Fox Factory Holding Corp 10-K for FY2021

Fox Factory Holding Corp (FOXF)

10-K 2022-02-24 For: 2021-12-31

Added on April 07, 2026

About this 10-K

Fox Factory Holding Corp filed this 10-K on February 24, 2022, covering the fiscal year ended December 31, 2021 (FY2021).

Headline figures

Fiscal year ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.3B; up 45.9% from $890.55M a year earlier
Net income: $163.82M; up 80.7% from net income of $90.67M a year earlier
Diluted EPS: $3.87; up 74.3% from $2.22 a year earlier

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Delaware			26-1647258
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)


Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	FOXF	The NASDAQ Stock Market LLC
		(NASDAQ Global Select Market)


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐


		Page

PART I.
Item 1	Business	1
Item 1A	Risk Factors	12
Item 1B	Unresolved Staff Comments	32
Item 2	Properties	33
Item 3	Legal Proceedings	33
Item 4	Mine Safety Disclosures	33

PART II.
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	34
Item 6	Reserved	35
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	52
Item 8	Financial Statements and Supplementary Data	53
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	53
Item 9A	Controls and Procedures	53
Item 9B	Other Information	54
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	54

PART III.
Item 10	Directors, Executive Officers and Corporate Governance	54
Item 11	Executive Compensation	54
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	54
Item 13	Certain Relationships and Related Transactions, and Director Independence	54
Item 14	Principal Accounting Fees and Services	55

PART IV.
Item 15	Exhibits, Financial Statement Schedules	55
Item 16	Form 10-K Summary	55

Signatures		59

Financial Statements
	Management’s Report on Internal Control Over Financial Reporting	61
	Reports of Independent Registered Public Accounting Firm	62
	Consolidated Balance Sheets as of December 31, 2021 and January 1, 2021	66
	Consolidated Statements of Income for the years ended December 31, 2021, January 1, 2021 and January 3, 2020	67
	Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, January 1, 2021 and January 3, 2020	68
	Consolidated Statements of Stockholders' Equity for the years ended December 31, 2021, January 1, 2021 and January 3, 2020	69
	Consolidated Statements of Cash Flows for the years ended December 31, 2021, January 1, 2021 and January 3, 2020	70
	Notes to Consolidated Financial Statements	72


	U.S.	Other Countries	Total
Leased facilities	823,572	401,468	1,225,040
Owned facilities	914,327	42,900	957,227
Total	1,737,899	444,368	2,182,267


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	High		Low
Year Ending January 1, 2021
Quarter ended April 3, 2020	$	79.19	$	34.58
Quarter ended July 3, 2020	91.84		37.40
Quarter ended October 2, 2020	113.41		69.95
Quarter ended January 1, 2021	108.89		78.20
Year Ending December 31, 2021
Quarter ended April 2, 2021	$	144.26	$	101.82
Quarter ended July 2, 2021	166.88		128.25
Quarter ended October 1, 2021	172.25		137.43
Quarter ended December 31, 2021	190.29		142.40


Period	Total Number of Shares Purchased (1)	Weighted Average Price Paid per Share
10/2-11/5	1,436	$	161.03
11/6-12/3	435	175.35
12/4-12/31	975	158.90
Total	2,846	$	162.49

(1) Includes shares acquired from holders of restricted stock unit awards and option exercises to satisfy tax withholding obligations.


	For the fiscal years ended
		December 31		January 1		January 3
(in thousands)		2021		2021		2020
Sales		$	1,299,064	$	890,554	$	751,020
Cost of sales		866,732		601,007		508,285
Gross profit		432,332		289,547		242,735
Operating expenses:
Sales and marketing		70,925		52,214		42,794
Research and development		46,567		34,292		31,789
General and administrative		97,241		71,309		48,999
Amortization of purchased intangibles		20,685		17,583		6,344

Total operating expenses		235,418		175,398		129,926
Income from operations		196,914		114,149		112,809
Interest and other expense, net:
Interest expense		8,162		9,294		3,173
Other expense, net		371		325		1,067
Total interest and other expense, net		8,533		9,619		4,240
Income before income taxes		188,381		104,530		108,569
Provision for income taxes		24,563		12,784		14,099
Net income		163,818		91,746		94,470
Less: net income attributable to non-controlling interest		—		1,072		1,437
Net income attributable to FOX stockholders		$	163,818	$	90,674	$	93,033


