Financial Data and Key Metrics Changes - The company achieved net sales of $166.7 million, reflecting a 3.9% increase in the core business compared to the prior year [13][38] - Free cash flow reached $35.7 million, marking the highest quarterly free cash flow generated in the company's history, an increase of $11.3 million versus the prior year [10][14] - Gross margins improved to 41.7%, up 26 basis points year over year, demonstrating stability despite external cost pressures [14][38] - Adjusted EBITDA margin was 21.9%, down 74 basis points year over year, reflecting normalization following prior year SKU rationalizations and divestitures [14][40] Business Line Data and Key Metrics Changes - The B2B channel experienced approximately 6.5% growth, driven by increased sales support and customer satisfaction [11] - Direct to consumer sales increased by 8.6%, with third-party marketplaces like Amazon and eBay growing over 28% [12][19] - The domestic muscle vertical delivered 6% year-over-year growth, while the modern truck and off-road division led with an impressive 17% growth [20] - The Euro and import division saw a combined growth of 4%, with Euro brands up 20% [20] Market Data and Key Metrics Changes - The company reported strong performance in the automotive performance aftermarket, with broad-based growth across more than 20 brands [11][19] - The company is expanding its reach in Mexico, which is expected to represent about 5% of the U.S. market long-term [80] Company Strategy and Development Direction - The company is focused on an omni-channel strategy, enhancing customer engagement through various platforms [6][7] - Strategic initiatives contributed approximately $27 million in revenue this quarter, emphasizing product innovation and operational excellence [11][30] - The company aims to maintain gross margins of 40% and achieve adjusted EBITDA margins greater than 20% while generating strong free cash flow [111] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the evolving consumer and macroeconomic environment, with no meaningful impact from tariffs projected for 2025 or 2026 [8][34] - The company is taking a conservative approach to guidance for the second half of the year, reflecting mixed economic signals [44][106] Other Important Information - The company has implemented a comprehensive tariff mitigation strategy, with over $15 million in opportunities identified through supplier negotiations and sourcing from lower-cost regions [33][104] - The company has reduced inventory by approximately $9 million since the beginning of the year, contributing to improved cash flow and working capital efficiency [17][40] Q&A Session Summary Question: How have partners and enthusiasts responded to price increases? - Management noted that feedback indicated pricing was in line or lower than competitors, with strong sales in June [50] Question: Are you winning market share with lower pricing? - Management confirmed that indicators suggest the company is continuing to take market share, outperforming distribution partners [52][53] Question: How do you anticipate gross margins will trend in the second half? - Management expects to maintain or increase gross margins, supported by strong partnerships and marketing support [55] Question: Can you provide an update on inventory sell-through? - Management reported strong sell-through numbers from distribution partners, indicating good end-user demand [59] Question: What is the outlook for free cash flow and capital allocation? - Management indicated a positive outlook for free cash flow in the second half, with a focus on debt prepayment and M&A opportunities [72] Question: What is the growth trajectory in Mexico? - Management sees Mexico as a natural market with long-term potential, focusing on establishing distributors and product distribution [80][81]

Second Quarter 2025 Financial Results Call 1 Disclaimer Certain statements in this presentation may be considered "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward- looking statements generally relate to future events or Holley's future financial or operating performance. For example, projections of future revenue and adjusted EBITDA and other metrics, along with statements regarding the impact of or ...

