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

¹See "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.

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Holley Reports Second Quarter 2023 Results