Holley Reports Fourth Quarter and Full Year 2024 Results; Transformative Year Begins to Ignite Growth Across Key Business Areas

Delivered strong fourth quarter and full year financial results within guidance range on a comparable basis

Proactive amendment to revolver enhances financial flexibility

Holley Performance Brands (NYSE:HLLY), a leader in automotive aftermarket performance solutions, today announced financial results for its fourth quarter and full year ended December 31, 2024.

Fourth Quarter Highlights vs. Prior Year Period

• Net Sales decreased (10.1%) to $140.1 million compared to $155.7 million last year
• Net Loss was $(37.8) million, or $(0.32) per diluted share, compared to a Net Income of $1.2 million, or $0.01 per diluted share, last year
  • Includes non-cash goodwill and trademark impairment charges of $40.9 million and $7.7 million, respectively
• Net Cash Provided by Operating Activities was $4.1 million compared to Net Cash Provided by Operating Activities of $31.2 million last year
• Adjusted Net Income¹ was $12.6 million compared to Adjusted Net Loss of $(0.5) million last year
• Adjusted EBITDA¹ was $29.1 million compared to $28.5 million last year
• Free Cash Flow¹ was $1.8 million compared to $29.9 million last year

Full Year 2024 Highlights vs. Prior Year Period

• Net Sales decreased (8.7%) to $602.2 million compared to $659.7 million last year
• Net Loss was $(23.2) million, or $(0.20) per diluted share, compared to a Net Income of $19.2 million, or $0.16 per diluted share, last year
• Net Cash Provided by Operating Activities was $46.9 million compared to Net Cash Provided by Operating Activities of $88.1 million last year
• Adjusted Net Income¹ was $24.8 million compared to Adjusted Net Income of $25.0 million last year
• Adjusted EBITDA¹ was $110.5² million compared to $130.9 million last year
• Free Cash Flow¹ was $41.8 million compared to $83.6 million last year

¹See "Use and Reconciliation of Non-GAAP Financial Measures" below.

²Adjusted EBITDA for 2024 includes the impact of $8.2 million non-cash related to a previously announced strategic product rationalization.

"2024 was an incredibly transformative year for Holley, marked by meaningful enhancements across the entire organization," said Matthew Stevenson, President and Chief Executive Officer of Holley. "We achieved several years' worth of progress in only twelve months, transforming Holley into a fundamentally more sophisticated organization. Despite operating in a challenging macroeconomic environment for consumers, we are demonstrating significant strides that, we believe, are coming to fruition in several areas of our business."

Stevenson continued, "These efforts translated into several wins in 2024 for Holley, such as DTC and National Retailer growth of 8% and 12%, respectively, and a 75% increase in revenue per SKU for new product launches, eclipsing $100 million in eCommerce sales, and growing 16 brands in our portfolio, including power brands such as Stilo, Simpson, Dinan, ADS, and Cataclean. Additionally, we remain deeply engaged with our enthusiast customer base through a series of world-class events, an enhanced social media presence, a dedicated customer engagement center, the launch of a new CRM system, and our solutions-focused approach that distinguishes us in the market as a comprehensive provider for their performance needs. We continue to strengthen our relationships with our distribution partners by developing additional programs and solutions intended to drive increased collaboration and to create growth."

"The progress made in 2024 positions Holley well for continued success in 2025. Our strategic plan for 2025 is based on the underlying principles of fueling our teammates, funding our growth, and supporting our customers. By empowering and investing in our people, we ensure that our team is equipped with the skills, resources, and motivation to drive success. Through careful investment in growth initiatives and innovation, we will aim to expand our capabilities and market reach. At the same time, we remain committed to delivering exceptional value and service to our customers, making sure that their needs are met with the highest level of support. Together, these pillars provide a robust framework that will guide our efforts in 2025 and beyond."

"As we look ahead, while we believe our market may continue to be challenged early in the year due to consumer confidence, distributor inventories are in a better position than they were a year ago, and by focusing on continuing to strengthen our B2B relationships, we aim to continue gaining market share and driving growth in 2025. Excluding $12.8 million of revenue from divested businesses in 2024 and $14.0 million in clearance sales from the Strategic Product Rationalization, our Full Year 2025 revenue guidance indicates an expected 0.8% to 4.3% revenue growth in 2025. We are committed to positioning Holley to not only navigate the challenges ahead but to thrive and drive growth for years to come."

Strategic Business Highlights

• Growth in significant areas of the business, including DTC and 17 brands in our portfolio, including power brands such as Stilo, Simpson, Dinan, ADS, and Cataclean.
• Proactively amended senior secured revolving credit facility, to a covenant-lite structure that includes a springing covenant of 5.0x total net leverage that is only tested when the revolver is drawn. The amendment also extends the maturity date to November 18, 2029 and updates available borrowing to $100 million.
• Proactively entered into a cash-less collar that further reduces interest rate exposure to the maturity date of the Term Loan in November 2028.
• Inventory turns improved to 2.0x compared to 1.9x last year¹
• In January, announced a perpetual exclusive license agreement with Cataclean for the North American market which allows Holley to develop, manufacture, market distribute and sell Cataclean branded products in the U.S., Canada, and Mexico for a total purchase price of $23.8 million.

¹We define Inventory Turns as the trailing twelve-month ("TTM") Cost of Goods Sold divided by the TTM average Inventory. We define TTM average Inventory as the total of each month-end Inventory amount during the year, divided by twelve.

