FOX FACTORY HOLDING CORP

Current report

Our recent Marucci Divestiture may not achieve its expected benefits and could adversely affect our business, financial condition, and results of operations.

Current report

The Marucci Divestiture has streamlined our business and increased our focus on our core products and end markets. Consequently, our success is now highly dependent on the performance of our remaining operations, leaving us more exposed to downturns in specific products, customers, industries, and market cycles. Adverse developments affecting these core businesses, such as shifts in customer demand, increased competition, supply chain disruptions, or broader economic volatility, may have a disproportionately greater impact on our financial performance than they would have prior to the Marucci Divestiture. In addition, the Marucci business contributed revenue, earnings and cash flow prior to the divestiture, and there can be no assurance that our remaining operations will generate comparable levels of revenue, profitability or cash flow or that we will successfully redeploy the proceeds from the divestiture in a manner that offsets the loss of such contributions. As a result, the Marucci Divestiture may be dilutive to our earnings, cash flow and financial performance, particularly in the near term. Furthermore, we may fail to realize the anticipated strategic, operational, or financial benefits of the divestiture.

Current report

Additionally, our ability to realize the full value of the Marucci Divestiture depends partially on the purchaser’s ability to satisfy its long-term obligations under the promissory note received as part of the sale price. If the purchaser defaults or its creditworthiness is impaired, we may not receive the full expected proceeds. We also remain subject to residual risks from the Marucci Divestiture, including certain retained liabilities, indemnification obligations, post-closing disputes, and purchase price adjustments. The materialization of any of these risks could have a material adverse effect on our financial condition and operational results.

Current report

The following risk factor updates and supersedes the risk factor in our most recent Annual Report on Form 10-K titled “Our business depends substantially on our ability to attract and retain experienced and qualified talent, including our senior management team.”

Current report

Our recent Chief Executive Officer transition could disrupt our business and result in the loss of other key personnel, which could have a material adverse effect on our business, results of operations and financial condition.

Current report

On October 15, 2026, the Company’s Board of Directors (the “Board”) approved a leadership transition plan pursuant to which Michael C. Dennison stepped down from his role as the Company’s Chief Executive Officer and resigned from his role as a member of the Board, effective October 15, 2026. On October 15, 2026, the Board also approved the appointment of Douglas J. Grimm, a member of our Board, as the Interim Chief Executive Officer of the Company, effective October 16, 2026, while the Board searches for a permanent successor. We have incurred, and expect to continue to incur, costs in connection with this transition, including compensation payable to our Interim Chief Executive Officer, executive search costs and payments under the Retirement and Transition Agreement with Mr. Dennison (described in Part II, Item 5 of this Quarterly Report on Form 10-Q). Our future success depends on the continued service and performance of our senior management team and other key employees. Many of them have extensive knowledge of our business, systems and processes and could be difficult to replace, given the limited number of direct competitors in our industry. We do not maintain “key person” life insurance on any of them.

Current report

Leadership transitions of this nature may disrupt our business by diverting the attention of our Board and senior management from our strategic priorities, including our profit optimization program. They may also create uncertainty among our employees, customers, OEM partners, suppliers and other stakeholders, and operating under an interim Chief Executive Officer may increase these risks. Uncertainty regarding the timing of the appointment of a permanent Chief Executive Officer, and any changes that person may make to our strategy, priorities or management team, could adversely affect our ability to retain or recruit senior management and other key employees. In addition, volatility in our stock price could reduce the retention value of our equity awards. Competition for qualified personnel in our industry is intense, and we may incur increased compensation and retention costs to attract and retain talent. If we are unable to manage this transition effectively, retain members of our senior management team and other key employees, or identify and successfully integrate a permanent Chief Executive Officer, our business, results of operations and financial condition could be materially and adversely affected.

Previous report

U.S. policies related to global trade and tariffs could have a material adverse effect on our results of operations.

Previous report

The current domestic and international political environment, including existing and potential changes to U.S. policies related to global trade and tariffs, have resulted in uncertainty surrounding the future state of the global economy. In 2018, the U.S. imposed tariffs of 25% on steel and 10% on aluminum, with only a handful of countries exempt from the increase. The new Trump administration enhanced these measures beginning in 2025 by increasing the tariffs on aluminum and steel to 50% for all countries except the United Kingdom, expanding the products on which the tariffs will be assessed to include derivative products containing steel or aluminum, and terminating all countrywide exemptions and the product specific exemption process. There is an inclusion process through which domestic industry can request the U.S. include new derivative steel and aluminum products that will be subject to the increased tariffs.