[Holley Reports Second Quarter 2025 Results](index=1&type=section&id=Holley%20Reports%20Second%20Quarter%202025%20Results) [Q2 2025 Performance Overview](index=1&type=section&id=Q2%202025%20Performance%20Overview) Holley Performance Brands achieved its second consecutive quarter of core net sales growth in Q2 2025, successfully mitigating tariff impacts through strategic sourcing and pricing. - Achieved second consecutive quarter of core net sales growth[1](index=1&type=chunk) - Successfully mitigated tariff impacts through strategic sourcing and pricing actions, forecasting a negligible impact on the business[1](index=1&type=chunk)[4](index=4&type=chunk) [Second Quarter Highlights vs. Prior Year Period](index=1&type=section&id=Second%20Quarter%20Highlights%20vs.%20Prior%20Year%20Period) [CEO Commentary and Business Momentum](index=1&type=section&id=CEO%20Commentary%20and%20Business%20Momentum) CEO Matthew Stevenson highlighted continued core business momentum, driven by strategic framework execution, strong new product launches, and significant growth across B2B and direct-to-consumer channels, enhancing guidance visibility. - New product launches generated approximately **$8 million in revenue** during Q2 2025[3](index=3&type=chunk) - Strengthened partnerships with B2B customers and saw meaningful growth across B2B and direct-to-consumer channels[3](index=3&type=chunk) - Tariff mitigation efforts, including strategic sourcing and targeted pricing, are expected to have a negligible impact on the business, leading to increased guidance visibility[4](index=4&type=chunk) [Key Financial Results (Q2 2025 vs. Q2 2024)](index=1&type=section&id=Key%20Financial%20Results%20(Q2%202025%20vs.%20Q2%202024)) Holley reported a slight decrease in total net sales but achieved 3.9% core business net sales growth, with declines in Net Income and Adjusted EBITDA, while Net Cash Provided by Operating Activities and Free Cash Flow significantly increased to a company record high. Q2 2025 Key Financial Highlights (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :---------- | :---------- | :--------- | | Net Sales | $166.7 million | $169.5 million | (1.7)% | | Core business net sales growth | 3.9% | N/A | N/A | | Net Income | $10.9 million | $17.1 million | (36.5)% | | Diluted EPS | $0.09 | $0.14 | (35.7)% | | Net Cash Provided by Operating Activities | $40.5 million | $25.7 million | 57.6% | | Adjusted Net Income | $10.6 million | $12.6 million | (15.9)% | | Adjusted EBITDA | $36.4 million | $38.3 million | (5.0)% | | Free Cash Flow | $35.7 million | $24.4 million | 46.3% | [Strategic Business Highlights](index=2&type=section&id=Strategic%20Business%20Highlights) [Operational Achievements and Growth Initiatives](index=2&type=section&id=Operational%20Achievements%20and%20Growth%20Initiatives) Holley achieved 3.9% core business net sales growth in Q2 2025, driven by strategic framework execution generating $27 million in revenue, significant growth across 20+ brands in both DTC and B2B channels, and product innovation contributing $10.8 million in revenue. - Achieved **3.9% core business net sales growth** for Q2 2025, marking consecutive quarters of growth across all divisions[10](index=10&type=chunk) - Execution of strategic framework drove approximately **$27 million in revenue** on key initiatives for Q2 2025[10](index=10&type=chunk) - Expanded growth across **20+ brands** in both DTC and B2B channels, with B2B channel growing approximately **6.5%** and DTC orders growing over **8.6%** (third-party platforms up >28%)[10](index=10&type=chunk) - Product innovation and strategic pricing initiatives contributed **$10.8 million in revenue** for the quarter and **$18.7 million year-to-date**[10](index=10&type=chunk) [Outlook](index=2&type=section&id=Outlook) [Full Year 2025 Guidance](index=2&type=section&id=Full%20Year%202025%20Guidance) Holley refined its full-year 2025 guidance, now incorporating the expected net impact of tariffs, projecting Net Sales between $580-$595 million and Adjusted EBITDA between $116-$127 million. Full Year 2025 Outlook | Metric | Full Year 2025 Outlook | | :-------------------------------- | :--------------------- | | Net Sales | $580 - $595 million | | Net Sales %YOY (vs. Core Business) | 0.8% to 3.4% | | Adjusted EBITDA | $116 - $127 million | | Capital Expenditures | $10 - $14 million | | Depreciation and Amortization Expense | $22 - $24 million | | Interest Expense (excluding collar revaluation) | $45 - $50 million | [Corporate Information](index=2&type=section&id=Corporate%20Information) [Conference Call Details](index=2&type=section&id=Conference%20Call) Details