2) (2.2) %

Other expense, net 1.7 2.1 (0.4) (19.0)

Other (income) expense, net (0.3) 1.7 (2.0) (117.6)

Interest and other expense, net $ 53.4 $ 56.6 $ (3.2) (5.7) %

Interest and other expense, net for the year ended January 3, 2025 increased by approximately $35.2 million to $56.6 million, compared to $21.4 million for the year ended December 29, 2023.

Interest expense increased by $35.6 million due to higher debt and interest rates.

For the fiscal years

(in millions) 2024 2023 Change ($) Change (%)

(Benefit) provision for income taxes $ (5.5) $ 17.8 $ (23.3) (130.9) %

Income tax expense for the year ended January 3, 2025 decreased by approximately $23.3 million to a benefit of $5.5 million compared to $17.8 million for the year ended December 29, 2023.

The decrease primarily resulted from a decrease in pre-tax profit.

The effective tax rates were (543.5)% and 12.8% for the years ended January 3, 2025 and December 29, 2023, respectively.

Interest and other expense, net for the year ended January 2, 2026 decreased by approximately $3.2 million to $53.4 million, compared to $56.6 million for the year ended January 3, 2025.

Interest expense decreased by $1.2 million due to lower debt and interest rates.

For the fiscal years ended

(in millions) January 2, 2026 January 3, 2025 Change ($) Change (%)

Benefit from income taxes $ (31.6) $ (5.5) $ (26.1) (474.5) %

Income tax benefit for the year ended January 2, 2026 increased by approximately $26.1 million to a benefit of $31.6 million compared to $5.5 million for the year ended January 3, 2025.

The increase primarily resulted from the impairment impact of non-deductible goodwill recognized during the year.

The effective tax rates were 5.5% and (543.5)% for the years ended January 2, 2026 and January 3, 2025, respectively.

For the year ended January 2, 2026, the difference between our effective tax rate and the 21% federal statutory rate resulted primarily from the impairment impact of non-deductible goodwill recognized during the year.

For the year ended January 3, 2025, the difference between our effective tax rate and the 21% federal statutory rate resulted primarily from a benefit from the U.S.

research and development tax credit.

For the year ended December 29, 2023, the difference between our effective tax rate and the 21% federal statutory rate resulted from a lower tax rate on foreign derived intangible income and benefit from the U.S.

research and development tax credit.

For the fiscal years

(in millions) 2024 2023 Change ($) Change (%)

Net income $ 6.5 $ 120.8 $ (114.3) (94.6) %

As a result of the factors described above, our net income decreased $114.3 million, or 94.6%, to $6.5 million in the fiscal year ended January 3, 2025 from $120.8 million for the fiscal year ended December 29, 2023.

Net income attributable to FOX stockholders

For the fiscal years

(in millions) 2024 2023 Change ($) Change (%)

Net income attributable to FOX stockholders $ 6.6 $ 120.8 $ (114.2) (94.5) %

Our net income attributable to FOX stockholders decreased $114.2 million, or 94.5%, to $6.6 million in the fiscal year ended January 3, 2025 from $120.8 million for the fiscal year ended December 29, 2023.

Net (loss) income

For the fiscal years ended

(in millions) January 2, 2026 January 3, 2025 Change ($) Change (%)

Net (loss) income $ (544.7) $ 6.5 $ (551.2) (8,480.0) %

As a result of the factors described above, our net income decreased $551.2 million to $544.7 million net loss in the fiscal year ended January 2, 2026 from $6.5 million net income for the fiscal year ended January 3, 2025.

Net (loss) income attributable to FOX stockholders

For the fiscal years ended

(in millions) January 2, 2026 January 3, 2025 Change ($) Change (%)

Net (loss) income attributable to FOX stockholders $ (544.6) $ 6.6 $ (551.2) (8,351.5) %

As a result of factors described above, our net income attributable to FOX stockholders decreased $551.2 million to $544.6 million net loss in the fiscal year ended January 2, 2026 from $6.6 million net income for the fiscal year ended January 3, 2025.

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 20 – Segment Information .

For additional financial information related to our operating segments including the reconciliation of segment adjusted EBITDA to (loss) income before income taxes, see Note 20.

