10q10k10q10k.net

What changed in FOX FACTORY HOLDING CORP's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of FOX FACTORY HOLDING CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+407 added−342 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-23)

Top changes in FOX FACTORY HOLDING CORP's 2025 10-K

407 paragraphs added · 342 removed · 288 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

77 edited+21 added−9 removed74 unchanged
Biggest changeOver the past several years, we have developed multiple new products, such as: • Semi-active Dual Live Valve shocks with compression and rebound control, for ultimate confidence and control, which such technology is currently being used in UTVs and the top tier of off-road performance trucks; • Live Valve, our proprietary semi-active, electronic suspension that processes data from multiple vehicle sensors to adjust the suspension virtually instantaneously to the demands of changing terrain, which such technology is currently in use UTVs, trucks, and mountain bikes; • The next generation of Live Valve combined with a 3.1-inch diameter anodized aluminum shock body, specifically designed to withstand the higher internal pressures created by the new valve’s wider dynamic range, which such technology has been adopted at the top tier of trucks in the U.S.; • Electronically adjustable rear suspension pre-load allowing a user to easily compensate for the additional weight and bring a vehicle back to optimal ride height, which such technology is currently in use on select motorcycles to adapt to added passenger and luggage weight without using tools; • Ridetech RidePro E5 Air Suspension Control System, improving comfort and performance to your vehicle, which such technology is currently being used in many classic muscle car and truck applications; • Ridetech 62-67 Nova Suspension System (Coil-Over & Air), complete suspension upgrades with either coil or air sprung adjustable shocks that bring modern performance to vintage and classic muscle cars; • Market leading 3-4” Bronco suspension lift products that are custom designed to each model configuration and that range from load spacers and coil-overs, to remote adjustable shocks for increased off-road performance, comfort and control; • 32, 34 and 36 Factory Series FLOAT FIT4, which reduces overall fork weight, provides external adjustability with our fourth-generation FOX Isolated Technology (“IT”) closed-cartridge damper, and includes the self-adjusting negative chamber air spring for quieter operation and ease of adjustment, which such technology is used widely across all brands of mountain bikes or as aftermarket upgrades to replace lower performing suspension; • The GRIP2 fork damper, which is our next-evolution sealed cartridge FIT system, our highest performing gravity-focused damper.
Biggest changeOver the past several years, we have developed multiple new products, such as: 2 Table of Contents • Fox Factory Silverado 1500, the first Fox upfitted vehicle showcasing Semi-Active Dual Live Valve Shocks, Baja Kits Long-Travel Suspension with 15” Wheel Travel, Supercharged to 700, and a host of additional exclusive performance and design upgrades. • Semi-active Dual Live Valve shocks with compression and rebound control, for ultimate confidence and control, which such technology is currently being used in utility terrain vehicles (“UTVs”) and the top tier of off-road performance trucks; • Live Valve, our proprietary semi-active, electronic suspension that processes data from multiple vehicle sensors to adjust the suspension virtually instantaneously to the demands of changing terrain, which such technology is currently used in UTVs, trucks, and mountain bikes; • The next generation of Live Valve combined with a 3.1-inch diameter anodized aluminum shock body, specifically designed to withstand the higher internal pressures created by the new valve’s wider dynamic range, which such technology has been adopted at the top tier of trucks in the U.S.; • Electronically adjustable rear suspension pre-load allowing a user to easily compensate for the additional weight and bring a vehicle back to optimal ride height, which such technology is currently in use on select motorcycles to adapt to added passenger and luggage weight without using tools; • Ridetech RidePro E5 Air Suspension Control System, improving comfort and performance to your vehicle, which such technology is currently being used in many classic muscle car and truck applications; • Ridetech 62-67 Nova Suspension System (Coil-Over & Air), complete suspension upgrades with either coil or air sprung adjustable shocks that bring modern performance to vintage and classic muscle cars; • Ridetech 67-69 Camaro Subframe – this product goes one step beyond Ridetech’s suspension kits and replaces the entire subframe to allow larger wheel and tire fitments, modern steering and modern powertrains.
While we have been able to mitigate the impacts of price fluctuations on our business historically, we actively monitor the current market conditions and price trends. We also have OEM partners that supply vehicle chassis used in our upfitting operations.
While we have been able to mitigate the impacts of price fluctuations on our business historically, we actively monitor current market conditions and price trends. We also have OEM partners that supply vehicle chassis used in our upfitting operations.
Our common stock is traded on the NASDAQ Global Select Market (the “NASDAQ”) under the symbol “FOXF.” Description of our business We are a designer, manufacturer and marketer of performance-defining products and systems used primarily on bikes, off-road vehicles and trucks, side-by-sides, on-road vehicles with and without off-road capabilities, ATVs, snowmobiles, and specialty vehicles and applications, and premium baseball and softball gear and equipment.
Our common stock is traded on the NASDAQ Global Select Market (the “NASDAQ”) under the symbol “FOXF.” Description of our business We are a designer, engineer, manufacturer and marketer of performance-defining products and systems used primarily on bikes, off-road vehicles and trucks, side-by-sides, on-road vehicles with and without off-road capabilities, ATVs, snowmobiles, and specialty vehicles and applications, and premium baseball and softball gear and equipment.
As part of our agreement with Miyaki, or the Kashima Agreement, we have been granted the exclusive right to use the trademark “KASHIMACOAT” on products comprising the aluminum finished parts for suspension components (e.g., tubes) and on related sales and marketing material worldwide, subject to a minimum model year order and certain other exclusions.
As part of our agreement with Miyaki, or the Kashima Agreement, we have been granted the exclusive right to use the trademark “KASHIMACOAT” on products comprising the aluminum finished parts for suspension components (e.g., tubes) and on related sales and marketing material worldwide, subject to a minimum year order and certain other exclusions.
Due to our experience in suspension engineering and design in multiple markets and with a variety of vehicles, solutions we develop for use in one market can ultimately be deployed across multiple markets. For example, we believe our success in the high-end ATV category led to the widespread adoption of our suspension technology in the side-by-sides market.
Due to our experience in suspension engineering and design in multiple markets and with a variety of vehicles, solutions we develop for use in one market can ultimately be deployed across multiple markets. For example, we believe our success in the high-end ATV category led to the widespread adoption of our suspension technology in the side-by-side market.
We believe that our brands achieved strong loyalty from our consumers. To support our brands, we introduce new products that we believe feature innovative technologies designed to improve vehicle performance and enhance our brand loyalty with consumers. Track record of innovation and new product introductions Innovation, including new product development, is a key component of our growth strategy.
We believe that our brands achieved strong loyalty from our consumers. To support our brands, we introduce new products that we believe feature innovative technologies designed to improve performance and enhance our brand loyalty with consumers. Track record of innovation and new product introductions Innovation, including new product development, is a key component of our growth strategy.
As strategies and marketing plans are developed for our products, our internal marketing and communications group works to ensure brand cohesion and consistency. Manufacturing and backlog We manufacture and complete final assembly on most of our products.
As strategies and marketing plans are developed for our products, our internal marketing and communications group works to ensure brand cohesion and consistency. Manufacturing We manufacture and complete final assembly on most of our products.
Specialty Sports Within the market for bike suspension components, we compete with several companies that manufacture front and rear suspension products, including RockShox (a subsidiary of SRAM Corp.), X-Fusion Shox (a wholly owned subsidiary of A-Pro), Manitou (a subsidiary of HB Performance Systems), SR Suntour, DT Swiss (a subsidiary of Vereinigte Drahtwerke AG), Cane Creek Cycling, DVO Suspension, Bos-Mountain Bike Suspensions, and Öhlins Racing AB.
Specialty Sports Group (“SSG”) Within the market for bike suspension components, we compete with several companies that manufacture front and rear suspension products, including RockShox (a subsidiary of SRAM Corp.), X-Fusion Shox (a wholly owned subsidiary of A-Pro), Manitou (a subsidiary of HB Performance Systems), SR Suntour, DT Swiss (a subsidiary of Vereinigte Drahtwerke AG), Cane Creek Cycling, DVO Suspension, Bos-Mountain Bike Suspensions, and Öhlins Racing AB.
Our innovative product development and speed to market are supported by: • our racing culture, including on-site technical race support of professional athletes, which provides us with unique real-time insights as to the evolving performance-defining product needs of those participating in challenging world-class events and is an integral part of our research and development efforts; • ongoing research and development through a team of full-time engineers and numerous other technicians and employees who spend at least part of their time testing and using our products and helping develop engineering-based solutions to enhance our product offerings; • feedback from professional athletes, race teams, enthusiasts and other consumers who use our products; 2 Table of Contents • strategic and collaborative relationships with OEM customers, which furthers our ability to extend technologies and applications across end-markets; and • our integrated manufacturing facilities and performance testing centers, which allow us to quickly move from concept to product.
Our innovative product development and speed to market are supported by: • our racing culture, including on-site technical race support for professional athletes, which provides us with unique real-time insights as to the evolving performance-defining product needs of those participating in challenging world-class events and is an integral part of our research and development efforts; • ongoing research and development through a team of full-time engineers and numerous other technicians and employees who spend at least part of their time testing and using our products and helping develop engineering-based solutions to enhance our product offerings; • feedback from professional athletes, race teams, enthusiasts and other consumers who use our products; • strategic and collaborative relationships with OEM customers, which furthers our ability to extend technologies and applications across end-markets; and • our integrated manufacturing facilities and performance testing centers, which allow us to quickly move from concept to product.
Furthermore, manufacturing our own products enables us to adjust our labor and production inputs to meet seasonal demands and the customized requirements of some of our customers. In the fourth quarter of 2021, we completed the construction of our Gainesville Facility to diversify our manufacturing platform and provide additional long-term capacity to support growth in our Powered Vehicles Group.
Furthermore, manufacturing our own products enables us to adjust our labor and production inputs to meet seasonal demands and the customized requirements of some of our customers. Powered Vehicles In the fourth quarter of 2021, we completed the construction of our Gainesville Facility to diversify our manufacturing platform and provide additional long-term capacity to support growth in our PVG.
Risk Factors – Risks Related to Our Business and Operations - “We depend on a limited number of suppliers for our materials and component parts for some of our products, and the loss of any of these suppliers or an increase in cost of raw materials could harm our business.” In addition, prices for our raw materials fluctuate.
Risk Factors – Risks Related to Our Business and Operations - “We depend on a limited number of suppliers for our materials and component parts for some of our products, and the loss of any of these suppliers or an increase in cost of raw materials could harm our business.” In addition, prices for our raw materials fluctuate from time to time.
In the ATV and side-by-sides markets, outside of vertically-integrated OEMs, we compete with ZF Sachs (ZF Friedrichshafen AG), and Walker Evans Racing for OEM business and Elka Suspension Inc., Öhlins Racing AB, Works Performance Products, and Penske Racing Shocks / Custom Axis, Inc. for aftermarket business.
In the ATV and side-by-side markets, outside of vertically-integrated OEMs, we compete with ZF Sachs (ZF Friedrichshafen AG), and Walker Evans Racing for OEM business and Elka Suspension Inc., Öhlins Racing AB, Works Performance Products, and Penske Racing Shocks / Custom Axis, Inc. for aftermarket business, and others.
Property, Plant and Equipment, net of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K. 11 Table of Contents Corporate and available information Our principal executive offices are located at 2055 Sugarloaf Circle, Suite 300, Duluth, GA 30097, and our telephone number is (831) 274-6500. Our website address is www.ridefox.com.
Property, Plant and Equipment, net of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K. Corporate and available information Our principal executive offices are located at 2055 Sugarloaf Circle, Suite 300, Duluth, GA 30097, and our telephone number is (831) 274-6500. Our website address is www.ridefox.com.
These competitors can be divided into the following categories: Powered Vehicles Within the market for off-road and specialty vehicle suspension components, we compete with ThyssenKrupp Bilstein Suspension GmbH (commonly known as “Bilstein”), King Shock Technology, Inc. (commonly known as “King Shocks”), Icon Vehicle Dynamics, Sway-A-Way, Pro Comp USA Suspension, and Rancho (“Tenneco”).
These competitors can be divided into the following categories: Powered Vehicles Group (“PVG”) Within the market for off-road and specialty vehicle suspension components, we compete with ThyssenKrupp Bilstein Suspension GmbH (commonly known as “Bilstein”), King Shock Technology, Inc. (commonly known as “King Shocks”), Icon Vehicle Dynamics, Sway-A-Way, Pro Comp USA Suspension, Rancho (“Tenneco”), and others.
In addition to the foregoing protections, we generally control access to and use of our proprietary and other confidential information using internal and external controls, including contractual protections with employees, OEMs, distributors and others. Customers Our OEM customers include market leaders in their respective categories, and they help define, as well as respond to, consumer trends in their respective industries.
In addition to the foregoing protections, we generally control access to and use of our proprietary and other confidential information using internal and external controls, including contractual protections with employees, OEMs, distributors and others. 8 Table of Contents Customers Our OEM customers include market leaders in their respective categories, and they help define, as well as respond to, consumer trends in their respective industries.
In March 2023, we purchased all of the outstanding equity of CWH Blocker Corp., (“Blocker”), and thereafter, though Blocker, acquired all of the outstanding equity interest of CWH Holdco, LLC, the parent company of Custom Wheel House, LLC (“Custom Wheel House”).
In March 2023, we purchased all of the outstanding equity of CWH Blocker Corp., (“Blocker”), and thereafter, through Blocker, acquired all of the outstanding equity interest of CWH Holdco, LLC, the parent company of Custom Wheel House, LLC (“Custom Wheel House”).
We believe that the performance of our products has been demonstrated by, and our brand benefits from, the success of professional athletes who use our products in elite competitive events, such as the Olympic Games, the Union Cycliste Internationale Mountain Bike World Cup, the X Games, the Baja 1000, and professional baseball.
We believe that the performance of our products has been demonstrated by, and our brand benefits from, the success of professional athletes who use our products in elite competitive events, such as the Olympic Games, the Union Cycliste Internationale Mountain Bike World Cup, the X Games, the Baja 1000, and professional baseball, including Major League Baseball.
Additionally, to grow our end user base, we are now looking at ways to explore international opportunities with some of our applications. Opportunistically expand our business platform through acquisitions Over the past several years, we completed acquisitions that we believe enhance our business and strategically expand our product offerings.
Additionally, to grow our end user base, we are now looking at ways to explore international opportunities with some of our applications. 4 Table of Contents Opportunistically expand our business platform through acquisitions Over the past several years, we completed acquisitions that we believe enhance our business and strategically expand our product offerings.
We believe the performance of our products has been demonstrated by, and our brands benefit from, the success of professional athletes who use our products in elite competitive events such as the Olympic Games, the Union Cycliste Internationale Mountain Bike World Cup, the X Games and the Baja 1000.
We believe the performance of our products has been demonstrated by, and our brands benefit from, the success of professional athletes who use our products in elite competitive events such as the Olympic Games, the Union Cycliste Internationale Mountain Bike World Cup, the X Games, the Baja 1000, and Major League Baseball games.
Dennison, our Chief Executive Officer. Many members of our management team and many of our employees are avid users of our products, which further extends their knowledge of, and expertise in, our products and end-markets. We are able to attract and retain highly trained and specialized employees who enhance our Company culture and serve as strong brand advocates.
Many members of our management team and many of our employees are avid users of our products, which further extends their knowledge of, and expertise in, our products and end-markets. We are able to attract and retain highly trained and specialized employees who enhance our Company culture and serve as strong brand advocates.
In the market for other bike components, we compete with SRAM, Truvativ and Zipp (all subsidiaries of SRAM Corp.), DT Swiss (a subsidiary of Vereinigte Drahtwerke AG), Mavic (a subsidiary of Bourrelier), and Shimano.
In the market for other bike components, we compete with SRAM, Truvativ and Zipp (all subsidiaries of SRAM Corp.), DT Swiss (a subsidiary of Vereinigte Drahtwerke AG), Mavic (a subsidiary of Bourrelier), and Shimano, as well as others.
Premium brand with strong consumer loyalty We believe that we developed a reputation for performance-defining products and that we own and license established trademarks, such as FOX ® , FOX RACING SHOX ® , BLACK WIDOW ® , ROCKY RIDGE ® , RACE FACE ® , MARZOCCHI ® , MARUCCI ® , VICTUS ® , BAUM BAT ® , LIZARD SKINS ® , and BASEBALL PERFORMANCE LAB ® , which are perceived as premium brands.
Premium brand with strong consumer loyalty We believe that we developed a reputation for performance-defining products and that we own and license established trademarks, such as FOX ® , FOX RACING SHOX ® , BLACK WIDOW ® , ROCKY RIDGE ® , METHOD RACE WHEELS ® , BDS ® , BAJA KITS ® , RACE FACE ® , MARZOCCHI ® , MARUCCI ® , VICTUS ® , BAUM BAT ® , LIZARD SKINS ® , and BASEBALL PERFORMANCE LAB ® , which are perceived as premium brands.
