The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended January 2, 2026, as filed with the SEC on February 27, 2026, and our other reports and registration statements that we file with the SEC from time to time. In addition to historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section included in Part II, Item 1A.
Unless the context otherwise requires, the terms “FOX,” the “Company,” “we,” “us,” and “our” in this Quarterly Report on Form 10-Q refer to Fox Factory Holding Corp. and its operating subsidiaries on a consolidated basis.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements, which are subject to the “safe harbor” created by Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We may make forward-looking statements in our SEC filings, press releases, news articles, earnings presentations and when we are speaking on behalf of the Company. Forward-looking statements generally relate to future events or our future financial or operating performance that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements because they contain words such as “may,” “might,” “will,” “would,” “should,” “expect,” “plan,” “anticipate,” “could,” “can,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “likely,” “potential”, “remain”, or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q are subject to numerous risks and uncertainties, including but not limited to risks related to:
•changes in general economic conditions, including, among others, market and macro-economic disruptions resulting from escalating tensions between China and Taiwan, the war in Iran, or similar events, due to inflation, higher interest rates, or tariffs, or due to the spread of infectious or contagious disease or public health issues;
•our dependency on a limited number of suppliers for materials, component parts, and product could lead to an increase in material costs, disruptions in our supply chain, or reputational costs;
•our ability to develop new and innovative products in our current end-markets;
•our ability to leverage our technologies and brand to expand into new categories and end-markets;
•our ability to increase our aftermarket penetration;
•our ability to accelerate international growth;
•our exposure to currency exchange rate fluctuations;
•the loss of key customers;
•our ability to accurately forecast demand for our products;
•our ability to improve operating and supply chain efficiencies;
•changes in commodity, freight, and tariff costs (including tariff relief or our ability to mitigate tariffs, particularly in light of the policies of the current presidential administration and retaliatory actions in response thereto);
•our ability to mitigate increasing input costs through pricing or other measures;
•economic conditions that impact consumer spending or consumer credit, including changes in inflation or interest rates;
•our ability to enforce our intellectual property rights;
•our future financial performance, including our net sales, cost of sales, gross profit or gross margins, operating expenses, ability to generate positive cash flow, ability to maintain our profitability, and ability to remain in compliance with financial covenants;
•our ability to maintain our premium brand image and high-performance products;
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•our ability to execute our cost optimization efforts and identify and capitalize on other strategic initiatives, including possible divestitures, sales, or related transactions involving one or more of our businesses or assets and any other actions we take related to our strategic review of our portfolio;
•our decision and ability to market and execute potential strategic transactions, which depend on, among other factors, third-party interest, valuation considerations and regulatory requirements;
•our ability to maintain relationships with the professional athletes and race teams we sponsor;
•our ability to selectively add additional dealers and distributors in certain geographic markets;
•the growth of the markets in which we compete, our expectations regarding consumer preferences, and our ability to respond to changes in consumer preferences and effectively compete against competitors;
•changes in demand for performance-defining products;
•the loss of key personnel, management, and skilled engineers;
•our ability to successfully identify, evaluate and manage potential or completed acquisitions and to benefit from such acquisitions;
•the outcome of pending litigation;
•future disruptions in the operations of our manufacturing facilities;
•our ability to adapt our business model to mitigate the impact of certain changes in tax laws, tariffs, international trade policies, and other regulatory matters;
•our ability to assess and monitor the effects of new technological applications, such as artificial intelligence, on our business and operations;
•our ability to protect against cybersecurity incidents and disruptions or failures of our information technology systems;
•changes in the relative proportion of profit earned in the numerous jurisdictions in which we do business and in tax legislation, case law and other authoritative guidance in those jurisdictions;
•product recalls and product liability claims; and
•future economic or market conditions.
You should not rely upon forward-looking statements as predictions of future events. We based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects and the outcomes of any of the events described in any forward-looking statements are subject to risks, uncertainties, and other factors. In addition to the risks, uncertainties, and other factors discussed above and elsewhere in this Quarterly Report on Form 10-Q, the risks, uncertainties, and other factors expressed or implied in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended January 2, 2026, as filed with the SEC on February 27, 2026, could cause or contribute to actual results differing materially from those set forth in any forward-looking statement. Moreover, we operate in a very competitive and challenging environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur and you should not place undue reliance on our forward-looking statements. Actual results, events, or circumstances could differ materially from those contemplated by, set forth in, or underlying any forward-looking statements. For all of these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements in Section 27A of the Securities Act and Section 21E of the Exchange Act.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information, the occurrence of unanticipated events or otherwise, except as required by law. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make or choose not to make.
