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Holley Reports First Quarter 2022 Results

Strength in consumer demand drives 25% year-over-year sales growth

Company reaffirms full year 2022 outlook

Holley Inc. (NYSE: HLLY), the largest and fastest growing platform serving performance automotive enthusiasts, today announced financial results for its first quarter ended April 3, 2022.

First Quarter Highlights vs. Prior Year Period

  • Net Sales increased 24.8% to $200.1 million compared to $160.3 million in 2021
  • Gross Profit increased 25.9% to $82.7 million compared to $65.7 million last year
  • Net Income of $16.9 million, or $0.15 per diluted share, compared to Net Loss of $(2.1) million, or $(0.03) per diluted share, in first quarter 2021
  • Adjusted Net Income1 of $21.5 million, compared to Adjusted Net Income of $15.1 million reported last year
  • Adjusted EBITDA1 rose to $46.0 million compared to $43.8 million in 2021

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

“Holley delivered solid first quarter results with strong growth in consumer demand for our products continuing into 2022,” said Tom Tomlinson, Holley’s President and Chief Executive Officer. “While we are facing persistent supply chain disruptions and inflationary headwinds, we’ve kept our foot on the gas and continued to invest in the development of innovative new products that will be exciting to our enthusiast consumers.”

First Quarter 2022 Financial Results

Net sales increased 24.8% to $200.1 million in the first quarter of 2022, up from $160.3 million in the first quarter of 2021. Non-comparable sales associated with acquisitions contributed $18.1 million, or 11.3%, of year-over-year net sales growth in the first quarter. Sales excluding the impact of acquisitions increased by $21.6 million and contributed 13.5% of year-over-year growth.

Cost of goods sold increased $22.7 million, or 24.0%, to $117.3 million, as compared to $94.7 million for the first quarter of 2021 and is primarily attributable to the increase in product sales. Gross profit for the first quarter of 2022 increased $17.0 million, or 25.9%, to $82.7 million, as compared to $65.7 million for the first quarter of 2021. The increase in gross profit was driven by the increase in sales. Gross margin for the first quarter of 2022 was 41.3% compared to a gross margin of 41.0% for the first quarter of 2021. Gains in price realization fully offset higher freight and product cost increases and allowed for a slight increase in gross margin.

Selling, general and administrative costs for the quarter increased $10.3 million to $34.3 million, representing an increase of 43.0% when compared to $24.0 million in 2021. Incremental SG&A from recent acquisitions were responsible for $1.9 million of the increase in the quarter. Additional cost drivers include an increase in non-cash compensation expense related to equity awards, increased administrative and sales personnel costs, reflecting company growth and the additional requirements of becoming a public company, and an increase in outbound shipping costs related to higher sales.

Net income for the first quarter of 2022 was $16.9 million compared to a net loss of $(2.1) million in 2021. Net income for the first quarter of 2022 was unfavorably impacted by a $4.6 million non-cash increase in liabilities for warrants and earn-out shares compared to an unfavorable impact in 2021 of $17.2 million due to a non-cash adjustment of the earn-out liability for the Simpson acquisition.

Adjusted for the special transaction and non-cash items noted above this quarter, Adjusted Net Income was $21.5 million, compared to last year’s Adjusted Net Income of $15.1 million. Reconciliation to GAAP Net Income is included in the “Use and Reconciliation of Non-GAAP Financial Measures” table below.

Adjusted EBITDA grew to $46.0 million in the first quarter of 2022 compared to $43.8 million in the first quarter last year. Reconciliation to GAAP Net Income is included in the “Use and Reconciliation of Non-GAAP Financial Measures” table below.

Diluted EPS of $0.15 for the first quarter of 2022 compared to $(0.03) in 2021.

Full Year 2022 Outlook

Holley reaffirmed the following outlook for 2022:

  • Net Sales in the range of $765-$790 million
  • Adjusted EBITDA of $186-$194 million
  • Capital Expenditures in the range of $14-$16 million
  • Depreciation and Amortization Expense of $24-$26 million
  • Interest Expense in the range of $30-$32 million

“We are off to a strong start in fiscal 2022, delivering on our financial objectives in the first quarter, and are reaffirming our previously stated 2022 guidance,” said Dominic Bardos, Holley’s Chief Financial Officer. “While it is not our policy to provide quarterly guidance, I believe it is important to recognize that current economic conditions and supply chain headwinds may continue to impact margins in the near term. That said, we remain well positioned to drive long-term growth for our shareholders.”

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 888-428-7458 (Toll Free) or 862-298-0702 (Toll) using the access code of 13729516.

For those unable to participate, a telephone replay recording will be available until Thursday, May 19, 2022. To access the replay, please call 877-660-6853 (Toll Free) or 201-612-7415 (Toll) and enter confirmation code 13729516. A web-based archive of the conference call will also be available at 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 the largest 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 to recognize the anticipated benefits of the business combination with Empower LTD, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; 2) costs related to the business combination and Holley becoming 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 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; 8) Holley’s estimates of its financial performance; 9) the impact of the novel coronavirus disease pandemic and its effect on business and financial conditions; 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, 2021 filed with the U.S. Securities and Exchange Commission (“SEC”) on March 15, 2022, and that are otherwise described or updated from time to time in Holley’s 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 any duty to update these forward-looking statements, except as otherwise required by law.