Our operations could be negatively impacted if we are not able to receive vehicle chassis according to our production needs, or if an OEM decides to discontinue supplying chassis for other reasons.
Our operations could be, and have been, negatively impacted if we are not able to receive vehicle chassis according to our production needs, or if an OEM decides to discontinue supplying chassis for other reasons.
No material portion of our business is subject to renegotiation of profits or termination of contracts or subcontracts at the election of the U.S. government. Net sales attributable to our 10 largest OEM customers, which can vary from year-to-year, collectively accounted for approximately 35% of our net sales in fiscal years 2023, 2022 and 2021.
No material portion of our business is subject to renegotiation of profits or termination of contracts or subcontracts at the election of the U.S. government. Net sales attributable to our 10 largest customers, which can vary from year-to-year, collectively accounted for approximately 36%, 35%, and 35% of our net sales in fiscal years 2024, 2023 and 2022, respectively.
We believe that OEMs often prominently display and incorporate our products to improve the marketability and consumer demand for their performance models, which reinforces our brand image. In addition, consumers select our products in the aftermarket channel where we market through a global network of dealers and distributors.
We believe that OEMs often prominently display and incorporate our products to improve the marketability and consumer demand for their performance models, which reinforces our brand image. In addition, consumers select our products in the aftermarket channel where we market through a global network of dealers and distributors, as well as our direct to customer platforms.
In addition to our websites and traditional marketing channels, such as print advertising and tradeshows, we maintain an active social media presence, including an Instagram feed, Facebook page, YouTube channel, Vimeo channel and Twitter feed to increase brand awareness, foster loyalty and build a community of users.
In addition to our websites and traditional marketing channels, such as print advertising and tradeshows, we maintain an active social media presence, including Instagram feeds, Facebook pages, YouTube channels, Vimeo channels and Twitter feeds to increase brand awareness, foster loyalty and build a community of users.
Additional information about our product revenues and certain geographical information is available in Note 2. Revenues of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K. Powered Vehicles We sell our powered vehicle suspension products to OEMs, including BRP, Ford, Polaris, Toyota, Kawasaki, Yamaha, and Honda.
Additional information about our product revenues and certain geographical information is available in Note 2. Revenues of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K. Powered Vehicles We sell our powered vehicle suspension products to OEMs, including BRP, Ford, Polaris, Toyota, Kawasaki, Yamaha, Stellantis, CF Moto, Ducati, BMW, Triumph, and Honda.
Many of our OEM customers, including Specialized, Trek Bicycles, Giant, Orbea, Canyon Bicycles, Santa Cruz Bicycles, and Yeti Cycles in Specialty Sports and BRP, Ford, Polaris, Toyota, 4 Wheel Parts, Kawasaki, Yamaha, and Honda in Powered Vehicles and Aftermarket Applications, are among the market leaders in their respective product categories, and help shape, as well as respond to, consumer trends in their respective categories.
Many of our OEM customers, including Specialized, Trek Bicycles, Giant, Cube, Orbea, Canyon Bicycles, Santa Cruz Bicycles, and Yeti Cycles in Specialty Sports and BRP, Ford Motor Company (“Ford”), Polaris, Toyota, 4 Wheel Parts, Kawasaki, Yamaha, Stellantis, CF Moto, and Honda in Powered Vehicles and Aftermarket Applications, are among the market leaders in their respective product categories, and help shape, as well as respond to, consumer trends in their respective categories.
We rely upon a combination of patents, trademarks, trade names, licensing arrangements, trade secrets, know-how and proprietary technology and we secure and protect our intellectual property rights. Our intellectual property counsel diligently protects our new technologies with patents and trademarks and defends against patent infringement allegations.
Intellectual property Intellectual property is an important aspect of our business. We rely upon a combination of patents, trademarks, trade names, licensing arrangements, trade secrets, know-how and proprietary technology and we secure and protect our intellectual property rights. Our intellectual property counsel diligently protects our new technologies with patents and trademarks and defends against patent infringement allegations.
In 2023, our sales to Ford, a powered vehicles OEM, accounted for approximately 13% of total net sales. In 2022 and 2021, no single customer represented 10% or more of our sales.
In 2024 and 2023, our sales to Ford, a powered vehicles OEM, accounted for approximately 15% and 13% of total net sales, respectively. In 2022, no single customer represented 10% or more of our sales.
In addition, we believe the inclusion of our products on high-end bikes and powered vehicles reinforces our premium brand image which helps to drive our sales in the aftermarket channel where dealers and distributors sell our products to consumers. 3 Table of Contents Experienced management team We have an experienced senior management team led by Michael C.
In addition, we believe the inclusion of our products on high-end bikes and powered vehicles reinforces our premium brand image which helps to drive our sales in the aftermarket channel where dealers and distributors sell our products to consumers. Experienced management team We have an experienced senior management team led by Michael C. Dennison, our Chief Executive Officer.
In each of the years ended December 29, 2023, December 30, 2022 and December 31, 2021, approximately 36%, 27% and 28%, respectively, of our net sales were attributable to net sales of powered vehicles related products. Products for these vehicles are designed for use on roads, trail riding, racing, and to help maximize performance and comfort.
In each of the years ended January 3, 2025, December 29, 2023 and December 30, 2022, approximately 33%, 36% and 27%, respectively, of our net sales were attributable to net sales of powered vehicles related products. Products for these vehicles are designed for use on roads, trail riding, racing, and to help maximize performance and comfort.
In each of the years ended December 29, 2023, December 30, 2022 and December 31, 2021, approximately 38%, 31% and 28%, respectively, of our net sales were attributable to net sales of aftermarket applications related products. 6 Table of Contents We also offer lift kits and components with our shock products and aftermarket accessory packages for use in trucks.
In each of the years ended January 3, 2025, December 29, 2023 and December 30, 2022, approximately 30%, 38% and 31%, respectively, of our net sales were attributable to net sales of aftermarket applications related products. We also offer lift kits and components with our shock products and aftermarket accessory packages for use in trucks.
As part of the 401(k) Plan, FOX matches 50% of the first 6% of compensation contributed by the employee into the 401(k) Plan. 10 Table of Contents Practices related to working capital items The Company does not believe that it, or the industry in general, has any special practices or special conditions affecting working capital items that are material to understanding our business.
As part of the 401(k) Plan, FOX matches 50% of the first 6% of compensation contributed by the employee, including executive officers, into the 401(k) Plan. 11 Table of Contents Practices related to working capital items The Company does not believe that it, or the industry in general, has any special practices or special conditions affecting working capital items that are material to understanding our business, except for our arrangements to obtain chassis.
We patent our proprietary technologies related to vehicle suspension and other products in the U.S. and various foreign patent offices. Our principal intellectual property also includes our registered trademarks in the U.S. and a number of international jurisdictions, including the marks FOX ® , FOX RACING SHOX ® and REDEFINE YOUR LIMITS ® .
We patent our proprietary technologies related to vehicle suspension and other products in the U.S. and various foreign patent offices. Our principal intellectual property also includes our registered trademarks in the U.S. and a number of international jurisdictions, including the marks of FOX ® and others from subsidiaries.
Please read “Risks Related to Laws and Regulations - Increasing focus on environmental, social and governance responsibility may impose additional costs on us and expose us to new risks” within Item 1A. Risk Factors .
Please read “Risks Related to Laws and Regulations - Increasing focus on environmental, social and governance responsibility may impose additional costs on us and expose us to new risks” within Item 1A. Risk Factors in this Annual Report on Form 10-K..
Aftermarket Applications 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, 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.
Aftermarket Applications Our range of aftermarket applications products includes premium products under the BDS Suspension, Zone Offroad, JKS Manufacturing, RT Pro UTV, 4x4 Posi-Lok, Ridetech, Fox Factory Vehicles, Black Widow, Rocky Ridge, Outside Van, and Custom Wheel House brands, including Method Race Wheels, 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.
In our upfitting product category, we sell to a broad network of automotive dealerships. 8 Table of Contents Specialty Sports We sell our bike suspension and components products to a broad network of domestic and international bike OEMs, including Specialized, Trek Bicycles, Giant, Orbea, Canyon Bicycles, Santa Cruz Bicycles, and Yeti Cycles.
In our upfitting product category, we sell to a broad network of automotive dealerships, including Ford, General Motors, and Stellantis (Ram and Jeep). Specialty Sports We sell our bike suspension and components products to a broad network of domestic and international bike OEMs, including Specialized, Trek Bicycles, Giant, Cube, Orbea, Canyon Bicycles, Santa Cruz Bicycles, and Yeti Cycles.
Information about the Company’s working capital is incorporated herein by reference to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations , and to the Consolidated Statements of Cash Flows within Item 8 of this Annual Report on Form 10-K.
For more details on chassis arrangements, refer to Note 12. Commitments and Contingent Liabilities . Information about the Company’s working capital is incorporated herein by reference to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations , and to the Consolidated Statements of Cash Flows within Item 8 of this Annual Report on Form 10-K.
Our overseas distributors sell to independent dealers, which then sell directly to consumers. We sell our baseball and softball gear and equipment products through several channels including Big Box Retailers; Direct-to-Consumer, Direct-to-Team, the company's experiential Clubhouse retail stores and other Owned Channels; and third-party e-commerce and resellers. Sales and marketing We employ specialized and dedicated sales professionals.
We sell our baseball and softball gear and equipment products through several channels including big box retailers; direct-to-consumer, direct-to-team, the company's experiential clubhouse retail stores and other owned channels; and third-party e-commerce and resellers. 9 Table of Contents Sales and marketing We employ specialized and dedicated sales professionals.
We seek to improve each vehicle’s capability with high quality, proprietary components and products, such as lift kits, shock products, superchargers, interior accessories, wheels, tires, lighting, and body enhancements, while still maintaining the factory warranty and safety standards that our customers expect. Our upfitting category includes brands such as Black Widow, Rocky Ridge, Badlander, Black Ops, Harley-Davidson and Shelby American.
We seek to improve each vehicle’s capability with high quality, proprietary components and products, such as lift kits, shock products, superchargers, interior accessories, wheels, tires, lighting, and body enhancements, while still maintaining the factory warranty and safety standards that our customers expect.
Our North American net sales totaled $1,127.6 million, $1,009.2 million, and $811.3 million, or 77%, 63% and 62%, of our total net sales in 2023, 2022 and 2021, respectively. Our international net sales totaled $336.6 million, $593.3 million and $487.8 million or 23%, 37% and 38% of our total net sales in fiscal years 2023, 2022 and 2021, respectively.
Our North American net sales totaled $1,097.3 million, $1,127.6 million, and $1,009.2 million, or 79%, 77% and 63%, of our total net sales in 2024, 2023 and 2022, respectively. Our international net sales totaled $296.6 million, $336.6 million and $593.3 million or 21%, 23% and 37% of our total net sales in fiscal years 2024, 2023 and 2022, respectively.
Our product strategy encompasses producing high quality products recognized by consumers for their performance, craftsmanship, and value, and building on a rich history to introduce innovative new products. Research and development Research and development are at the core of our product innovation and market leadership strategy.
Our product strategy encompasses producing high quality products recognized by consumers for their performance, craftsmanship, and value, and building on a rich history to introduce innovative new products.
Within the market for baseball and softball gear and equipment, we compete with offerings from multiple large baseball equipment manufacturers, including Easton (under the Easton and Rawlings brands) and Wilson Sporting Goods Company (under the Wilson, DeMarini, Louisville Slugger, and Evoshield brands), and numerous smaller wood bat specific brands including Old Hickory, Chandler Bats, Tucci, Dove Tail, Sam Bat, and D-Bat.
Within the market for baseball and softball gear and equipment, we compete with offerings from multiple large baseball equipment manufacturers, including Easton (under the Easton and Rawlings brands) and Wilson Sporting Goods Company (under the Wilson, DeMarini, Louisville Slugger, and Evoshield brands), and numerous smaller wood bat specific brands including Old Hickory, Chandler Bats, Tucci, Dove Tail, Sam Bat, and D-Bat, as well as others. 6 Table of Contents Our products We design, engineer and manufacture performance-defining products, of which a significant portion is suspension products.
Government contracts No material portion of our business is subject to renegotiation of profits or termination of contracts or subcontracts at the election of the U.S. government. Financial information about segments and geographic areas We operate in one reportable segment: manufacturing, sale and service of performance-defining products.
Government contracts No material portion of our business is subject to renegotiation of profits or termination of contracts or subcontracts at the election of the U.S. government. 12 Table of Contents Financial information about segments and geographic areas We operate in three reportable segments: PVG, AAG, and SSG.
The Company expects these acquisitions to expand its North American geographic manufacturing footprint and broaden its product offerings in the automotive and sport industries.
The Company expects that these acquisitions will continue to support the expansion of its North American geographic manufacturing footprint and the broadening of its product offerings in the automotive and sport industries.
We believe the high-end segments in which we participate are well positioned for growth due to several factors, including: • increasing consumer appetite for performance-defining products; • increasing average retail sales prices, which we believe are driven by differentiated and feature-rich products with advanced technologies; • continuing product cycle innovation, which we observed often motivates consumers to upgrade and purchase new products for enhanced performance; and • increasing sales opportunities for high-end bikes, powered vehicles, and premium baseball equipment in international markets.
We believe that performance-defining products, which include suspension systems, as well as wheels, cranks, and other components, are critical to the performance of the bikes and powered vehicles in the product categories in which we focus and that technical features, component performance, product design, durability, reliability, and brand recognition strongly influence consumer-purchasing decisions. 1 Table of Contents We believe the high-end segments in which we participate are well positioned for growth due to several factors, including: • increasing consumer appetite for performance-defining products; • increasing average retail sales prices, which we believe are driven by differentiated and feature-rich products with advanced technologies; • continuing product cycle innovation, which we observed often motivates consumers to upgrade and purchase new products for enhanced performance; and • increasing sales opportunities for high-end bikes, powered vehicles, and premium baseball equipment in international markets.
GRIP2 shares its roots with the original GRIP architecture, but has been enhanced with all-new technology: four-way adjustability, VVC high-speed rebound circuit, high-performance mid-valve, and overall friction-reducing treatments, which such technology is used widely across all brands of mountain bikes or as aftermarket upgrades to replace lower performing suspension; • Rhythm series fork products developed to address a lower price point offering without compromising proven FOX performance; • FOX AWL suspension fork for the growing electronic sports utility vehicle (“eSUV”) commuter and e-mobility segment combining the confidence and stability of off-road capable suspension with the convenience of direct mount compatibility with full wrap fenders, lights, and anti-lock braking system, which such technology is found on a wide range of electric bikes; • Race Face Vault Hub, a 120-point high-engagement mountain bike hubset featuring tool-free end caps that simplify conversion among all major axle standards and is approved for e-bike applications, which such technology is found in select Race Face mountain bike wheels and as standalone hubs; and • Easton EC90 SL Crankset, a versatile and ultralight gravel road bike crankset that allows quick conversion between 1x and 2x chainring configurations.
The Grip X2 damper was awarded 2024 suspension product of the year by the largest global mountain bike media site (Pinkbike.com). • Rhythm series fork products developed to address a lower price point offering without compromising proven FOX performance; • FOX AWL suspension fork for the growing electronic sports utility vehicle (“eSUV”) commuter and e-mobility segment combining the confidence and stability of off-road capable suspension with the convenience of direct mount compatibility with full wrap fenders, lights, and anti-lock braking system, which such technology is found on a wide range of electric bikes; • Race Face Vault Hub, a 120-point high-engagement mountain bike hubset featuring tool-free end caps that simplify conversion among all major axle standards and is approved for e-bike applications, which such technology is found in select Race Face mountain bike wheels and as standalone hubs; • Easton EC90 SL Crankset, a versatile and ultralight gravel road bike crankset that allows quick conversion between 1x and 2x chainring configurations; • Method Raised Wheels, a series of new wheels featuring innovative new styles ranging from bold to sophisticated.
Powered Vehicles In our powered vehicle product categories, we offer premium products under the FOX brand for off-road vehicles and trucks, side-by-sides, on-road vehicles with and without off-road capabilities, ATVs, snowmobiles, specialty vehicles and applications, motorcycles, and commercial trucks.
Our suspension products are assembled according to precise specifications throughout the assembly process to create consistently high-performance levels and customer satisfaction. Powered Vehicles In our powered vehicle product categories, we offer premium products under the FOX brand 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 motorcycles.
Within our markets, we compete with several large companies and numerous small companies that provide branded and unbranded products across many of our product lines.
While the pricing of competing products is always a factor, we believe the performance of our products helps justify our premium pricing. Within our markets, we compete with several large companies and numerous small companies that provide branded and unbranded products across many of our product lines.