Segment Information .

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

For the fiscal years

(in millions) 2024 2023 Change ($) Change (%)

For the fiscal years ended

(in millions) January 2, 2026 January 3, 2025 Change ($) Change (%)

Powered Vehicles Group $ 488.1 $ 461.4 $ 26.7 5.8 %

6 unchanged sentences

Specialty Sports Group 107.6 117.8 (10.2) (8.7)

Unallocated corporate expenses (56.4) (62.7) 6.3 (10.0)

Adjusted EBITDA $ 167.0 $ 261.1 $ (94.1) (36.0) %

Powered Vehicles Group

Powered Vehicles Group net sales decreased by approximately $62.5 million, or 11.9%, due to lower industry demand in power sports and automotive because of higher interest rates impacting dealers and consumers, and higher inventory levels at dealerships.

Powered Vehicles Group adjusted EBITDA decreased by approximately $25.4 million or 32.1%, mainly due to a decrease in gross profit.

Powered Vehicles Group net sales increased by approximately $26.7 million, or 5.8%, due to higher sales in powersports and aftermarket applications, which offset lower industry demand in automotive OE product lines.

Powered Vehicles Group adjusted EBITDA increased by approximately $8.5 million or 15.8%, mainly due to an increase in gross profit.

Aftermarket Applications Group

Aftermarket Applications Group net sales decreased by approximately $129.7 million, or 23.5%, driven by lower upfitting sales due to product mix, chassis availability, higher interest rates impacting dealers and consumers, and higher inventory level at dealerships.

Aftermarket Applications Group adjusted EBITDA decreased by approximately $75.1 million, or 59.2%, mainly due to lower gross profit.

Aftermarket Applications Group net sales increased by approximately $48.6 million, or 11.5%, driven by increased demand for aftermarket products and higher upfitting sales;

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 approximately $4.1 million, or 7.9%, mainly due to higher gross profit.

Specialty Sports Group

Specialty Sports Group net sales increased by approximately $121.9 million, or 31.3%, primarily due to the inclusion of $192.4 million in net sales from Marucci, partially offset by a reduction in bike sales of $53.7 million because of the ongoing bike channel inventory recalibration and, to a lesser extent, lower end consumer demand.

Specialty Sports Group adjusted EBITDA remained nearly unchanged primarily due to product mix within the segment, offset by the inclusion of Marucci.

Unallocated corporate expenses

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 decreased by $6.3 million, or 10.0%, driven by cost containment measures.

Specialty Sports Group net sales decreased by approximately $1.9 million, or 0.4%, primarily due to lower diamond sports product sales partially offset by higher bike sales.

Specialty Sports Group adjusted EBITDA decreased by approximately $10.2 million, or 8.7%, primarily due to a decrease in gross profit.

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.

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

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

These sources of liquidity may be impacted by factors and events described in Special Note Regarding Forward-Looking Statements and Item 1A.

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For the years ended

(in millions) January 3, 2025 December 29, 2023 December 30, 2022

(in millions) January 2, 2026 January 3, 2025 December 29, 2023

Net cash provided by operating activities $ 60.9 $ 131.8 $ 178.7

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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 Annual Report on Form 10-K and beyond.

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

Operating activities

In the fiscal year ended January 2, 2026, net cash provided by operating activities was $60.9 million.

The change in our operating assets and liabilities is a result of a decrease in prepaids and other current assets of $48.5 million, an increase in accounts payable of $23.2 million, and a decrease in accounts receivable of $10.4 million, partially offset by an increase in inventory of $26.5 million, and decreases in income taxes payable of $11.2 million and accrued expenses and other liabilities of $2.8 million.

The change in our operating assets and liabilities is a result of an increase in prepaids and other current assets of $27.1 million, an increase in accounts receivable of $23.5 million, a decrease in accrued expenses and other liabilities of $7.3 million, and a decrease in income taxes payable of $1.9 million, partially offset by a decrease in inventory of $18.0 million, and an increase in accounts payable of $1.2 million.

The increase in prepaids and other current assets is primarily due to an increase in prepaid chassis deposits to meet next year upfitting production needs.