	For the fiscal years ended
(in millions)	2021		2020		Change ($)		Change (%)
Sales	$	1,299.1	$	890.6	$	408.5	45.9	%


	For the years ended
	December 31		January 1		January 3
(in thousands)	2021		2021		2020
Net cash provided by operating activities	$	65,290	$	82,715	$	74,830
Net cash used in investing activities	(106,727)		(388,525)		(60,330)
Net (used in) provided by financing activities	(24,100)		506,722		859
Effect of exchange rate changes on cash and cash equivalents	(541)		1,116		419
(Decrease) increase in cash and cash equivalents	$	(66,078)	$	202,028	$	15,778


Payments due by period	Total		Less than 1 year		1-3 years		4-5 years		More than 5 years
Long-term borrowings	$	382,500	$	17,500	$	40,000	$	325,000	$	—
Operating lease obligations	40,189		9,866		16,596		9,310		4,417

Purchase obligations and other	3,564		3,055		509		—		—
Total	$	426,253	$	30,421	$	57,105	$	334,310	$	4,417


(a) Financial Statements
Management’s Report on Internal Control Over Financial Reporting			61
Reports of Independent Registered Public Accounting Firm (PCAOB ID Number: 248)			62
Consolidated Balance Sheets as of December 31, 2021 and January 1, 2021			66
Consolidated Statements of Income for the years ended December 31, 2021, January 1, 2021 and January 3, 2020			67
Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, January 1, 2021 and January 3, 2020			68
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2021, January 1, 2021 and January 3, 2020			69
Consolidated Statements of Cash Flows for the years ended December 31, 2021, January 1, 2021 and January 3, 2020			70
Notes to Consolidated Financial Statements			72

(b) Exhibits
See "Index to Exhibits"			56


	FOX FACTORY HOLDING CORP.

	By:	/s/ Scott R. Humphrey
February 24, 2022		Scott R. Humphrey, Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer & Duly Authorized Signatory)


/s/ Michael C. Dennison
Michael C. Dennison
Chief Executive Officer

/s/ Scott R. Humphrey
Scott R. Humphrey
Chief Financial Officer and Treasurer


	December 31,		January 1,
	2021		2021

Assets
Current assets:
Cash and cash equivalents	$	179,686	$	245,764
Accounts receivable (net of allowances of $410 and $663 at December 31, 2021 and January 1, 2021, respectively)	142,040		121,194
Inventory	279,837		127,091
Prepaids and other current assets	123,107		87,920
Total current assets	724,670		581,969
Property, plant and equipment, net	192,003		163,288
Lease right-of-use assets	38,752		26,148
Deferred tax assets	34,998		19,362
Goodwill	323,299		289,349
Intangibles, net	197,021		204,491
Other assets	4,986		1,954
Total assets	$	1,515,729	$	1,286,561
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	99,984	$	92,403
Accrued expenses	112,378		59,391
Reserve for uncertain tax positions	—		1,095
Current portion of long-term debt	17,500		12,500

Total current liabilities	229,862		165,389

Long-term debt, less current portion	360,953		377,088
Other liabilities	30,832		24,913

Total liabilities	621,647		567,390
Commitments and contingencies (Refer to Note 12. "Commitments and Contingencies")

Stockholders’ equity
Preferred stock, $0.001 par value — 10,000 authorized and no shares issued or outstanding as of December 31, 2021 and January 1, 2021	—		—
Common stock, $0.001 par value — 90,000 authorized; 43,010 shares issued and 42,120 outstanding as of December 31, 2021; 42,692 shares issued and 41,802 outstanding as of January 1, 2021	42		42
Additional paid-in capital	344,119		336,834
Treasury stock, at cost; 890 common shares as of December 31, 2021 and January 1, 2021	(13,754)		(13,754)
Accumulated other comprehensive income	4,876		1,068
Retained earnings	558,799		394,981
Total stockholders’ equity	894,082		719,171
Total liabilities and stockholders’ equity	$	1,515,729	$	1,286,561