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Critical Accounting Policies and Estimates
There have been no changes to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended January 2, 2026, as filed with the SEC on February 27, 2026, that had a material impact on our unaudited condensed consolidated financial statements and related notes.
Recent Accounting Pronouncements
See Note 1 - Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies to the accompanying notes to unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further details regarding this topic.
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Results of Operations
The table below summarizes our results of operations:
For the three months ended For the six months ended
(in millions) July 3, 2026 July 4, 2025 July 3, 2026 July 4, 2025
Net sales $ 358.1 $ 374.9 $ 726.8 $ 729.9
Cost of sales 248.4 257.9 510.7 503.2
Gross profit 109.7 117.0 216.1 226.7
Operating expenses:
Goodwill impairment — — — 262.1
General and administrative 34.2 39.0 72.8 76.4
Sales and marketing 29.4 31.2 62.7 64.1
Research and development 18.6 17.8 37.1 34.9
Amortization of purchased intangibles 10.0 10.4 20.0 21.3
Total operating expenses 92.2 98.5 192.6 458.7
Income (loss) from operations 17.5 18.5 23.5 (232.1)
Interest expense 11.9 14.4 23.8 27.3
Other (income) expense, net (0.7) (1.4) 9.0 (1.5)
Income (loss) before income taxes 6.3 5.5 (9.3) (257.9)
Provision (benefit) for income taxes 2.3 2.8 1.7 (0.8)
Net income (loss) $ 4.0 $ 2.7 $ (11.0) $ (257.0)
Less: net loss attributable to non-controlling interest — — — (0.1)
Net income (loss) attributable to FOX stockholders $ 4.1 $ 2.7 $ (10.9) $ (257.0)
*Amounts may not foot due to rounding.
The following table sets forth selected statement of income data as a percentage of net sales for the periods indicated:
For the three months ended For the six months ended
July 3, 2026 July 4, 2025 July 3, 2026 July 4, 2025
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 69.4 68.8 70.3 68.9
Gross profit 30.6 31.2 29.7 31.1
Operating expenses:
Goodwill impairment — — — 35.9
General and administrative 9.5 10.4 10.0 10.5
Sales and marketing 8.2 8.3 8.6 8.8
Research and development 5.2 4.8 5.1 4.8
Amortization of purchased intangibles 2.8 2.8 2.8 2.9
Total operating expenses 25.7 26.3 26.5 62.8
Income (loss) from operations 4.9 4.9 3.2 (31.8)
Interest expense 3.3 3.8 3.3 3.7
Other (income) expense, net (0.2) (0.4) 1.2 (0.2)
Income (loss) before income taxes 1.8 1.5 (1.3) (35.3)
Provision (benefit) for income taxes 0.6 0.7 0.2 (0.1)
Net income (loss) 1.1 % 0.7 % (1.5) % (35.2) %
Less: net loss attributable to non-controlling interest — — — —
Net income (loss) attributable to FOX stockholders 1.1 % 0.7 % (1.5) % (35.2) %
*Percentages may not foot due to rounding.
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Three months ended July 3, 2026 compared to three months ended July 4, 2025
Net sales
For the three months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Net sales $ 358.1 $ 374.9 $ (16.8) (4.5) %
Total net sales for the three months ended July 3, 2026 decreased $16.8 million, or 4.5%, compared to the three months ended July 4, 2025. The decrease in net sales is driven by OEMs, distributors and dealers reducing inventory levels in response to market-wide economic conditions and lost revenues from divested businesses, offset by strengthening demand across powersports and AAG products.
Cost of sales
For the three months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Cost of sales $ 248.4 $ 257.9 $ (9.5) (3.7) %
Cost of sales for the three months ended July 3, 2026 decreased $9.5 million, or 3.7%, compared to the three months ended July 4, 2025. The decrease in cost of sales is mainly due to lower sales and our optimization efforts. Our gross margin decreased 60 basis points to 30.6% for the three months ended July 3, 2026, as compared to the same prior fiscal year period, primarily due to shifts in our product line mix.