for the conference call and audio webcast scheduled for August 6, 2025, at 8:30 a.m. Eastern Time, including access numbers and replay information, are provided for investors and media. - Conference call and audio webcast scheduled for **August 6, 2025, at 8:30 a.m. ET** to discuss results[8](index=8&type=chunk) - Webcast available on investor.holley.com; telephone replay available until August 13, 2025[8](index=8&type=chunk)[9](index=9&type=chunk) [Additional Financial Information & Investor Resources](index=3&type=section&id=Additional%20Financial%20Information) Holley encourages investors to visit its Investor Relations page on holley.com for comprehensive financial information, including earnings presentations and regular updates. - Investor Relations page (investor.holley.com) provides significant financial information, including earnings presentations, and is regularly updated[11](index=11&type=chunk) [About Holley Performance Brands](index=3&type=section&id=About%20Holley%20Performance%20Brands) Holley Performance Brands is a leading designer, manufacturer, and marketer of high-performance automotive aftermarket products, managing a portfolio of iconic brands across four key consumer vertical groupings. - Holley Performance Brands is a leader in designing, manufacturing, and marketing high-performance products for automotive enthusiasts[12](index=12&type=chunk) - Manages a portfolio of iconic brands and focuses on four consumer vertical groupings: Domestic Muscle, Modern Truck & Off-Road, Euro & Import, and Safety & Racing[12](index=12&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains a standard disclaimer regarding forward-looking statements, highlighting that projections are subject to various risks and uncertainties that could cause actual results to differ materially. - Statements regarding future financial or operating performance are forward-looking and subject to risks and uncertainties[13](index=13&type=chunk) - Factors that may cause actual results to differ include business strategy execution, market competition, product development, customer relationships, economic conditions, and supply chain disruptions[13](index=13&type=chunk) [Contacts](index=4&type=section&id=Investor%20Relations%20Contacts) Contact information is provided for investor relations and media inquiries. - Investor Relations contacts: Anthony Rozmus / Neel Sikka / Jenna Kozlowski at Solebury Strategic Communications (203-428-3324, holley@soleburystrat.com)[15](index=15&type=chunk) - Media Relations contacts: Jordan Moore / Sydney Goggans at Tiny Mighty Communications (615-454-2913)[15](index=15&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=Financial%20Tables%20to%20Follow) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) The unaudited condensed consolidated statements of comprehensive income show a decrease in net sales and net income for both the thirteen and twenty-six weeks ended June 29, 2025, compared to the prior year, despite an increase in gross profit for the twenty-six-week period. Condensed Consolidated Statements of Comprehensive Income (Q2 2025 vs. Q2 2024) | Metric | 13 Weeks Ended June 29, 2025 (in thousands of dollars) | 13 Weeks Ended June 30, 2024 (in thousands of dollars) | Variance ($) (in thousands of dollars) | Variance (%) | 26 Weeks Ended June 29, 2025 (in thousands of dollars) | 26 Weeks Ended June 30, 2024 (in thousands of dollars) | Variance ($) (in thousands of dollars) | Variance (%) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------- | :----------- | :--------------------------- | :--------------------------- | :----------- | :----------- | | Net Sales | $166,661 | $169,496 | $(2,835) | -1.7% | $319,705 | $328,132 | $(8,427) | -2.6% | | Cost of Goods Sold | $97,103 | $99,203 | $(2,100) | -2.1% | $186,059 | $205,780 | $(19,721) | -9.6% | | Gross Profit | $69,558 | $70,293 | $(735) | -1.0% | $133,646 | $122,352 | $11,294 | 9.2% | | Operating Income | $27,514 | $27,878 | $(364) | -1.3% | $46,857 | $38,086 | $8,771 | 23.0% | | Net Income | $10,863 | $17,105 | $(6,242) | -36.5% | $13,680 | $20,835 | $(7,155) | -34.3% | | Diluted Net Income per Share | $0.09 | $0.14 | $(0.05) | -36.8% | $0.11 | $0.17 | $(0.06) | -34.5% | [Condensed Consolidated Balance Sheet](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEET) The unaudited condensed consolidated balance sheet shows an increase in total assets to $1,158,230 thousand as of June 29, 2025, from $1,133,320 thousand at December 31, 2024, primarily driven by increases in cash and cash equivalents and accounts receivable. Condensed Consolidated