FOX FACTORY HOLDING CORP. 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 condensed consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year endedJanuary 1, 2021 , as filed with theSEC onFebruary 25, 2021 , and our other reports and registration statements that we file with theSEC 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 toFox 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 ourSEC 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," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "likely," "potential" 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: •the spread of highly infectious or contagious disease, such as COVID-19, could cause severe disruptions in theU.S. and global economy, which could in turn disrupt the business activities and operations of our customers, as well as our businesses and operations; •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 exchange rate fluctuations; •the loss of key customers; •our ability to improve operating and supply chain efficiencies; •our ability to enforce our intellectual property rights; •our future financial performance, including our sales, cost of sales, gross profit or gross margins, operating expenses, ability to generate positive cash flow and ability to maintain our profitability; •our ability to maintain our premium brand image and high-performance products; •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; •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; 27 -------------------------------------------------------------------------------- Table of Contents •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; •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 have 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 2020 Annual Report on Form 10-K, as filed with theSEC onFebruary 25, 2021 , 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. 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 or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make. Critical Accounting Policies and Estimates As a result of the enactment of the Tax Cuts and Jobs Act of 2017 (the "TCJA" or "Tax Act") inDecember 2017 , we believe that it is more likely than not that a portion of our foreign tax credits will not be realizable before their expiration and therefore have provided a partial valuation allowance of$6.8 million against that tax asset. We reassess our projections and assumptions regarding the realization of our foreign tax credits periodically as changes in our business and tax regulations occur. To the extent such a valuation allowance is established or reduced in a period, we reflect the change with a corresponding increase or decrease of our income tax provision in our condensed consolidated financial statements. In the first and second quarters of 2021, the Company increased the forecast for additional revenue fromTaiwan . The additional revenue will generate foreign tax credits that the Company believes will render tax credits carried over from prior periods not be realizable before their expiration. Therefore, the Company added$3.0 million and$0.6 million to the valuation allowance in the first and second quarters of 2021, respectively. There have been no other changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year endedJanuary 1, 2021 , as filed with theSEC onFebruary 25, 2021 , that have had a material impact on our condensed consolidated financial statements and related notes. Recent Accounting Pronouncements See Note 1 - Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies to the accompanying notes to unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further details regarding this topic. 28 -------------------------------------------------------------------------------- Table of Contents Results of Operations The table below summarizes our results of operations: For the three months ended For the six months ended (in thousands) July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020 Sales$ 328,164 $ 183,102 $ 609,300 $ 367,463 Cost of sales 217,076 123,116 400,288 250,862 Gross profit 111,088 59,986 209,012 116,601 Operating expenses: Sales and marketing 17,840 12,561 34,698 24,624 Research and development 11,216 8,236 21,092 16,265 General and administrative 24,226 14,566 44,595 36,979 Amortization of purchased intangibles 5,083 5,264 10,048 7,807 Total operating expenses 58,365 40,627 110,433 85,675 Income from operations 52,723 19,359 98,579 30,926 Interest and other expense, net: Interest expense 1,598 2,892 4,502 4,739 Other expense 83 71 1,042 133 Interest and other expense, net 1,681 2,963 5,544 4,872 Income before income taxes 51,042 16,396 93,035 26,054 Provision for income taxes 6,767 3,204 10,774 4,124 Net income 44,275 13,192 82,261 21,930 Less: net income attributable to non-controlling interest - 584 - 1,072 Net income attributable toFOX stockholders$ 44,275 $ 12,608 $ 82,261 $ 20,858 29
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The following table sets forth selected statement of income data as a percentage
of sales for the periods indicated:
For the three months ended For the six months ended
July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020
Sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 66.1 67.2 65.7 68.3
Gross profit 33.9 32.8 34.3 31.7
Operating expenses:
Sales and marketing 5.4 6.9 5.7 6.7
Research and development 3.4 4.5 3.5 4.4
General and administrative 7.4 8.0 7.3 10.1
Amortization of purchased intangibles 1.5 2.9 1.6 2.1
Total operating expenses 17.8 22.2 18.1 23.3
Income from operations 16.1 10.6 16.2 8.4
Interest and other expense, net:
Interest expense 0.5 1.6 0.7 1.3
Other expense - - 0.2 -
Interest and other expense, net 0.5 1.6 0.9 1.3
Income before income taxes 15.6 9.0 15.3 7.1
Provision for income taxes 2.1 1.7 1.8 1.1
Net income 13.5 7.2 13.5 6.0
Less: net income attributable to
non-controlling interest - 0.3 - 0.3
Net income attributable to FOX
stockholders 13.5 % 6.9 % 13.5 % 5.7 %
*Percentages may not foot due to rounding.
