Fox Factory Holding Corp 10-K for FY2023

Fox Factory Holding Corp (FOXF)

10-K 2024-02-23 For: 2023-12-29

Added on April 07, 2026

About this 10-K

Fox Factory Holding Corp filed this 10-K on February 23, 2024, covering the fiscal year ended December 29, 2023 (FY2023).

Headline figures

Fiscal year ended December 29, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.46B; down 8.6% from $1.6B a year earlier
Net income: $120.85M; down 41.1% from net income of $205.28M a year earlier
Diluted EPS: $2.85; down 41.1% from $4.84 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	13
Item 1B	Unresolved Staff Comments	35
Item 1C	Cybersecurity	36
Item 2	Properties	37
Item 3	Legal Proceedings	37
Item 4	Mine Safety Disclosures	37

PART II.
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	38
Item 6	Reserved	40
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	58
Item 8	Financial Statements and Supplementary Data	58
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	58
Item 9A	Controls and Procedures	58
Item 9B	Other Information	59
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	59

PART III.
Item 10	Directors, Executive Officers and Corporate Governance	59
Item 11	Executive Compensation	60
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	60
Item 13	Certain Relationships and Related Transactions, and Director Independence	60
Item 14	Principal Accountant Fees and Services	60

PART IV.
Item 15	Exhibits, Financial Statement Schedules	61
Item 16	Form 10-K Summary	61

Signatures		65

Financial Statements
	Management’s Report on Internal Control Over Financial Reporting	67
	Reports of Independent Registered Public Accounting Firm	68
	Consolidated Balance Sheets as of December 29, 2023 and December 30, 2022	72
	Consolidated Statements of Income for the years ended December 29, 2023, December 30, 2022 and December 31, 2021	73
	Consolidated Statements of Comprehensive Income for the years ended December 29, 2023, December 30, 2022 and December 31, 2021	74
	Consolidated Statements of Stockholders’ Equity for the years ended December 29, 2023, December 30, 2022 and December 31, 2021	75
	Consolidated Statements of Cash Flows for the years ended December 29, 2023, December 30, 2022 and December 31, 2021	76
	Notes to Consolidated Financial Statements	78


	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


☒			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


Period	Total Number of Shares Purchased (1)	Weighted Average Price Paid per Share (3)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs (2)
9/30-11/3	436	$	81.47	—	$	—
11/4-12/1	427,555	$	58.44	427,555	$	275,000,000
12/2-12/29	—	$	—	—	$	275,000,000
Total	427,991	$	—	427,555	$	275,000,000

(1) Includes 436 shares acquired from holders of restricted stock unit awards and option exercises to satisfy tax withholding obligations. These shares were not purchased as part of a publicly announced program to purchase common stock.
(2) On November 1, 2023, the Company’s Board of Directors authorized a share repurchase plan for up to $300 million in shares of the Company’s common stock, par value $0.001 per share. Refer to Note 13. Stockholders’ Equity for further details.
(3) The average price paid per share excludes excise tax on share repurchases imposed as part of the Inflation Reduction Act of 2022.


	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


	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)	%


	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)


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


(a) Financial Statements
Management’s Report on Internal Control Over Financial Reporting			67
Reports of Independent Registered Public Accounting Firm (PCAOB ID Number: 248)			68
Consolidated Balance Sheets as of December 29, 2023 and December 30, 2022			72
Consolidated Statements of Income for the years ended December 29, 2023, December 30, 2022 and December 31, 2021			73
Consolidated Statements of Comprehensive Income for the years ended December 29, 2023, December 30, 2022 and December 31, 2021			74
Consolidated Statements of Stockholders’ Equity for the years ended December 29, 2023, December 30, 2022 and December 31, 2021			75
Consolidated Statements of Cash Flows for the years ended December 29, 2023, December 30, 2022 and December 31, 2021			76
Notes to Consolidated Financial Statements			78

(b) Exhibits
See Index to Exhibits			62


	FOX FACTORY HOLDING CORP.
February 22, 2024	By:	/s/ Dennis C. Schemm
		Dennis C. Schemm, Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer & Duly Authorized Signatory)

February 22, 2024	By:	/s/ Brendan R. Enick
		Brendan R. Enick, Chief Accounting Officer
		(Principal Accounting Officer)


