Company raises full year 2023 Sales and
Adjusted EBITDA guidance ranges
Continued sequential improvement in sales
and profitability
EBITDA Margins in line with the Company’s
long-term targets
Holley Inc. (NYSE: HLLY), a leading platform serving performance
automotive enthusiasts, today announced financial results for its
second quarter ended July 2, 2023.
Second Quarter Highlights vs. Prior
Year Period
- Net Sales decreased 2.3% to $175.3 million compared to $179.4
million last year
- Gross Profit decreased 7.4% to $69.7 million versus $75.3
million last year, and gross margin was 39.8% versus 42.0% last
year
- Net Income was $13.0 million, or $0.11 per diluted share,
compared to $40.6 million, or $0.35 per diluted share, last
year
- Adjusted Net Income1 was $16.0 million compared to $13.2
million last year
- Adjusted EBITDA1 was $37.9 million versus $37.2 million last
year with a margin of 21.6% versus 20.7% last year
- Free Cash Flow1 was $29.0 million compared to $(1.3) million
last year
1 See "Use and Reconciliation of Non-GAAP
Financial Measures" below.
“We are pleased with our second quarter results, as Holley
continued to benefit from the various operational improvement and
cost savings initiatives underway,” said Matthew Stevenson,
Holley’s President and Chief Executive Officer. “Holley
demonstrated its ability to deliver EBITDA profitability in line
with the Company’s long-term targets during the quarter, and we are
just scratching the surface of unlocking the potential of this
business. We remain focused on streamlining our operations,
capturing synergies from recent acquisitions, and improving both
supply chain and working capital management. During my onboarding
period at Holley, I have focused on strengthening Holley’s employee
and customer relationships, and our leadership team is committed to
listening to our Holley teammates, optimizing our operations, and
putting our customers first.”
Stevenson concluded, “Subsequent to quarter end, we were proud
to announce the launch of our Holley Sniper 2 EFI product line, as
introducing new and exciting products and brands to our enthusiast
customers remains a top priority. I appreciate the outstanding
efforts of our entire team as we continue to deliver innovative
consumer brands to the aftermarket space, reinforcing the value of
the Holley brand. Harnessing the power of our brands, our
teammates, and our customer relationships will be critical to
driving Holley’s future success.”
Key Operating Metrics and Strategic
Highlights
- Matthew Stevenson joined Holley as President and Chief
Executive Officer
- Reduced past due orders sequentially by $4.4 million during the
second quarter, across Electronics and Non-Electronics
categories
- Reduced inventory sequentially by $11.5 million during the
second quarter
- $11 million of year-over-year savings in the second quarter of
2023
- Holley’s bank-adjusted EBITDA leverage ratio at quarter end of
5.58x was well below the amended covenant ceiling of 7.25x for Q2
of 2023
- Launched Holley Sniper 2 EFI, the next generation of Holley’s
most popular electronic fuel injection platform
Full Year 2023 Outlook
Holley revised its outlook for 2023 as follows:
Full Year 2023 Metric
Previous Outlook
Revised Outlook
Net Sales
$625 - $675 million
$635 - $675 million
Adjusted EBITDA
$108 - $122 million
$118 - $128 million
Capital Expenditures
$10 - $15 million
$5 - $10 million
Depreciation and Amortization
Expense
$23 - $25 million
$23 - $25 million
Interest Expense
$60 - $65 million
$58 - $62 million
“Holley delivered continued sequential top and bottom-line
improvement in the second quarter, driven primarily by improving
year-over-year order growth trends, past due fulfillment, and
realization of cost savings,” said Jesse Weaver, Holley’s Chief
Financial Officer. “We are encouraged by the strong rebound in our
free cash generation during the quarter, which benefited from
higher EBITDA, improved working capital management, and slightly
lower capital expenditures. For the remainder of this fiscal year,
we remain fully committed to further restoring Holley’s strong
profitability, driving free cash flow, optimizing working capital,
and de-levering the balance sheet.”
“On the back of strong year-to-date performance, we are raising
our full year 2023 net sales and Adjusted EBITDA guidance ranges.