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Table of Contents Three months endedJuly 2, 2021 compared to three months endedJuly 3, 2020 Sales For the three months ended (in millions) July 2, 2021 July 3, 2020 Change ($) Change (%) Powered Vehicle products$ 189.5 $ 98.5 $ 91.0 92.4 % Specialty Sports products 138.7 84.6 54.1 63.9 Total sales$ 328.2 $ 183.1 $ 145.1 79.2 % Total sales for the three months endedJuly 2, 2021 increased approximately$145.1 million , or 79.2%, compared to the three months endedJuly 3, 2020 . Powered Vehicle product sales increased by$91.0 million , or 92.4%, due to an increase in demand in both the original equipment manufacturer ("OEM") and aftermarket channels, including strong performance from our upfitting product lines. Additionally, our prior year results were impacted by production shutdowns at certain OEM customers.Specialty Sports product sales increased by$54.1 million , or 63.9%, due to an increase in demand primarily in the OEM channel. Cost of sales For the three months ended (in millions) July 2, 2021 July 3, 2020 Change ($) Change (%) Cost of sales$ 217.1 $ 123.1 $ 94.0 76.4 % Cost of sales for the three months endedJuly 2, 2021 increased approximately$94.0 million , or 76.4%, compared to the three months endedJuly 3, 2020 . The increase in cost of sales was primarily due to the 79.2% increase in sales in the same period, as well as certain business factors affecting gross margin, which are discussed below. For the three months endedJuly 2, 2021 , our gross margin increased 110 basis points to 33.9% compared to 32.8% for the three months endedJuly 3, 2020 . The increase in gross margin was primarily driven by favorable product and channel mix led by higher volume sales in ourSpecialty Sports Group and the strong performance of our upfitting product lines. Additionally, our prior fiscal year period results were negatively impacted by higher factory related costs including incremental costs related to the COVID-19 pandemic. Operating expenses For the three months ended (in millions) July 2, 2021 July 3, 2020 Change ($) Change (%) Operating expenses: Sales and marketing $ 17.8$ 12.6 $ 5.2 41.3 % Research and development 11.2 8.2 3.0 36.6 General and administrative 24.3 14.5 9.8 67.6 Amortization of purchased intangibles 5.1 5.3 (0.2) (3.8) Total operating expenses $ 58.4$ 40.6 $ 17.8 43.8 % Total operating expenses for the three months endedJuly 2, 2021 were$58.4 million compared to$40.6 million for the three months endedJuly 3, 2020 . When expressed as a percentage of total sales, total operating expenses decreased to 17.8% of total sales for the three months endedJuly 2, 2021 compared to 22.2% of total sales in the three months endedJuly 3, 2020 . The increase in operating expenses is primarily due to higher employee related costs, higher commission costs, and higher investments to right size our administrative support functions. 31 -------------------------------------------------------------------------------- Table of Contents Within operating expenses, our sales and marketing expenses increased approximately$5.2 million primarily due to higher commissions of$3.6 million . Research and development costs increased approximately$3.0 million primarily due to personnel investments to support future growth and product innovation. General and administrative expenses increased by approximately$9.8 million due to higher employee related costs of$6.8 million , as well as increases in various other costs as we continue to expand our administrative support functions. Income from operations For the three months ended (in millions) July 2, 2021 July 3, 2020 Change ($) Change (%) Income from operations $ 52.7$ 19.4 $ 33.3 171.6 %
As a result of the factors discussed above, income from operations for the three
months ended
For the three months ended
(in millions) July 2, 2021 July 3, 2020 Change ($) Change (%)
Interest and other expense, net:
Interest expense $ 1.5 $ 2.9 $ (1.4) (48.3) %
Other expense 0.1 0.1 - - %
Interest and other expense, net $ 1.6 $ 3.0
(46.7) %
Interest and other expense, net for the three months ended July 2, 2021
decreased by $1.4 million to $1.6 million compared to $3.0 million for the three
months ended July 3, 2020 . The decrease in interest and other expense, net is
primarily due to the pay down of additional borrowings incurred in the prior
year in connection with our March 2020 acquisition of SCA and lower interest
rates.
Income taxes
For the three months ended
(in millions) July 2, 2021 July 3, 2020 Change ($) Change (%)
Provision for income taxes $ 6.8 $ 3.2 $ 3.6 112.5 %
The effective tax rate was 13.3% and 19.5% for the three month periods ended
July 2, 2021 and July 3, 2020 , respectively.
