Holley (HLLY) FY Conference Transcript

Summary of Holley (HLLY) FY Conference Call - August 12, 2025 Company Overview - Holley is a 120-year-old company known for serving automotive enthusiasts, with a consumer base of approximately 70 million enthusiasts, which is larger than many other consumer discretionary segments [3][2] - The company went public in 2021 and has since been focused on transforming into a billion-dollar platform in the consumer auto performance enthusiast space [5][4] Market Segmentation and Addressable Markets - Holley has organized its business into four distinct verticals: Domestic Muscle, Trucking Off-Road, Euro and Import, and Safety and Racing [5][6] - The total addressable market for Domestic Muscle is estimated at $5 billion, while Trucking Off-Road is $26 billion, Euro and Import is $14 billion, and Safety and Racing is also significant [7][8][9] - The company is seeing a shift in consumer interest towards vehicles from the late 1990s and early 2000s, indicating a long runway for growth in the Domestic Muscle segment [26][6] Financial Performance and Growth Strategy - Holley has posted back-to-back growth in its core business for two consecutive quarters, outperforming competitors in a flat market [14][18] - The company has focused on operational improvements and cost reductions to maintain margins and EBITDA, even in a challenging market [16][30] - Holley aims to reduce its net leverage from over four times to closer to three times through free cash flow generation and operational efficiency [37][38] Consumer Trends and Market Conditions - The company acknowledges that the automotive industry has faced challenges, with a depressed SAAR (Seasonally Adjusted Annual Rate) of 15 million vehicles, but believes that a return to 17 million is possible with lower interest rates and aggressive manufacturer rebates [22][23] - Holley’s consumer base remains stable and enthusiastic, with spending patterns expected to normalize post-COVID [24][59] Tariffs and Supply Chain Management - Holley has implemented various tariff mitigation strategies and believes it is well-positioned to navigate supply chain challenges better than competitors [30][32] - The company recognizes the complexities of moving supply chains out of China, emphasizing the importance of quality and craftsmanship [33][34] M&A Strategy and Future Outlook - Holley maintains a robust pipeline for M&A opportunities but is cautious about pursuing large transactions until leverage is optimized [41][42] - The company is focused on smaller deals that align with its growth strategy without jeopardizing its path to lower leverage [41][42] Investor Relations and Market Perception - Holley has seen a 60% increase in share performance over the last five days, attributed to consistent execution of its growth strategy [55][56] - The management emphasizes the importance of building credibility with investors by delivering on promises and maintaining operational excellence [55][58] Key Takeaways - Holley is positioned for growth in multiple automotive segments, with a strong focus on operational efficiency and market share expansion - The company is navigating macroeconomic challenges while maintaining a stable consumer base and exploring strategic M&A opportunities - Holley’s management is committed to improving investor relations and demonstrating the value of its business model through consistent performance and transparency