The Kashima Agreement does not contain minimum purchase obligations. Human Capital Resources Employee Overview As of December 29, 2023, we had approximately 4,300 employees in the U.S., Canada, Europe, Taiwan and Australia. Our employees are primarily located in the U.S. We also use temporary employees at our manufacturing facilities to help us meet seasonal demands.
Human Capital Resources Employee Overview As of January 3, 2025, we had approximately 4,100 employees in the U.S., Canada, Europe, Taiwan, Thailand and Australia. Our employees are primarily located in the U.S. We also use temporary employees at our manufacturing facilities to help us meet seasonal demands. None of our employees are subject to collective bargaining agreements.
The information on our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549.
The information on our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC.
Our employees have diverse skills, experiences and unique perspectives that collectively contribute to greater opportunities for engagement, innovation and business growth. Our commitment to Inclusion, Diversity, and Engagement aligns with our values of Leadership, Trust, Service, Agility, Ingenuity, and Collaboration and is a critical component of being a purpose-led organization.
Our commitment to Inclusion, Diversity, and Engagement aligns with our values of Leadership, Trust, Service, Agility, Ingenuity, and Collaboration and is a critical component of being a purpose-led organization.
Specialty Sports 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.
Our upfitting category includes brands such as Black Widow, Rocky Ridge, Badlander, Black Ops, Harley-Davidson and Shelby American. 7 Table of Contents Specialty Sports 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.
For example, in March 2022, the SEC proposed new rules for extensive and prescriptive climate-related disclosures in annual reports and registration statements, which would also require inclusion of certain climate-related financial metrics in a note to companies’ audited financial statements.
For example, in March 2024, the SEC approved new rules for extensive and prescriptive climate-related disclosures in annual reports and registration statements, which would also require inclusion of certain climate-related financial metrics in a note to companies’ audited financial statements; however, the implementation and enforcement of these rules has been paused and enjoined due to ongoing litigation between the SEC, certain U.S. states and other entities.
Our strategy Our goal is to expand our leadership position as a designer, manufacturer and marketer of performance-defining products designed to enhance ride dynamics and performance.
Our strategy Our goal is to expand our leadership position in designing, engineering, manufacturing and marketing performance-defining products designed to enhance ride dynamics and performance.
Baseball and softball products are also subject to rigorous product validation on the field and in the Marucci performance lab where Big League and amateur players test and provide feedback before product rollout and distribution.
Baseball and softball products are also subject to rigorous product validation on the field and in the Marucci performance lab where professional and amateur players test and provide feedback before product rollout and distribution. Research and development expenses totaled approximately $60.3 million, $53.2 million and $56.2 million in fiscal years 2024, 2023 and 2022, respectively.
Inclusion, Diversity and Engagement At FOX, we believe that people are our greatest asset. Therefore, we are committed to building and maintaining an inclusive workplace in which all employees feel they belong, are empowered to be their best, and inspired to deliver maximum performance.
Therefore, we are committed to building and maintaining an inclusive workplace in which all employees feel they belong, are empowered to be their best, and inspired to deliver maximum performance. Our employees have diverse skills, experiences and unique perspectives that collectively contribute to greater opportunities for engagement, innovation and business growth.
The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 12 Table of Contents
The public may read and copy any materials we file with the SEC at the SEC’s Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 13 Table of Contents
We intend to further penetrate the aftermarket channel by selectively adding dealers and distributors in certain geographic markets, increasing our internal sales force and strategically expanding aftermarket-specific products and services to existing vehicle platforms. 4 Table of Contents Accelerate international growth We believe international expansion represents a significant opportunity for us and we have, and intend to continue to, selectively increase infrastructure investments and focus on identified geographic regions.
We intend to further penetrate the aftermarket channel by selectively adding dealers and distributors in certain geographic markets, increasing our internal sales force and strategically expanding aftermarket-specific products and services to existing vehicle platforms.
We have great relations with our OEM and aftermarket partners and given our key distinct strengths, we believe we have and will continue to win more applications. Leveraging our technology and scale, we successfully expanded into recreational vehicles and street car applications, and we believe there are opportunities to further penetrate these markets and grow with more pioneering product applications.
Leveraging our technology and scale, we successfully expanded into recreational vehicles and street car applications, international truck and sports utility vehicle (“SUV”) applications, and entry premium bike applications, and we believe there are opportunities to further penetrate these markets and grow with more pioneering product applications.
With the recent acquisitions of Shock Therapy in December 2021 and Custom Wheel House in 2023, we added suspension tuning services and high-performance wheels, off-road tires and accessories to the portfolio.
With the recent acquisitions of Shock Therapy in December 2021 and Custom Wheel House in 2023, we added suspension tuning services and high-performance wheels, off-road tires and accessories to the portfolio. Our upfitting category leverages our strong partnerships with Ford, General Motors, Jeep, Nissan and RAM, enabling us to obtain truck, van and SUV chassis directly from the manufacturers’ facilities.
Our products for powered vehicles are used primarily on off-road vehicles and trucks, on-road vehicles with and without off-road capabilities, side-by-sides, ATVs, snowmobiles, specialty vehicles and applications, including military, motorcycles, and commercial trucks. 1 Table of Contents We focus on premium-priced products within each of these categories, which we consider to be the high-end segment because of their higher retail sale prices, where we believe consumers prefer well-designed, performance-oriented equipment.
We focus on premium-priced products within each of these categories, which we consider to be the high-end segment because of their higher retail sale prices, where we believe consumers prefer well-designed, performance-oriented equipment.
Competition in the high-end segment of the performance-defining market revolves around technical features, performance, product design, innovation, reliability and durability, brand, time to market, customer service and reliable order execution. While the pricing of competing products is always a factor, we believe the performance of our products helps justify our premium pricing.
Some of our competitors may have greater financial, research and development or marketing resources than we do. Competition in the high-end segment of the performance-defining market revolves around technical features, performance, product design, innovation, reliability and durability, brand, time to market, customer service and reliable order execution.
The Gainesville Facility is used for manufacturing, warehousing, distribution and office space. Additionally, we completed the transition of our Watsonville, California facility (the “Watsonville Facility”) and the relocation of our powered vehicles suspension manufacturing to the Gainesville Facility in the first quarter of 2022.
Additionally, we completed the transition of our Watsonville, California facility (the “Watsonville Facility”) and the relocation of our powered vehicles suspension manufacturing to the Gainesville Facility in the first quarter of 2022. 5 Table of Contents Seasonality Certain portions of our business are seasonal; we believe this seasonality is due to the delivery of new products.
In addition, we manufacture suspension systems that enhance the handling and ride quality of muscle cars, trucks, sports cars and hot rods.
In addition, we manufacture suspension systems that enhance the handling and ride quality of muscle cars, trucks, sports cars and hot rods. With the recent acquisition of Marzocchi in 2024, we expanded our product portfolio to include Marzocchi motorcycle shocks, forks, cushioning, and hydraulic components.
In each of the years ended December 29, 2023, December 30, 2022 and December 31, 2021, approximately 27%, 42% and 45%, respectively, of our net sales were attributable to net sales of bike-related products. Primarily for the mountain bike market, we offer mid-end and high-end front fork and rear suspension products designed for cross-country, trail, all-mountain, free-ride and downhill riding.
Primarily for the mountain bike market, we offer mid-end and high-end front fork and rear suspension products designed for cross-country, trail, all-mountain, free-ride and downhill riding.
We also expanded our existing product mix to other areas in the upfitting business, enhancing our market reach and product offerings. These initiatives significantly contributed to the increased manufacturing and production output, positioning us favorably to meet growing demand and capitalize on market opportunities.
These initiatives significantly contributed to the increased manufacturing and production output, positioning us favorably to meet growing demand and capitalize on market opportunities. Specialty Sports With the acquisition of Marucci in 2023, we expanded our manufacturing footprint to baseball and softball gear and equipment products.
Seasonality Certain portions of our business are seasonal; we believe this seasonality is due to the delivery of new products. As we diversified our product offerings and our product launch cycles, seasonal fluctuations are becoming less material. Competition The markets for performance-defining products are highly competitive.
As we diversified our product offerings and our product launch cycles, seasonal fluctuations are becoming less material. Competition The markets for performance-defining products are highly competitive. We compete with other companies that produce products for sale to OEMs, dealers and distributors, and retailers as well as with OEMs that produce their own line of products for their own use.
We also offer premium baseball and softball gear and equipment. We use high-grade materials in our products and developed a number of sophisticated assembly processes to maintain quality across all product lines. Our suspension products are assembled according to precise specifications throughout the assembly process to create consistently high-performance levels and customer satisfaction.
Our products use adjustable suspension, position-sensitive damping, electronically controllable damping, multiple air spring technologies, low weight and structural rigidity, all of which improve user control for greater performance. We also offer premium baseball and softball gear and equipment. We use high-grade materials in our products and developed a number of sophisticated assembly processes to maintain quality across all product lines.
We believe our products are generally sold at premium prices, which to us means manufacturer suggested retail sale prices that are generally in the upper quartile of their respective product categories. We design our products for, and market our products to, some of the world’s leading cycling and automotive OEMs and to consumers through the aftermarket channel.
We design our products for, and market our products to, some of the world’s leading cycling and automotive OEMs and to consumers through the aftermarket channel.
We currently sell to approximately 100 OEMs and distribute our products to more than 5,000 retail dealers and distributors worldwide. In 2023, 50% of our net sales resulted from net sales to OEM customers and 50% resulted from net sales to dealers and distributors for resale in the aftermarket channel.
We currently sell to approximately 250 OEMs and distribute our products to more than 16,000 retail dealers and distributors worldwide.
In the snowmobile market, we compete with KYB (Kayaba Industry Co., Ltd.), Öhlins Racing AB (a wholly-owned subsidiary of Tenneco), Walker Evans Racing, Works Performance Products, Inc., and Penske Racing Shocks / Custom Axis, Inc. 5 Table of Contents Aftermarket Applications In the market for suspension systems, or lift kits, we compete with TransAmerican Wholesale/Pro Comp USA, Rough Country Suspension Systems, TeraFlex, Falcon, ReadyLIFT Suspension, Tuff Country EZ-Ride Suspension, and Rusty’s Off-Road.
Aftermarket Applications Group (“AAG”) In the market for suspension systems, or lift kits, we compete with TransAmerican Wholesale/Pro Comp USA, Rough Country Suspension Systems, TeraFlex, Falcon, ReadyLIFT Suspension, Tuff Country EZ-Ride Suspension, Rusty’s Off-Road, MTS Offroad, Thumper Fab, and others.
Suspension products allow wheels or skis (in the case of snowmobiles) to move up and down to absorb bumps and shocks while maintaining contact with the ground for better control. Our products use adjustable suspension, position-sensitive damping, electronically controllable damping, multiple air spring technologies, low weight and structural rigidity, all of which improve user control for greater performance.
These suspension products dissipate the energy and force generated by bikes and powered vehicles while they are in motion. Suspension products allow wheels or skis (in the case of snowmobiles) to move up and down to absorb bumps and shocks while maintaining contact with the ground for better control.
In the market for upfitted vehicles, we compete with Roush Performance and DSI Custom Vehicles.
In the market for upfitted vehicles, we compete with Roush Performance, Waldoch, Sherrod Vans, American Luxury Coach, DSI Custom Vehicles, Storyteller Overland, Remote Vans, Winnerbago, Airstream, Grench, Grit Overland, Roadtrek, Pleasureway, Benchmark, Sync Vans, Titan Van, Off Highway Vans, and others.
None of our employees are subject to collective bargaining agreements. Health and Safety Employee health and safety in the workplace is one of our top priorities. In response to the COVID-19 pandemic, we have been working to keep our employees safe and healthy from this outbreak.
Health and Safety Employee health and safety in the workplace is one of our top priorities. We are committed to providing a safe and healthy work environment by following guidance from relevant health and safety organizations, as well as state and local regulations.
As a result of the completion of our Gainesville Facility, we were able to realign our manufacturing and production processes efficiently to work through the backlog during the year. Furthermore, we strategically reallocated a majority of the aftermarket production to our El Cajon facility, leveraging its capabilities and optimizing resource allocation.
Furthermore, we strategically reallocated a majority of the aftermarket production to our El Cajon, CA facility, leveraging its capabilities and optimizing resource allocation. Aftermarket Applications We expanded our existing product mix to other areas in the upfitting, high-performance wheels, off-road tires and accessories businesses, enhancing our market reach and product offerings.
Removed
We believe that performance-defining products, which include suspension systems, as well as wheels, cranks, and other components, are critical to the performance of the bikes and powered vehicles in the product categories in which we focus and that technical features, component performance, product design, durability, reliability, and brand recognition strongly influence consumer-purchasing decisions.
Added
Our products for powered vehicles are used primarily on off-road vehicles and trucks, on-road vehicles with and without off-road capabilities, side-by-sides, ATVs, snowmobiles, specialty vehicles and applications, including military, and motorcycles.
Removed
We compete with other companies that produce products for sale to OEMs, dealers and distributors, and retailers as well as with OEMs that produce their own line of products for their own use. Some of our competitors may have greater financial, research and development or marketing resources than we do.

… 27 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

115 edited+38 added−13 removed224 unchanged
Biggest changeIf our information systems fail to perform these functions adequately, if we or our vendors or commercial partners experience an interruption in our operations, or if we are impacted by cybersecurity attacks or data privacy issues, our business could suffer; • we have grown and may continue to grow in the future through acquisitions, and we may not be able to effectively integrate businesses we acquire, or we may not be able to identify or complete any future acquisitions on favorable terms, or at all; • our operating results are subject to quarterly variations in our sales, which could make our operating results difficult to predict and could adversely affect the price of our common stock; • growth in our sales and the mix of domestic versus export shipments from Taiwan could cause additional foreign tax credits to not be realizable, potentially reducing our income and adversely affecting our cash flows; • the current inflation affecting the economy and the Federal Reserve’s repeated interest rate increases in response, could negatively impact our cash flows due to higher debt costs or negatively impact our customers’ ability to finance powered vehicles or bikes that include our products; Risks Related to Our Indebtedness and Liquidity • our 2022 Credit Facility places operating restrictions on us and creates default risks, and the variable rate makes us more vulnerable to increases in interest rates; • we continue to have the ability to incur debt and our levels of debt may affect our operations and our ability to pay the principal of and interest on our debt; • we may incur losses on interest rate swap and hedging arrangements; Risks Related to Laws and Regulations • changes in tax laws and regulations or other factors could cause our income tax obligations to increase, potentially reducing our net income and adversely affecting our cash flows; • we are subject to extensive U.S. federal and state, foreign and international safety, environmental, employment practices and other government regulations that may require us to incur expenses or modify product offerings in order to maintain compliance with such regulation, which could have a negative effect on our business and results of operations; • unpredictability in increasingly stringent emission standards and increasing focus on environmental, social and governance responsibility, including climate change, may impose additional costs and new risks on us; • we are subject to employment practice laws and regulations, and, as such, are exposed to litigation risks, and we may incur higher employee costs in the future; • we retain certain personal information about individuals and are subject to various privacy and consumer protection laws; • our vendors and any potential commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements; • we are, and may in the future be, subject to legal proceedings, which could have a negative effect on our business and results of operations if the outcomes of these proceedings are adverse to us; Risks Related to Ownership of Our Common Stock • potential volatility in our trading price, publications by securities or industry analysts, and future issuances, sales, and the perception of such could cause our stock price and trading volume to decline; • anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of our Company; • our Amended and Restated Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees; • we cannot guarantee that our share repurchase program will be fully consummated or that it will enhance stockholder value, and the volatility of the price of our common stock could increase; and 14 Table of Contents General Risk Factors • failure of our internal control over financial reporting could adversely affect our business and financial results.