Operating expenses
For the three months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Operating expenses:
General and administrative $ 34.2 $ 39.0 $ (4.8) (12) %
Sales and marketing 29.4 31.2 (1.8) (5.8)
Research and development 18.6 17.9 0.7 3.9
Amortization of purchased intangibles 10.0 10.4 (0.4) (3.8)
Total operating expenses $ 92.2 $ 98.5 $ (6.3) (6.4) %
Total operating expenses for the three months ended July 3, 2026 were $92.2 million, compared to $98.5 million for the three months ended July 4, 2025. General and administrative expenses decreased $4.8 million and sales and marketing expenses decreased by $1.8 million mainly due to our strategic optimization initiatives.
Income from operations
For the three months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Income from operations $ 17.5 $ 18.5 $ (1.0) (5.4) %
As a result of the factors discussed above, income from operations for the three months ended July 3, 2026 decreased $1.0 million, or 5.4%, compared to loss from operations for the three months ended July 4, 2025.
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Interest and other expense, net
For the three months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Interest expense $ 11.9 $ 14.4 $ (2.5) (17.4) %
Other income, net (0.7) (1.4) 0.7 50.0
Interest and other (income) expense, net $ 11.2 $ 13.0 $ (1.8) (13.8) %
Interest and other expense, net for the three months ended July 3, 2026 decreased by $1.8 million to $11.2 million, compared to $13.0 million for the three months ended July 4, 2025 driven by lower interest rates.
Income taxes
For the three months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Provision for income taxes $ 2.3 $ 2.8 $ (0.5) (17.9) %
The effective tax rates were 36.0% and 50.9% for the three months ended July 3, 2026 and July 4, 2025, respectively.
For the three months ended July 3, 2026, the difference between the Company’s effective tax rate of 36.0% and the 21% federal statutory rate was primarily due to unfavorable impact of discrete items in proportion to lower levels of pre-tax income.
For the three months ended July 4, 2025, the difference between our effective tax rate of 50.9% and the 21% federal statutory rate was due to the unfavorable impact of discrete items in proportion to lower levels of pre-tax income.
Net income
For the three months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Net income $ 4.0 $ 2.7 $ 1.3 48.1 %
As a result of the factors described above, our net income increased $1.3 million, or 48.1%, to $4.0 million for the three months ended July 3, 2026 from $2.7 million for the three months ended July 4, 2025.
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Segment Review
We manage our activities based on three operating segments: PVG, AAG, and SSG.
For additional financial information related to our operating segments including the reconciliation of consolidated net (loss) income to adjusted EBITDA, see Note 14 – Segment Information.
The following table summarizes consolidated net sales and adjusted EBITDA by segment:
For the three months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Net sales
Powered Vehicles Group $ 124.2 $ 123.5 $ 0.7 0.6 %
Aftermarket Applications Group 109.6 114.2 (4.6) (4.0)
Specialty Sports Group 124.3 137.2 (12.9) (9.4)
Net sales $ 358.1 $ 374.9 $ (16.8) (4.5) %
Adjusted EBITDA
Powered Vehicles Group $ 15.8 $ 16.4 $ (0.6) (3.7) %
Aftermarket Applications Group $ 16.2 $ 16.0 $ 0.2 1.3 %
Specialty Sports Group $ 27.7 $ 30.4 $ (2.7) (8.9) %
Powered Vehicles Group
Powered Vehicles Group net sales increased by $0.7 million, or 0.6%, mainly due to strengthening demand in powersports.
Powered Vehicles Group adjusted EBITDA decreased by $0.6 million, or 3.7%, primarily due to lower gross profit driven by shifts in product line mix.
Aftermarket Applications Group
Aftermarket Applications Group net sales decreased by $4.6 million, or 4.0%. Excluding the impact of the divested businesses, AAG net sales increased compared to the prior year period, with growth limited by supply constraints affecting our upfit businesses.
Aftermarket Applications Group adjusted EBITDA increased by $0.2 million, or 1.3%, mainly due to decreases in operating expenses, partially offset by lower gross profit.
Specialty Sports Group
Specialty Sports Group net sales decreased by $12.9 million, or 9.4%, primarily due to OEMs, distributors and dealers reducing inventory levels in response to market-wide economic conditions.
Specialty Sports Group adjusted EBITDA decreased by $2.7 million, or 8.9%, primarily due to lower gross profit, partially offset by decreases in operating expenses.