For the three months ended July 2, 2021 , the difference between the Company's
effective tax rate of 13.3% and the 21% federal statutory rate resulted
primarily from excess benefits related to stock-based compensation and a lower
tax rate on foreign derived intangible income. These benefits were partially
offset by state taxes, an increase in the valuation allowance for foreign tax
credits and non-deductible expenses.
For the three months ended July 3, 2020 , the difference between our effective
tax rate of 19.5% and the 21% federal statutory rate resulted primarily from a
lower tax rate on foreign derived intangible income, research and development
credits, and excess tax benefits related to stock based compensation. These
benefits were partially offset by state taxes, global low-tax intangible income
and non-deductible expenses.
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Net income
For the three months ended
(in millions) July 2, 2021 July 3, 2020 Change ($) Change (%)
Net income $ 44.3 $ 13.2 $ 31.1 235.6 %
As a result of the factors described above, our net income increased
Six months ended
For the six months ended
(in millions) July 2, 2021 July 3, 2020 Change ($) Change (%)
Powered Vehicle products $ 352.2 $ 219.1 $ 133.1 60.7 %
Specialty Sports products 257.1 148.4 108.7 73.2
Total sales $ 609.3 $ 367.5 $ 241.8 65.8 %
Total sales for the six months ended July 2, 2021 increased approximately $241.8
million , or 65.8%, compared to the six months ended July 3, 2020 . Powered
Vehicle product sales increased by $133.1 million , or 60.7%, primarily due
increased demand in both the OEM and aftermarket channels, including strong
performance from our upfitting product lines. Additionally, our prior year
results were impacted by production shutdowns at certain OEM customers.
Specialty Sports product sales increased by $108.7 million , or 73.2%, primarily
due to increased demand in the OEM channel.
Cost of sales
For the six months ended
(in millions) July 2, 2021 July 3, 2020 Change ($) Change (%)
Cost of sales $ 400.3 $ 250.9 $ 149.4 59.5 %
Cost of sales for the six months ended July 2, 2021 increased approximately
$149.4 million , or 59.5%, compared to the six months ended July 3, 2020 . The
increase in cost of sales was primarily due to the 65.8% increase in sales in
the same period, as well as certain business factors affecting gross margin,
which are discussed below.
For the six months ended July 2, 2021 , our gross margin increased 260 basis
points to 34.3% compared to 31.7% for the six months ended July 3, 2020 . The
increase in gross margin was primarily due to higher volume sales in our
Specialty Sports Group and the strong performance of our upfitting product
lines, as well as favorable product and channel mix. Additionally, our gross
margin for the first six months of the prior year was negatively impacted by
incremental costs related to the COVID-19 pandemic.
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Operating expenses
For the six months ended
(in millions) July 2, 2021 July 3, 2020 Change ($) Change (%)
Operating expenses:
Sales and marketing $ 34.7 $ 24.6 $ 10.1 41.1 %
Research and development 21.1 16.3 4.8 29.4
General and administrative 44.6 37.0 7.6 20.5
Amortization of purchased intangibles 10.0 7.8 2.2 28.2
Total operating expenses $ 110.4 $ 85.7 $ 24.7 28.8 %
Total operating expenses for the six months ended July 2, 2021 were $110.4
million compared to $85.7 million for the six months ended July 3, 2020 . When
expressed as a percentage of total sales, total operating expenses decreased to
18.1% of total sales for the six months ended July 2, 2021 compared to 23.3% of
total sales in the six months ended July 3, 2020 . The increase in operating
expenses is primarily due to higher employee related costs, increases in various
other costs as we continue to expand our administrative support functions, and
the impact of a full six months of SCA operating costs. These increases were
partially offset by lower acquisition related costs and lower patent litigation
related expenses.
Within operating expenses, our sales and marketing expenses increased
approximately $10.1 million primarily due to commissions of $5.8 million ,
employee related expenses of $1.3 million , and various other expenses. Research
and development costs increased approximately $4.8 million primarily due to
personnel investments to support future growth and product innovation. General
and administrative expenses increased by approximately $7.6 million due to
higher employee related costs of $12.4 million , as well as various other
investments as we continue to right size our administrative support functions.
These increases were partially offset by lower acquisition-related costs of $9.2
million and lower litigation expenses of $0.7 million .
Amortization of purchased intangibles for the six months ended July 2, 2021
increased by approximately $2.2 million as compared to the six months ended
July 3, 2020 . The increase is primarily due to the amortization of intangible
assets obtained through our acquisition of SCA.