Biggest changeIf our information systems fail to perform these functions adequately, if we or our vendors or partners experience an interruption in our operations, or if we are impacted by cybersecurity attacks or data privacy issues, our business could suffer; • we have grown and may continue to grow through acquisitions, and we may not be able to effectively integrate businesses we acquire, or we may not be able to identify or complete future acquisitions on favorable terms, or at all; • our operating results are subject to quarterly variations in our sales, which could make our operating results difficult to predict and could adversely affect the price of our common stock; • qualitative data and limited sources support our beliefs regarding the future growth of the performance-defining product market and may not be reliable; • the current inflation and changes in interest rates in response, could negatively impact our cash flows due to higher debt costs or negatively impact our customers’ ability to finance powered vehicles or bikes that include our products; Risks Related to Our Indebtedness and Liquidity • our amended credit agreement with Wells Fargo Bank, National Association, and other named lenders (“2022 Credit Facility”) places operating restrictions on us and creates default risks, and the variable rate makes us more vulnerable to increases in interest rates; • we continue to have the ability to incur debt, and our levels of debt may affect our operations and our ability to pay the principal of and interest on our debt; • we may incur losses on interest rate swap and hedging arrangements; Risks Related to Laws and Regulations • changes in tax laws and regulations or other factors could cause our income tax obligations to increase, potentially reducing our net income and adversely affecting our cash flows; • we are subject to extensive U.S. federal and state, foreign and international safety, environmental, employment practices and other government regulations that may require us to incur expenses or modify product offerings in order to maintain compliance with such regulation, which could have a negative effect on our business and results of operations; • unpredictability in increasingly stringent emission standards and increasing focus on environmental, social and governance responsibility, including climate change, may impose additional costs and new risks on us; • we are subject to employment practice laws and regulations, and, as such, are exposed to litigation risks; • we are subject to environmental laws and regulations and potential exposure, costs and liabilities due to laws and regulations regarding conflict minerals, environmental matters, land-use, and noise and air pollution may have a negative impact on our future sales and results of operations; • we retain certain personal information about individuals and are subject to various privacy and consumer protection laws; • our vendors and any potential commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements; • U.S. policies related to global trade and tariffs could have a material adverse effect on our results of operations; • we are, and may in the future be, subject to legal proceedings, which could have a negative effect on our business and results of operations if the outcomes of these proceedings are adverse to us; Risks Related to Ownership of Our Common Stock • potential volatility in our trading price, publications by securities or industry analysts, and future issuances, sales, and the perception of such could cause our stock price and trading volume to decline; • anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of our Company; • we cannot guarantee that our share repurchase program will be fully consummated or that it will enhance stockholder value, and the volatility of the price of our common stock could increase; • our Amended and Restated Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain actions and proceedings initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees; and 15 Table of Contents General Risk Factors • failure of our internal control over financial reporting could adversely affect our business and financial results.
Unless otherwise required by law, we generally provide a limited warranty for our 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 our product is incorporated as original equipment on the purchased bike or powered vehicle; (ii) in the case of aftermarket 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.
Unless otherwise required by law, we generally provide a limited warranty for our 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 our 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.
The loss of all or a substantial portion of our sales to any of these OEM customers, whether through the temporary or permanent discontinuation of their products which incorporate our products or otherwise, the loss of market share by these customers, manufacturing or other problems, including disruptions related to the lingering effects of the COVID-19 pandemic or labor strikes, could have a material impact on our business, financial condition, or results of operations.
The loss of all or a substantial portion of our sales to any of these customers, whether through the temporary or permanent discontinuation of their products which incorporate our products or otherwise, the loss of market share by these customers, manufacturing or other problems, including disruptions related to the lingering effects of the COVID-19 pandemic or labor strikes, could have a material impact on our business, financial condition, or results of operations.
The information technology systems described above are also potentially vulnerable to unauthorized access, computer viruses, ransomware attacks and other similar types of malicious activities and cyber-attacks, including attempts by others to gain access to our proprietary or sensitive information, and ranging from individual attempts to advanced persistent threats. Further, ransomware attacks are becoming increasingly prevalent and severe.
The information technology systems described above are also vulnerable to unauthorized access, computer viruses, ransomware attacks and other similar types of malicious activities and cyber-attacks, including attempts by others to gain access to our proprietary or sensitive information, and ranging from individual attempts to advanced persistent threats. Further, ransomware attacks are becoming increasingly prevalent and severe.
Pursuant to the new share repurchase program authorized by our Board of Directors on November 1, 2023, we are authorized to repurchase up to $300.0 million of outstanding shares of our common stock through various methods, including, but not limited to, open market, privately negotiated, or accelerated share repurchase transactions.
Pursuant to the share repurchase program authorized by our Board of Directors on November 1, 2023, we are authorized to repurchase up to $300.0 million of outstanding shares of our common stock through various methods, including, but not limited to, open market, privately negotiated, or accelerated share repurchase transactions.
A portion of our products are subject to extensive statutory and regulatory requirements governing emission and noise, including standards imposed by the Environmental Protection Agency, the European Union, state regulatory agencies (such as the California Air Resources Board), and other regulatory agencies around the world.
A portion of our products are subject to extensive statutory and regulatory requirements governing emission and noise, including standards imposed by the Environmental Protection Agency, the European Union, state regulatory agencies (such as the California Air Resources Board (“CARB”)), and other regulatory agencies around the world.
Throughout the Trump Administration, the U.S. and China imposed a variety of tariffs on most goods traded between the two countries. The U.S. and the European Union also imposed tariffs on each other’s products stemming from a dispute at the World Trade Organization related to aircraft. The Biden Administration and U.S.
Throughout the first Trump administration, the U.S. and China imposed a variety of tariffs on most goods traded between the two countries. The U.S. and the European Union also imposed tariffs on each other’s products stemming from a dispute at the World Trade Organization related to aircraft. The Biden administration and U.S.
In the event these markets stop expanding or contract due to economic factors, changes in consumer preferences, or other reasons, or we are unsuccessful in creating new products for these markets or other competitors successfully enter into these markets, we may fail to achieve future growth or our sales could decrease, and our business, financial condition or results of operations could be negatively affected. 18 Table of Contents A significant portion of our Specialty Sports Group’s sales are highly dependent on the demand for high-end bikes and Marucci products.
In the event these markets stop expanding or contract due to economic factors, changes in consumer preferences, or other reasons, or we are unsuccessful in creating new products for these markets or other competitors successfully enter into these markets, we may fail to achieve future growth or our sales could decrease, and our business, financial condition or results of operations could be negatively affected. 19 Table of Contents A significant portion of our Specialty Sports Group’s sales are highly dependent on the demand for high-end bikes and Marucci products.
If we are unable develop or implement new technologies as quickly as our competitors, or if our competitors develop more cost-effective technologies or product offerings, we could experience a material adverse effect on business, financial condition or results of operations.
If we are unable to develop or implement new technologies as quickly as our competitors, or if our competitors develop more cost-effective technologies or product offerings, we could experience a material adverse effect on business, financial condition or results of operations.
As a result, our products may be unable to compete successfully with our competitors’ products, which could negatively affect our business, financial condition, or results of operations. 16 Table of Contents If we are unable to anticipate and respond effectively to the threat of, and the opportunity presented by, new technological applications, such as artificial intelligence, machine learning, robotics, blockchain or other new approaches to data mining, we may be exposed to competitive risks related to the adoption and application of such technology.
As a result, our products may be unable to compete successfully with our competitors’ products, which could negatively affect our business, financial condition, or results of operations. 17 Table of Contents If we are unable to anticipate and respond effectively to the threat of, and the opportunity presented by, new technological applications, such as artificial intelligence, machine learning, robotics, blockchain or other new approaches to data mining, we may be exposed to competitive risks related to the adoption and application of such technology.
Today, there appears to be an increasing risk of recessions or inflationary economic impacts related to lingering effects of the global COVID-19 pandemic, geopolitical events, escalating energy costs, global supply chain disruptions, rising interest rates, and other economic changes. In addition, many of our products are recreational in nature and are generally discretionary purchases by consumers.
Today, there appears to be an increasing risk of recessions or inflationary economic impacts related to lingering effects of the global COVID-19 pandemic, geopolitical events, escalating energy costs, global supply chain disruptions, changing interest rates, and other economic changes. In addition, many of our products are recreational in nature and are generally discretionary purchases by consumers.
In addition to foreign currency risks, these risks include: • difficulty in transporting materials internationally, including labor disputes at West Coast ports, which handle a large amount of our products; • political, economic, or other actions from China or changes in China-Taiwan relations could impact Taiwan and its economy, which may adversely affect our operations in Taiwan, our customers, and our supply chain; • geopolitical regional conflicts, including the impact of the Russian invasion of Ukraine and the Israel-Palestine conflict on the global economy, energy supplies and raw materials, terrorist activity, political unrest, civil strife, acts of war, and other political uncertainty; • increased difficulty in protecting our intellectual property rights and trade secrets; • changes in tax laws and the interpretation of those laws; • exposure to local economic conditions; • unexpected government action or changes in legal or regulatory requirements; • changes in tariffs, quotas, trade barriers, and other similar restrictions on sales; • the effects of any anti-American sentiments on our brands or sales of our products; • increased difficulty in ensuring compliance by employees, agents, and contractors with our policies as well as with the laws of multiple jurisdictions, including but not limited to the U.S.
In addition to foreign currency risks, these risks include: • difficulty in transporting materials internationally, including labor disputes at East and West Coast ports, which handle a large amount of our products; • political, economic, or other actions from China or changes in China-Taiwan relations could impact Taiwan and its economy, which may adversely affect our operations in Taiwan, our customers, and our supply chain; • geopolitical regional conflicts, including the impact of the Russian war in Ukraine and the Israel-Palestine conflict on the global economy, energy supplies and raw materials, terrorist activity, political unrest, civil strife, acts of war, and other political uncertainty; • increased difficulty in protecting our intellectual property rights and trade secrets; • changes in tax laws and the interpretation of those laws; • exposure to local economic conditions; • unexpected government action or changes in legal or regulatory requirements; • changes in tariffs, quotas, trade barriers, and other similar restrictions on sales; • the effects of any anti-American sentiments on our brands or sales of our products; 23 Table of Contents • increased difficulty in ensuring compliance by employees, agents, and contractors with our policies as well as with the laws of multiple jurisdictions, including but not limited to the U.S.
In addition, if current bike enthusiasts stop purchasing our products due to changes in preferences, we may fail to achieve future growth or our sales could be decreased, and our business, financial condition or results of operations could be negatively affected. Additionally, in the fourth quarter of 2023, our Sport’s Specialty Group expanded and diversified with the acquisition of Marucci.
In addition, if current bike enthusiasts stop purchasing our products due to changes in preferences, we may fail to achieve future growth or our sales could be decreased, and our business, financial condition or results of operations could be negatively affected. Additionally, in the fourth quarter of 2023, our Specialty Sports Group expanded and diversified with the acquisition of Marucci.
We may incur losses on interest rate swap and hedging arrangements. We may periodically enter into agreements to reduce the risks associated with increases in interest rates, such as our 2022 Swap Agreement. Although these agreements may partially protect against rising interest rates, they also may reduce the benefits to us if interest rates decline.
We may incur losses on interest rate swap and hedging arrangements. We may periodically enter into agreements to reduce the risks associated with increases in interest rates, such as our swap agreements. Although these agreements may partially protect against rising interest rates, they also may reduce the benefits to us if interest rates decline.
In addition, a number of our facilities are located in California, a state that frequently experiences earthquakes and wildfires and has recently experienced frequent and severe flooding. As a result, the effects of climate change could have a long-term adverse impact on our business, and results of operations.
In addition, a number of our facilities are located in California, a state that frequently experiences earthquakes and has recently experienced increasingly frequent and severe wildfires, flooding, and landslides. As a result, the effects of climate change could have a long-term adverse impact on our business and results of operations.
Similarly, if those other bike component manufacturers experience sales disruptions, lose their competitive position in the marketplace, or face reputational damage, customers could migrate to complementary bike products, some of which may be incompatible with our suspension products or directly compete with our products.
Similarly, if those other manufacturers experience sales disruptions, lose their competitive position in the marketplace, or face reputational damage, customers could migrate to complementary products, some of which may be incompatible with our suspension products or directly compete with our products.
The amounts and timing of the repurchases may also be influenced by general market conditions, regulatory developments (including recent legislative actions which, subject to certain conditions, may impose an excise tax of 1% on our stock repurchases), and the prevailing price and trading volumes of our common stock.
The amounts and timing of the repurchases may also be influenced by general market conditions, regulatory developments (including recent legislative actions which, subject to certain conditions, imposed an excise tax of 1% on our stock repurchases), and the prevailing price and trading volumes of our common stock.
For example, there have been significant increases in gasoline and diesel fuel prices due to geopolitical developments, including the impacts resulting from the Russian invasion of Ukraine, and there are heightened uncertainties regarding the future price and availability of gasoline and diesel fuel.
For example, there have been significant increases in gasoline and diesel fuel prices due to geopolitical developments, including the impacts resulting from the Russian war in Ukraine, and there are heightened uncertainties regarding the future price and availability of gasoline and diesel fuel.
A reduction or lack of continued growth in the popularity of high-end bikes, powered vehicles, baseball, or in the number of consumers who are willing to pay premium prices for well-designed, performance-oriented equipment in the markets in which we sell our products could adversely affect our product sales and profits, financial condition, or results of operations.
A reduction or lack of continued growth in the popularity of high-end bikes, powered vehicles, diamond sports, or in the number of consumers who are willing to pay premium prices for well-designed, performance-oriented equipment in the markets in which we sell our products could adversely affect our product sales and profits, financial condition, or results of operations.
Failure to comply with the requirements of such organizations could result in the loss of certain customer contracts, fines and penalties, or both, which could have an adverse effect on our business, financial condition, or results of operations. 29 Table of Contents Unpredictability in the adoption, implementation, and enforcement of increasingly stringent emission standards by multiple jurisdictions could adversely affect our business.
Failure to comply with the requirements of such organizations could result in the loss of certain customer contracts, fines and penalties, or both, which could have an adverse effect on our business, financial condition, or results of operations. Unpredictability in the adoption, implementation, and enforcement of increasingly stringent emission standards by multiple jurisdictions could adversely affect our business.
The failure to prevent or limit infringements and imitations could have a permanent negative impact on the pricing of our products or reduce our product sales and product margins, even if we are ultimately successful in limiting the distribution of a product that infringes our rights, which in turn may affect our business, financial condition, or results of operations.
The failure to prevent or limit infringements and imitations could have a permanent negative impact on the pricing of our products or reduce our product sales and product 24 Table of Contents margins, even if we are ultimately successful in limiting the distribution of a product that infringes our rights, which in turn may affect our business, financial condition, or results of operations.
Economic weakness and uncertainty in the U.S., Europe, and other international markets may make accurate forecasting particularly challenging. 23 Table of Contents In the future, if actual demand for our products exceeds forecasted demand, the margins on our incremental sales in excess of anticipated sales may be lower due to temporary higher costs, which could decrease our overall margins.
Economic weakness and uncertainty in the U.S., Europe, and other international markets may make accurate forecasting particularly challenging. In the future, if actual demand for our products exceeds forecasted demand, the margins on our incremental sales in excess of anticipated sales may be lower due to temporary higher costs, which could decrease our overall margins.
Furthermore, there is a trend toward more stringent privacy legislation in the U.S., as 12 states across the country have enacted privacy laws of broad applicability and others are considering and proposing similar laws.
Furthermore, there is a trend toward more stringent privacy legislation in the U.S., as 19 states across the country have enacted privacy laws of broad applicability and others are considering and proposing similar laws.
If one or more of these analysts ceases coverage of our Company or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline. 33 Table of Contents Anti-takeover provisions in our charter documents and Delaware law could discourage, delay, or prevent a change in control of our Company.
If one or more of these analysts ceases coverage of our Company or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline. Anti-takeover provisions in our charter documents and Delaware law could discourage, delay, or prevent a change in control of our Company.
Additionally, if the Federal Reserve continues raising interest rates, the result could be a recession, which could slow demand for our products, hinder our sales growth, or cause sales to decline in future periods.
Additionally, if the Federal Reserve resumes raising interest rates, the result could be a recession, which could slow demand for our products, hinder our sales growth, or cause sales to decline in future periods.
Additionally, if we do not effectively implement the ERP system as planned or the system does not operate as intended, the effectiveness of our internal control over financial reporting could be adversely affected. 25 Table of Contents Our operations may be impaired if our technology systems fail to perform adequately, and we could be negatively impacted by cybersecurity attacks.
Additionally, if we do not effectively implement the ERP system as planned or the system does not operate as intended, the effectiveness of our internal control over financial reporting could be adversely affected. Our operations may be impaired if our technology systems fail to perform adequately, and we could be negatively impacted by cybersecurity attacks.
We may not be able to identify or consummate any future acquisitions on favorable terms, or at all. Our operating results are subject to quarterly variations in our sales, which could make our operating results difficult to predict and could adversely affect the price of our common stock.
We may not be able to identify or consummate any future acquisitions on favorable terms, or at all. 28 Table of Contents Our operating results are subject to quarterly variations in our sales, which could make our operating results difficult to predict and could adversely affect the price of our common stock.
RISKS RELATED TO OUR BUSINESS AND OPERATIONS The impact of the risks associated with international geopolitical conflicts—including continuing tensions between Taiwan and China, the Russian invasion of Ukraine, and the Israel-Palestine conflict—on the global economy, energy supplies, and raw materials is uncertain, and may prove to negatively impact our business and operations.