Key Operating and Financial Metrics

¹See "Use and Reconciliation of Non-GAAP Financial Measures" below. We define the Bank-adjusted EBITDA Leverage Ratio as Net Debt divided by our Bank-adjusted EBITDA for the TTM period, as defined under our Credit Agreement entered into in November 2021, as amended, which is used in calculating covenant compliance.

Outlook

Holley is providing the following outlook for the full-year 2025:

* Holley is not providing reconciliations of forward-looking full year 2025 Adjusted EBITDA outlook and full year 2025 Bank-adjusted EBITDA Leverage Ratio outlook 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 these forward-looking reconciliations without unreasonable effort. Accordingly, Holley is relying on the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K to exclude these reconciliations.

Holley notes that its outlook for the full-year 2025 may vary due to changes in assumptions or market conditions and other factors described below under "Forward-Looking Statements."

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 13750870.

For those unable to participate, a telephone replay recording will be available until Tuesday, March 18, 2025. To access the replay, please call 877-660-6853 (Toll Free) or 201-612-7415 (Toll) and enter confirmation code 13750870. A web-based archive of the conference call will also be available on the Company's website.

Additional Financial Information

The Investor Relations page of Holley's website, investor.holley.com contains a significant amount of financial information about Holley, including our earnings presentation, which can be found under Events & Presentations. Holley encourages investors to visit this website regularly, as information is updated, and new information is posted.

About Holley Performance Brands

Holley Performance Brands (NYSE:HLLY) leads in the design, manufacturing and marketing of high-performance products for automotive enthusiasts. The company owns and manages a portfolio of iconic brands, catering to a diverse community of enthusiasts passionate about the customization and performance of their vehicles. Holley Performance Brands distinguishes itself through a strategic focus on four consumer vertical groupings, including Domestic Muscle, Modern Truck & Off-Road, Euro & Import, and Safety & Racing, ensuring a wide-ranging impact across the automotive aftermarket industry. Renowned for its innovative approach and strategic acquisitions, Holley Performance Brands is committed to enhancing the enthusiast experience and driving growth through innovation. For more information on Holley Performance Brands and its dedication to automotive excellence, 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, along with statements regarding the impact of organizational changes, 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) Holley's ability to compete effectively in our market; 3) Holley's ability to successfully design, develop, and market new products; 4) Holley's ability to respond to changes in vehicle ownership and type; 5) Holley's ability to maintain and strengthen demand for our products; 6) Holley's ability to effectively manage our growth; 7) Holley's ability to attract new customers in a cost-effective manner; 8) Holley's ability to expand into additional consumer markets; 9) costs related to Holley being a public company; 10) disruptions to Holley's operations, including as a result of cybersecurity incidents; 11) changes in applicable laws or regulations; 12) the outcome of any legal proceedings that have been or may be instituted against Holley; 13) general economic and political conditions, including the current macroeconomic environment, political tensions, and war (including the conflict in Ukraine, the conflict in the Middle East, and the possible expansion of such conflicts and potential geopolitical consequences); 14) 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); 15) Holley's estimates and expectations of its financial performance and future growth prospects; 16) Holley's 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; 17) disruptions and costs associated with doing business in certain countries; 18) Holley's ability to adopt and react to risks posed by new technology and 19) 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, 2024 filed with the U.S. Securities and Exchange Commission ("SEC") on March 14, 2024, 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]

We present certain information with respect to EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Bank-adjusted EBITDA Leverage Ratio, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Net Income, Adjusted Diluted EPS and Free Cash Flow as supplemental measures of our operating performance and believe that such non-GAAP financial measures are useful to investors in evaluating our financial performance and in comparing our financial results between periods because they exclude the impact of certain items that we do not consider indicative of our ongoing operating performance. We believe that the presentation of these non-GAAP financial measures enhances the usefulness of our financial information by presenting measures that management uses internally to establish forecasts, budgets, and operational goals to manage and monitor our business. We believe that these non-GAAP financial measures help to depict a more realistic representation of the performance of our underlying business, enabling us to evaluate and plan more effectively for the future.

EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Bank-adjusted EBITDA Leverage Ratio, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Net Income, Adjusted Diluted EPS and Free Cash Flow are not prepared in accordance with generally accepted accounting principles ("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 our financial performance. These metrics should not be considered as alternatives to net income, gross profit, net cash provided by operating activities, or any other performance measures, as applicable, derived in accordance with GAAP.

We define EBITDA as earnings before depreciation, amortization of intangible assets, interest expense, and income tax expense. We define Adjusted EBITDA as EBITDA adjusted to exclude, to the extent applicable, restructuring costs, which includes operational restructuring and integration activities, 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; gain or loss on the early extinguishment of debt; notable items that we do not believe are reflective of our underlying operating performance, including litigation settlements and certain costs incurred for advisory services related to identifying performance initiatives; and other expenses or gains, which includes gains or losses from disposal of fixed assets, franchise taxes, and gains or losses from foreign currency transactions. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by net sales.

We define Adjusted Net Income as earnings excluding the after-tax effect of changes in the fair value of the warrant liability, write-downs of assets held-for-sale, changes in the fair value of the earn-out liability, impairment of indefinite-lived intangible assets, impairment of goodwill, and gain or loss on the early extinguishment of debt. We define Adjusted Diluted EPS as Adjusted Net Income on a per share basis. Management uses these measures 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. We believe that using this information, along with net income and net income per diluted share, provides for a more complete analysis of the results of operations.

We define 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 our performance and results of cash generation after making capital investments required to support ongoing business operations.

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