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Six months ended July 3, 2026 compared to six months ended July 4, 2025
Consolidated net sales
For the six months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Net sales $ 726.8 $ 729.9 $ (3.1) (0.4) %
Total net sales for the six months ended July 3, 2026 decreased $3.1 million, or 0.4%, compared to the six months ended July 4, 2025. The decrease in net sales is primarily due to OEMs, distributors and dealers reducing inventory levels in response to market-wide economic conditions and lost revenues from divested businesses, offset by strengthening demand across powersports and AAG products.
Cost of sales
For the six months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Cost of sales $ 510.7 $ 503.2 $ 7.5 1.5 %
Cost of sales for the six months ended July 3, 2026 increased $7.5 million, or 1.5%, compared to the six months ended July 4, 2025. The increase in cost of sales is primarily due to impacts of tariffs. Our gross margin decreased by 140 basis points to 29.7% for the six months ended July 3, 2026, as compared to the same prior fiscal year period, primarily due to shifts in our product line mix and the impact of tariffs.
Operating expenses
For the six months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Operating expenses:
Goodwill impairment $ — $ 262.1 $ (262.1) N/A
General and administrative 72.8 76.4 (3.6) (4.7) %
Sales and marketing 62.7 64.0 (1.3) (2.0)
Research and development 37.1 34.9 2.2 6.3
Amortization of purchased intangibles 20.0 21.3 (1.3) (6.1)
Total operating expenses $ 192.6 $ 458.7 $ (266.1) (58.0) %
*Numbers may not foot due to rounding.
Total operating expenses for the six months ended July 3, 2026 were $192.6 million, compared to $458.7 million for the six months ended July 4, 2025. During the six months ended July 4, 2025, we recognized an impairment charge of $262.1 million as a result of our quantitative assessment on goodwill triggered by adverse changes in U.S. tariff policies, new and expanded tariffs enacted by the current presidential administration, and resulting sustained decline in our stock price. General and administrative and sales and marketing expenses decreased $3.6 million and $1.3 million, respectively, primarily on our strategic optimization initiatives. Research and development increased $2.2 million, due to our investments to support future growth and product innovation.
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Income (loss) from operations
For the six months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Income (loss) from operations $ 23.5 $ (232.1) $ 255.6 110.1 %
As a result of the factors discussed above, income from operations for the six months ended July 3, 2026 increased $255.6 million, or 110.1%, compared to loss from operations for the six months ended July 4, 2025.
Interest and other expense, net
For the six months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Interest expense $ 23.8 $ 27.3 $ (3.5) (12.8) %
Other expense (income), net 9.0 (1.5) 10.5 700.0
Interest and other expense, net $ 32.8 $ 25.8 $ 7.0 27.1 %
Interest and other expense, net for the six months ended July 3, 2026 increased by $7.0 million to $32.8 million, compared to $25.8 million for the six months ended July 4, 2025, mainly due to a loss on divestiture of $10.6 million, partially offset by lower interest rates.
Income taxes
For the six months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Provision (benefit) for income taxes $ 1.7 $ (0.8) $ 2.5 (312.5) %
The effective tax rates were (17.8)% and 0.3% for the six months ended July 3, 2026 and July 4, 2025, respectively.
For the six months ended July 3, 2026, the difference between the Company’s effective tax rate of (17.8)% and the 21% federal statutory rate was due to the lower pre‑tax earnings for the quarter and the tax effects of discrete items recognized in connection with the sale of the Arizona entities.
For the six months ended July 4, 2025, the difference between our effective tax rate of 0.3% and the 21% federal statutory rate was due to the impairment impact of non-deductible goodwill.
Net loss
For the six months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Net loss $ (11.0) $ (257.0) $ 246.0 95.7 %
As a result of the factors described above, our net loss decreased $246.0 million to a net loss of $11.0 million for the six months ended July 3, 2026 from a net loss of $257.0 million for the six months ended July 4, 2025.
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Segment Review
For additional financial information related to our operating segments including the reconciliation of consolidated net (loss) income to adjusted EBITDA, see Note 14. Segment Information.
The following table summarizes consolidated net sales and adjusted EBITDA by segment:
For the six months ended
(in millions) July 3, 2026 July 4, 2025 Change ($) Change (%)
Net sales
Powered Vehicles Group $ 267.6 $ 245.6 $ 22.0 9.0 %
Aftermarket Applications Group 224.3 226.1 (1.8) (0.8)
Specialty Sports Group 234.8 258.2 (23.4) (9.1)
Net sales $ 726.8 $ 729.9 $ (3.1) (0.4) %
Adjusted EBITDA
Powered Vehicles Group $ 38.4 $ 30.8 $ 7.6 24.7 %
Aftermarket Applications Group $ 27.6 $ 33.0 $ (5.4) (16.4) %
Specialty Sports Group $ 45.1 $ 53.8 $ (8.7) (16.2) %
*Numbers may not foot due to rounding.