Our financial results have demonstrated the strength and resiliency
of our brand portfolio in uncertain times, and we are increasingly
confident in our ability to deliver profitability in line with our
long-term margin targets and strong free cash flow.”
Conference Call
A conference call and audio webcast has been scheduled for 8:30
a.m. Eastern Time today to discuss these results. Investors,
analysts, and members of the media interested in listening to the
live presentation are encouraged to join a webcast of the call
available on the investor relations portion of the Company’s
website at investor.holley.com. For those that cannot join the
webcast, you can participate by dialing 877-407-4019 (Toll Free) or
201-689-8337 (Toll) using the access code of 13740096.
For those unable to participate, a telephone replay recording
will be available until Thursday, August 17, 2023. To access the
replay, please call 877-660-6853 (Toll Free) or 201-612-7415 (Toll)
and enter confirmation code 13740096. A web-based archive of the
conference call will also be available on the Company’s
website.
About Holley Inc.
Holley Inc. (NYSE: HLLY) is a leading designer, marketer, and
manufacturer of high-performance products for car and truck
enthusiasts. Holley offers a leading portfolio of iconic brands
that deliver innovation and inspiration to a large and diverse
community of millions of avid automotive enthusiasts who are
passionate about the performance and personalization of their
classic and modern cars. Holley has disrupted the performance
category by putting the enthusiast consumer first, developing
innovative new products, and building a robust M&A process that
has added meaningful scale and diversity to its platform. For more
information on Holley, visit https://www.holley.com.
Forward-Looking
Statements
Certain statements in this press release 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 are forward-looking statements.
In some cases, you can identify forward-looking statements by
terminology such as “may,” “should,” “expect,” “intend,” “will,”
“estimate,” “anticipate,” “believe,” “predict,” “or” or the
negatives of these terms or variations of them or similar
terminology. Such forward-looking statements are subject to risks,
uncertainties, and other factors which could cause actual results
to differ materially from those expressed or implied by such
forward-looking statements. These forward-looking statements are
based upon estimates and assumptions that, while considered
reasonable by Holley and its management, are inherently uncertain.
Factors that may cause actual results to differ materially from
current expectations include, but are not limited to: 1) the
ability of Holley to grow and manage growth profitably which may be
affected by, among other things, competition; to maintain
relationships with customers and suppliers; and to retain its
management and key employees; 2) costs related to Holley being a
public company; 3) disruptions to Holley's operations, including as
a result of cybersecurity incidents; 4) changes in applicable laws
or regulations; 5) the outcome of any legal proceedings that may be
instituted against Holley; 6) general economic and political
conditions, including the current macroeconomic environment,
political tensions and war (such as the ongoing conflict in
Ukraine); 7) the possibility that Holley may be adversely affected
by other economic, business and/or competitive factors, including
recent events affecting the financial services industry (such as
the closures of certain regional banks); 8) Holley’s estimates of
its financial performance; 9) our ability to anticipate and manage
through disruptions and higher costs in manufacturing, supply
chain, logistical operations, and shortages of certain company
products in distribution channels; and 10) other risks and
uncertainties set forth in the section entitled “Risk Factors” and
“Cautionary Note Regarding Forward-Looking Statements” in the
Annual Report on Form 10-K for the year ended December 31, 2022
filed with the U.S. Securities and Exchange Commission (“SEC”) on
March 15, 2023, and/or disclosed in any subsequent filings with the
SEC. Although Holley believes the expectations reflected in the
forward-looking statements are reasonable, nothing in this press
release should be regarded as a representation by any person that
the forward-looking statements or projections set forth herein will
be achieved or that any of the contemplated results of such forward
looking statements or projections will be achieved. There may be
additional risks that Holley presently does not know or that Holley
currently believes are immaterial that could also cause actual
results to differ from those contained in the forward-looking
statements. You should not place undue reliance on forward-looking
statements, which speak only as of the date they are made. Holley
undertakes no duty to update these forward-looking statements,
except as otherwise required by law.
