Holley (HLLY) The 44th Annual William Blair Growth Stock Conference summary

Industry overview and market positioning

• Automotive aftermarket performance sector shows over 6% CAGR, driven by a passionate, high-income enthusiast base who view spending as a lifestyle priority.

• The U.S. market includes 70 million enthusiasts, with 82% considering automotive upgrades a budgeted expense.

• Product offerings span Domestic Muscle, Euro & Import, Modern Truck & Off-Road, and Safety & Racing, with leading brands in each.

• Grassroots engagement includes over 100,000 consumers at events, notably LS Fest East with 60,000+ attendees.

• Modern Truck & Off-Road is a major focus, representing $21 billion in sector spend and 80% of new vehicle sales.

Strategic transformation and organizational changes

• Recent transformation aligned sales, marketing, and product strategy around four verticals, using data-driven decision-making to prioritize profitable categories.

• Safety & Racing vertical targets a $10 billion global market, leveraging brands like HANS, Stilo, Simpson, and RaceQuip.

• Leadership team expanded with industry experts to scale operations and drive growth, including hires with backgrounds in racing, digital, and product strategy.

• SKU rationalization removed 35,000 low-revenue items, focusing on market-driven product innovation and a new phase gate system.

• Enhanced promotional strategy and digital fundamentals, shifting from cost-based to market value-based pricing for margin improvement.

Financial performance and operational efficiency

• Maintained close to 20% EBITDA margin despite an 8% revenue decline in Q1, supported by $3.7 million in cost savings.

• Free cash flow remains strong, with $50 million generated and $65 million in debt prepaid since September last year.

• Working capital improvements and inventory optimization led to $15 million year-over-year free cash flow growth in the most recent quarter.

• SKU count reduced by 45% since 2022, impacting only 3% of revenue, improving focus and long-term margin.

• Forecast accuracy in supply chain improved from 30% to 70-80%, reducing overbuying and underbuying.