Powered Vehicles Group
Powered Vehicles Group net sales increased by $22.0 million, or 9.0%, primarily due to strengthening demand in powersports.
Powered Vehicles Group adjusted EBITDA increased by $7.6 million, or 24.7%, mainly due to an increase in gross profit driven by higher net sales.
Aftermarket Applications Group
Aftermarket Applications Group net sales decreased by $1.8 million, or 0.8%. Excluding the impact of the divested businesses, AAG net sales increased compared to the prior year period, with growth limited by supply constraints affecting our upfit businesses.
Aftermarket Applications Group adjusted EBITDA decreased by $5.4 million, or 16.4%, driven by lower gross profit due to shifts in product mix.
Specialty Sports Group
Specialty Sports Group net sales decreased by $23.4 million, or 9.1%, mainly attributable to OEMs, distributors and dealers reducing inventory levels in response to market-wide economic conditions.
Specialty Sports Group adjusted EBITDA decreased by $8.7 million, or 16.2%, primarily due to a decrease in gross profit.
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Liquidity and Capital Resources
Our primary cash needs are to support working capital, research and development, interest on debt, employee compensation, capital expenditures, acquisitions, debt repayments, and other general corporate purposes. Historically, we generally financed our liquidity needs with operating cash flows, borrowings under our Credit Agreement, and the issuance of common stock. These sources of liquidity may be impacted by events described in Cautionary Note Regarding Forward-Looking Statements and Part II, Item 1A. Risk Factors.
As of July 3, 2026, we held $9.9 million of our $61.3 million of cash and cash equivalents in accounts of our subsidiaries outside of the U.S., which we may repatriate.
A summary of our operating, investing, and financing activities is shown in the following table:
For the six months ended
(in millions) July 3, 2026 July 4, 2025
Net cash provided by operating activities $ 13.2 $ 37.5
Net cash provided by (used in) investing activities 0.7 (19.4)
Net cash used in financing activities (9.5) (9.4)
Effect of exchange rate changes on cash and cash equivalents (1.0) 1.1
Change in cash and cash equivalents $ 3.3 $ 9.8
*Amounts may not foot due to rounding.
We expect that cash on hand, cash flows from operations and availability under our Credit Agreement will be sufficient to fund our operations during the next 12 months from the date of this Form 10-Q and beyond.
Operating activities
In the six months ended July 3, 2026, net cash provided by operating activities was $13.2 million. Our investment in operating assets and liabilities is mainly a result of an increase in inventory of $17.4 million, an increase in accounts receivable of $13.0 million, a decrease in accounts payable of $5.9 million, and a decrease in accrued expenses and other liabilities of $4.3 million, partially offset by a decrease in prepaids and other assets of $3.9 million, net of the impact of the divestiture. Inventory increased primarily due to planned inventory builds to support anticipated demand. The change in our accounts receivable reflects the timing of customer collections. The change in accounts payable reflects the timing of vendor payments. The decrease in accrued expenses and other liabilities is driven by amortization of lease liabilities. Prepaids and other assets decreased primarily due to lower prepaid insurance.
In the six months ended July 4, 2025, net cash provided by operating activities was $37.5 million. Our investment in operating assets and liabilities is a result of an increase in accounts receivable of $15.4 million, a decrease in accounts payable of $11.1 million, a decrease in accrued expenses and other liabilities of $8.6 million, a decrease in income taxes payable of $4.0 million, and an increase in inventory of $2.1 million, partially offset by a decrease in prepaids and other assets of $19.8 million. The change in our accounts receivable reflects an increase in our sales and the timing of customer collections. The change in our accounts payable is driven by timing of inventory purchases and vendor payments. The decrease in accrued expenses and other liabilities is mainly due to a decrease in warranty reserve, a decrease in lease liabilities due to lease terminations, and payments for various accruals. The decrease in income taxes payable is mainly due to our income tax payments. Inventory increased primarily due to planned inventory builds to support anticipated demand, the impact from higher tariffs, and foreign currency translation, partially offset by our efforts to optimize inventory levels. The decrease in prepaids and other assets is primarily due to lower chassis deposits driven by working capital optimization efforts.