Previous report

Since taking office, the new Trump administration implemented various new strategies regarding tariffs. President Trump invoked the International Emergency Economic Powers Act (“IEEPA”) to impose 25% tariffs on products from Mexico and 25% tariffs on products from Canada (with a lower 10% tariff on Canadian energy and energy resources) but exempted from the tariffs those products that are entitled to preferential treatment under the United States-Mexico-Canada Agreement. President Trump also imposed a 20% tariff on all imports from China and Hong Kong under the International Emergency Economic Powers Act. Acting on an investigation concluded during the first Trump administration, the current Trump administration-imposed tariffs of 25% on certain passenger vehicles and light trucks and parts for those vehicles.

Previous report

In April 2024, the Trump administration imposed a universal “reciprocal” tariff of at least 10% on all countries and higher rates for certain countries, which took effect on August 1, 2025. On February 20, 2026, the U.S. Supreme Court issued a decision finding that IEEPA does not authorize the President to impose tariffs. The Company continues to evaluate the potential ramifications of the U.S. Supreme Court’s ruling and any impacts on the Company from that ruling, including refunds from the government, and any contractual obligations arising from such refunds. Responding to that ruling, President Trump rescinded the tariff actions based on IEEPA and signed a new proclamation imposing, effective February 24, 2026, a 10% global tariff (to be increased to 15%) under Section 122 of the Trade Act of 1974 (“Section 122”). The tariff expired on July 28, 2026. However, the Trump administration announced on July 27, 2026, new tariffs ranging from 10% to 12.5% for over 60 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.

Previous report

The tariff actions by the U.S. may result in a decrease of global trade volumes due to uncertainty, may create an administrative burden and will cause retailers to make difficult decisions as to how to pay the tariff or absorb the cost into their profit margins.

Previous report

While we have exposure to implemented tariffs at this time, in regard to our supply chain and end-user demand, any expansion in the types of tariffs implemented has the potential to negatively impact our supply chain costs and the operating performance of our customers, which in turn may negatively affect our sales, gross margin, and operating performance. Additionally, there is a risk that continued U.S. tariffs on imports could be met with additional retaliatory tariffs on U.S.-produced exports and that the broader trade uncertainty could intensify. This has the potential to significantly impact global trade and economic conditions in many of the regions where we do business and have a material adverse effect on our results of operations.

Previous report

In addition, with respect to sourcing products and raw materials from third-party suppliers in other countries, our ability to timely or successfully import such products or those made with such raw materials may be adversely affected by changes in U.S. laws. As a result, products we import into the U.S. could be held for inspection by U.S. Customs and Border Patrol (“U.S. CBP”) based on a suspicion of noncompliance. Additionally, the Uyghur Forced Labor Prevention Act (“UFLPA”) empowers the U.S. CBP to withhold release of items produced in whole or in part in countries or by companies included on the UFLPA entities list, creating a presumption that such goods were produced using forced labor. In January 2025, the Department of Homeland Security added to the UFLPA entity list, marking the largest single expansion of the list to date, and including a large supplier of critical minerals and one of the world’s largest textile manufacturers, both linked to forced labor practices in the People’s Republic of China. Although we do not believe that our suppliers source materials from entities included on the UFLPA for the products they sell to us or use to manufacture our products and we could be subject to penalties, fines or sanctions if any of the suppliers from which we purchase goods is found to have dealings, directly or indirectly, with entities on the ULFPA entities list. We are committed to complying with the UFLPA and have taken significant steps to assess and mitigate risks within our supply chain. Given the complexity and multi-tiered nature of global supply chains, achieving full traceability for every supplier and sub-supplier presents substantial challenges. However, we are continuously working to enhance our due diligence processes, leveraging available data and supplier engagement to ensure compliance to the fullest extent possible.

Previous report

Recently, in September 2025, the U.S. CBP issued a Withhold Release Order against bicycles, bicycle parts, and accessories manufactured in Taiwan by Giant Manufacturing Co. Ltd., based on information of possible forced labor use. The similarity in product offerings and our company’s products being associated with Giant Manufacturing Co. Ltd. may subject our Taiwan-based or other operations to increased scrutiny and review, which could result in compliance and reporting costs and hinder or delay the importation and delivery of our products manufactured in Taiwan. With the majority of our manufacturing operations for our bike products occurring in Taiwan, any adverse order issued by the U.S. CBP on our company or other manufacturers of bicycles, bicycle parts, and related accessories could negatively affect our business, financial condition or results of operations.