Income from operations
For the six months ended
(in millions) July 2, 2021 July 3, 2020 Change ($) Change (%) Income from operations$ 98.6 $ 30.9 $ 67.7 219.1 %
As a result of the factors discussed above, income from operations for the six
months ended
For the six months ended
(in millions) July 2, 2021 July 3, 2020 Change ($) Change (%)
Interest and other expense, net:
Interest expense $ 4.5 $ 4.7 $ (0.2) (4.3) %
Other expense 1.0 0.1 0.9 900.0 %
Interest and other expense, net $ 5.5 $ 4.8
$ 0.7 14.6 % Interest and other expense, net for the six months endedJuly 2, 2021 increased by$0.7 million to$5.5 million compared to$4.8 million for the six months endedJuly 3, 2020 . The increase in interest and other expense, net is primarily due to higher foreign exchange losses, partially offset by a decrease in interest expense due to the pay down of additional borrowings incurred in the prior year in connection with ourMarch 2020 acquisition of SCA and lower interest rates. 34 --------------------------------------------------------------------------------
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Income taxes
For the six months ended
(in millions) July 2, 2021 July 3, 2020 Change ($) Change (%)
Provision for income taxes $ 10.8 $ 4.1 $ 6.7 163.4 %
The effective tax rate was 11.6% and 15.8% for the six months periods ended
July 2, 2021 and July 3, 2020 .
For the six months ended July 2, 2021 , the difference between the Company's
effective tax rate of 11.6% and the 21% federal statutory rate resulted
primarily from excess benefits related to stock-based compensation, a lower tax
rate on foreign derived intangible income and a benefit resulting from the
conclusion of an audit. These benefits were partially offset by an increase in
the valuation allowance for foreign tax credits, state taxes and non-deductible
expenses.
For the six months ended July 3, 2020 , the difference between our effective tax
rate of 15.8% and the 21% federal statutory rate resulted primarily from a lower
tax rate on foreign derived intangible income, research and development credits,
a negotiated reduction of Switzerland withholding tax on prior year earnings,
and excess tax benefits related to stock-based compensation. These benefits were
partially offset by state taxes, global low-tax intangible income and
non-deductible expenses.
Net income
For the six months ended
(in millions) July 2, 2021 July 3, 2020 Change ($) Change (%)
Net income $ 82.3 $ 21.9 $ 60.4 275.8 %
As a result of the factors described above, our net income increased
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Liquidity and Capital Resources
Our primary cash needs are to support working capital, capital expenditures,
acquisitions, and debt repayments. Historically, we have generally financed our
liquidity needs with operating cash flows, borrowings under our Credit Facility
and the issuance of common stock. These sources of liquidity may be impacted by
various factors, including demand for our products, impacts of the COVID-19
pandemic, investments made by us in acquired businesses, our plant and equipment
and other capital expenditures, and expenditures on general infrastructure and
information technology. A summary of our operating, investing and financing
activities are shown in the following table:
For the six months ended
(in thousands) July 2, 2021 July 3, 2020
Net cash provided by operating activities $ 81,690 $ 5,689
Net cash used in investing activities (43,273) (361,992)
Net cash (used in) provided by financing activities (9,616) 530,773
Effect of exchange rate changes on cash and cash equivalents 411 (241)
Change in cash and cash equivalents $
29,212
Operating activities Cash provided by operating activities consists of net income, adjusted for certain non-cash items, primarily depreciation and amortization, stock-based compensation, changes in deferred income taxes and uncertain tax positions, amortization of loan fees and net cash invested in working capital. In the six months endedJuly 2, 2021 , net cash provided by operating activities was$81.7 million and consisted of net income of$82.3 million , plus non-cash items totaling$27.0 million , offset by changes in operating assets and liabilities totaling$27.6 million . Non-cash items and other adjustments consisted of depreciation and amortization of$21.4 million , stock-based compensation of$5.9 million , and amortization of loan fees of$0.8 million , offset by a$1.1 million change in deferred taxes and uncertain tax positions. Our investment in operating assets and liabilities is a result of increased inventory of$79.2 million , accounts receivable of$28.3 million , and prepaids and other current assets of$0.5 million , partially offset by increases in accounts payable of$63.5 million , accrued expenses of$14.6 million , and income taxes of$2.3 million . The change in inventory is primarily due to additional raw materials purchases to mitigate risks associated with supply chain uncertainty. The changes in accounts receivable and accounts payable reflect normal business growth. The changes in accrued expenses and income taxes are primarily attributable to the timing of rebate payments and the timing of tax payments, respectively. In the six months endedJuly 3, 2020 , net cash provided by operating activities was$5.7 million and consisted of net income of$21.9 million , plus non-cash items totaling$12.5 million and less changes in operating assets and liabilities totaling$28.7 million . Non-cash items and other adjustments consisted of depreciation and amortization