Investing activities
In the six months ended July 3, 2026 and July 4, 2025, net cash provided by investing activities was $0.7 million and net cash used by investing activities was $19.4 million, respectively. Investing activities for the six months ended July 3, 2026 consisted of $7.4 million proceeds from a divestiture and $2.8 million proceeds from sales of assets, partially offset by $9.5 million of property and equipment additions. Investing activities for the six months ended July 4, 2025 consisted of $19.6 million of property and equipment additions and $0.2 million proceeds from sales of assets.
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Financing activities
In the six months ended July 3, 2026, net cash used in financing activities was $9.5 million, and consisted of $18.4 million repayments on our term loan, payments of $94.0 million to reduce the revolver borrowings, offset by proceeds from our revolver of $107.0 million that were used to support our working capital, $2.4 million debt modification costs, and payments of $1.7 million to repurchase shares of our common stock to cover withholding taxes from our stock-based compensation program.
In the six months ended July 4, 2025, net cash used in financing activities was $9.4 million, and consisted of payments of $53.0 million to reduce the revolver borrowings, offset by proceeds from our Credit Agreement revolver of $57.0 million that were used to support our working capital, $12.1 million quarterly repayment on our term loans, and payments of $1.3 million to repurchase shares of our common stock to cover withholding taxes from our stock-based compensation program.
Credit Agreement
On April 5, 2022, the Company entered into a new credit agreement with Wells Fargo Bank, National Association, and other named lenders. The Credit Agreement, which was set to mature on April 5, 2027, provides for revolving loans, swingline loans and letters of credit up to an aggregate amount of $650.0 million.
The Company may borrow, prepay, and re-borrow principal under the Credit Agreement during its term. Advances under the Credit Agreement can be either Adjusted Term 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%. 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%.
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 “First Amendment”) amending the Credit Agreement. The First Amendment provided the Company with the Incremental Term A Loan in an amount of $400.0 million and the Delayed Draw Term Loan in an amount of $200.0 million, each of which are permitted under the Credit Agreement, subject to satisfaction of certain conditions. 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 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 5.00% per annum. 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. Each Incremental Term Loan has a maturity date of April 5, 2027, consistent with the Credit Agreement. On May 13, 2024, the Company borrowed the full amount of $200.0 million of the Delayed Draw Term Loan.
On July 31, 2024 and December 20, 2024, the Company entered into the Third and Fourth Amendment to the Credit Facility, respectively to secure an improved covenant profile on its capital structure to provide more flexibility given the uncertain macro environment.
Fifth Amended Credit Agreement
On October 24, 2025, the Company entered into the Fifth Amendment to the Credit Agreement, which amended the Credit Agreement, dated as of April 5, 2022, as previously amended.
The Fifth Amendment, among other things, amended the Credit Agreement to replace the existing loans provided under the Credit Agreement with (i) the Term Loan in the aggregate outstanding amount of $537.5 million, which will be repaid by the Company in quarterly installments in the amount of $6.7 million, (ii) the Revolving Credit Facility in an aggregate amount of up to $500.0 million, with sub-facilities for swing line loans in an aggregate amount of up to $25.0 million and letters of credit in an aggregate amount of up to $25.0 million, and (iii) an incremental loan facility, subject to additional terms set forth in the Amended Credit Agreement, in an aggregate amount of up to $175.0 million plus an unlimited amount so long as after giving effect to the incurrence of such incremental loans, on a pro forma basis, the Consolidated Net Leverage Ratio is less than 3.25. To the extent not previously paid, all then-outstanding amounts under the Term Loan and the Revolving Credit Facility are due and payable on October 24, 2030.
The Term Loan and advances under the Revolving Credit Facility can be either SOFR loans or base rate loans. SOFR loans bear interest on the outstanding principal amount thereof for each interest period at a rate per annum equal to the term SOFR for such calculation plus a margin ranging from 1.00% to 2.50%. Base rate 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
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day as publicly announced from time to time by the Agent as its “prime rate,” and (iii) term SOFR rate for a one-month tenor plus 1.00%, subject to the interest rate floors set forth in the Amended Credit Agreement, plus a margin ranging from 0.00% to 1.50%.