[Financial Tables to Follow]
HOLLEY INC. and
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
For the thirteen weeks
ended
For the twenty-six weeks
ended
July 2,
July 3,
Variance
Variance
July 2,
July 3,
Variance
Variance
2023
2022
($)
(%)
2023
2022
($)
(%)
Net Sales
$
175,262
$
179,420
$
(4,158
)
-2.3
%
$
347,467
$
379,475
$
(32,008
)
-8.4
%
Cost of Goods Sold
105,514
104,132
1,382
1.3
%
210,006
221,466
(11,460
)
-5.2
%
Gross Profit
69,748
75,288
(5,540
)
-7.4
%
137,461
158,009
(20,548
)
-13.0
%
Selling, General, and Administrative
29,101
36,269
(7,168
)
-19.8
%
59,118
70,611
(11,493
)
-16.3
%
Research and Development Costs
6,182
8,196
(2,014
)
-24.6
%
12,835
16,357
(3,522
)
-21.5
%
Amortization of Intangible Assets
3,674
3,662
12
0.3
%
7,353
7,323
30
0.4
%
Acquisition and Restructuring Costs
352
1,691
(1,339
)
-79.2
%
1,691
1,981
(290
)
-14.6
%
Other Operating Expense
485
325
160
49.2
%
536
547
(11
)
-2.0
%
Operating Expense
39,794
50,143
(10,349
)
-20.6
%
81,533
96,819
(15,286
)
-15.8
%
Operating Income
29,954
25,145
4,809
19.1
%
55,928
61,190
(5,262
)
-8.6
%
Change in Fair Value of Warrant
Liability
2,017
(23,168
)
25,185
nm
3,452
(20,941
)
24,393
nm
Change in Fair Value of Earn-Out
Liability
961
(4,234
)
5,195
nm
1,389
(1,853
)
3,242
nm
Interest Expense
9,899
8,961
938
10.5
%
28,197
16,352
11,845
72.4
%
Non-Operating Expense
12,877
(18,441
)
31,318
nm
33,038
(6,442
)
39,480
nm
Income Before Income Taxes
17,077
43,586
(26,509
)
-60.8
%
22,890
67,632
(44,742
)
-66.2
%
Income Tax Expense
4,098
3,023
1,075
35.6
%
5,664
10,211
(4,547
)
-44.5
%
Net Income
$
12,979
$
40,563
$
(27,584
)
-68.0
%
$
17,226
$
57,421
$
(40,195
)
-70.0
%
Comprehensive Income:
Foreign Currency Translation
Adjustment
272
501
(229
)
-45.7
%
73
742
(669
)
-90.2
%
Total Comprehensive Income
$
13,251
$
41,064
$
(27,813
)
-67.7
%
$
17,299
$
58,163
$
(40,864
)
-70.3
%
Common Share Data:
Basic Net Income per Share
$
0.11
$
0.35
$
(0.24
)
-68.6
%
$
0.15
$
0.49
$
(0.34
)
-69.4
%
Diluted Net Income per Share
$
0.11
$
0.35
$
(0.24
)
-68.6
%
$
0.15
$
0.31
$
(0.16
)
-51.6
%
Weighted Average Common Shares Outstanding
- Basic
117,221
116,932
289
0.2
%
117,187
116,398
789
0.7
%
Weighted Average Common Shares Outstanding
- Diluted
117,869
117,115
754
0.6
%
117,557
117,344
213
0.2
%
nm - not meaningful
HOLLEY INC. and
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEET
(In thousands)
(Unaudited)
As of
July 2,
December 31,
2023
2022
Assets
Total Current Assets
$
333,275
$
324,963
Property, Plant and Equipment, Net
49,691
52,181
Goodwill
419,056
418,121
Other Intangibles, Net
417,613
424,855
Other Noncurrent Assets
31,033
29,522
Total Assets
$
1,250,668
$
1,249,642
Liabilities and Stockholders' Equity
Total Current Liabilities
$
103,211
$
101,259
Long-Term Debt, Net of Current Portion
629,435
643,563
Deferred Taxes
47,727
58,390
Other Noncurrent Liabilities
34,879
30,440
Total Liabilities
815,252
833,652
Common Stock
12
12
