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]