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

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

The decrease in income taxes payable is mainly due to lower pre-tax income and tax payments.

The decrease in inventory is driven by strong execution of continuous improvement efforts to optimize inventory levels across the organization, particularly within PVG, which offset some of the impact from higher tariffs.

In the fiscal year ended January 3, 2025, net cash provided by operating activities was $131.8 million.

The change in our operating assets and liabilities is a result of a decrease in prepaids and other current assets of $48.5 million, an increase in accounts payable of $15.0 million, a decrease in accounts receivable of $10.4 million, and an increase in accrued expenses and other liabilities of $5.4 million, partially offset by an increase in inventory of $26.5 million, and a decrease in income taxes payable of $11.2 million.

The decrease in prepaids and other current assets is primarily due to lower prepaid chassis deposits driven by the sale of 2023 and 2024 model year chassis.

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The change in income taxes payable is mainly due to lower pre-tax income.

In the fiscal year ended December 29, 2023, net cash provided by operating activities was $178.7 million.

In the fiscal year ended December 29, 2023, cash provided by operating activities was $178.7 million.

Our investment in operating assets and liabilities is a result of an increase in prepaids and other current assets of $38.2 million primarily due to carrying more chassis to meet current year production needs for the upfitting product lines, and decreases in accounts payable of $44.0 million, accrued expenses and other liabilities of $21.4 million, and income taxes payable of $19.1 million, partially offset by decreases in accounts receivable of $64.5 million and inventory of $31.6 million.

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

In the fiscal year ended December 30, 2022, cash provided by operating activities was $187.1 million.

Cash invested in operating assets and liabilities is primarily the result of increases in inventory of $87.4 million and accounts receivable of $64.0 million, partially offset by a decrease in prepaids and other current assets of $18.1 million, and increases in accounts payable of $40.5 million, accrued expenses of $11.7 million and income taxes payable of $8.7 million.

The increase in inventory is due to several factors, including natural growth to meet anticipated demand, receipt of long lead time items that had been delayed, and higher levels of safety stock to mitigate supply chain uncertainty.

The increases in accounts receivable, accounts payable and accrued expenses reflect normal business growth, as well as the timing of customer collections and vendor payments.

The decrease in prepaids and other current assets is primarily due to a lower supply of chassis as we worked through the safety stock that we had secured at the end of 2021.

Investing activities

In the fiscal year ended January 2, 2026, cash used in investing activities consisted of $34.0 million in property and equipment additions.

In the fiscal year ended January 3, 2025, cash used in investing activities was $76.3 million, which primarily consisted of $44.0 million in property and equipment additions, $25.8 million in cash considerations for our acquisitions including the acquisition of Marzocchi, $5.4 million in cash consideration for our purchase of other assets, and $1.1 million paid for acquisition foreign exchange hedge settlement related to the acquisition of Marzocchi.

In the fiscal year ended December 29, 2023, cash used in investing activities was $750.4 million, which primarily consisted of $701.1 million in cash consideration for our acquisitions of Marucci and Custom Wheel House, $46.9 million in property and equipment additions, and $2.4 million in cash consideration for our purchase of other assets.

In the fiscal year ended December 30, 2022, cash used in investing activities was $44.7 million, which primarily consisted of $43.7 million in property and equipment additions, $3.5 million in cash consideration for our purchase of intellectual property assets, and $0.7 million in cash consideration to finalize our acquisition of Shock Therapy, partially offset by $3.2 million in proceeds from the sale of property and equipment.

Financing activities

In the fiscal year ended January 3, 2025, net cash used in financing activities was $67.3 million, which primarily consisted of $406.0 million in payments on our revolver, $25.0 million to repurchase shares of our common stock, $19.3 million in repayments on our Incremental Term Loans (as defined below), $3.4 million in deferred fees for debt modifications, $2.6 million net of proceeds from the exercise of stock options, as part of our stock-based compensation program, partially offset by $200.0 million proceeds from the Delayed Draw Term Loan (as defined below) and $189.0 million proceeds from the revolver, which were used to support our working capital and the acquisition of Marzocchi.