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

/s/ Dennis C. Schemm
Dennis C. Schemm
Chief Financial Officer and Treasurer


	As of		As of
	December 29, 2023		December 30, 2022

Assets
Current assets:
Cash and cash equivalents	$	83,642	$	145,250
Accounts receivable (net of allowances of $1,158 and $443 at December 29, 2023 and December 30, 2022, respectively)	171,060		200,440
Inventory	371,841		350,620
Prepaids and other current assets	141,512		101,364
Total current assets	768,055		797,674
Property, plant and equipment, net	237,192		202,215
Lease right-of-use assets	84,317		48,096
Deferred tax assets	21,297		57,339
Goodwill	636,565		323,978
Trademarks and brands, net	275,480		64,214
Customer and distributor relationships, net	182,731		109,887
Core technologies, net	25,136		4,879
Other assets	11,525		10,054
Total assets	$	2,242,298	$	1,618,336
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	104,150	$	131,160
Accrued expenses	103,400		127,729



Total current liabilities	207,550		258,889
Line of credit	370,000		200,000
Long-term debt, less current portion	373,528		—
Other liabilities	69,459		38,061

Total liabilities	1,020,537		496,950
Commitments and contingent liabilities (Refer to Note 12. Commitments and Contingent Liabilities)

Stockholders’ equity
Preferred stock, $0.001 par value — 0 authorized and no shares issued or outstanding as of December 29, 2023 and December 30, 2022	—		—
Common stock, $0.001 par value — 90,000 authorized; 42,844 shares issued and 41,954 outstanding as of December 29, 2023; 43,160 shares issued and 42,270 outstanding as of December 30, 2022	42		42
Additional paid-in capital	348,346		356,239
Treasury stock, at cost; 890 common shares as of December 29, 2023 and December 30, 2022	(13,754)		(13,754)
Accumulated other comprehensive income	9,041		14,782
Retained earnings	878,086		764,077
Total stockholders’ equity	1,221,761		1,121,386
Total liabilities and stockholders’ equity	$	2,242,298	$	1,618,336


	Common Stock			Treasury			Additional paid-in capital		Accumulated other comprehensive income		Retained earnings		Total stockholders’ equity
	Shares	Amount		Shares	Amount

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
Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding	150	—		—	—		(4,231)		—		—		(4,231)
Stock-based compensation expense	—	—		—	—		16,351		—		—		16,351
Other comprehensive income	—	—		—	—		—		9,906		—		9,906
Net income	—	—		—	—		—		—		205,278		205,278
Balance - December 30, 2022	43,160	$	42	890	$	(13,754)	$	356,239	$	14,782	$	764,077	$	1,121,386
Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding	112	—		—	—		(6,195)		—		—		(6,195)
Stock-based compensation expense	—	—		—	—		16,465		—		—		16,465
Purchase and retirement of common stock	(428)	—		—	—		(18,163)		—		(6,837)		(25,000)
Other comprehensive income	—	—		—	—		—		(5,741)		—		(5,741)
Net income	—	—		—	—		—		—		120,846		120,846
Balance - December 29, 2023	42,844	$	42	890	$	(13,754)	$	348,346	$	9,041	$	878,086	$	1,221,761


	For the fiscal years ended
	December 29,		December 30,		December 31,
	2023		2022		2021
OPERATING ACTIVITIES:
Net income	$	120,846	$	205,278	$	163,818
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	58,603		49,242		43,426
Provision for inventory reserve	6,184		8,923		3,916
Stock-based compensation	16,465		16,351		13,914
Amortization of acquired inventory step-up	13,008		—		—
Amortization of loan fees	905		1,086		1,631
Write off of unamortized loan origination fees	—		1,927		—
Amortization of deferred gains on prior swap settlements	(4,252)		(3,177)		(48)

(Gain) Loss on disposal of property and equipment	1,492		(1,740)		(96)