RISKS RELATED TO OUR BUSINESS AND OPERATIONS The impact of the risks associated with international geopolitical conflicts—including continuing tensions between Taiwan and China, the Russian war in Ukraine, and the Israel-Palestine conflict—on the global economy, energy supplies, and raw materials is uncertain, and may prove to negatively impact our business and operations.
Any disruption or loss of our non-wood finishing supplier for our bats could temporarily diminish overall bat production output, which could negatively impact our business, financials, or results of operations. 15 Table of Contents We also have OEM partners that supply vehicle chassis used in our upfitting operations.
Any disruption or loss of our non-wood finishing supplier for our bats could temporarily diminish overall bat production output, which could negatively impact our business, financials, or results of operations. We also have OEM partners that supply vehicle chassis used in our upfitting operations.
Any assessment of the potential impact of future climate change legislation, regulations, or industry standards, as well as any international treaties and accords, is uncertain given the scope of potential regulatory change in the countries in which we operate. 30 Table of Contents We are subject to employment practice laws and regulations.
Any assessment of the potential impact of future climate change legislation, regulations, or industry standards, as well as any international treaties and accords, is uncertain given the scope of potential regulatory change in the countries in which we operate. We are subject to employment practice laws and regulations.
The need to replace the Kashima coating could temporarily disrupt our business and harm our business, financial condition, or results of operations. Similarly, Marucci depends on a sole-source supplier for the manufacturing and finishing of select aluminum and composite metal bats.
The need to replace the Kashima coating could temporarily disrupt our business and harm our business, financial condition, or results of operations. 16 Table of Contents Similarly, Marucci depends on a sole-source supplier for the manufacturing and finishing of select aluminum and composite metal bats.
Should the New Taiwan Dollar appreciate against the U.S. Dollar, this could have the effect of decreasing our sales, increasing our expenses, and decreasing our profitability. 21 Table of Contents Additionally, a portion of our operations take place in Canada and a percentage of our sales and expenses are denominated in Canadian Dollars.
Should the New Taiwan Dollar appreciate against the U.S. Dollar, this could have the effect of decreasing our sales, increasing our expenses, and decreasing our profitability. Additionally, a portion of our operations take place in Canada and a percentage of our sales and expenses are denominated in Canadian Dollars.
Continued increases in our employee costs could adversely affect our earnings, financial condition, and liquidity. We rely on increasingly complex information systems to manage our manufacturing, distribution, sales, and other functions. If our information systems fail to perform these functions adequately or if we experience an interruption in our operations, our business could suffer.
Continued increases in our employee costs could adversely affect our earnings, financial condition, and liquidity. 26 Table of Contents We rely on increasingly complex information systems to manage our manufacturing, distribution, sales, and other functions. If our information systems fail to perform these functions adequately or if we experience an interruption in our operations, our business could suffer.
We may incur significant expenses to comply with privacy, consumer protection, and security standards and protocols imposed by law, regulation, industry standards, or contractual obligations. Our vendors and any potential commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements.
We may incur significant expenses to comply with privacy, consumer protection, and security standards and protocols imposed by law, regulation, industry standards, or contractual obligations. 33 Table of Contents Our vendors and any potential commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements.
Currency exchange rate fluctuations could impact gross margins and expenses. Foreign currency fluctuations could have an adverse effect on our business, financial condition, or results of operations. U.S. government policy—including interest rate increases by the Federal Reserve—may impact the exchange rate between the U.S. Dollar and foreign currencies.
Currency exchange rate fluctuations could impact gross margins and expenses. Foreign currency fluctuations could have an adverse effect on our business, financial condition, or results of operations. U.S. government policy­—including changes in interest rates by the Federal Reserve­—may impact the exchange rate between the U.S. Dollar and foreign currencies.
The 2015 strike lasted longer than we forecasted, and any similar labor dispute in the future or any slowdown or stoppage relating to the ongoing labor agreement negotiations could potentially have a negative effect on both our financial condition and results of operations.
The 2015 strike lasted longer than we forecasted, and any similar labor dispute in the future or any slowdown or stoppage relating to the ongoing labor agreement negotiations, including the threatened strike by the ILA, could potentially have a negative effect on both our financial condition and results of operations.
While we expended approximately $53.2 million, $56.2 million and $46.6 million for our research and development efforts in fiscal years 2023, 2022 and 2021, respectively, there can be no assurance that this level of investment in research and development will be sufficient in the future to maintain our competitive advantage in product innovation, which could cause our business, financial condition or results of operations to suffer.
While we expended approximately $60.3 million, $53.2 million and $56.2 million for our research and development efforts in fiscal years 2024, 2023 and 2022, respectively, there can be no assurance that this level of investment in research and development will be sufficient in the future to maintain our competitive advantage in product innovation, which could cause our business, financial condition or results of operations to suffer.
A material decline in the demand for these bikes, bike suspension components, or Marucci products could have a material adverse effect on our business or results of operations. During 2023, approximately 25% of our net sales were generated from the sale of bike products.
A material decline in the demand for these bikes, bike suspension components, or Marucci products could have a material adverse effect on our business or results of operations. During 2024, approximately 23% of our net sales were generated from the sale of bike products.
Any significant delay in deliveries to our customers could lead to increased returns or cancellations, expose us to damage claims from our customers or damage our brands, and, in turn, negatively affect our business, financial condition, or results of operations. 19 Table of Contents Work stoppages or other disruptions, including those that involve our customers, could adversely affect our operating results.
Any significant delay in deliveries to our customers could lead to increased returns or cancellations, expose us to damage claims from our customers or damage our brands, and, in turn, negatively affect our business, financial condition, or results of operations. Work stoppages, infrastructure issues, or other disruptions, including those that involve our customers, could adversely affect our operating results.
For example, in March 2022, the SEC proposed new rules for extensive and prescriptive climate-related disclosure in annual reports and registration statements, which would also require the inclusion of certain climate-related financial metrics in a note to companies’ audited financial statements.
For example, in March 2024, the SEC adopted new rules for extensive and prescriptive climate-related disclosure in annual reports and registration statements, which would also require the inclusion of certain climate-related financial metrics in a note to companies’ audited financial statements.
Because of the current inflation affecting the economy and the Federal Reserve’s interest rate increases in response, we may be harmed in the future. We believe inflation, and actions taken by the Federal Reserve in response, currently pose a risk to us in a number of ways.
Because of the current inflation affecting the economy and the Federal Reserve’s changes in interest rates in response, we may be harmed in the future. We believe inflation, and actions taken by the Federal Reserve in response, currently pose a risk to us in a number of ways.
We completed several acquisitions over the past several years, including our acquisition of SCA Performance Holdings, Inc. in March 2020, Outside Van and Sola Sport Pty Ltd. (“Sola Sport”) in May 2021, Shock Therapy in December 2021, Custom Wheel House, LLC in March 2023, and Marucci Sports, LLC in November 2023.
We completed several acquisitions over the past several years, including our acquisition of SCA Performance Holdings, Inc. in March 2020, Outside Van and Sola Sport Pty Ltd. (“Sola Sport”) in May 2021, Shock Therapy in December 2021, Custom Wheel House, LLC in March 2023, Marucci Sports, LLC in November 2023, and Marzocchi Suspension S.r.l. in December 2024.
Our business, financial condition or results of operations could be materially and adversely impacted if we experience difficulties with our suppliers or manufacturing delays caused by our suppliers, whether in connection with our manufacturing operations in the U.S. or in Taiwan. Our products require various raw materials (e.g., aluminum, magnesium, steel, carbon, and timber) for production output and manufacturing purposes.
Our business, financial condition or results of operations could be materially and adversely impacted if we experience difficulties with our suppliers or manufacturing delays caused by our suppliers. Our products require various raw materials (e.g., aluminum, magnesium, steel, carbon, and timber) for production output and manufacturing purposes.
Net sales attributable to our five largest OEM customers, which can vary from year to year, collectively accounted for approximately 27%, 23%, and 24% of our net sales in fiscal years 2023, 2022 and 2021.
Net sales attributable to our five largest customers, which can vary from year to year, collectively accounted for approximately 28%, 27%, and 23% of our net sales in fiscal years 2024, 2023 and 2022.
Summary of Risk Factors The risks described below include, but are not limited to, the following: Risks Related to Our Business and Operations • the impact of the risks associated with international geopolitical conflicts, including continuing tensions between Taiwan and China, the Russian invasion of Ukraine, and the Israel-Palestine conflict on the global economy, energy supplies and raw materials are uncertain, but may prove to negatively impact our business and operations; • our dependency on a limited number of suppliers for materials, component parts, and vehicle chassis could lead to an increase in material costs, disruptions in our supply chain, or reputational costs; • failure to effectively compete against competitors, enhance existing products or develop, manufacture and market new products, such as artificial intelligence, machine learning, robotics, blockchain or other new approaches to data mining, that respond to consumer needs and preferences and achieve market acceptance could result in a decrease in demand for our products and negatively impact our business and financial results; • our performance-defining products, and the bikes and powered vehicles into which many of them are incorporated, are discretionary purchases and may be adversely impacted by changes in the economy, a shrinking market for these powered vehicles, or a material decline in demand for the high-end bikes that make up a significant portion of our sales; • our business, financial condition and results of operations have been and may continue to be adversely affected by global public health epidemics or pandemics, including the ongoing effects of the COVID-19 pandemic; • our business depends substantially on our ability to maintain our premium brand image and to attract and retain experienced and qualified talent, including our senior management team; • changes in our customer, channel and product mix could place demands that are more rigorous on our infrastructure and cause our profitability percentages to fluctuate; • a disruption in the operations of our facilities or along our global supply chain, such as work stoppages, or delays in our planned expansion of certain facilities, including labor strikes, could have a negative effect on our business, financial condition or results of operations; • we may not be able to sustain our past growth or successfully implement our growth strategy, which may have a negative effect on our business, financial condition or results of operations; • the loss of the support of professional athletes for our products, or the inability to attract new professional athletes or disruption in relationships with dealers and distributors may harm our business; • our business is dependent in large part on our relationships with dealers and distributors and their success and the orders we receive from our OEM customers and from their success.
Summary of Risk Factors The risks described below include, but are not limited to, the following: Risks Related to Our Business and Operations • the impact of the risks associated with international geopolitical conflicts is uncertain, but may prove to negatively impact our business and operations; • our dependency on a limited number of suppliers for materials, component parts, and vehicle chassis could lead to an increase in material costs, disruptions in our supply chain, or reputational costs; • failure to effectively compete against competitors, enhance existing products or develop, manufacture and market new products that respond to consumer needs and preferences and achieve market acceptance could result in a decrease in demand for our products and negatively impact our business and financial results; • our performance-defining products, and the bikes and powered vehicles into which many of them are incorporated, are discretionary purchases and may be adversely impacted by changes in the economy, a shrinking market for these powered vehicles, or a material decline in demand for the high-end bikes that make up a significant portion of our sales; • our business, financial condition and results of operations have been and may continue to be adversely affected by global public health epidemics or pandemics, including the ongoing effects of the COVID-19 pandemic; • our business depends substantially on our ability to maintain our premium brand image, the continued expansion of the market and demand for our products, and to attract and retain experienced and qualified talent; • changes in our customer, channel and product mix could place demands that are more rigorous on our infrastructure and cause our profitability percentages to fluctuate; • a disruption in the operations of our facilities or along our global supply chain, such as work stoppages, labor strikes, or infrastructure issues, could have a negative effect on our business, financial condition or results of operations; • we may not be able to sustain our past growth or successfully implement our growth strategy, which may have a negative effect on our business, financial condition or results of operations; • our cost optimization efforts may not succeed or may be significantly delayed; • the loss of the support of professional athletes for our products, or the inability to attract new professional athletes or disruption in relationships with dealers and distributors may harm our business; • our business is dependent in large part on our relationships with dealers and distributors and their success and the orders we receive from our OEM customers and from their success.
An adverse change in any of these conditions could have a negative effect upon our business, financial condition, or results of operations. Our sales could be adversely impacted by the disruption or cessation of sales by other bike component manufacturers or if other bike component manufacturers enter the specialty bike component market.
An adverse change in any of these conditions could have a negative effect upon our business, financial condition, or results of operations. Our sales could be adversely impacted by the disruption or cessation of sales by other manufacturers or if other manufacturers enter the specialty markets in which we operate.
We believe that our policies and processes comply with applicable employment standards and related regulations; however, we are subject to risks of litigation by employees and others that might involve allegations of illegal, unfair, or inconsistent employment practices, including wage and hour violations, employment discrimination, misclassification of independent contractors as employees, wrongful termination, and other concerns, which could require additional expenditures.
We believe that our policies and processes comply with applicable employment standards and related regulations; however, we are subject to risks of litigation by employees and others that might involve allegations of illegal, unfair, or inconsistent employment practices, including wage and hour violations, employment discrimination, misclassification of independent contractors as employees, wrongful termination, and other concerns, which could require additional expenditures. 32 Table of Contents We are subject to environmental laws and regulation and potential exposure for environmental costs and liabilities.
We and our employees are subject to certain risks in our manufacturing and in the testing of our products. As of December 29, 2023, we employed approximately 4,300 employees worldwide, a large percentage of which work at our manufacturing facilities. Our business involves complex manufacturing processes that can be inherently dangerous.
We and our employees are subject to certain risks in our manufacturing and in the testing of our products. As of January 3, 2025, we employed approximately 4,100 employees worldwide, a large percentage of which work at our manufacturing facilities. Our business involves complex manufacturing processes that can be inherently dangerous.
If the outcomes of these proceedings are adverse to us, it could have a material adverse effect on our business, financial condition and results of operations. We are subject to various litigation matters from time to time, the outcome of which could have a material adverse effect on our business, financial condition and results of operations.
We are subject to various litigation matters from time to time, the outcome of which could have a material adverse effect on our business, financial condition and results of operations.
We are subject to various laws and regulations that are continuously evolving and developing regarding privacy, data protection, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data.
The use of personal information by our business is highly regulated. We are subject to various laws and regulations that are continuously evolving and developing regarding privacy, data protection, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data.
This has the potential to significantly impact global trade and economic conditions in many of the regions where we do business and have a material adverse effect on our results of operations. We are, and may in the future be, subject to legal proceedings.
This has the potential to significantly impact global trade and economic conditions in many of the regions where we do business and have a material adverse effect on our results of operations.
Our Amended and Restated Certificate of Incorporation authorizes us to issue 90,000,000 shares of common stock, 41,953,938 of which shares were outstanding as of December 29, 2023. In the future, we may issue additional shares of common stock or other equity or debt securities convertible into common stock in connection with financings, acquisitions, registration statements, or otherwise.
Our Amended and Restated Certificate of Incorporation authorizes us to issue 90,000,000 shares of common stock, 41,683,905 of which shares were outstanding as of January 3, 2025. In the future, we may issue additional shares of common stock or other equity or debt securities convertible into common stock in connection with financings, acquisitions, registration statements, or otherwise.
Alternatively, if a court were to find this choice of forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.
Alternatively, if a court were to find this choice of forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations. 37 Table of Contents GENERAL RISK FACTORS Failure of our internal controls over financial reporting could adversely affect our business and financial results.
There is increasing concern that a gradual increase in global average temperatures due to the increased concentration of carbon dioxide and other greenhouse gases in the atmosphere will cause significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters.
Climate change and related regulatory responses may adversely impact our business. There is increasing concern that a gradual increase in global average temperatures due to the increased concentration of carbon dioxide and other greenhouse gases in the atmosphere will cause significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters.
Growth by acquisitions involves risks, and we may not be able to effectively integrate businesses we acquire, or we may not be able to identify or consummate any future acquisitions on favorable terms, or at all.
We have grown and may continue to grow in the future through acquisitions. Growth by acquisitions involves risks, and we may not be able to effectively integrate businesses we acquire, or we may not be able to identify or consummate any future acquisitions on favorable terms, or at all.
To the extent that any disruption or security breach were to result in a loss of, or damage to, our data, or inappropriate disclosure of confidential or proprietary information, we could be subject to litigation and reputational harm, which could materially adversely affect our financial condition, business, or results of operations. 26 Table of Contents We have grown and may continue to grow in the future through acquisitions.
To the extent that any disruption or security breach were to result in a loss of, or damage to, our data, or inappropriate disclosure of confidential or proprietary information, we could be subject to litigation and reputational harm, which could materially adversely affect our financial condition, business, or results of operations.
Although the U.S. withdrew from the Paris Agreement in November 2020, the U.S. officially rejoined the Paris Agreement in February 2021 following the change in Presidential administrations and may, in the future, choose to join other international agreements targeting greenhouse gas emissions.
Although the U.S. withdrew from the Paris Agreement in November 2020, rejoined the Paris Agreement in February 2021, and then announced an intent to again withdraw from the Paris Agreement following the change in Presidential administration, the U.S. may, in the future, choose to join other international agreements targeting greenhouse gas emissions.