In the fiscal year ended December 29, 2023, net cash provided by financing activities was $509.0 million, which primarily consisted of proceeds from our 2022 Credit Facility of $793.5 million, which was used to support our working capital and the purchases of Marucci and Custom Wheel House, partially offset by $230.0 million in payments on our revolver, $20.0 million in prepayments on our Term A Loan, $25.0 million to repurchase shares of our common stock, net of proceeds from the exercise of stock options, as part of our stock-based compensation program, and $6.2 million and $3.4 million in deferred debt issuance costs.

In the fiscal year ended December 30, 2022, net cash used in financing activities was $179.1 million, which primarily consisted of $404.3 million in payments on our 2022 Credit Facility, $382.5 million in payments on our term debt, $4.3 million to repurchase shares of our common stock, net of proceeds from the exercise of stock options, as part of our stock-based compensation program and $2.7 million in installment payments related to the purchase of the Tuscany non-controlling interest (defined at Note 12.

Commitments an d Contingen t Liabilities ).

These changes were partially offset by net proceeds from our 2022 Credit Facility of $602.4 million, which was used to refinance our Prior Credit Facility, and proceeds from the termination of our 2021 Swap Agreement (defined at Note 11.

De rivatives and Hedging ) of $12.3 million.

2022 Credit Facility

On April 5, 2022, the Company entered into the 2022 Credit Facility with Wells Fargo Bank, National Association, and other named lenders.

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 $650.0 million.

On April 5, 2022, the Company borrowed $475.0 million under the 2022 Credit Facility, which was used to repay all outstanding amounts owed under the Prior Credit Facility and for general corporate purposes.

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

To the extent not previously paid, all then-outstanding amounts under the 2022 Credit Facility are due and payable on the maturity date.

The Company paid $2.0 million in debt issuance costs in connection with the 2022 Credit Facility, which were allocated to the revolver and amortized on a straight-line basis over the term of the facility.

Additionally, the Company had $4.5 million of remaining unamortized debt issuance costs related to the Prior Credit Facility, of which $2.5 million were carried forward to the 2022 Credit Facility.

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

Advances under the 2022 Credit Facility can be either Adjusted Term Secured Overnight Financing Rate (“SOFR”) loans or base rate loans.

In the fiscal year ended January 2, 2026, net cash used in financing activities was $40.0 million, which primarily consisted of $567.4 million in repayments on our Incremental Term Loans (as defined below), $282.0 million in payments on our revolver, $2.9 million in deferred fees for debt modifications, and payments of $1.3 million to repurchase shares of our common stock to cover withholding taxes from our stock-based compensation program, partially offset by $534.6 million proceeds from the Term Loan and $279.0 million proceeds from the Revolving Credit Facility (as defined below) issued under the Amended Credit Agreement (as defined below), which were used to repay all outstanding amounts owed under the Credit Agreement (as defined below) and for general corporate purposes.

In the fiscal year ended January 3, 2025, net cash provided by financing activities was $67.3 million, which primarily consisted of $406.0 million in payments on our revolver, $25.0 million to repurchase shares of our common stock, $19.3 million in repayments on our Incremental Term Loans (as defined below), $3.4 million in deferred fees for debt modifications, $2.6 million net of proceeds from the exercise of stock options, as part of our stock-based compensation program, partially offset by $200.0 million proceeds from the Delayed Draw Term Loan (as defined below) and $189.0 million proceeds from the revolver, which were used to support our working capital and the acquisition of Marzocchi.

In the fiscal year ended December 29, 2023, net cash provided by financing activities was $509.0 million, which primarily consisted of proceeds from our Credit Agreement (as defined below) of $793.5 million, which was used to support our working capital and the purchases of Marucci and Custom Wheel House, partially offset by $230.0 million in payments on our revolver, $20.0 million in prepayments on our Term A Loan (as defined below), $25.0 million to repurchase shares of our common stock, $6.2 million to repurchase shares of our common stock to cover withholding taxes from our stock-based compensation program, and $3.4 million in deferred debt issuance costs.

Credit Agreement

On April 5, 2022, the Company entered into a new credit agreement with Wells Fargo Bank, National Association, and other named lenders (the “Credit Agreement”).

