PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for the three months ended April 2, 2021, showing significant year-over-year growth in revenue and net income Condensed Consolidated Balance Sheets As of April 2, 2021, total assets increased to $1.36 billion from $1.29 billion at the beginning of the year, primarily driven by growth in cash, accounts receivable, and inventory, while total liabilities rose to $594.8 million and stockholders' equity grew to $762.3 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | April 2, 2021 | January 1, 2021 | | :--- | :--- | :--- | | Total Current Assets | $650,853 | $581,969 | | Total Assets | $1,357,098 | $1,286,561 | | Total Current Liabilities | $198,034 | $165,389 | | Total Liabilities | $594,807 | $567,390 | | Total Stockholders' Equity | $762,291 | $719,171 | Condensed Consolidated Statements of Income For the first quarter of 2021, the company reported a significant 52.5% year-over-year increase in sales, reaching $281.1 million, with net income attributable to stockholders surging to $38.0 million, or $0.90 per diluted share Q1 2021 vs. Q1 2020 Income Statement (in thousands, except per share data) | Metric | Q1 2021 (ended Apr 2) | Q1 2020 (ended Apr 3) | % Change | | :--- | :--- | :--- | :--- | | Sales | $281,136 | $184,361 | +52.5% | | Gross Profit | $97,924 | $56,615 | +73.0% | | Income from Operations | $45,856 | $11,567 | +296.4% | | Net Income Attributable to FOX Stockholders | $37,986 | $8,250 | +360.4% | | Diluted EPS | $0.90 | $0.21 | +328.6% | Condensed Consolidated Statements of Cash Flows The company generated $66.0 million in cash from operating activities, a substantial improvement from a $33.5 million use of cash in the prior-year period, with cash and cash equivalents increasing by $45.7 million to $291.5 million Q1 2021 vs. Q1 2020 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2021 (ended Apr 2) | Q1 2020 (ended Apr 3) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $66,028 | $(33,485) | | Net cash used in investing activities | $(16,885) | $(342,050) | | Net cash (used in) provided by financing activities | $(3,752) | $408,332 | | Change in Cash and Cash Equivalents | $45,707 | $32,446 | Notes to Unaudited Condensed Consolidated Financial Statements The notes provide detailed breakdowns of financial data, confirming strong revenue growth across both Powered Vehicles and Specialty Sports segments, and detailing debt structure, legal proceedings, and the accounting for the March 2020 SCA Performance acquisition Sales by Product Category (in thousands) | Product Category | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | Powered Vehicles | $162,747 | $120,526 | +35.0% | | Specialty Sports | $118,389 | $63,835 | +85.5% | | Total Sales | $281,136 | $184,361 | +52.5% | - The company is engaged in ongoing patent infringement litigation with SRAM Corporation, with lawsuits filed by both parties. The company believes the lawsuits against it are without merit6970 - On March 11, 2020, the company acquired SCA Performance Holdings, Inc. for $331.9 million, net of cash acquired. The acquisition contributed significantly to the Powered Vehicles segment97 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 52.5% year-over-year sales growth to the SCA acquisition and strong demand, with gross margin improving by 410 basis points to 34.8% and operating expenses decreasing as a percentage of sales, leading to a 295.7% increase in income from operations - Total sales increased by $96.8 million, or 52.5%, year-over-year. Powered Vehicle sales grew 35.0%, primarily due to the SCA acquisition, while Specialty Sports sales grew 85.5% due to increased demand in both OEM and aftermarket channels114 - Gross margin increased by 410 basis points to 34.8% from 30.7% in the prior year. This was primarily due to a favorable product and channel mix, including the impact of the SCA acquisition, and lower factory costs related to COVID-19 compared to Q1 2020116 - General and administrative expenses decreased by $2.0 million, mainly due to a $9.9 million decrease in acquisition-related costs, partially offset by higher headcount and incentive compensation costs118 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to its market risk disclosures since its Annual Report on Form 10-K for the fiscal year ended January 1, 2021 - There have been no material changes to the disclosures regarding market risk from the company's most recent Annual Report on Form 10-K142 Item 4. Controls and Procedures Based on an evaluation as of April 2, 2021, the company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of April 2, 2021145 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls146 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in ongoing patent infringement litigation with SRAM Corporation, with both companies filing lawsuits against each other, and Fox Factory believes the claims against it are without merit and intends to defend itself vigorously - The company's subsidiary, RFE Canada, is in a legal dispute with SRAM Corporation over alleged patent infringement. The company has also filed its own patent infringement lawsuits against SRAM149150 - The company cannot predict the outcome or a range of reasonably possible losses at this time and has not recorded any liability for these matters151 Item 1A. Risk Factors This section details significant risks to the business, including the ongoing impact of the COVID-19 pandemic, intense competition, reliance on discretionary consumer spending, dependence on a small number of large OEM customers, potential supply chain disruptions, and risks associated with international operations - The business continues to face risks from the COVID-19 pandemic, which could disrupt supply chains, manufacturing, and consumer demand160 - The company's products are discretionary purchases, making sales sensitive to economic downturns and changes in consumer spending habits167 - A substantial portion of sales comes from a small number of OEM customers, and the loss of any of these customers could materially impact the business. In fiscal 2020, the top five OEM customers accounted for approximately 23% of sales188 - The company depends on a limited number of suppliers, including a sole-source supplier for its Kashima coating, which could lead to production delays or increased costs if supply is disrupted214216 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the quarter, the company repurchased 1,493 shares of its common stock at a weighted-average price of $106.22 per share to satisfy tax-withholding obligations related to the vesting of restricted stock unit awards for employees Issuer Purchases of Equity Securities (Q1 2021) | Period | Total Number of Shares Purchased | Weighted-average Price Paid per Share | | :--- | :--- | :--- | | 1/2 - 2/5 | — | $— | | 2/6 - 3/5 | 813 | $127.15 | | 3/6 - 4/2 | 680 | $81.19 | | Total | 1,493 | $106.22 | Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None262 Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable263 Item 5. Other Information There is no other information to report for the period - None264 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act of 2002 - The report includes certifications from the CEO and CFO pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act, as well as XBRL data files265
Fox(FOXF) - 2021 Q1 - Quarterly Report