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Holley Reports Second Quarter 2023 Results

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.

Contacts

Investor Relations:

Ross Collins / Stephen Poe

Alpha IR Group

312-445-2870

HLLY@alpha-ir.com

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