Fox(FOXF) - 2024 Q3 - Quarterly Report

Sales Performance - For the three months ended September 27, 2024, net sales increased by $28.0 million, or 8.5$359.1 million compared to $331.1 million for the same period in 2023[98]. - The increase in net sales was primarily due to$49.6 million in net sales from Marucci, acquired in November 2023, and a $27.9 million increase in bike sales[98]. - Specialty Sports Group net sales increased by$77.5 million, or 107.6%, primarily due to the inclusion of $49.6 million in net sales from Marucci, acquired in November 2023[113]. - Aftermarket Applications Group net sales decreased by$35.8 million, or 26.3%, due to lower upfitting sales and higher inventory levels at dealerships[112]. - Powered Vehicles Group net sales decreased by $60.3 million, or 14.9$121.1 million, or 28.1%, driven by lower upfitting sales and higher inventory levels at dealerships[129]. - Specialty Sports Group net sales increased by $90.8 million, or 30.7$150.8 million in net sales from Marucci[130]. - Consolidated net sales for the nine months ended September 27, 2024 were $1,041.1 million, a decrease of$90.6 million or 8.0% compared to $1,131.7 million for the same period in 2023[127]. Financial Performance - Cost of sales for the three months ended September 27, 2024, increased by$27.7 million, or 12.4%, to $251.6 million compared to$223.9 million for the same period in 2023[99]. - Gross margin decreased by 250 basis points to 29.9% for the three months ended September 27, 2024, compared to the same prior fiscal year period[99]. - Operating expenses for the three months ended September 27, 2024, totaled $65.9 million, compared to$65.0 million for the same period in 2023[96]. - Total operating expenses for the three months ended September 27, 2024 were $88.7 million, an increase of$22.8 million or 34.6% compared to $65.9 million for the three months ended September 29, 2023[100]. - Income from operations for the three months ended September 27, 2024, was$41.4 million, compared to $41.0 million for the same period in 2023[96]. - Income from operations decreased by$22.6 million, or 54.6%, to $18.8 million for the three months ended September 27, 2024, compared to$41.4 million for the same period in 2023[102]. - Net income for the three months ended September 27, 2024, was $35.3 million, compared to$35.0 million for the same period in 2023[96]. - Net income for the three months ended September 27, 2024 was $4.8 million, a decrease of$30.5 million or 86.4% from $35.3 million for the three months ended September 29, 2023[107]. - Total operating expenses for the nine months ended September 27, 2024 were$275.3 million, an increase of $51.6 million or 23.1$223.7 million for the nine months ended September 29, 2023[119]. - Net income for the nine months ended September 27, 2024 decreased by $110.1 million, or 94.3$6.7 million from $116.8 million for the same period in 2023[125]. Research and Development - Research and development expenses increased to$8.9 million for the three months ended September 27, 2024, compared to $7.4 million for the same period in 2023[96]. - Research and development expenses for the three months ended September 27, 2024 increased by$7.2 million, or 80.9%, primarily due to personnel investments and a state research and development tax credit[100]. Debt and Interest - Interest expense increased by $10.7 million, or 305.7$29.8 million to $40.9 million, compared to$11.1 million for the same period in 2023, with interest expense rising by $30.0 million to$41.4 million due to additional debt and higher interest rates[122]. - As of September 27, 2024, the weighted-average interest rate on outstanding borrowing was 6.30%[140]. - The Company entered into a new credit agreement on April 5, 2022, providing for revolving loans and letters of credit up to $650.0 million[140]. - On November 14, 2023, the Company amended the 2022 Credit Facility, securing an Incremental Term A Loan of$400.0 million and a Delayed Draw Term Loan of $200.0 million[140]. - The Incremental Term Loans are subject to quarterly amortization payments of principal at a rate of 5.00$10.1 million in debt issuance costs related to the Incremental Term Loans[140]. - On July 31, 2024, the Company entered into the Third Amendment to the Credit Facility to improve its covenant profile for greater flexibility[141]. - The 2022 Credit Facility is secured by substantially all of the Company's assets and requires compliance with customary financial ratios[141]. - The Company was in compliance with the covenants as of September 27, 2024[141]. Economic Factors - The company continues to face headwinds from ongoing channel inventory recalibration and lower end consumer demand despite improved bike sales[98]. - Future growth may be impacted by macroeconomic factors, including inflation and interest rates, as well as supply chain dependencies[91]. - Significant increases in inflation could adversely impact the Company's business and financial condition[143]. - There have been no material changes to the Company's cash requirements or market risk disclosures since the last Annual Report[142][144]. Cash Flow - Net cash provided by operating activities for the nine months ended September 27, 2024 was $50.1 million, a decrease from$126.7 million for the same period in 2023[135]. - Net cash used in investing activities for the nine months ended September 27, 2024 was $42.5 million, significantly lower than$165.4 million for the same period in 2023[138]. - Net cash used in financing activities for the nine months ended September 27, 2024 was $1.7 million, compared to net cash provided of$16.2 million for the same period in 2023[139].