The Credit Agreement, which matures on April 5, 2027, provides for revolving loans, swingline loans and letters of credit up to an aggregate amount of $650.0 million.

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

Advances under the Credit Agreement 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%.

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

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

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 $400.0 million (the “Incremental Term A Loan”) and a delayed draw term loan in an amount of $200.0 million (the “Delayed Draw Term Loan” and, together with the Incremental Term A Loan, the “Incremental Terms Loans”), each of which are permitted under the 2022 Credit Facility, subject to satisfaction of certain conditions.

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 “First Amendment”) amending the Credit Agreement.

The Amendment provided the Company with a term loan in an amount of $400.0 million (the “Incremental Term A Loan”) and a delayed draw term loan in an amount of $200.0 million (the “Delayed Draw Term Loan” and, together with the Incremental Term A Loan, the “Incremental Terms Loans”), each of which are permitted under the Credit Agreement, 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 for up to six months commencing on December 6, 2023, until the date on which the Delayed Draw Term Loan commitments have been terminated.

Each of the Incremental Term Loans is subject to quarterly amortization payments of principal at a rate of 5.00% per annum.

The Delayed Draw Term Loan was available to the Company from and including December 6, 2023, until the earlier of May 14, 2024 and the date on which the Delayed Draw Term Loan 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 of the Incremental Term Loans has a maturity date of April 5, 2027, consistent with the 2022 Credit Facility.

Each Incremental Term Loan has a maturity date of April 5, 2027, consistent with the Credit Agreement.

The Company paid $10.1 million in debt issuance costs, of which $6.7 million were allocated to the Incremental Term A Loan and $3.4 million were allocated to the Delayed Draw Term Loan.

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

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

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

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 $200.0 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.

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 macroeconomic environment.

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.

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

The Company paid $3.5 million in loan fees for the Third and Fourth Amendments, of which $3.4 million were allocated among the revolver and the Incremental Term Loans to be amortized over the remaining term of the Credit Agreement.

Amended Credit Agreement

On October 24, 2025, the Company entered into the Fifth Amendment to the Credit Agreement and Second Amendment to Guaranty and Security Agreement (the “Fifth Amendment”) among the Company, certain subsidiaries of the Company, Wells Fargo Bank, National Association, as administrative agent, swingline lender and L/C issuer (the “Agent”), and a group of lenders party thereto.

The Fifth Amendment amends the Credit Agreement, dated as of April 5, 2022 (as amended prior to the Fifth Amendment, the “Credit Agreement” and, as amended by the Fifth Amendment, the “Amended Credit Agreement”), and the Guaranty and Security Agreement, dated as of April 5, 2022, as amended prior to the Fifth Amendment, which secures the obligations under the Credit Agreement in favor of the Agent for the benefit of the lenders and other secured parties.

Terms not otherwise defined below will have the meaning as set forth in the Amended Credit Agreement.

The Fifth Amendment, among other things, amends the Credit Agreement to replace the existing loans provided under the Credit Agreement with (i) a term loan in the aggregate outstanding amount of $537.5 million (the “Term Loan”), which will be repaid by the Company in quarterly installments in the amount of $6.7 million, (ii) revolving loans in an aggregate amount of up to $500.0 million, with sub-facilities for swing line loans in an aggregate amount of up to $25.0 million and letters of credit in an aggregate amount of up to $25.0 million (the “Revolving Credit Facility”), and (iii) an incremental loan facility, subject to additional terms set forth in the Amended Credit Agreement, in an aggregate amount of up to $175.0 million plus an unlimited amount so long as after giving effect to the incurrence of such incremental loans, on a pro forma basis, the Consolidated Net Leverage Ratio is less than 3.25.

To the extent not previously paid, all then-outstanding amounts under the Term Loan and the Revolving Credit Facility are due and payable on October 24, 2030.

The Term Loan and advances under the Revolving Credit Facility can be either SOFR loans or base rate loans.

SOFR loans bear interest on the outstanding principal amount thereof for each interest period at a rate per annum equal to the term SOFR for such calculation plus a margin ranging from 1.00% to 2.50%.

Base rate 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 Agent as its “prime rate,” and (iii) term SOFR rate for a one-month tenor plus 1.00%, subject to the interest rate floors set forth in the Amended Credit Agreement, plus a margin ranging from 0.00% to 1.50%.