Balance Sheet (As of June 29, 2025 vs. December 31, 2024) | Metric | June 29, 2025 (in thousands of dollars) | December 31, 2024 (in thousands of dollars) | | :-------------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $63,842 | $56,087 | | Accounts receivable | $51,011 | $36,123 | | Inventory | $180,827 | $192,523 | | Total Current Assets | $303,213 | $297,347 | | Total Assets | $1,158,230 | $1,133,320 | | Total Current Liabilities | $103,559 | $95,172 | | Long-Term Debt, Net of Current Portion | $543,271 | $545,385 | | Total Liabilities | $720,391 | $712,168 | | Total Stockholders' Equity | $437,839 | $421,152 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The unaudited condensed consolidated statements of cash flows indicate a significant increase in net cash provided by operating activities for the thirteen weeks ended June 29, 2025, to $40,487 thousand, compared to $25,678 thousand in the prior year. Condensed Consolidated Statements of Cash Flows (Q2 2025 vs. Q2 2024) | Metric | 13 Weeks Ended June 29, 2025 (in thousands of dollars) | 13 Weeks Ended June 30, 2024 (in thousands of dollars) | 26 Weeks Ended June 29, 2025 (in thousands of dollars) | 26 Weeks Ended June 30, 2024 (in thousands of dollars) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Cash Provided by Operating Activities | $40,487 | $25,678 | $32,637 | $44,521 | | Net Cash Used in Investing Activities | $(13,158) | $(1,325) | $(20,898) | $(2,416) | | Net Cash Used in Financing Activities | $(2,088) | $(12,373) | $(4,458) | $(30,042) | | Net Change in Cash and Cash Equivalents | $24,774 | $11,953 | $7,755 | $11,999 | | Cash and Cash Equivalents, End of Period | $63,842 | $53,080 | $63,842 | $53,080 | [Use and Reconciliation of Non-GAAP Financial Measures](index=8&type=section&id=USE%20AND%20RECONCILIATION%20OF%20NON-GAAP%20FINANCIAL%20MEASURES) [Non-GAAP Measures Overview and Definitions](index=8&type=section&id=Non-GAAP%20Measures%20Overview%20and%20Definitions) Holley provides various non-GAAP financial measures to offer supplemental insights into operating performance and facilitate period-over-period comparisons, excluding items not indicative of ongoing operations. - Non-GAAP measures (EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, etc.) are used to supplement GAAP measures, providing insights into ongoing operating performance by excluding non-recurring or non-operational items[22](index=22&type=chunk)[23](index=23&type=chunk) - Adjusted EBITDA is defined as EBITDA adjusted for restructuring costs, changes in fair value of warrant/earn-out liability, equity-based compensation, loss on early extinguishment of debt, notable items, and other expenses/gains[24](index=24&type=chunk) [Adjusted EBITDA Reconciliation](index=8&type=section&id=Adjusted%20EBITDA%20Reconciliation) The reconciliation shows that Adjusted EBITDA for the thirteen weeks ended June 29, 2025, was $36,428 thousand, a decrease from $38,296 thousand in the prior year, while for the twenty-six weeks, it increased to $63,715 thousand. Adjusted EBITDA Reconciliation (Q2 2025 vs. Q2 2024) | Metric | 13 Weeks Ended June 29, 2025 (in thousands of dollars) | 13 Weeks Ended June 30, 2024 (in thousands of dollars) | 26 Weeks Ended June 29, 2025 (in thousands of dollars) | 26 Weeks Ended June 30, 2024 (in thousands of dollars) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income | $10,863 | $17,105 | $13,680 | $20,835 | | EBITDA | $33,305 | $38,442 | $58,737 | $58,185 | | Adjusted EBITDA | $36,428 | $38,296 | $63,715 | $59,252 | | Net Income Margin | 6.5% | 10.1% | 4.3% | 6.3% | | Adjusted EBITDA Margin | 21.9% | 22.6% | 19.9% | 18.1% | [Bank-adjusted EBITDA Leverage Ratio Reconciliation](index=10&type=section&id=Bank-adjusted%20EBITDA%20Leverage%20Ratio) The Bank-adjusted EBITDA Leverage Ratio increased slightly to 4.22x for the trailing twelve months ended June 29, 2025, from 4.17x at December 31, 2024, based on Net Indebtedness of $508,224 thousand. - Bank-adjusted EBITDA Leverage Ratio is defined as Net Debt divided by Bank-adjusted EBITDA for the trailing twelve-month period, as per the Credit Agreement[27](index=27&type=chunk) Bank-adjusted EBITDA Leverage Ratio | Metric | TTM June 29, 2025 | December 31, 2024 | | :-------------------------------- | :---------------- | :---------------- | | Adjusted EBITDA (in thousands of dollars) | $114,960 | $110,493 | | Adjusted EBITDA per Credit Agreement (in thousands of dollars) | $120,323 | $122,754 | | Net Indebtedness per Credit Agreement (in thousands of dollars) | $508,224 | $511,840 | | Bank-adjusted EBITDA Leverage Ratio | 4.22 x | 4.17 x | [Adjusted Net Income and Diluted EPS Reconciliation](index=11&type=section&id=Adjusted%20Net%20Income%20and%20Diluted%20EPS) Adjusted Net Income for the thirteen weeks ended June 29, 2025, was $10,637 thousand, and Adjusted Diluted EPS was $0.09, reflecting adjustments for changes in fair value of warrant and earn-out liabilities. - Adjusted Net Income excludes the after-tax effect of changes in fair value of warrant liability, earn-out liability, asset write-downs, and loss on early extinguishment of debt, used to focus on ongoing operations[29](index=29&type=chunk) Adjusted Net Income and Diluted EPS Reconciliation | Metric | 13 Weeks Ended June 29, 2025 (in thousands of dollars) | 13 Weeks Ended June 30, 2024 (in thousands of dollars) | 26 Weeks Ended June 29, 2025 (in thousands of dollars) | 26 Weeks Ended June 30, 2024 (in thousands of dollars) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income | $10,863 | $17,105 | $13,680 | $20,835 | | Adjusted Net Income | $10,637 | $12,645 | $13,196 | $12,740 | | Net Income per Diluted Share | $0.09 | $0.14 | $0.11 | $0.17 | | Adjusted Diluted EPS | $0.09 | $0.10 | $0.11 | $0.11 | [Free Cash Flow Reconciliation](index=12&type=section&id=Free%20Cash%20Flow) Free Cash Flow for the thirteen weeks ended June 29, 2025, was $35,659 thousand, a significant increase from $24,353 thousand in the prior year, calculated by subtracting capital expenditures from net cash provided by operating activities. - Free Cash Flow is defined as net cash provided by operating activities minus cash payments for capital expenditures, net of dispositions, used to understand cash generation after capital investments[31](index=31&type=chunk) Free Cash Flow Reconciliation | Metric | 13 Weeks Ended June 29, 2025 (in thousands of dollars) | 13 Weeks Ended June 30, 2024 (in thousands of dollars) | 26 Weeks Ended June 29, 2025 (in thousands of dollars) | 26 Weeks Ended June 30, 2024 (in thousands of dollars) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Cash Provided by Operating Activities | $40,487 | $25,678 | $32,637 | $44,521 | | Capital Expenditures, Net of Dispositions | $(4,828) | $(1,380) | $(7,808) | $(2,645) | | Free Cash Flow | $35,659 | $24,353 | $24,829 | $42,105 |

Core Business Performance - Holley Performance Brands reported a core business net sales growth of 3.9% in the second quarter of 2025 compared to the same period in 2024, marking the second consecutive quarter of growth [9][8] - The company's net sales decreased by 1.7% to $166.7 million from $169.5 million year-over-year [8][19] - New product launches contributed approximately $8 million in revenue during the second quarter [5] Financial Highlights - Net income for the second quarter was $10.9 million, or $0.09 per diluted share, down from $17.1 million, or $0.14 per diluted share, in the prior year [8][20] - Adjusted EBITDA for the quarter was $36.4 million, compared to $38.3 million in the previous year [8] - Free cash flow reached $35.7 million, the highest level in the company's history, compared to $24.4 million last year [8][15] Strategic Initiatives - The company successfully mitigated tariff impacts through strategic sourcing and pricing actions, leading to increased guidance visibility [6][15] - Holley has refined its full-year guidance for 2025, projecting net sales between $580 million and $595 million, reflecting a year-over-year growth of 0.8% to 3.4% [10] - The company achieved approximately 6.5% growth in its B2B channel and over 8.6% growth in direct-to-consumer orders during the second quarter [15] Operational Efficiency - Net cash provided by operating activities was $40.5 million, significantly higher than $25.7 million in the prior year [8][25] - The company reported a gross profit of $69.6 million, a slight decrease from $70.3 million year-over-year, but an increase in gross profit margin was noted [19] - Operating income for the second quarter was $27.5 million, compared to $27.9 million in the previous year [19]

Company Overview - Holley Inc. (HLLY) is experiencing significant attention from investors due to high implied volatility in its options market, particularly the Aug 15, 2025 $7.50 Call option [1] - The company currently holds a Zacks Rank 3 (Hold) in the Automotive - Original Equipment industry, which ranks in the top 29% of the Zacks Industry Rank [3] Analyst Insights - Over the past 60 days, there has been a mixed sentiment among analysts regarding Holley's earnings estimates; one analyst has increased estimates while five have decreased them, resulting in a consensus estimate drop from 11 cents to 10 cents per share for the current quarter [3] Options Market Dynamics - The high implied volatility suggests that options traders are anticipating a significant price movement for Holley shares, which could indicate an upcoming event that may lead to a substantial rally or sell-off [2][4] - Seasoned options traders often seek to sell premium on options with high implied volatility, aiming to benefit from the decay of the option's value if the underlying stock does not move as much as expected [4]