Sixth Amended Credit Agreement
On May 6, 2026, the Company entered into the Sixth Amendment to the Credit Agreement. The Sixth Amendment amended the Credit Agreement, dated April 5, 2022, as previously amended.
The Sixth Amendment, among other things, amended the margins for interest under the Credit Agreement, pursuant to which the term loan and advances under the revolving credit facility can be either SOFR loans or base rate loans. Pursuant to the Sixth Amendment, SOFR loans bear interest on the outstanding principal amount thereof for each interest period at a rate per annum equal to the term SOFR for such calculation period plus a margin ranging from 1.00% to 2.75%, based on the levels of Consolidated Net Leverage Ratio. Base rate 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 Agent as its “prime rate,” and (iii) term SOFR rate for a one-month tenor plus 1.00%, subject to the interest rate floors set forth in the Sixth Amended Credit Agreement, plus a margin ranging from 0.00% to 1.75%, based on the levels of Consolidated Net Leverage Ratio.
The Sixth Amendment also amended the definition of Consolidated Net Leverage Ratio and modifies the provisions for the mandatory prepayment of the loans with the net proceeds of asset sales. In addition, the Sixth Amendment tightens certain negative covenants on the Company, including restrictions on indebtedness, investments, and restricted payments during the period beginning on the effective date of the Sixth Amendment and ending on the date a compliance certificate is delivered by the Company for the fiscal quarter ending June 30, 2028, provided that no default or event of default has occurred and is continuing on such date of delivery.
Under the Sixth Amendment, the Company is required to maintain (i) a Consolidated Net Leverage Ratio not to exceed (a) 5.00 as of the end of each fiscal quarter ending July 3, 2026 through January 1, 2027, (b) 4.75 as of the end of each fiscal quarter ending April 2, 2027 through July 2, 2027, (c) 4.50 as of the end of each fiscal quarter ending October 1, 2027 through December 31, 2027, (d) 4.25 as of the end of the fiscal quarter ending March 31, 2028, and (e) 4.00 as of the end of the fiscal quarters ending June 30, 2028 and thereafter, each of which will be, at the Company’s election, increased by 0.50 (but not to exceed 4.50) for the four fiscal quarters after the consummation of certain permitted acquisitions exceeding $75,000 (provided that such increase is not permitted during the Covenant Relief Period), and (ii) a Consolidated Interest Coverage Ratio of not less than (a) 2.50 as of the end of each fiscal quarter ending July 3, 2026 through June 30, 2028, and (b) 2.75 as of the end each fiscal quarter ending September 29, 2028 and thereafter.
The Sixth Amended Credit Agreement 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 July 3, 2026.
At July 3, 2026, the one-month SOFR and three-month SOFR rates were 3.63% and 3.63%, respectively. At July 3, 2026, our weighted-average interest rate on outstanding borrowing was 6.05%.
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Recent Developments
Global Trade Actions and Tariffs - New and expanded tariffs announced under the Trump administration and triggered retaliatory actions, by certain affected countries and other foreign governments, have introduced additional costs and uncertainty into our supply chain, which may impact our cost structure and working capital needs. In February 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the Trump administration were unlawful, and U.S. Customs and Border Protection has subsequently implemented a process through which eligible importers may apply for refunds of tariffs previously paid. While we are evaluating our eligibility and the potential recoverability and timing of any such refunds, the process is subject to administrative requirements and uncertainty, and any refunds are not assured. In July 2026, the administration announced new tariffs ranging from 10% to 12.5 % for over sixty countries, citing that the tariffs target countries with forced labor practices. Some countries hit by the new tariffs have objected to unfounded labor claims and the enforceability of the tariffs is still to be determined. We continue to assess the potential effects of these developments on our supply chain and sourcing strategies as well as our future operating results, cash flows, and working capital. Although we may experience volatility in cash flows as trade policies and refund mechanisms evolve, we believe our existing liquidity and access to the Amended Credit Agreement provide sufficient flexibility to manage these developments.
Material Cash Requirements
There have been no material changes to the information in our material cash requirements related to commitments or contractual obligations from those reported in our Annual Report on Form 10-K for the fiscal year ended January 2, 2026, as filed with the SEC on February 27, 2026.
Inflation
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.
Interest Rates
Interest rate volatility can impact our borrowing costs and overall financial condition. Significant increases could lead to higher interest expense on our variable-rate debt. To mitigate this risk and enhance predictability, we utilize interest rate swaps to manage our exposure to interest rate fluctuations.
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