Holley (HLLY) - 2025 Q2 - Quarterly Results

Holley Reports Second Quarter 2025 Results Q2 2025 Performance Overview 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] - Successfully mitigated tariff impacts through strategic sourcing and pricing actions, forecasting a negligible impact on the business[1][4] Second Quarter Highlights vs. Prior Year Period CEO Commentary and Business Momentum 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] - Strengthened partnerships with B2B customers and saw meaningful growth across B2B and direct-to-consumer channels[3] - 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] Key Financial Results (Q2 2025 vs. Q2 2024) 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 Operational Achievements and Growth Initiatives 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] - Execution of strategic framework drove approximately $27 million in revenue on key initiatives for Q2 2025[10] - 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] - Product innovation and strategic pricing initiatives contributed $10.8 million in revenue for the quarter and $18.7 million year-to-date[10] Outlook Full Year 2025 Guidance 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 Conference Call Details 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] - Webcast available on investor.holley.com; telephone replay available until August 13, 2025[8][9] Additional Financial Information & Investor Resources 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] About Holley Performance Brands 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] - 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] Forward-Looking Statements 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] - 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] Contacts 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] - Media Relations contacts: Jordan Moore / Sydney Goggans at Tiny Mighty Communications (615-454-2913)[15] Condensed Consolidated Financial Statements Condensed Consolidated Statements of Comprehensive Income 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 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 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 Non-GAAP Measures Overview and Definitions 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][23] - 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] Adjusted EBITDA Reconciliation 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 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] 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 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] 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 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] 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 |