Summary of Holley (HLLY) FY Conference Call - June 04, 2025 Company Overview - Holley specializes in automotive aftermarket products, enhancing vehicle performance and enjoyment for car enthusiasts [2][3] - The company has a history of over 120 years, focusing on iconic brands in the automotive sector [6][27] Market Insights - The automotive enthusiast market in the U.S. comprises approximately 70 million individuals, surpassing other hobbies like golf and fishing [5] - The market for trucks, SUVs, and CUVs is valued at $26 billion, representing 80% of new vehicle sales in the U.S. [10] - Holley operates in four main verticals: domestic muscle cars, trucks/SUVs, import vehicles, and safety/racing [10][11] Financial Performance - In Q1, Holley reported a 3.3% year-over-year growth in core business, marking the first growth in five quarters [12][13] - Direct-to-consumer sales grew over 10%, while third-party marketplace sales increased by 50% [15] - The company achieved $8.1 million in product innovation and strategic pricing during the quarter [15] - Free cash flow was negatively impacted by timing issues, with expectations of recovery in Q2 [17] Operational Efficiency - Holley has cut operational inefficiencies by over $30 million in the past two and a half years, with a target of an additional $5-10 million this year [29][30] - The company reduced its SKU count by 45%, improving inventory management [32] - Past dues were reduced by 20%, and the company is focused on freeing up cash by eliminating unproductive inventory [18] Strategic Initiatives - Holley aims to enhance the consumer experience and improve its direct-to-consumer model, which has grown from 15% to 20-25% of sales [42] - The company is exploring transformational M&A opportunities to further strengthen its market position [23] - Holley is expanding into new markets, including Mexico, and is looking to enter additional international markets [22] Challenges and Risks - The automotive aftermarket industry has faced softness over the past three years, with market conditions being challenging [20] - Tariff impacts remain a concern, but Holley has managed to mitigate some effects through supplier consolidation and moderate pricing actions [49][50] Consumer Engagement - Holley has a strong social media presence with 8 million followers and hosts events that attract over 50,000 attendees [38][40] - The company emphasizes the importance of brand recognition and consumer loyalty in the automotive aftermarket [42] Future Outlook - Holley maintains a guidance of approximately $120 million in EBITDA for the year, with expectations of generating $40-50 million in free cash flow [36] - The company is focused on deleveraging and improving its balance sheet through strategic financial management [36][37] Conclusion - Holley is positioned for growth in the automotive aftermarket, leveraging its strong brand portfolio and operational improvements while navigating market challenges and consumer trends [37][42]

Company Performance - Holley Inc. reported quarterly earnings of $0.02 per share, missing the Zacks Consensus Estimate of $0.05 per share, compared to break-even earnings per share a year ago, representing an earnings surprise of -60% [1] - The company posted revenues of $153.04 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.05%, but down from year-ago revenues of $158.64 million [2] - Over the last four quarters, Holley has surpassed consensus EPS estimates just once and topped consensus revenue estimates two times [2] Stock Performance - Holley shares have lost about 31.5% since the beginning of the year, while the S&P 500 has declined by -4.7% [3] - The current consensus EPS estimate for the coming quarter is $0.11 on $162.13 million in revenues, and $0.26 on $592.26 million in revenues for the current fiscal year [7] Industry Outlook - The Automotive - Original Equipment industry, to which Holley belongs, is currently in the bottom 25% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Holley's stock performance [5]