In connection with the Fifth Amendment, the Company borrowed $710.0 million under the Amended Credit Agreement consisting of the $537.5 million Term Loan and $172.5 million under the Revolving Credit Facility, which was used to repay all outstanding amounts owed under the Credit Agreement prior to the Fifth Amendment and for general corporate purposes.

The Company paid $6.0 million in debt issuance costs in connection with the Fifth Amendment, of which $5.8 million was allocated between the Term Loan and the Revolving Credit Facility to be amortized over the term of the Amended Credit Agreement.

Additionally, the Company had $8.1 million of remaining unamortized debt issuance costs related to the Credit Agreement, of which $6.3 million were carried forward to the Amended Credit Agreement and $1.8 million were written off as a loss on debt extinguishment.

The Amended Credit Agreement 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 January 2, 2026.

At January 2, 2026, the one-month SOFR and three-month SOFR rates were 3.78% and 4.00%, respectively.

At January 2, 2026, our weighted-average interest rate on outstanding borrowing was 6.05%.

Material Cash Requirements

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Operating lease obligations 128.8 20.4 34 27.8 46.6

Purchase obligations and other 17.0 6.8 4.5 5.7 —

Other obligations 16.3 6.6 6.6 3.1 —

Total $ 826.0 $ 53.9 $ 94.4 $ 631.1 $ 46.6

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To mitigate this risk and enhance predictability, we utilize interest rate swaps to manage our exposure to interest rate fluctuations.

Recent Developments

Global Trade Actions and Tariffs - New and expanded tariffs announced under the current administration and triggered retaliatory actions by certain affected countries, and other foreign governments have introduced additional costs and uncertainty into our supply chain, which 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 Amended Credit Agreement provide sufficient flexibility to manage these developments.

Please read “ U.S.

policies related to global trade and tariffs could have a material adverse effect on our results of operations ” within Item 1A.

Risk Factors of this Annually Report on Form 10-K.

One Big Beautiful Bill Act (“OBBBA”) - 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 reviewed the enacted legislation and determined that these provisions do not affect the measurement of our deferred tax assets and liabilities as of January 2, 2026.

We will continue to assess the impact on the effective tax rate for future periods.

Critical Accounting Policies and Estimates

We have adopted various accounting policies to prepare the consolidated financial statements in accordance with U.S.

We adopted various accounting policies to prepare the consolidated financial statements in accordance with U.S.

Our significant accounting policies are described in Note 1.

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The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement.

We consider many factors when evaluating tax positions such as the closing of a tax audit, the refinement of estimates, and the expiration of a statute of limitations that may require periodic adjustments that impact our tax provision in our consolidated statements of income.

Interest and penalties associated with income taxes are recorded as income tax expense.

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An increase in warranty claims or the related costs associated with satisfying these warranty obligations could increase our cost of sales and negatively affect our operating results.

Total accrued warranty liabilities were approximately $21.6 million and $20.0 million as of January 3, 2025 and December 29, 2023, respectively.

Total accrued warranty liabilities were approximately $15.2 million and $21.6 million as of January 2, 2026 and January 3, 2025, respectively.

Refer to Note 8.

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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.

Sensitivity analyses are performed to assess the impact of changes in key assumptions.

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

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

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Impairments, if any, are charged directly to earnings.

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

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

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

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

No impairment charges have been incurred to date.

In early fiscal year 2025, the Company 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 our stock price.

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 additional impairment existed as of July 4, 2025.

The annual impairment assessment was performed in the third quarter, and the Company concluded that it was not more likely than not that the fair values of the reporting units were less than the carrying values.

In the fourth quarter, the Company conducted another quantitative impairment assessment due to a further sustained decrease in our stock price and recorded another non-cash goodwill impairment charge of $295.2 million within operating expenses.

The Company’s goodwill impairment assessment is subject to significant estimates and assumptions.

Adverse changes in key assumptions, including projected revenue growth rates, the terminal growth rate, or the WACC could result in additional goodwill impairment charges.

As of January 2, 2026, SSG was the only reporting unit with a remaining goodwill balance following the recorded goodwill impairment charges.