of$15.0 million , stock-based compensation of$4.0 million , and amortization of loan fees of$0.7 million , offset by a$7.2 million change in deferred taxes and uncertain tax positions. Our investment in operating assets and liabilities is a result of increased prepaids and other current assets of$30.7 million , inventory of$13.6 million , and decreases in accrued expenses of$2.6 million , offset by decreases in accounts receivable of$13.1 million , increases in accounts payable of$2.7 million and income taxes of$2.4 million . The change in prepaids and other current assets is primarily due to deposits on chassis and acquisition-related compensation payments held in escrow, both related to ourMarch 2020 SCA subsidiary acquisition. The changes in inventory, accounts receivable, and accounts payable reflect the impact of mandated shutdowns in response to COVID-19 on our shipment, collection and payment cycles, and normal seasonality. The changes in accrued expenses and income taxes are primarily attributable to seasonality and the timing of tax payments. Investing activities Cash used in investing activities primarily relates to strategic acquisitions of businesses and other assets and investments in our manufacturing and general infrastructure through the procurement of property and equipment. In the six months endedJuly 2, 2021 andJuly 3, 2020 , net cash used in investing activities was$43.3 million and$362.0 million , respectively. Investing activities for the six months endedJuly 2, 2021 consisted of$27.6 million of property and equipment additions and$15.6 million of cash consideration for our purchases ofOutside Van and Sola Sport Pty Ltd. Our investing activities for the six months endedJuly 3, 2020 consisted of$329.2 million of cash consideration for our acquisition of SCA and$12.8 million of property and equipment additions. 36 -------------------------------------------------------------------------------- Table of Contents Financing activities Cash used in or provided by financing activities primarily relates to various forms of debt and equity instruments used to finance our business. In the six months endedJuly 2, 2021 , net cash used in financing activities was$9.6 million , which consisted of payments of$5.0 million to repurchase shares of our common stock, net of proceeds from the exercise of stock options, payments on our term debt of$5.0 million , and$2.8 million in installment payments related to the purchase of theTuscany non-controlling interest. These outflows were partially offset by net proceeds of$3.2 million from our line of credit. Refer to Note 9 - Commitments and Contingencies for additional information on our purchase of theTuscany non-controlling interest. In the six months endedJuly 3, 2020 , net cash provided by financing activities was$530.8 million , which consisted of$392.4 million in proceeds, net of issuance costs, from our Credit Facility, which was amended and restated in connection with our acquisition of SCA, partially offset by net payments of$53.0 million on our line of credit and payments on our term debt of$2.5 million . In addition, we received$198.2 million from ourJune 2020 issuance of common stock and paid$4.3 million to repurchase shares of our common stock, as part of our stock-based compensation program. Credit Facility InJune 2019 , the Company entered into a credit facility withBank of America and other named lenders, which was amended and restated onMarch 11, 2020 , and further amended onJune 19, 2020 andJune 11, 2021 (as amended to date, the "Credit Facility"). The Credit Facility, which matures onMarch 11, 2025 , provides a senior secured revolving line of credit with a borrowing capacity of$250.0 million and a term loan of$400.0 million . The term loan is subject to quarterly amortization payments. The Company paid$7.6 million in debt issuance costs, of which$6.5 million were allocated to the term debt and$1.2 million were allocated to the line of credit. Additionally, the Company had$0.4 million of remaining unamortized debt issuance costs. The Company expensed$0.3 million of the remaining unamortized debt issuance costs, which are included in interest and other expense, net on the Condensed Consolidated Statements of Income for the six months endedJuly 3, 2020 . The remaining$0.2 million were allocated to the line of credit. All loan fees allocated to the term debt will be amortized using the interest method and all loan fees allocated to the line of credit will be amortized on a straight-line basis over the term of the Credit Facility. The Credit Facility provides for interest at a rate either based on theLondon Interbank Offered Rate, or LIBOR, plus a margin ranging from 1.00% to 2.25%, with a floor rate of 0.00% or based on the base rate offered byBank of America plus a margin ranging from 0.00% to 1.25%. AtJuly 2, 2021 , the one-month LIBOR and prime rates were 0.10% and 3.25%, respectively. AtJuly 2, 2021 , our weighted-average interest rate on outstanding borrowing was 1.32%. The Credit Facility 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 ofJuly 2, 2021 . Off-Balance Sheet Arrangements We have no material off-balance sheet arrangements. Inflation Historically, inflation has not had a material effect on our results of operations. However, significant increases in inflation, particularly those related to wages and increases in the cost of raw materials, could have an adverse impact on our business, financial condition and results of operations. 37
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