Financial Data and Key Metrics Changes - The company achieved net sales of $153 million, representing a 3.3% increase in the core business compared to the prior year [13][45] - Gross margins improved to 41.9%, an increase of 910 basis points from 32.8% in the prior year [14][46] - Free cash flow for the quarter was negative $10.8 million, a decrease of $28.6 million compared to the prior year [15][48] - Adjusted EBITDA margin improved to 17.8%, an increase of 460 basis points from the prior year [16][48] Business Line Data and Key Metrics Changes - The direct-to-consumer channel saw significant growth with more than a 10% increase, while third-party platforms like Amazon and eBay experienced growth of over 50% [12][21] - The B2B channel strengthened relationships with partners, resulting in over 2.5% growth [11][21] - The domestic muscle vertical experienced a 3% year-over-year growth, with power brands averaging an impressive 11% growth [21] Market Data and Key Metrics Changes - The company is gaining market share despite a challenging macroeconomic environment, with no material pre-buy observed from customers in the second quarter [9][10] - The overall consumer sentiment has declined, indicating growing concerns regarding inflation and economic viability, which could moderate spending in the near term [50] Company Strategy and Development Direction - The company is focused on operational excellence and cash flow optimization, with a strategic framework that includes enhancing customer relationships and product innovation [22][43] - The company is actively managing costs to offset tariff impacts, including spend optimization and operational improvements [30][36] - The strategic initiatives have driven $15 million in revenue across key areas and achieved $3.1 million in cost reductions [29] Management's Comments on Operating Environment and Future Outlook - Management noted that the financial health of consumers shows signs of strain, which could impact discretionary spending [50][51] - The company is maintaining its revenue guidance for 2025, expecting $580 million to $600 million, implying approximately 2.5% growth at the midpoint [52] Other Important Information - The company launched several new products across various divisions, contributing approximately $8.1 million in revenue for the quarter [12][17] - The company is on track with its Mexico market expansion, having signed up 15 distributors [27] Q&A Session Summary Question: How does Holley's sourcing mix and capabilities to respond differ from peers? - Management highlighted that Holley's breadth and depth of product across various categories positions it well to gain market share, especially with most production costs based in the U.S. [55] Question: What has been the feedback to the price increase announced in early April? - Overall feedback has been positive, with distribution partners appreciating the blended approach across the portfolio compared to competitors who have implemented larger price increases [58] Question: Can you elaborate on the moderation in demand witnessed through the first quarter? - Management noted that while January and February were slow due to weather conditions, March saw strong performance, and there have been no significant changes in demand trends since then [65] Question: How much exposure does the company have to China regarding tariffs? - Management stated that while most production costs are U.S.-based, the situation is fluid, and the company is actively working to mitigate tariff impacts [90] Question: Can you provide more details on the changes to Holly events? - The company is optimizing events to enhance customer experiences and increase revenue through VIP experiences and improved merchandising [94]

Financial Data and Key Metrics Changes - The company achieved net sales of $153 million, representing a 3.3% increase in core business compared to the prior year [14][48] - Gross margins improved to 41.9%, an increase of 910 basis points from 32.8% in the prior year [15][49] - Free cash flow for the quarter was negative $10.8 million, a decrease of $28.6 million compared to the prior year [15][51] - Adjusted EBITDA margin improved to 17.8%, an increase of 460 basis points from the prior year [16][50] Business Line Data and Key Metrics Changes - The direct-to-consumer channel saw significant growth with more than a 10% increase, while third-party platforms like Amazon and eBay experienced growth of over 50% [13][12] - The B2B channel strengthened relationships with partners, resulting in over 2.5% growth [12][22] - The domestic muscle vertical experienced a 3% year-over-year growth, while the Euro and import division recorded the highest growth at 