Based on the most recent quantitative assessment, and for purposes of this sensitivity analysis assuming a 100% weighting to the income approach, a 1.5% increase in the WACC would result in a full future impairment of SSG’s remaining goodwill.

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.

Finite-lived intangible assets

Due to the triggering events 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 reached the same conclusion as of July 4, 2025.

The annual impairment assessment conducted in the third quarter and the quantitative assessment performed in the fourth quarter also indicated no impairment.

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.

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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 other long-lived assets 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.

During the fourth quarter of fiscal 2025, due to lower expected cash flows, the Company performed a recoverability test and related quantitative impairment assessment for its finite‑lived intangible assets and other long‑lived assets.

As a result, the Company recorded $13.5 of intangible and long-lived asset impairment in operating expenses.

Acquisition of certain identifiable definite-lived and indefinite-lived assets

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To the extent shares are expected to vest, the stock-based compensation cost is recognized on a straight-line basis over the requisite service period.

Stock-based compensation was $9.6 million, $16.5 million and $16.4 million for the fiscal years ended January 3, 2025, December 29, 2023 and December 30, 2022, respectively.

Stock-based compensation was $14.3 million, $9.6 million and $16.5 million for the fiscal years ended January 2, 2026, January 3, 2025 and December 29, 2023, respectively.

Refer to Note 13.

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The determination of the grant date fair value of options using an option-pricing model is affected by our common stock fair value as well as assumptions including our expected stock price volatility over the expected term of the options, stock option exercise and cancellation behaviors, risk-free interest rates and expected dividends.

Stock-based compensation expenses are classified in the statements of income based on the department to which the related employee reports.

Stock-based compensation expenses are classified in the statements of operations based on the department to which the related employee reports.

Our stock-based awards subsequent to our IPO have been comprised principally of RSU awards.

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

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

The Company is required to place a deposit on all Stellantis chassis, which we record as a prepaid asset, however that deposit is refunded when the chassis is sold through to the end customer.

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

Revenues generated from custom upfit packages from our Outside Van and Upfit UTV generally include the vehicle chassis, of which the Company has the risks and rewards of ownership and, in certain Outside Van instances, are recognized over-time as work is performed based on actual costs incurred.

Revenues generated from upfit packages from our Outside Van and Upfit UTV generally include the vehicle chassis, of which the Company has the risks and rewards of ownership.

We elected as a practical expedient to not capitalize the incremental costs to obtain contracts with customers because 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.

Accrued sales rebates were $7.9 million, $11.9 million, and $8.7 million as of January 3, 2025, December 29, 2023, and December 30, 2022, respectively.

Accrued sales rebates were $7.0 million, $7.9 million, and $11.9 million as of January 2, 2026, January 3, 2025, and December 29, 2023, respectively.

Sales returns allowances have historically been immaterial to the financial statements.

Allowance for credit losses

We record a provision for credit losses deemed not collectible using the aging method.

The provision is based on how long a receivable has been outstanding, taking into account the historical credit loss rate and adjusting for both current conditions and reasonable and supportable forecasts of future economic conditions that may impact collectability.

We record an allowance for credit losses deemed not collectible using the aging method.

The allowance is based on how long a receivable has been outstanding, taking into account the historical credit loss rate and adjusting for both current conditions and reasonable and supportable forecasts of future economic conditions that may impact collectability.

Our methodology reflects the expected credit loss model, which does not solely rely on past events or incurred losses but also considers forward-looking information to estimate potential credit deterioration.

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When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that reasonable market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk.

As of January 3, 2025, the carrying amount of the principal under the Company’s 2022 Credit Facility - Incremental Term Loans and Revolver approximated fair value because they had variable interest rates that reflected market changes in interest rates and changes in the Company’s net leverage ratio.

As of January 2, 2026, the carrying amount of the principal under the Company’s Credit Agreement - 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.

7 unchanged sentences

Recent Accounting Pronouncements

See Note 1 - Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies to the accompanying notes to consolidated financial statements included in this Annual Report on Form 10-K for further details regarding this topic.

See Note 1 - Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies within the accompanying Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further details regarding this topic.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis