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]

Financial Data and Key Metrics Changes - Net sales for Q4 2024 decreased approximately 10% to $140.1 million compared to $156 million in the same period last year [21][49] - Gross margin improved significantly by 690 basis points year-over-year to 45.6%, with gross profit at $63.9 million [22][51] - Adjusted EBITDA for Q4 was $29.1 million, up from $28.5 million in the prior year, with an adjusted EBITDA margin increase of 250 basis points to 20.8% [53] - For the full year 2024, net sales totaled $602.2 million, down from $659.7 million in 2023, while adjusted EBITDA was $110.5 million, down from $130.9 million [60][62] Business Line Data and Key Metrics Changes - Direct-to-consumer sales grew by 8% year-over-year, with significant growth in 17 brands across all channels [17][31] - The B2B channel saw a 12% growth driven by enhanced sales support and strategic partnerships [18][33] - Operational improvements led to a 22% year-over-year reduction in past dues, reflecting a commitment to operational efficiency [19] Market Data and Key Metrics Changes - The overall market sentiment has reverted to a cautious stance, with consumers holding back due to high prices and economic uncertainty [12][14] - The Mexican market is estimated to be between $3 billion and $5 billion, with opportunities in older car parks and modifications [80] Company Strategy and Development Direction - The company aims to become a $1 billion enthusiast platform, focusing on enhancing consumer experiences and balancing sales channels [8][10] - Strategic initiatives include digital modernization, operational improvements, and expanding into new markets, including Mexico [20][30] - The company is committed to maintaining rigorous financial discipline while driving growth through strategic partnerships and product innovation [11][36] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding consumer spending and highlighted the impact of economic uncertainty on consumer confidence [12][64] - The guidance for 2025 assumes that consumer confidence does not worsen, with expectations for growth in the back half of the year [90][71] - The company remains optimistic about its transformative initiatives driving core business growth despite potential market softness [72][102] Other Important Information - The company achieved significant operational improvements, including $7.8 million in cost of service savings and a successful product launch strategy [24][25] - The company has made substantial progress in debt reduction, with $75 million prepaid on its term loan [48][57] Q&A Session Summary Question: Can you talk about the Mexico opportunity? - The Mexican market is estimated to be between $3 billion and $5 billion, with a focus on older car parks and modifications [80] Question: Can you provide more detail on gross margin performance in Q4? - Gross margin improvements were driven by cost to serve efforts and purchasing price variance, with expectations for a more balanced margin throughout 2025 [84][87] Question: Does your guidance assume consumer confidence improves? - The guidance assumes that consumer confidence does not worsen, with potential for growth if conditions improve [90] Question: How are inventories in the channel? - Inventory levels are healthier than last year, with improved alignment between sell-in and sell-through [92] Question: Can you discuss the Cataclean acquisition? - The acquisition of Cataclean is seen as a growth opportunity in the chemicals sector, expanding the company's portfolio [108] Question: How is the modern truck segment performing? - The modern truck and off-road vertical is performing well, with 80% of vehicles sold in the U.S. being trucks, CVs, and SUVs [111] Question: Can you provide details on your core customer demographics? - The core customer demographic is modestly higher income, with expectations of new car purchases showing some hesitancy [114][116] Question: What impact did new product demand have on the top line in 2024? - New product launches contributed positively, with several achieving significant sales, but the primary growth driver remains B2B relationship repair [118][120]