Additional Paid-In Capital
370,249
368,122
Accumulated Other Comprehensive Loss
(871
)
(944
)
Retained Earnings
66,026
48,800
Total Stockholders' Equity
435,416
415,990
Total Liabilities and Stockholders'
Equity
$
1,250,668
$
1,249,642
HOLLEY INC. and
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the thirteen weeks
ended
For the twenty-six weeks
ended
July 2,
July 3,
July 2,
July 3,
2023
2022
2023
2022
Operating
Activities
Net Income
$
12,979
$
40,563
$
17,226
$
57,421
Adjustments to Reconcile to Net Cash
109
(12,665
)
13,983
1,335
Changes in Operating Assets and
Liabilities
17,656
(25,416
)
3,174
(37,925
)
Net Cash Provided by Operating
Activities
30,744
2,482
34,383
20,831
Investing
Activities
Capital Expenditures, Net of
Dispositions
(1,699
)
(3,778
)
(2,382
)
(9,365
)
Acquisitions / Divestitures, net
—
(12,460
)
—
(14,077
)
Net Cash Used in Investing Activities
(1,699
)
(16,238
)
(2,382
)
(23,442
)
Financing
Activities
Net Change in Debt
(6,788
)
189
(14,072
)
(3,099
)
Deferred financing fees
(310
)
—
(1,427
)
—
Payments from Stock-Based Award
Activities
(39
)
—
(73
)
—
Proceeds from Issuance of Common Stock Due
to Exercise of Warrants
—
383
—
383
Net Cash Used in Financing Activities
(7,137
)
572
(15,572
)
(2,716
)
Effect of Foreign Currency Rate
Fluctuations on Cash
16
(342
)
161
(443
)
Net Change in Cash and Cash
Equivalents
21,924
(13,526
)
16,590
(5,770
)
Cash and Cash
Equivalents
Beginning of Period
20,816
44,081
26,150
36,325
End of Period
$
42,740
$
30,555
$
42,740
$
30,555
EBITDA, Adjusted EBITDA, Adjusted Net Income, Organic Sales, and
Free Cash Flow are not prepared in accordance with accounting
principles generally accepted in the United States (“GAAP”) and may
be different from non-GAAP and other financial measures used by
other companies. These measures should not be considered as
measures of financial performance under GAAP, and the items
excluded from or included in these metrics are significant
components in understanding and assessing Holley’s financial
performance. These metrics should not be considered as alternatives
to net income, net cash provided by operating activities, or any
other performance measures, as applicable, derived in accordance
with GAAP.
Holley believes EBITDA, Adjusted EBITDA, Adjusted Net Income,
Organic Sales, and Free Cash Flow are useful to investors in
evaluating the Company’s financial performance and in comparing the
Company's financial results between periods because they exclude
the impact of certain items that we do not consider indicative of
our ongoing operating performance. In addition, Holley uses these
measures internally to establish forecasts, budgets, and
operational goals to manage and monitor its business. Holley
believes that these non-GAAP and other financial measures help to
depict a more realistic representation of the performance of the
underlying business, enabling Holley to evaluate and plan more
effectively for the future.