In addition, we continue to monitor any adverse impact that the Israeli-Palestinian conflict, the conflict in Ukraine, and subsequent sanctions against Russia by the United States and European and Asian countries may have on the global economy, our business and operations, and our suppliers and customers.
In addition, we continue to monitor any adverse impact that the Israeli-Palestinian conflict, the conflict in Ukraine, subsequent sanctions against Russia by the United States and European and Asian countries, and geopolitical tensions or conflict that may arise out of the new U.S. Presidential administration may have on the global economy, our business and operations, and our suppliers and customers.
Among other things, these provisions: • authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to discourage a takeover attempt; • establish a classified Board of Directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election; • require that directors be removed from office only for cause; • provide that vacancies on our Board of Directors, including newly created directorships, may be filled only by a majority vote of directors then in office; • provide that no action be taken by stockholders by written consent; • provide that special meetings of our stockholders may be called only by our Board of Directors, our Chairperson of the Board of Directors, our Lead Director (if we do not have a Chairperson or the Chairperson is disabled), our Chief Executive Officer or our President (in the absence of a Chief Executive Officer); • require supermajority stockholder voting for our stockholders to effect certain amendments to our Charter Documents; and • establish advance notice requirements for nominations for elections to our Board of Directors or for proposing other matters that can be acted upon by stockholders at stockholder meetings.
Among other things, these provisions: • authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to discourage a takeover attempt; • establish a classified Board of Directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election; • require that directors be removed from office only for cause; • provide that vacancies on our Board of Directors, including newly created directorships, may be filled only by a majority vote of directors then in office; • provide that no action be taken by stockholders by written consent; • provide that special meetings of our stockholders may be called only by our Board of Directors, our Chairperson of the Board of Directors, our Lead Director (if we do not have a Chairperson or the Chairperson is disabled), our Chief Executive Officer or our President (in the absence of a Chief Executive Officer); • require supermajority stockholder voting for our stockholders to effect certain amendments to our Charter Documents; and • establish advance notice requirements for nominations for elections to our Board of Directors or for proposing other matters that can be acted upon by stockholders at stockholder meetings. 36 Table of Contents In addition, we are subject to Section 203 of the General Corporation Law of the State of Delaware (“DGCL”), which generally prohibits a Delaware corporation from engaging in a broad range of business combinations with a stockholder owning 15% or more of such corporation’s outstanding voting stock for a period of three years following the date on which such stockholder became an “interested” stockholder.
Most bikes that incorporate our suspension products are built using products and components manufactured by other bike component manufacturers. If those other bike component manufacturers stopped selling or producing the products and components for which the finished bikes that incorporates our products depend on, our sales may be adversely affected.
Most bikes that incorporate our suspension products are built using products and components manufactured by other bike component manufacturers. We face similar concerns with manufacturers in our other lines of business. If those other manufacturers stopped selling or producing the products and components for which our products depend on, our sales may be adversely affected.
As a result, the costs to defend any action or the potential liability resulting from any such accident or death or arising out of any other litigation, and any negative publicity associated therewith, could have a negative effect on our business, financial condition, or results of operations. 24 Table of Contents Fuel shortages, or high fuel prices, could have a negative effect on the use of powered vehicles that use our products.
As a result, the costs to defend any action or the potential liability resulting from any such accident or death or arising out of any other litigation, and any negative publicity associated therewith, could have a negative effect on our business, financial condition, or results of operations.
Accordingly, we may experience material increases in our interest expense as a result of increases in interest rate levels generally. Refer to Note 11. Derivatives and Hedging for additional information regarding the interest rate swap arrangement. As of December 29, 2023, we had $750.0 million of interest-bearing indebtedness outstanding under the 2022 Credit Facility.
Accordingly, we may experience material increases in our interest expense as a result of increases in interest rate levels generally. Refer to Note 11. Derivatives and Hedging for additional information regarding the interest rate swap arrangement. 30 Table of Contents As of January 3, 2025, we had $713.7 million of interest-bearing indebtedness outstanding under the 2022 Credit Facility.
Based on the $650.0 million of variable interest rate indebtedness that was outstanding under the 2022 Credit Facility as of December 29, 2023, after giving effect to our interest rate swap, a hypothetical 100 basis point increase or decrease in the interest rate would have resulted in an approximately $6.5 million increase or decrease in interest expense for the year ended December 29, 2023, respectively.
Based on the $213.7 million of variable interest rate indebtedness that was outstanding under the 2022 Credit Facility as of January 3, 2025, after giving effect to our interest rate swap, a hypothetical 100 basis point increase or decrease in the interest rate would have resulted in an approximately $2.1 million increase or decrease in interest expense for the year ended January 3, 2025, respectively.
For instance, if customers begin to require more lower-margin products from us and fewer higher-margin products, or place demands on our performance that increase our costs, our business, results of operations, and financial condition may be adversely affected.
For instance, if customers begin to require more lower-margin products from us and fewer higher-margin products, or place demands on our performance that increase our costs, our business, results of operations, and financial condition may be adversely affected. 20 Table of Contents A disruption in the operations of our facilities could have a negative effect on our business, financial condition, or results of operations.
We are subject to environmental laws and regulation and potential exposure for environmental costs and liabilities. Our operations, facilities, and properties are subject to a variety of foreign, federal, state, and local laws and regulations relating to health, safety, and the protection of the environment.
Our operations, facilities, and properties are subject to a variety of foreign, federal, state, and local laws and regulations relating to health, safety, and the protection of the environment.
For example, a class action is pending in the United States District Court for the Northern District of Georgia in Atlanta asserting claims on behalf of a putative class of Company stockholders against the Company and certain of its current and former officers alleging violations of federal securities laws. See Part I, Item 3.
For example, a class action and two stockholder derivative complaints are pending in the United States District Court for the Northern District of Georgia in Atlanta asserting claims on behalf of a putative class of Company stockholders against the Company and certain of its current and former officers alleging violations of federal securities laws and fiduciary duties.
Dockworkers, none of whom are our employees, must offload freight from ships arriving at West Coast ports. We do not control the activities of these employees or seaports, and we could suffer supply chain disruptions due to any disputes, capacity shortages, slowdowns, or shutdowns that may occur, as was experienced in February 2015, in relation to certain West Coast ports.
We do not control the activities of these employees or seaports, and we could suffer supply chain disruptions due to any disputes, capacity shortages, slowdowns, or shutdowns that may occur, as was experienced in February 2015, in relation to certain ports on the West Coast of the U.S.
The loss of all or a substantial portion of our sales to any of these customers could have a material adverse impact on us and our results of operations; • our international operations are exposed to risks associated with conducting business globally, including currency exchange rate fluctuations and policies related to global trade and tariffs; • our sales could be impacted by the disruption of sales by other bike component manufacturers or if other bike component manufacturers enter into the specialty bike component market; • if we are unable to enforce our intellectual property rights, our reputation and sales could be adversely affected, while intellectual property disputes could lead to significant costs or the inability to sell products; • 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; • 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; • an adverse determination in any material product liability claim against us could adversely affect our operating results or financial condition; 13 Table of Contents • we and our employees are subject to certain risks in our manufacturing and in the testing of our products; • fuel shortages, or high prices for fuel, could have a negative effect on the use of powered vehicles that use our products; • we rely on increasingly complex information systems for management of our manufacturing, distribution, sales and other functions.
The loss of all or a substantial portion of our sales to any of these customers, including a group of relatively small number of customers that account for a substantial portion of our sales, could have a material adverse impact on us and our results of operations; • our international operations are exposed to risks associated with conducting business globally; • our sales could be impacted by the disruption of sales by other manufacturers or if other manufacturers enter into the specialty markets in which we operate; • if we are unable to enforce our intellectual property rights, our reputation and sales could be adversely affected, while intellectual property disputes could lead to significant costs or the inability to sell products; • if we inaccurately forecast demand for our products or inaccurately predict destocking and restocking cycles and production schedules, we may manufacture insufficient or excess quantities or our manufacturing costs could increase; • 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; • an adverse determination in any material product liability claim against us could adversely affect our operating results or financial condition; • we and our employees are subject to certain risks in our manufacturing and in the testing of our products; • fuel shortages, or high prices for fuel, could have a negative effect on the use of powered vehicles that use our products; 14 Table of Contents • we do not control our suppliers, athletic programs, OEMs, other customers, or partners, or require them to comply with a formal code of conduct, and actions that they might take could harm our reputation and sales; • we may incur higher employee costs in the future; • we rely on increasingly complex information systems for management of our various functions.
In response, we increased the prices we charge customers for our products. While these price adjustments have not caused a reduction in sales thus far, continued increases in inflation rates may result in a reduction of customers or sales volumes.
While these price adjustments have not caused a reduction in sales thus far, continued increases in inflation rates may result in a reduction of customers or sales volumes.
If our financial condition deteriorates or we decide to use our cash for other purposes, we may suspend repurchase activity at any time. 34 Table of Contents Our Amended and Restated Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.
Our Amended and Restated Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.
President Biden also issued an executive order solely targeting climate change. The adoption of legislation or regulatory programs at the federal level or other government action to reduce emissions of greenhouse gases could have the potential to impact our operations directly or indirectly as a result of required compliance by our suppliers and us.
The adoption of legislation or regulatory programs at the federal level or other government action to reduce emissions of greenhouse gases, such as the programs implemented under the Biden Administration to address the climate crises, could have the potential to impact our operations directly or indirectly as a result of required compliance by our suppliers and us.
We may face disqualification as a supplier for customers and reputational challenges if our due diligence procedures do not enable us to verify the origins for all conflict minerals used in our products or to determine if such conflict minerals are conflict-free.
We may face disqualification as a supplier for customers and reputational challenges if our due diligence procedures do not enable us to verify the origins for all conflict minerals used in our products or to determine if such conflict minerals are conflict-free. Accordingly, these rules could have a material adverse effect on our business, results of operations, or financial condition.
These government-mandated closures, “shelter-in-place” directives, and an outbreak among, or quarantine of, the employees in any of our facilities caused and could continue to cause significant interruptions to, or temporary closures, of our operations.
Government-mandated closures and “shelter-in-place” directives aimed at combating the spread of COVID-19 or future public health epidemics or pandemics, or an outbreak among, or quarantine of, the employees in any of our facilities caused and could continue to cause significant interruptions to, or temporary closures, of our operations.
Additionally, the U.S. government’s credit and deficit concerns, the European sovereign debt crisis, and the potential trade war with China, could further cause interest rates to be volatile, which may negatively impact our ability to access the debt markets on favorable terms.
Additionally, the U.S. government’s credit and deficit concerns, the European sovereign debt crisis, and the potential trade war with China, could further cause interest rates to be volatile, which may negatively impact our ability to access the debt markets on favorable terms. 29 Table of Contents RISKS RELATED TO OUR INDEBTEDNESS AND LIQUIDITY The 2022 Credit Facility places operating restrictions on us and creates default risks.
We collect personal information for various purposes and through various methods, including from third parties and directly from consumers through our website, at events and sales, and via telephone and email.
We retain certain personal information about individuals and are subject to various privacy and consumer protection laws. We collect personal information for various purposes and through various methods, including from third parties and directly from consumers through our website, at events and sales, and via telephone and email.
The impact of the COVID-19 pandemic, including changes in consumer behavior, COVID-19 pandemic fears and market downturns, and restrictions on business and individual activities, created significant volatility in the global economy and led to reduced economic activity.
We face various risks related to ongoing and potential public health issues, including epidemics, pandemics, and other outbreaks, including the COVID-19 pandemic. The impact of the COVID-19 pandemic, including changes in consumer behavior, pandemic fears and market downturns, and restrictions on business and individual activities, created significant volatility in the global economy and led to reduced economic activity.
Such recall events could also adversely affect the image of our brands and have a negative effect on our relationships with our OEMs, sponsored athletes and race teams, or otherwise have a negative effect on our business, financial condition or results of operations.
Such recall events could also adversely affect the image of our brands and have a negative effect on our relationships with our OEMs, sponsored athletes and race teams, or otherwise have a negative effect on our business, financial condition or results of operations. 25 Table of Contents An adverse determination in any material product liability claim against us could adversely affect our operating results or financial condition.
Gasoline or diesel fuel is required to operate most powered vehicles that use our products. There can be no assurance that the supply of these fuels will continue uninterrupted, that rationing will not be imposed, or that the price of or tax on these petroleum products will not significantly increase.
There can be no assurance that the supply of these fuels will continue uninterrupted, that rationing will not be imposed, or that the price of or tax on these petroleum products will not significantly increase.
The trading price of our common stock could be volatile, and you could lose all or part of your investment in our common stock. For example, from January 2, 2021 through December 29, 2023, our stock price fluctuated between $190.29 and $49.12 per share, and such volatility may continue in the future.
The trading price of our common stock could be volatile, and you could lose all or part of your investment in our common stock. For example, from January 1, 2022 through January 3, 2025, our stock price fluctuated between $171.80 and $28.33 per share, and such volatility may continue in the future.
While the Federal Reserve did not increase benchmark interest rates at the June 2023 or September 2023 meeting, it indicated it may continue to raise benchmark interest rates in 2024 in an effort to curb the upward inflationary pressure on the cost of goods and services across the U.S.
While the Federal Reserve reduced benchmark interest rates in 2024, it may decide to raise benchmark interest rates in 2025 in an effort to curb the upward inflationary pressure on the cost of goods and services across the U.S.

… 86 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+1 added−0 removed8 unchanged
Biggest changeRisk Management and Strategy Our cybersecurity risk management program includes: • policies, process, and tools designed to identify, assess, and mitigate cyber risks across all aspects of our operations; • a cybersecurity team principally responsible for managing our cybersecurity risk assessment processes, our security controls, and our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test, monitor, or otherwise assist with aspects of our security controls; • cybersecurity awareness training for our employees and contractors; and • a Cybersecurity Incident Response Plan that includes procedures for responding to cybersecurity incidents.
Biggest changeRisk Management and Strategy Our cybersecurity risk management program includes: • policies, process, and tools designed to identify, assess, and mitigate cyber risks across all aspects of our operations; • a cybersecurity team principally responsible for managing our cybersecurity risk assessment processes, our security controls, and our response to cybersecurity incidents (as such term is used and defined in Item 106(a) of Regulation S-K, as amended and supplemented, of the Securities Act (“Regulation S-K”)); • the use of external service providers, where appropriate, to assess, test, monitor, or otherwise assist with aspects of our cybersecurity controls; • cybersecurity awareness training for our employees and contractors; and • a Cybersecurity Incident Response Plan that includes procedures for responding to cybersecurity incidents.
Risk Factors of this Annual Report on Form 10-K. 36 Table of Contents
Risk Factors of this Annual Report on Form 10-K. 39 Table of Contents
Our Chief Information Officer, who oversees our cybersecurity team, is responsible for assessing and managing our material risks from cybersecurity threats. The Chief Information Officer and our cybersecurity team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal personnel dedicated to cybersecurity as well as our engaged and retained external cybersecurity consultants.
The Chief Information Officer and our cybersecurity team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal personnel dedicated to cybersecurity as well as our engaged and retained external cybersecurity consultants.
Added
Our Chief Information Officer, who oversees our cybersecurity team, is responsible for assessing and managing our material risks from cybersecurity threats (as such term is used and defined in Item 106(a) of Regulation S-K).

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeITEM 2. PROPERTIES At December 29, 2023, we occupied the following square footage by location: U.S. Other Countries Total Leased facilities 2,680,286 405,115 3,085,401 Owned facilities 829,363 178,842 1,008,205 Total 3,509,649 583,957 4,093,606 Certain administrative, research and development and manufacturing operations are located in California and Georgia. We also manufacture in the U.S.
Biggest changeITEM 2. PROPERTIES At January 3, 2025, we occupied the following square footage by location: U.S. Other Countries Total Leased facilities 3,028,156 475,342 3,503,498 Owned facilities 1,726,373 179,789 1,906,162 Total 4,754,529 655,131 5,409,660 Certain administrative, research and development and manufacturing operations are located in California and Georgia.
States of Michigan, Colorado, Indiana, Alabama, Pennsylvania, Louisiana, Utah and Oregon, and internationally in Taiwan and Canada, and maintain sales and service offices in the U.S. and Europe. We believe that our properties are generally suitable to meet our needs for the foreseeable future.
We also manufacture in Michigan, Indiana, Alabama, Pennsylvania, Louisiana, Utah, Arizona, and Oregon, and internationally in Taiwan, Italy, and Canada, and maintain sales and service offices in the U.S., Australia, and Europe. We believe that our properties are generally suitable to meet our needs for the foreseeable future.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

4 edited+4 added−0 removed0 unchanged
Biggest changeThe complaint asserts claims under Sections 10(b) and 20 of the Securities Exchange Act and alleges that the Company made material misstatements and omissions to investors regarding demand for the Company’s products and inventory levels. The complaint generally seeks money damages, interest, attorneys’ fees, and other costs.