	Common Stock			Treasury			Additional paid-in capital		Accumulated other comprehensive (loss) income		Retained earnings		Total stockholders' equity		Redeemable non-controlling interest
	Shares	Amount		Shares	Amount

Balance - December 28, 2018	38,881	$	38	890	$	(13,754)	$	116,019	$	(784)	$	219,686	$	321,205	$	14,282
Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding	469	1		—	—		(6,776)		—		—		(6,775)		—
Issuance of stock for business acquisition	98	—		—	—		7,167		—		—		7,167		—
Stock-based compensation expense	—	—		—	—		6,864		—		—		6,864		—
Other comprehensive income	—	—		—	—		—		934		—		934		—
Adoption of new accounting standard, net of taxes	—	—		—	—		—		—		(228)		(228)		—
Net income	—	—		—	—		—		—		93,033		93,033		1,437
Balance - January 3, 2020	39,448	39		890	(13,754)		123,274		150		312,491		422,200		15,719
Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding	348	$	1	—	$	—	$	(4,342)	$	—	$	—	$	(4,341)	$	—
Issuance of common stock, net	2,760	2		—	—		198,233		—		—		198,235		—
Issuance of stock for business acquisition	—	—		—	—		322		—		—		322		—
Adjustment to the fair value of non-controlling interest	—	—		—	—		—		—		(8,184)		(8,184)		8,184
Redeemable non-controlling interest	136	—		—	—		11,169		—		—		11,169		(24,975)
Stock-based compensation expense	—	—		—	—		8,178		—		—		8,178		—
Other comprehensive income	—	—		—	—		—		918		—		918		—

Net income	—	—		—	—		—		—		90,674		90,674		1,072
Balance - January 1, 2021	42,692	$	42	890	$	(13,754)	$	336,834	$	1,068	$	394,981	$	719,171	$	—
Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding	318	—		—	—		(7,050)		—		—		(7,050)		—




Stock-based compensation expense	—	—		—	—		14,335		—		—		14,335		—
Other comprehensive income	—	—		—	—		—		3,808		—		3,808		—

Net income	—	—		—	—		—		—		163,818		163,818		—
Balance - December 31, 2021	43,010	$	42	890	$	(13,754)	$	344,119	$	4,876	$	558,799	$	894,082	$	—


	For the fiscal years ended
Allowance for credit losses:	2021		2020		2019
Balance, beginning of year	$	663	$	810	$	600
Add: bad debt (benefit) expense	(14)		103		335
Less: write-offs, net of recoveries	(239)		(250)		(125)
Balance, end of year	$	410	$	663	$	810


Asset Classification			Estimated useful life
Building and building improvements			15-39 years
Information systems, office equipment and furniture			3-7 years
Internal-use computer software			10 years
Land improvements			15 years
Machinery and manufacturing equipment			5-15 years
Transportation equipment			3-5 years


	Balance Sheet Classification	December 31, 2021
Operating lease right-of-use assets	Lease right-of-use assets	$	38,752
Current lease liabilities	Accrued expenses	$	9,095
Non-current lease liabilities	Other liabilities	$	28,919


For fiscal year	Total future payments
2022	$	9,866
2023	8,853
2024	7,743
2025	5,553
2026	3,757
Thereafter	4,417
Total lease payments	40,189
Less: imputed interest	(2,175)
Present value of lease liabilities	38,014
Less: current portion	(9,095)
Lease liabilities less current portion	$	28,919


	Gross carrying amount		Accumulated amortization		Net carrying amount		Weighted average life (years)
December 31, 2021
Customer relationships	$	195,910	$	(66,240)	$	129,670	10
Core technology	35,795		(33,989)		1,806		8
Trademarks and brands, subject to amortization	12,443		(2,468)		9,975		9
Total	$	244,148	$	(102,697)	141,451
Trademarks and brands, not subject to amortization					55,570
Total					$	197,021
January 1, 2021
Customer relationships	$	194,950	$	(46,800)	$	148,150	10
Core technology	34,625		(33,678)		947		8
Trademarks and brands, subject to amortization	1,859		(1,535)		324		4
Total	$	231,434	$	(82,013)	149,421
Trademarks and brands, not subject to amortization					55,070
Total					$	204,491