Deferred taxes	(7,867)		(18,445)		(17,096)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	64,527		(63,957)		(20,230)
Inventory	31,613		(87,460)		(150,448)
Income taxes	(19,094)		8,717		26,789
Prepaids and other assets	(38,180)		18,132		(34,509)
Accounts payable	(44,029)		40,493		10,304
Accrued expenses and other liabilities	(21,478)		11,724		21,813
Net cash provided by operating activities	178,743		187,094		63,184
INVESTING ACTIVITIES:
Acquisition of businesses, net of cash acquired	(701,112)		(714)		(51,881)
Acquisition of other assets	(2,432)		(3,500)		—
Purchases of property and equipment	(46,852)		(43,701)		(54,846)
Proceeds from sale of property and equipment	—		3,180		1,781
Net cash used in investing activities	(750,396)		(44,735)		(104,946)
FINANCING ACTIVITIES:
Proceeds from line of credit, net of origination fees	400,000		602,356		37,931
Payments on line of credit	(230,000)		(404,336)		(37,931)
Proceeds from issuance of debt, net of origination fees	393,528		—		—
Repayment of term debt	—		(382,500)		(12,500)
Prepayment of term debt	(20,000)		—		—

Purchase and retirement of common stock	(25,000)		—		—
Installment on purchase of non-controlling interest	—		(2,700)		(4,550)
Repurchases from stock compensation program, net	(6,195)		(4,231)		(7,050)
Deferred debt issuance costs	(3,354)		—		—
Proceeds from termination of swap agreement	—		12,270		324
Net cash provided by (used in) financing activities	508,979		(179,141)		(23,776)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	1,066		2,346		(540)
CHANGE IN CASH AND CASH EQUIVALENTS	(61,608)		(34,436)		(66,078)
CASH AND CASH EQUIVALENTS—Beginning of year	145,250		179,686		245,764
CASH AND CASH EQUIVALENTS—End of year	$	83,642	$	145,250	$	179,686


	For the fiscal years ended
SUPPLEMENTAL CASH FLOW INFORMATION:	December 29, 2023			December 30, 2022		December 31, 2021
Cash paid during the period for:
Income taxes	$	44,655		$	37,493	$	14,980
Interest, net of capitalized interest	$	21,147		$	9,922	$	6,384
Amounts included in the measurement of lease liabilities	$	14,009		$	10,499	$	8,747
Non-cash operating activities:
Right-of-use assets obtained in exchange for lease obligations	$	54,949	(1)	$	21,167	$	20,289
Non-cash investing and financing activities:


Capital expenditures included in accounts payable	$	977		$	2,049	$	3,491


	For the fiscal years ended
Allowance for credit losses:	December 29, 2023		December 30, 2022		December 31, 2021
Balance, beginning of year	$	443	$	410	$	663
Add: bad debt expense (benefit)	907		446		(14)
Less: write-offs, net of recoveries	(192)		(413)		(239)
Balance, end of year	$	1,158	$	443	$	410


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


	December 29, 2023		December 30, 2022
Raw materials	$	217,888	$	247,441
Work-in-process	8,813		9,959
Finished goods	145,140		93,220
Total inventory	$	371,841	$	350,620


	December 29, 2023		December 30, 2022
Prepaid chassis deposits	$	108,866	$	74,013
Advanced payments and prepaid contracts	14,025		13,598

Other current assets	18,621		13,753
Total prepaids and other assets	$	141,512	$	101,364


	December 29, 2023		December 30, 2022
United States	$	198,033	$	166,544
International	39,159		35,671
Total long-lived assets	$	237,192	$	202,215


	Balance Sheet Classification	December 29, 2023
Operating lease right-of-use assets	Lease right-of-use assets	$	84,317
Current lease liabilities	Accrued expenses	$	14,115
Non-current lease liabilities	Other liabilities	$	69,237


For fiscal year	Total future payments
2024	$	16,600
2025	13,887
2026	11,528
2027	8,510
2028	8,013
Thereafter	42,438
Total lease payments	100,976
Less: imputed interest	(17,624)
Present value of lease liabilities	83,352
Less: current portion	(14,115)
Lease liabilities less current portion	$	69,237


	Gross carrying amount		Accumulated amortization		Net carrying amount		Weighted average life (years)
December 29, 2023
Trademarks and brands, subject to amortization	$	226,563	$	(6,653)	$	219,910	14
Customer and distributor relationships	290,518		(107,787)		182,731		12
Core technologies	61,439		(36,303)		25,136		10
Total	$	578,520	$	(150,743)	427,777
Trademarks and brands, not subject to amortization					55,570
Total					$	483,347
December 30, 2022
Trademarks and brands, subject to amortization	$	12,443	$	(3,799)	$	8,644	9
Customer and distributor relationships	195,910		(86,023)		109,887		10
Core technologies	39,291		(34,412)		4,879		8
Total	$	247,644	$	(124,234)	123,410
Trademarks and brands, not subject to amortization					55,570
Total					$	178,980