Biggest changeThe amended complaint asserts claims under Sections 10(b) and 20 of the Securities Exchange Act and alleges 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 seeks monetary damages, interest, attorneys’ fees, and other costs.
ITEM 3. 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. The complaint has not yet been served.
ITEM 3. 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.
The complaint purports 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.
On August 16, 2024, the plaintiff filed an amended complaint that purports 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 Company denies all allegations of wrongdoing, believes the plaintiffs' positions are without merit, and intends to vigorously defend itself.
The defendants deny all allegations of wrongdoing, believe the plaintiffs’ claims are without merit, and intend to vigorously defend themselves.
Added
The defendants deny all allegations of wrongdoing, believe the plaintiff’s positions are without merit, and intend to vigorously defend themselves. On October 15, 2024, the defendants filed a motion to dismiss the amended complaint. Plaintiff filed his opposition on December 13, 2024, and defendants filed their reply on January 13, 2025.
Added
The motion is fully briefed, and the parties await the court’s ruling. 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.
Added
The cases are assigned to the same judge presiding over the securities fraud class action.
Added
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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+2 added−0 removed3 unchanged
Biggest changeWe do not intend to pay dividends in the foreseeable future. Equity Compensation Plan Information For equity compensation plan information, refer to
Biggest changeEquity Compensation Plan Information For equity compensation plan information, refer to
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock has been listed on the NASDAQ Global Select Market under the symbol “FOXF” since August 8, 2013. Our IPO was priced at $15.00 per share on August 8, 2013.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock has been listed on the NASDAQ under the symbol “FOXF” since August 8, 2013. Our IPO was priced at $15.00 per share on August 8, 2013.
Dividend Policy We did not declare or pay any dividends in the years ended December 29, 2023 and December 30, 2022. In addition, our 2022 Credit Facility contains covenants limiting our ability to pay dividends to our stockholders. See Item 7.
Dividend Policy We did not declare or pay any dividends in the years ended January 3, 2025, December 29, 2023, and December 30, 2022. In addition, our 2022 Credit Facility contains covenants limiting our ability to pay dividends to our stockholders. See Item 7.
Prior to that date, there was no public trading market for our common stock. On February 15, 2024, the closing price per share of our common stock as reported on the NASDAQ Global Select Market was $68.30 per share. Stockholders As of January 31, 2024, there were approximately 7 holders of record of our common stock.
Prior to that date, there was no public trading market for our common stock. On February 20, 2025, the closing price per share of our common stock as reported on the NASDAQ was $26.48 per share. Stockholders As of January 31, 2025, there were approximately 7 holders of record of our common stock.
Added
We do not intend to pay dividends in the foreseeable future. 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.
Added
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. For repurchase activity during the year ended January 3, 2025, refer to Note 13. Stockholders’ Equity .

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

79 edited+52 added−32 removed47 unchanged
Biggest changeThe following table sets forth statement of income data as a percentage of net sales for the years indicated: For the fiscal years ended December 29, 2023 December 30, 2022 December 31, 2021 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 68.3 66.8 66.7 Gross profit 31.7 33.2 33.3 Operating expenses: General and administrative 8.5 7.2 7.5 Sales and marketing 6.9 5.7 5.5 Research and development 3.6 3.5 3.6 Amortization of purchased intangibles 1.8 1.3 1.6 Total operating expenses 20.8 17.8 18.1 Income from operations 10.9 15.4 15.2 Interest expense 1.3 0.6 0.6 Other expense, net 0.1 0.2 — Income before income taxes 9.5 14.6 14.5 Provision for income taxes 1.2 1.8 1.9 Net income 8.3 % 12.8 % 12.6 % *Percentages may not foot due to rounding. 45 Table of Contents Fiscal year ended December 29, 2023 compared to fiscal year ended December 30, 2022 Net Sales For the fiscal years (in millions) 2023 2022 Change ($) Change (%) Powered Vehicle Group $ 523.9 $ 432.4 $ 91.5 21.2 % Aftermarket Applications Group 551.1 489.1 (291.8) (59.7) Specialty Sports Group 389.2 681.0 (42.8) Total net sales $ 1,464.2 $ 1,602.5 $ (138.3) (8.6) % Net sales for the year ended December 29, 2023 decreased approximately $138.3 million, or 8.6%, compared to the year ended December 30, 2022.
Biggest changeThe following table sets forth statement of income data as a percentage of net sales for the years indicated: For the fiscal years ended January 3, 2025 December 29, 2023 December 30, 2022 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 69.6 68.3 66.8 Gross profit 30.4 31.7 33.2 Operating expenses: General and administrative 10.0 8.5 7.2 Sales and marketing 8.7 6.9 5.7 Research and development 4.3 3.6 3.5 Amortization of purchased intangibles 3.2 1.8 1.3 Total operating expenses 26.3 20.8 17.8 Income from operations 4.1 10.9 15.4 Interest expense 3.9 1.3 0.6 Other expense, net 0.1 0.1 0.2 Income before income taxes 0.1 9.5 14.6 (Benefit) provision for income taxes (0.4) 1.2 1.8 Net income 0.5 8.3 12.8 Less: net loss attributable to non-controlling interest — — — Net income attributable to FOX stockholders 0.5 % 8.3 % 12.8 % *Percentages may not foot due to rounding. 48 Table of Contents Fiscal year ended January 3, 2025 compared to fiscal year ended December 29, 2023 Consolidated net sales For the fiscal years (in millions) 2024 2023 Change ($) 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.
Our effective tax rate could be affected by numerous factors such as change 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.
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.
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 2.00%.
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%.
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 market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk.
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.
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 line of credit and amortized on a straight-line basis over the term of the facility.
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.
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 Term Loans”), each of which are permitted under the 2022 Credit Facility, subject to satisfaction of certain conditions.
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.
Financing activities 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 line of credit, $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 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.
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 0.5% to 1.50% for base rate loans and 1.50% to 2.50% for term SOFR loans, subject to adjustment provisions.
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.
We define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
We define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between reasonable market participants at the measurement date.
Refer to Note 15. Income Taxes for further details. 54 Table of Contents Inventories Inventories are stated at the lower of actual cost (or standard cost which generally approximates actual costs on a first-in first-out basis) or net realizable value. Cost includes raw materials and inbound freight, as well as direct labor and manufacturing overhead for products we manufacture.
Refer to Note 15. Income Taxes for further details. 56 Table of Contents Inventories Inventories are stated at the lower of actual cost (or standard cost which generally approximates actual costs on a first-in first-out basis) or net realizable value. Cost includes raw materials and inbound freight, as well as direct labor and manufacturing overhead for products we manufacture.
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. 55 Table of Contents Acquisition of certain identifiable definite-lived and indefinite-lived assets In conjunction with an acquisition of a business, the Company records identifiable definite-lived and indefinite-lived intangible assets acquired at their respective fair values as of the date of acquisition.
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. 57 Table of Contents Acquisition of certain identifiable definite-lived and indefinite-lived assets In conjunction with an acquisition of a business, the Company records identifiable definite-lived and indefinite-lived intangible assets acquired at their respective fair values as of the date of acquisition.
The Company recognizes revenue when it satisfies a performance obligation by transferring control over 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.
The Company recognizes revenue when it satisfies a performance obligation by transferring control over 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, dealers and retailers, the Company may also enter into master agreements.
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 administrative agent 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%.
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%.
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. 57 Table of Contents
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. 59 Table of Contents
We record professional and contract service expenses, occupancy related expenses associated with corporate locations and equipment, and legal expenses in general and administrative expenses. Our amortization of purchased intangibles includes amortization over their respective useful lives of our purchased intangible assets, such as customer lists and our core technology.
We record professional and contract service expenses, occupancy related expenses associated with corporate locations and equipment, and legal expenses in general and administrative expenses. Our amortization of purchased intangibles includes amortization over their respective useful lives of our purchased intangible assets, such as customer lists, trade names, and our core technology.
We compute our provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities.
We compute our provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities.
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 $11.9 million and $8.7 million as of December 29, 2023 and December 30, 2022, respectively.
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.
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.
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.
It is reasonably possible that we could record a material adjustment to the valuation allowance in the next 12 months. We are subject to examination of our income tax returns by the U.S. Internal Revenue Service (“IRS”) and other tax authorities.
It is reasonably possible that we could record a material adjustment to the valuation allowance in the next 12 months. 46 Table of Contents We are subject to examination of our income tax returns by the U.S. Internal Revenue Service (“IRS”) and other tax authorities.
Stock-based compensation expenses are classified in the statements of income based on the department to which the related employee reports. Our stock-based awards subsequent to our IPO have been comprised principally of restricted stock unit awards. Revenue recognition Revenue is measured based on the consideration specified in a contract with a customer.
Stock-based compensation expenses are classified in the statements of income 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. Revenue recognition Revenue is measured based on the consideration specified in a contract with a customer.
Other expense, net, consists of foreign currency transaction gains and losses, gains and losses on the disposal of fixed assets, and other miscellaneous items. 43 Table of Contents Income taxes We are subject to income taxes in the U.S. (federal and state) and various other foreign jurisdictions.
Other expense, net, consists of foreign currency transaction gains and losses, gains and losses on the disposal of fixed assets, and other miscellaneous items. Income taxes We are subject to income taxes in the U.S. (federal and state) and various other foreign jurisdictions.
Historically, we have generally financed our liquidity needs with operating cash flows, borrowings under our Prior Credit Facility and our 2022 Credit Facility, and the issuance of common stock. These sources of liquidity may be impacted by factors and events described in Special Note Regarding Forward-Looking Statement s and Item 1A. Risk Factors .
Historically, we have generally financed our liquidity needs with operating cash flows, borrowings under our 2022 Credit Facility, 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. Risk Factors .
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 line of credit, $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.
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.
Loan fees allocated to the Term A Loan were 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 is drawn.
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.
If circumstances change, such as higher-than-expected defaults or an unexpected material adverse change in a major customer’s ability to meet its financial obligations, we estimate if the recoverability of the amounts due could be reduced by a material amount. 56 Table of Contents Fair value measurement and financial instruments ASC 820, Fair Value Measurements and Disclosures , 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).
If circumstances change, such as higher-than-expected defaults or an unexpected material adverse change in a major customer’s ability to meet its financial obligations, we reassess our estimates and determine whether the recoverability of the amounts due could be reduced by a material amount. 58 Table of Contents Fair value measurement and financial instruments Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures , 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).
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 good products), including: • the costs to inspect and repair products; • shipping costs associated with inbound freight (such costs are capitalized as part of inventory and included in cost of sales as the inventory is sold); • royalty expenses, including payments to certain parties for our use of licensed technology incorporated into our products; • freight expenses incurred for certain shipments to customers; • warranty costs associated with the repair or replacement of products under warranty; and • reductions in the cost of inventory to its net realizable value, if required, for estimated excess, obsolescence or impaired balances. 42 Table of Contents Gross profit/gross margin Our gross profit equals our net sales minus cost of sales.
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: • the costs to inspect and repair products; • shipping costs associated with inbound freight (such costs are capitalized as part of inventory and included in cost of sales as the inventory is sold); • royalty expenses, including payments to certain parties for our use of licensed technology incorporated into our products; • freight expenses incurred for certain shipments to customers; • warranty costs associated with the repair or replacement of products under warranty; and • reductions in the cost of inventory to its net realizable value, if required, for estimated excess, obsolescence or impaired balances.
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 December 29, 2023, December 30, 2022 and December 31, 2021.
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.
Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. As of December 29, 2023, the Company determined a valuation allowance was not needed. 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.
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. 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.
Revenues generated from custom upfit packages from our Outside Van subsidiary generally include the vehicle chassis, of which the Company has the risks and rewards of ownership and are recognized over-time as work is performed based on actual costs incurred.
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.
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 December 29, 2023.
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 January 3, 2025.
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 $20.0 million and $17.1 million as of December 29, 2023 and December 30, 2022, respectively. Refer to Note 8. Accrued Expenses for further details.
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. Refer to Note 8. Accrued Expenses for further details.
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. Operating activities In the fiscal year ended December 29, 2023, net cash provided by operating activities was $178.7 million.
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. Operating activities In the fiscal year ended January 3, 2025, net cash provided by operating activities was $131.8 million.
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.
Each of the Incremental Term Loans has a maturity date of April 5, 2027, consistent with the 2022 Credit Facility. 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.
A summary of our operating, investing and financing activities is shown in the following table: For the years ended (in millions) December 29, 2023 December 30, 2022 December 31, 2021 Net cash provided by operating activities $ 178.7 $ 187.1 $ 63.2 Net cash used in investing activities (750.4) (44.7) (104.9) Net cash provided by (used in) financing activities 509.0 (179.1) (23.8) Effect of exchange rate changes on cash and cash equivalents 1.1 2.3 (0.5) Decrease in cash and cash equivalents $ (61.6) $ (34.4) $ (66.1) *Amounts may not foot due to rounding.
A summary of our operating, investing and financing activities is shown in the following table: For the years ended (in millions) January 3, 2025 December 29, 2023 December 30, 2022 Net cash provided by operating activities $ 131.8 $ 178.7 $ 187.1 Net cash used in investing activities (76.3) (750.4) (44.7) Net cash (used in) provided by financing activities (67.3) 509.0 (179.1) Effect of exchange rate changes on cash and cash equivalents (0.2) 1.1 2.3 Decrease in cash and cash equivalents $ (12.0) $ (61.6) $ (34.4) *Amounts may not foot due to rounding.
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 forecasts of economic conditions into that expected credit loss rate.
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.
If inventory is written down, a new cost basis will be established that cannot be increased in future periods. Warranty Unless otherwise required by law, the Company generally offers limited warranties on its products for one to three years.
If inventory is written down, a new cost basis will be established at the end of that fiscal period that cannot be increased in future periods. Warranty Unless otherwise required by law, the Company generally offers limited warranties on its products for a one, two or three-year period.
When expressed as a percentage of net sales, operating expenses increased to 20.8% of net sales for the year ended December 29, 2023, compared to 17.8% of net sales for the fiscal year ended December 30, 2022.
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.
Additionally, the Company had $4.5 million of remaining unamortized debt issuance costs related to the Prior Credit Facility. The Company expensed $1.9 million of the remaining unamortized debt issuance costs and allocated $2.5 million to the 2022 Credit Facility. 52 Table of Contents The Company may borrow, prepay and re-borrow principal under the 2022 Credit Facility during its term.
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. 54 Table of Contents The Company may borrow, prepay and re-borrow principal under the 2022 Credit Facility during its term.
We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our income tax liabilities and expense. Should actual events or results differ from our current expectations, charges or credits to our income tax expense may become necessary.
We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our income tax liabilities and expense. Should actual events or results differ from our current expectations, charges or credits to our income tax expense may become necessary. Any such adjustments could have a significant impact on our effective tax rate.
Interest expense increased by $10.4 million due to higher debt and interest rates.
Interest expense increased by $35.6 million due to higher debt and interest rates.
For the years ended December 29, 2023, December 30, 2022 and December 31, 2021, we had effective tax rates of 12.8%, 12.2% and 13.0%, respectively. As of December 29, 2023, our deferred tax assets included foreign tax credits of approximately $51.2 million, which begin to expire in 2026 unless utilized.
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. As of January 3, 2025, our deferred tax assets included foreign tax credits of approximately $47.4 million, which begin to expire in 2027 unless utilized.
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 of $12.3 million.
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.
As of December 29, 2023, the carrying amount of the principal under the Company’s 2022 Credit Facility - Incremental Term A Loan approximated fair value because it had a variable interest rate that reflected market changes in interest rates and changes in the Company’s net leverage ratio.
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.
Our gross margin measures our gross profit as a percentage of net sales. Our gross margins fluctuate based on production volumes, product, customer and channel mix and overall supply chain and manufacturing efficiencies. Generally, we earn higher gross margins on our products sold to the aftermarket channel.
Gross profit/gross margin Our gross profit equals our net sales minus cost of sales. Our gross margin measures our gross profit as a percentage of net sales. Our gross margins fluctuate based on production volumes, product, customer and channel mix and overall supply chain and manufacturing efficiencies.
Income from operations We define income from operations as gross profit less our operating expenses. We use income from operations as an indicator of the profitability of our business and our ability to manage costs. Interest and other expense, net Interest expense consists of interest charged to us under our credit facility and changes related to our interest rate swap.
Income from operations We define income from operations as gross profit less our operating expenses. Interest and other expense, net Interest expense consists of interest charged to us under our credit facility, changes related to our interest rate swap, and interest on supplier-financed chassis.