For fiscal year:	Amortization Expense
2022	$	21,358
2023	20,366
2024	20,151
2025	17,516
2026	16,958
Thereafter	45,102
Total expected future amortization	$	141,451


Goodwill activity consisted of the following:
Balance as of January 1, 2021	$	289,349
Acquisitions (Refer to Note 18. "Acquisitions")	33,483
Purchase price adjustments (Refer to Note 18. "Acquisitions")	513
Currency translation and other adjustments	(46)
Balance as of December 31, 2021	$	323,299


			December 31, 2021		January 1, 2021
Effective Date	Termination Date	Notional Amount	Unrealized Gain (Loss) in AOCI		Unrealized Gain (Loss) in AOCI
September 2, 2020	June 11, 2021	$200,000	$	276	$	(915)
July 2, 2021	March 11, 2025	$200,000	3,583		—
Total			$	3,859	$	(915)


	Unvested RSUs
	Number of shares outstanding	Weighted-average grant date fair value
Unvested at December 28, 2018	655	$	29.34
Granted	131	74.70
Canceled	(67)	32.29
Vested	(292)	26.06
Unvested at January 3, 2020	427	44.98
Granted	260	47.46
Canceled	(13)	48.51
Vested	(224)	37.34
Unvested at January 1, 2021	450	50.12
Granted	89	149.08
Canceled	(24)	56.21
Vested	(177)	49.17
Unvested at December 31, 2021	338	$	76.30


	Unvested PSUs
	Number of shares outstanding	Weighted-average grant date fair value
Unvested at January 1, 2021	—	$	—
Granted	29	$	141.46


Unvested at December 31, 2021	29	$	141.46


	Number of shares outstanding	Weighted-average exercise price		Weighted-average remaining contractual life (years)	Aggregate intrinsic value
Balance at December 28, 2018	720	$	5.17	3	$	39,403
Options exercised	(289)	5.03			17,422
Balance at January 3, 2020	431	5.27		2	27,814
Options exercised	(206)	5.16			19,724
Balance at January 1, 2021	225	5.37		2	22,593
Options exercised	(192)	5.41			25,751
Balance at December 31, 2021	33	5.16		1	5,389
Options vested and expected to vest - December 31, 2021	33	5.16		1	5,389
Options exercisable - December 31, 2021	33	5.16		1	5,389


	December 31, 2021								January 1, 2021
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Interest Rate Swap	—		3,583		—		3,583		—		—		—		—
Total assets measured at fair value	$	—	$	3,583	$	—	$	3,583	$	—	$	—	$	—	$	—
Liabilities:
Credit Facility	$	—	$	378,453	$	—	$	378,453	$	—	$	389,588	$	—	$	389,588
Interest Rate Swap	—		—		—		—		—		915		—		915
Total liabilities measured at fair value	$	—	$	378,453	$	—	$	378,453	$	—	$	390,503	$	—	$	390,503


Fair market values
Tangible assets acquired	$	28,678
Liabilities assumed	(32,479)
Intangible assets	139,900
Goodwill	195,754
Total	$	331,853


	Quarter Ended
	Dec 31,		Oct 1,		Jul 2,		April 2,		Jan 1,		Oct 2		Jul 3		April 3,
	2021		2021		2021		2021		2021		2020		2020		2020
Sales	$	342,329	$	347,435	$	328,164	$	281,136	$	262,391	$	260,700	$	183,102	$	184,361
Gross profit	107,302		116,018		111,088		97,924		83,472		89,474		59,986		56,615
Income from operations	43,086		55,249		52,723		45,856		37,670		45,553		19,359		11,567
Net income attributable to Fox Stockholders	37,734		43,823		44,275		37,986		31,796		38,020		12,608		8,250
Earnings per share:
Basic	$	0.90	$	1.04	$	1.05	$	0.91	$	0.76	$	0.91	$	0.32	$	0.21
Diluted	$	0.89	$	1.03	$	1.05	$	0.90	$	0.75	$	0.90	$	0.32	$	0.21