HOLLEY INC. and
SUBSIDIARIES
USE AND RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
For the thirteen weeks
ended
For the twenty-six weeks
ended
July 2,
July 3,
July 2,
July 3,
2023
2022
2023
2022
Net Income
$
12,979
$
40,563
$
17,226
$
57,421
Adjustments:
Interest Expense
9,899
8,961
28,197
16,352
Income Taxes
4,098
3,023
5,664
10,211
Depreciation
2,468
2,523
4,953
4,663
Amortization
3,674
3,662
7,353
7,323
EBITDA
33,118
58,732
63,393
95,970
Acquisition and Restructuring Costs
352
1,691
1,691
1,981
Change in Fair Value of Warrant
Liability
2,017
(23,168
)
3,452
(20,941
)
Change in Fair Value of Earn-Out
Liability
961
(4,234
)
1,389
(1,853
)
Product Rationalization
(800
)
—
(800
)
—
Equity-Based Compensation Expense
1,806
3,483
2,200
6,645
Notable Items
(16
)
378
8
884
Other Expense
485
325
536
547
Adjusted EBITDA
$
37,923
$
37,207
$
71,869
$
83,233
For the thirteen weeks
ended
For the twenty-six weeks
ended
July 2,
July 3,
July 2,
July 3,
2023
2022
2023
2022
Net Income
$
12,979
$
40,563
$
17,226
$
57,421
Special items:
Adjust for: Change in Fair Value of
Warrant Liability
2,017
(23,168
)
3,452
(20,941
)
Adjust for: Change in Fair Value of
Earn-Out Liability
961
(4,234
)
1,389
(1,853
)
Adjusted Net Income
$
15,957
$
13,161
$
22,067
$
34,627
13 Weeks Ended
July 2, 2023
Net Sales
175,262
Less: Sales from Acquisitions within 365
Days of Purchase (Non-Comparable to Prior Year)
(2,617
)
Organic Sales (Comparable to Prior Year
Period Net Sales)
$
172,645
For the thirteen weeks
ended
July 2,
July 3,
2023
2022
Net Cash Provided by Operating
Activities
$
30,744
$
2,482
Capital Expenditures, Net of
Dispositions
(1,699
)
(3,778
)
Free Cash Flow
$
29,045
$
(1,296
)
2023 Forecast
Low Range
High Range
Net Sales
$
635,000
$
675,000
Adjusted EBITDA
118,000
128,000
Depreciation and Amortization
23,000
25,000
Interest Expense
58,000
62,000
Capital Expenditures
5,000
10,000
Holley defines EBITDA as earnings before depreciation,
amortization of intangible assets, interest expense, and income tax
expense. Holley defines Adjusted EBITDA as EBITDA adjusted to
exclude, to the extent applicable, acquisition and restructuring
costs, which includes transaction fees and expenses, termination
related benefits, facilities relocation, and executive transition
costs; changes in the fair value of the warrant liability; changes
in the fair value of the earn-out liability; equity-based
compensation expense; impairment of intangible assets; gain or loss
on the early extinguishment of debt; non-cash charges due to a
product rationalization initiative aimed at eliminating
unprofitable or slow-moving stock keeping units, for which a
partial reversal of the initial reserve was recognized during the
thirteen weeks ended July 2, 2023; notable items, which for the
twenty-six weeks ended July 3, 2022 includes a non-cash adjustment
related to the adoption of ASC 842, “Leases,” and may also include
certain fees and settlements; and other expenses or gains, which
includes gains or losses from disposal of fixed assets and foreign
currency transactions.
Holley calculates Adjusted Net Income by excluding the after-tax
effect of items considered by management to be special items from
the earnings reported under U.S. GAAP. Management uses this measure
to focus on on-going operations and believes that it is useful to
investors because it enables them to perform meaningful comparisons
of past and present consolidated operating results. Holley believes
that using this information, along with net income, provides for a
more complete analysis of the results of operations.
Organic Sales, or sales excluding the impact of acquisitions,
exclude the impact from sales from acquisitions within 365 days of
the consummation of such acquisition. Holley believes organic sales
provides investors with useful supplemental information regarding
Holley's underlying sales trends.
Holley defines Free Cash Flow as net cash provided by operating
activities minus cash payments for capital expenditures, net of
dispositions. Management believes providing Free Cash Flow is
useful for investors to understand the Company's performance and
results of cash generation after making capital investments
required to support ongoing business operations.
A forecast for full year 2023 Adjusted EBITDA is provided on a
non-GAAP basis only because certain information necessary to
calculate the most comparable GAAP measure, net income, is
unavailable due to the uncertainty and inherent difficulty of
predicting the occurrence and the future financial statement impact
of certain items. Therefore, as a result of the uncertainty and
variability of the nature and amount of future adjustments, which
could be significant, Holley is unable to provide a reconciliation
of its forecasted 2023 Adjusted EBITDA without unreasonable
effort.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230810339418/en/
Investor Relations: Ross Collins / Stephen Poe Alpha IR
Group 312-445-2870 HLLY@alpha-ir.com
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