Sales are measured based on the consideration specified in a contract with a customer. We recognize sales when a performance obligation is satisfied by transferring control of a product to a customer, generally at the time of shipment for most products and over the time it takes to complete certain upfit packages.
We recognize sales when a performance obligation is satisfied by transferring control of a product to a customer, generally at the time of shipment for most products and over the time it takes to complete certain Outside Van upfit packages. Contracts are generally in the form of purchase orders and are governed by standard terms and conditions.
The increases in net income taxes payable, accrued expenses, accounts receivable and accounts payable are the result of normal business growth and the timing of vendor and tax payments. 51 Table of Contents Investing activities 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 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 $2.4 million in cash consideration for our purchase of other assets.
Net income For the fiscal years (in millions) 2023 2022 Change ($) Change (%) Net income $ 120.8 $ 205.3 $ (84.5) (41.2) % As a result of the factors described above, our net income decreased $84.5 million, or 41.2%, to $120.8 million in the fiscal year ended December 29, 2023 from $205.3 million for the fiscal year ended December 30, 2022.
Net income For the fiscal years (in millions) 2024 2023 Change ($) 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 $120.8 million for the fiscal year ended December 29, 2023. 50 Table of Contents Net income attributable to FOX stockholders For the fiscal years (in millions) 2024 2023 Change ($) 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 $120.8 million for the fiscal year ended December 29, 2023.
Cost of sales For the fiscal years (in millions) 2023 2022 Change ($) Change (%) Cost of sales $ 999.4 $ 1,071.1 $ (71.7) (6.7) % Cost of sales for the year ended December 29, 2023 decreased approximately $71.7 million, or 6.7%, compared to the year ended December 30, 2022.
Cost of sales For the fiscal years (in millions) 2024 2023 Change ($) Change (%) Cost of sales $ 970.3 $ 999.4 $ (29.1) (2.9) % 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.
Operating expenses Our operating expenses consist of the following: • sales and marketing; • research and development; • general and administrative; and • amortization of purchased intangibles. 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.
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.
As of December 29, 2023, we held $24.7 million of our $83.6 million of cash and cash equivalents in accounts of our subsidiaries outside of the U.S., which we may repatriate.
As of January 3, 2025, we held $7.9 million of our $71.7 million of cash and cash equivalents in accounts of our subsidiaries outside of the U.S., which we may repatriate.
Material Cash Requirements As of December 29, 2023, we had the following material cash requirements related to commitments or contractual obligations (in millions): Payments due by period Total Less than 1 year 1-3 years 4-5 years More than 5 years Long-term borrowings $ 750.0 $ — $ 40.0 $ 710.0 $ — Operating lease obligations 101.0 16.6 25.4 16.5 42.4 Purchase obligations and other 11.6 6.8 4.7 — — Total $ 862.6 $ 23.4 $ 70.2 $ 726.5 $ 42.4 *Amounts may not foot due to rounding.
Material Cash Requirements As of January 3, 2025, we had the following material cash requirements related to commitments or contractual obligations (in millions): Payments due by period Total Less than 1 year 1-3 years 4-5 years More than 5 years Long-term borrowings $ 713.7 $ 24.3 $ 689.4 $ — $ — Operating lease obligations 127.5 20.5 33.1 25.1 48.8 Purchase obligations and other 17.0 6.8 4.5 5.7 — Total $ 858.2 $ 51.6 $ 727 $ 30.8 $ 48.8 *Amounts may not foot due to rounding.
Interest and other expense, net For the fiscal years (in millions) 2023 2022 Change ($) Change (%) Interest expense $ 19.3 $ 8.9 $ 10.4 116.9 % Other expense, net 2.1 4.0 (1.9) (47.5) Interest and other expense, net $ 21.4 $ 12.9 $ 8.5 65.9 % Interest and other expense, net for the year ended December 29, 2023 increased by approximately $8.5 million to $21.4 million, compared to $12.9 million for the year ended December 30, 2022.
Interest and other expense, net For the fiscal years (in millions) 2024 2023 Change ($) Change (%) Interest expense $ 54.9 $ 19.3 $ 35.6 184.5 % Other expense, net 1.7 2.1 (0.4) (19.0) Interest and other expense, net $ 56.6 $ 21.4 $ 35.2 164.5 % 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.
In the fiscal year ended December 31, 2021, cash provided by operating activities was $63.2 million.
In the fiscal year ended December 29, 2023, net cash provided by operating activities was $178.7 million.
Any such adjustments could have a significant impact on our effective tax rate. 44 Table of Contents Results of operations The table below summarizes our results of operations for the fiscal years ended December 29, 2023, December 30, 2022, and December 31, 2021: For the fiscal years ended (in millions) December 29, 2023 December 30, 2022 December 31, 2021 Net sales $ 1,464.2 $ 1,602.5 $ 1,299.1 Cost of sales 999.4 1,071.1 866.7 Gross profit 464.8 531.3 432.3 Operating expenses: General and administrative 124.6 116.1 97.2 Sales and marketing 100.5 90.8 70.9 Research and development 53.2 56.2 46.6 Amortization of purchased intangibles 26.5 21.5 20.7 Total operating expenses 304.7 284.6 235.4 Income from operations 160.1 246.7 196.9 Interest expense 19.3 8.9 8.2 Other expense, net 2.1 4.0 0.4 Income before income taxes 138.7 233.8 188.4 Provision for income taxes 17.8 28.5 24.6 Net income $ 120.8 $ 205.3 $ 163.8 *Amounts may not foot due to rounding.
The joint venture was created with the purpose of offering specialized training programs to high performance athletes, as well as the development of training apparel and other products. 47 Table of Contents 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: For the fiscal years ended (in millions) January 3, 2025 December 29, 2023 December 30, 2022 Net sales $ 1,393.9 $ 1,464.2 $ 1,602.5 Cost of sales 970.3 999.4 1,071.1 Gross profit 423.6 464.8 531.3 Operating expenses: General and administrative 139.9 124.6 116.1 Sales and marketing 121.2 100.5 90.8 Research and development 60.3 53.2 56.2 Amortization of purchased intangibles 44.5 26.5 21.5 Total operating expenses 365.9 304.7 284.6 Income from operations 57.7 160.1 246.7 Interest expense 54.9 19.3 8.9 Other expense, net 1.7 2.1 4.0 Income before income taxes 1.0 138.7 233.8 (Benefit) provision for income taxes (5.5) 17.8 28.5 Net income 6.5 120.8 205.3 Less: net loss attributable to non-controlling interest — — — Net income attributable to FOX stockholders $ 6.6 $ 120.8 $ 205.3 *Amounts may not foot due to rounding.
Cash invested in operating assets and liabilities is primarily the result of increases in inventory of $150.4 million, prepaids and other current assets of $34.5 million, and accounts receivable of $20.2 million, offset by increases in net income taxes payable of $26.8 million, accrued expenses of $21.8 million, and accounts payable of $10.3 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.
Indefinite-lived intangible assets Certain trademarks and trade names are considered to be indefinite life intangibles, and are not amortized but are subject to testing for impairment annually. Finite-lived intangible 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.
Finite-lived intangible 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.
However, significant increases in inflation, particularly those related to wages and increases in the cost of raw materials have and could continue to have an adverse impact on our business, financial condition and results of operations. 53 Table of Contents Critical Accounting Policies and Estimates We have adopted various accounting policies to prepare the consolidated financial statements in accordance with U.S.
However, significant increases in inflation, particularly those related to wages and increases in the cost of raw materials have and could continue to have an adverse impact on our business, financial condition and results of operations. 55 Table of Contents Interest Rates Interest rate volatility can impact our borrowing costs and overall financial condition.
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 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.
We completed our most recent annual impairment test in the third quarter of 2023 at which time we had a single reporting unit for purposes of assessing goodwill impairment. No impairment charges have been incurred to date.
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 decrease in cost of sales was due to our decreased sales partially offset by certain business factors affecting gross margin, which are discussed below. For the year ended December 29, 2023, our gross margin was 31.7% compared to 33.2% for the year ended December 30, 2022.
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.
Operating expenses For the fiscal years (in millions) 2022 2021 Change ($) Change (%) Operating expenses: General and administrative $ 116.1 $ 97.2 $ 18.9 19.4 % Sales and marketing 90.8 70.9 19.9 28.1 Research and development 56.2 46.6 9.6 20.6 Amortization of purchased intangibles 21.5 20.7 0.8 3.9 Total operating expenses $ 284.6 $ 235.4 $ 49.2 20.9 % Total operating expenses for the year ended December 30, 2022 increased approximately $49.2 million, or 20.9%, over the comparable period in 2021.
Operating expenses For the fiscal years (in millions) 2024 2023 Change ($) Change (%) Operating expenses: General and administrative $ 139.9 $ 124.6 $ 15.3 12.3 % Sales and marketing 121.2 100.4 20.8 20.7 Research and development 60.3 53.2 7.1 13.3 Amortization of purchased intangibles 44.5 26.5 18.0 67.9 Total operating expenses $ 365.9 $ 304.7 $ 61.2 20.1 % Total operating expenses for the year ended January 3, 2025 increased approximately $61.2 million, or 20.1%, over the comparable period in 2023.
GAAP. Our significant accounting policies are described in Note 1. Description of the Business, Basis of Presentation and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements. Some of those significant accounting policies require us to make difficult, subjective, or complex judgments or estimates.
Critical Accounting Policies and Estimates We have adopted various accounting policies to prepare the consolidated financial statements in accordance with U.S. GAAP. Our significant accounting policies are described in Note 1. Description of the Business, Basis of Presentation and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements.
The decrease in expense primarily resulted from a decrease in pre-tax profit, partially offset by the release of the valuation allowance for foreign tax credits in the prior year. The effective tax rates were 12.8% and 12.2% for the years ended December 29, 2023 and December 30, 2022, respectively.
The decrease primarily resulted from a decrease in pre-tax profit. The effective tax rates were (543.5)% and 12.8% for the years ended January 3, 2025 and December 29, 2023, respectively.
Income from operations For the fiscal years (in millions) 2023 2022 Change ($) Change (%) Income from operations $ 160.1 $ 246.7 $ (86.6) (35.1) % As a result of the factors discussed above, income from operations for the year ended December 29, 2023 decreased approximately $86.6 million, or 35.1%, compared to the year ended December 30, 2022.
Amortization of purchased intangible assets for the year ended January 3, 2025 increased by approximately $18.0 million as compared to the year ended December 29, 2023, primarily due to the amortization of Marucci intangible assets. 49 Table of Contents Income from operations For the fiscal years (in millions) 2024 2023 Change ($) 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.
Stock-based compensation was $16.5 million, $16.4 million and $13.9 million for the fiscal years ended December 29, 2023, December 30, 2022 and December 31, 2021, respectively. Refer to Note 13. Stockholders’ Equity for further details. The fair value of each stock option granted is estimated using the Black-Scholes option-pricing model.
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. Refer to Note 13. Stockholders’ Equity for further details. The Company does not estimate forfeitures in recognizing stock-based compensation expense.
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.
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.
Other expense, net decreased $1.9 million primarily due lower losses on foreign currency transactions. 47 Table of Contents Income taxes For the fiscal years (in millions) 2023 2022 Change ($) Change (%) Provision for income taxes $ 17.8 $ 28.5 $ (10.7) (37.5) % Income tax expense for the year ended December 29, 2023 decreased by approximately $10.7 million to $17.8 million compared to $28.5 million for the year ended December 30, 2022.
Income taxes For the fiscal years (in millions) 2024 2023 Change ($) 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.
For the year ended December 31, 2021, the difference between our effective tax rate and the 21% federal statutory rate resulted from a lower tax rate on U.S. foreign derived earnings and the benefit of excess stock based compensation deductions.
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.
In the fiscal year ended December 31, 2021, net cash used in financing activities was $23.8 million, which primarily consisted of $12.5 million in payments on our term debt, $7.0 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 $4.6 million in installment payments related to the purchase of the Tuscany non-controlling interest, partially offset by $0.3 million in proceeds received from the termination of our 2020 Swap Agreement.
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.
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.
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 term loan was subject to quarterly amortization payments. 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”), and concurrently repaid in full and terminated the Prior Credit Facility.
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.
On June 11, 2021, the Company entered into an interest rate swap agreement (the “2021 Swap Agreement”) to mitigate the cash flow risk associated with changes in interest rates on its variable rate debt. On April 5, 2022, the Company terminated its 2021 Swap Agreement and entered into a new interest rate swap agreement (the “2022 Swap Agreement”).
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 11. Derivatives and Hedging for additional details of the agreements.
The decrease in Specialty Sports Group net sales is primarily related to channel inventory recalibration and to a lesser extent lower end consumer demand, partially offset by the inclusion of $16.8 million net sales from our Marucci subsidiary that was acquired in November 2023.
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.
Within operating expenses, our sales and marketing expense increased by approximately $9.6 million primarily due to the inclusion of $10.6 million and $2.7 million Custom Wheel House and Marucci expenses, respectively, offset by cost controls.
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 $26.9 million higher expenses attributable to Marucci, respectively, attributed to including a full year of Marucci expenses in 2024. The increase was partially offset by our cost containment measures.
Net income For the fiscal years (in millions) 2022 2021 Change ($) Change (%) Net income $ 205.3 $ 163.8 $ 41.5 25.3 % As a result of the factors described above, our net income increased $41.5 million, or 25.3%, to $205.3 million in the fiscal year ended December 30, 2022 from $163.8 million for the fiscal year ended December 31, 2021. 50 Table of Contents 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.
Unallocated corporate expenses decreased by $6.3 million, or 10.0%, driven by cost containment measures. 52 Table of Contents 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.
The Delayed Draw Term Loan is 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 5.0% per annum.
Each of the Incremental Term Loans is subject to quarterly amortization payments of principal at a rate of 5.00% per annum.
Upon the drawing of the Delayed Draw Term Loan, the fees will be reclassified to a contra-liability account and amortized over the term of the drawn debt using the interest method. At December 29, 2023, the one-month SOFR and three-month SOFR rates were 5.34% and 5.36%, respectively. At December 29, 2023, our weighted-average interest rate on outstanding borrowing was 6.97%.
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.
Contracts are generally in the form of purchase orders and are governed by standard terms and conditions. For larger OEMs, we may also enter into master agreements; and • Shipping and handling fees: consists of shipping and handling fees billed to customers.
For larger OEMs, dealers and retailers, we may also enter into master agreements; • Service sales: consist of revenue generated from maintenance, repair, installation, and other support services provided to customers. These services are typically recognized as revenue when the service is performed; and • Shipping and handling fees: consists of shipping and handling fees billed to customers.
Removed
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Material Cash Requirements for additional information. Basis of presentation Composition of net sales Sales from: • Product sales: consist of sales of performance-defining products and systems to customers worldwide.

… 83 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−0 removed7 unchanged
Biggest changeBased on the $650.0 million of variable interest rate indebtedness that was outstanding as of December 29, 2023, after giving effect to our interest rate swap, a hypothetical 100 basis point increase or decrease in the interest rate would have resulted in an approximately $6.5 million increase or decrease in interest expense for the year ended December 29, 2023.
Biggest changeBased on the $213.7 million of variable interest rate indebtedness that was outstanding as of January 3, 2025, after giving effect to our interest rate swaps, a hypothetical 100 basis point increase or decrease in the interest rate would have resulted in an approximately $2.1 million increase or decrease in interest expense for the year ended January 3, 2025.
Credit and other risks We are exposed to credit risk associated with cash and cash equivalents, interest rate swap agreement and trade receivables. As of December 29, 2023, the majority of our cash and cash equivalents consisted of cash balances in non-interest bearing checking accounts which significantly exceed the insurance coverage provided on such deposits.
Credit and other risks We are exposed to credit risk associated with cash and cash equivalents, interest rate swap agreement and trade receivables. As of January 3, 2025, the majority of our cash and cash equivalents consisted of cash balances in non-interest bearing checking accounts which significantly exceed the insurance coverage provided on such deposits.
We have established policies and procedures governing our management of market risks and the use of financial instruments to manage exposure to such risks. As of December 29, 2023, we had $750.0 million of interest bearing indebtedness outstanding under our 2022 Credit Facility.
We have established policies and procedures governing our management of market risks and the use of financial instruments to manage exposure to such risks. As of January 3, 2025, we had $713.7 million of interest bearing indebtedness outstanding under our 2022 Credit Facility.
Exchange rate sensitivity As of December 29, 2023, we are exposed to changes in foreign currency exchange rates.
Exchange rate sensitivity As of January 3, 2025, we are exposed to changes in foreign currency exchange rates.
Added
As of January 3, 2025, our supplier-financed chassis on hand were $46.9 million. A hypothetical 100 basis point increase or decrease in the interest rate would have resulted in an approximately $0.5 million increase or decrease in interest expense for the year ended January 3, 2025.

Other FOXF 10-K year-over-year comparisons