For fiscal year:	Amortization Expense
2024	$	43,611
2025	40,976
2026	40,425
2027	39,191
2028	36,737
Thereafter	226,837
Total expected future amortization	$	427,777


Goodwill activity consisted of the following:
Balance as of December 30, 2022	$	323,978
Acquisitions (Refer to Note 18. Acquisitions)	312,567

Currency translation and other adjustments	20
Balance as of December 29, 2023	$	636,565


	Unvested RSUs
	Number of shares outstanding	Weighted-average grant date fair value
Unvested at January 1, 2021	450	$	50.12
Granted	89	$	149.08
Canceled	(24)	$	56.21
Vested	(177)	$	49.17
Unvested at December 30, 2021	338	$	76.30
Granted	142	$	95.34
Canceled	(17)	$	97.00
Vested	(166)	$	73.14
Unvested at December 30, 2022	297	$	87.05
Granted	135	$	109.23
Canceled	(44)	$	90.91
Vested	(141)	$	83.97
Unvested at December 29, 2023	247	$	100.21


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


Unvested at December 31, 2021	29	$	141.46
Granted	37	$	120.90
Canceled	(4)	$	126.73
Vested	(14)	$	141.46
Unvested at December 30, 2022	48	$	126.69
Granted	45	$	114.04
Canceled	(10)	$	120.08
Vested	(13)	$	141.57
Unvested at December 29, 2023	70	$	116.54


	Number of shares outstanding	Weighted-average exercise price		Weighted-average remaining contractual life (years)	Aggregate intrinsic value
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	2	$	5,389
Options exercised	(33)	$	5.16		$	2,470
Balance at December 30, 2022	—	$	—	0	$	—
Options exercised	—	$	—		$	—
Balance at December 29, 2023	—	$	—	0	$	—
Options vested and expected to vest - December 29, 2023	—	$	—	0	$	—
Options exercisable - December 29, 2023	—	$	—	0	$	—


	December 29, 2023								December 30, 2022
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Interest Rate Swap	$	—	$	3,394	$	—	$	3,394	$	—	$	5,087	$	—	$	5,087
Total assets measured at fair value	$	—	$	3,394	$	—	$	3,394	$	—	$	5,087	$	—	$	5,087
Liabilities:
Incremental Term A Loan	$	—	$	373,528	$	—	$	373,528	$	—	$	—	$	—	$	—

Total liabilities measured at fair value	$	—	$	373,528	$	—	$	373,528	$	—	$	—	$	—	$	—


Acquisition consideration
Cash consideration	$	129,784
Total consideration at closing	$	129,784

Fair market values
Inventory	$	23,266
Other current assets	3,109
Property, plant and equipment	3,529
Lease right-of-use assets	4,718
Trademarks and brands	36,397
Customer and distributor relationships	10,808
Core technologies	1,548
Goodwill	67,610
Total assets acquired	$	150,985

Accounts payable and accrued expenses	$	10,783
Current portion of lease liabilities	1,693
Lease liabilities	3,024
Deferred taxes	5,701
Total liabilities assumed	$	21,201
Purchase price allocation	$	129,784


Acquisition consideration
Cash consideration, net of cash acquired	$	567,092
Due to sellers	102
Total consideration at closing	$	567,194

Fair market values
Accounts receivable	$	31,268
Inventory	44,972
Prepaid and other current assets	1,256
Property, plant and equipment	19,065
Lease right-of-use assets	9,423
Trademarks and brands	174,700
Customer and distributor relationships	83,800
Core technologies	20,600
Goodwill	244,790
Other assets	583
Total assets acquired	$	630,457

Accounts payable	$	6,995
Accrued expenses	10,512
Other current liabilities	1,854
Deferred Taxes	36,914
Other liabilities	6,988
Total liabilities assumed	$	63,263
Purchase price allocation	$	567,194