17% [22] Market Data and Key Metrics Changes - The company is gaining market share despite a challenging macroeconomic environment, with no material pre-buy observed from customers in the second quarter [10][11] - The overall consumer sentiment has declined, indicating growing concerns regarding inflation and economic viability, which could moderate spending in the near term [53] Company Strategy and Development Direction - The company is focused on operational excellence and cash flow optimization, with a strategic framework that includes enhancing customer relationships and product innovation [23][54] - The company is implementing proactive cost reductions and strategic sourcing initiatives to mitigate tariff impacts [14][30] - The strategic initiatives have driven $15 million in revenue across key areas and achieved $3.1 million in cost reductions [30] Management's Comments on Operating Environment and Future Outlook - Management noted that the financial health of consumers shows signs of strain, which could impact discretionary spending [53] - The company is maintaining its revenue guidance for 2025 of $580 million to $600 million, implying approximately 2.5% growth at the midpoint [55] - Management expressed confidence in the company's ability to navigate near-term challenges while preserving free cash flow [54] Other Important Information - The company launched several new products across various divisions, contributing approximately $8.1 million in revenue for the quarter [14][19] - The company has made significant progress in reducing inventory levels, achieving a reduction of over $3 million since year-end 2024 [20][47] Q&A Session Summary Question: How does Holley's sourcing mix and capabilities to respond differ from peers? - Management highlighted that Holley's breadth and depth of product across various categories positions the company to take market share, especially with most production costs based in the U.S. [58][60] Question: What has been the feedback on the price increase from distribution partners? - Overall feedback has been positive, with distribution partners appreciating the blended approach across the portfolio, contrasting with competitors who have implemented larger price increases [61][63] Question: Can you elaborate on the moderation in demand witnessed in the first quarter? - Management noted that January and February saw slow sales due to weather conditions, but March was strong, and current demand trends remain stable [67][69] Question: What is the approach to pricing in light of tariffs? - The company is implementing a blended price increase across its portfolio, with a focus on maintaining competitive pricing relative to peers [70][72] Question: How much exposure does the company have to China regarding tariffs? - Management indicated that while most production is U.S.-based, the evolving tariff situation requires ongoing analysis and mitigation efforts [90][92] Question: How are Holley events being optimized for revenue generation? - The company is enhancing event structures to increase attendance and merchandise sales, providing more opportunities for engagement with enthusiasts [93][95]

Q1 2025 Financial Performance - Net sales reached $153.0 million, a 3.3% increase compared to the previous year, after adjusting for divestitures and strategic product rationalization[9] - Gross margin improved significantly to 41.9%, a 910 basis points increase year-over-year[9] - Adjusted EBITDA margin increased to 17.8%, a 460 basis points improvement compared to the previous year[9] - Free cash flow was negative at ($10.8) million, a decrease of ($28.6) million compared to the previous year[9] Growth Initiatives and Strategies - B2B channel experienced growth of approximately 2.5%[8] - DTC orders increased by over 10%, with third-party platforms like Amazon and eBay growing by more than 50%[8] - Product innovation and strategic pricing initiatives contributed $8.1 million in revenue[8] - The company is implementing proactive cost reductions and strategic sourcing initiatives to mitigate tariff impacts[8] Key Operational Improvements - In-stock percentage of the top 2,500 products increased by 2% year-over-year[9] - Operational efficiency improved by over $1 million year-over-year[9] - Past dues were reduced by 20% year-over-year[9] Financial Outlook - The company reaffirms its full-year 2025 net sales guidance of $580 million to $600 million, excluding the impact of tariffs, representing a year-over-year growth of 0.8% to 4.3%[39, 40] - Adjusted EBITDA for the full year 2025 is projected to be between $113 million and $130 million[39]