Holley (HLLY) investor relations material

Business transformation and market positioning

• Underwent significant transformation over the past three years, focusing on professionalization, operational improvements, and steady-state growth.

• Serves a large and passionate car enthusiast market, with over 70 million enthusiasts in the U.S. and a global footprint expanding into new regions and adjacent markets like powersports.

• Portfolio includes over 70 brands, with a focus on 20 core lifestyle and power brands, segmented into American Performance, Truck and Off-Road, Euro and Import, and Safety and Racing.

• Recent acquisitions, such as HRX, complement existing high-end offerings and support global B2B expansion.

• Direct-to-consumer business accounts for 22% of sales, with omni-channel strategies including national retailers and third-party marketplaces.

Operational improvements and portfolio optimization

• Removed $40 million in non-value-added costs and continue to seek further efficiencies, including facility consolidation and workforce reduction by about 10%.

• Rationalized SKUs from 80,000 to around 35,000, focusing on higher-margin, higher-growth products and exiting underperforming brands.

• Portfolio rebalancing expected to generate a one-time $15 million cash benefit and improve EBITDA and leverage.

• Implemented lean manufacturing, Toyota Production System principles, and invested in ERP and warehouse management systems to modernize operations.

• Achieved 92% in-stock rates for top SKUs, up from 70-75%, and targeted $10 million in operational improvements for the year.

Financial performance and capital allocation

• EBITDA margin above 20%, gross margin above 40%, and free cash flow between $35–45 million annually after a peak of $80 million.

• Paid down $100 million in debt, reducing leverage from nearly 6x to under 4x, with a goal to reach sub-3x by the end of next year.

• Q1 sales were challenged due to inventory and weather, but EBITDA improved 71 basis points year-over-year, and free cash flow increased by $4.5 million.

• Added a $25 million share repurchase option to capital allocation, prioritizing leverage reduction, accretive acquisitions, and opportunistic buybacks.

• Guidance adjusted for $15 million net revenue impact from portfolio rebalancing, but EBITDA and free cash flow targets remain intact.