HOLLEY INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

 

 

 

 

For the thirteen weeks ended

 

 

 

 

April 3,

 

 

March 28,

 

 

 

 

 

%

 

 

 

 

2022

 

 

2021

 

 

Variance

 

 

Variance

 

Net Sales

 

 

$

200,055

 

 

$

160,332

 

 

$

39,723

 

 

 

24.8

%

Cost of Goods Sold

 

 

 

117,334

 

 

 

94,653

 

 

 

22,681

 

 

 

24.0

%

Gross Profit

 

 

 

82,721

 

 

 

65,679

 

 

 

17,042

 

 

 

25.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, General, and Administrative

 

 

 

34,342

 

 

 

24,012

 

 

 

10,330

 

 

 

43.0

%

Research and Development Costs

 

 

 

8,161

 

 

 

5,969

 

 

 

2,192

 

 

 

36.7

%

Amortization of Intangible Assets

 

 

 

3,661

 

 

 

3,336

 

 

 

325

 

 

 

9.7

%

Acquisition and Restructuring Costs

 

 

 

290

 

 

 

18,833

 

 

 

(18,543

)

 

 

-98.5

%

Related Party Acquisition and Management Fee Costs

 

 

 

 

 

 

881

 

 

 

(881

)

 

 

-100.0

%

Other Operating Expense (Income)

 

 

 

222

 

 

 

(133

)

 

 

355

 

 

 

-266.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expense

 

 

 

46,676

 

 

 

52,898

 

 

 

(6,222

)

 

 

-11.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

36,045

 

 

 

12,781

 

 

 

23,264

 

 

 

182.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Fair Value of Warrant Liability

 

 

 

2,227

 

 

 

 

 

 

2,227

 

 

nm

 

Change in Fair Value of Earn-Out Liability

 

 

 

2,381

 

 

 

 

 

 

2,381

 

 

nm

 

Interest Expense

 

 

 

7,391

 

 

 

10,071

 

 

 

(2,680

)

 

 

-26.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Operating Expense

 

 

 

11,999

 

 

 

10,071

 

 

 

1,928

 

 

 

19.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

 

 

24,046

 

 

 

2,710

 

 

 

21,336

 

 

 

787.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

 

 

7,188

 

 

 

4,766

 

 

 

2,422

 

 

 

50.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

 

$

16,858

 

 

$

(2,056

)

 

$

18,914

 

 

nm

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Currency Translation Adjustment

 

 

 

241

 

 

 

(16

)

 

 

257

 

 

nm

 

Total Comprehensive Income (Loss):

 

 

$

17,099

 

 

$

(2,072

)

 

$

19,171

 

 

nm

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Net Income (Loss) per Share

 

 

$

0.15

 

 

$

(0.03

)

 

$

0.18

 

 

nm

 

Diluted Net Income (Loss) per Share

 

 

$

0.15

 

 

$

(0.03

)

 

$

0.18

 

 

nm

 

Weighted Average Common Shares Outstanding - Basic

 

 

 

115,876

 

 

 

67,674

 

 

 

48,202

 

 

 

71.2

%

Weighted Average Common Shares Outstanding - Diluted

 

 

 

116,049

 

 

 

67,674

 

 

 

48,375

 

 

 

71.5

%

nm - not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

HOLLEY INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(In thousands)

(Unaudited)

 

 

 

April 3,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Total Current Assets

 

$

314,286

 

 

$

291,717

 

Property, Plant and Equipment, Net

 

 

55,192

 

 

 

51,495

 

Goodwill

 

 

411,721

 

 

 

411,383

 

Other Intangibles, Net

 

 

434,672

 

 

 

438,461

 

Right-of-Use Assets

 

 

32,814

 

 

 

 

Total Assets

 

$

1,248,685

 

 

$

1,193,056

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Total Current Liabilities

 

$

96,809

 

 

$

91,795

 

Long-Term Debt, Net of Current Portion

 

 

636,303

 

 

 

637,673

 

Deferred Taxes

 

 

68,735

 

 

 

70,045

 

Other Noncurrent Liabilities

 

 

107,401

 

 

 

89,056

 

Total Liabilities

 

 

909,248

 

 

 

888,569

 

 

 

 

 

 

 

 

Common Stock

 

 

12

 

 

 

12

 

Additional Paid-In Capital

 

 

347,556

 

 

 

329,705

 

Accumulated Other Comprehensive Loss

 

 

(15

)

 

 

(256

)

Accumulated Deficit

 

 

(8,116

)

 

 

(24,974

)

Total Stockholders' Equity

 

 

339,437

 

 

 

304,487

 

Total Liabilities and Stockholders' Equity

 

$

1,248,685

 

 

$

1,193,056

 

HOLLEY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

For the thirteen weeks ended

 

 

 

 

April 3,

 

 

March 28,

 

 

 

 

2022

 

 

2021

 

Operating Activities

 

 

 

 

 

 

 

Net Income (Loss)

 

 

$

16,858

 

 

$

(2,056

)

Adjustments to Reconcile to Net Cash

 

 

 

14,000

 

 

 

24,082

 

Changes in Operating Assets and Liabilities

 

 

 

(12,509

)

 

 

(3,070

)

Net Cash from Operating Activities

 

 

 

18,349

 

 

 

18,956

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

Capital Expenditures, Net of Dispositions

 

 

 

(5,587

)

 

 

(3,104

)

Acquisitions

 

 

 

(1,617

)

 

 

 

Net Cash from Investing Activities

 

 

 

(7,204

)

 

 

(3,104

)

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

Net Change in Debt

 

 

 

(3,288

)

 

 

(64

)

Net Cash from Financing Activities

 

 

 

(3,288

)

 

 

(64

)

 

 

 

 

 

 

 

 

Effect of foreign currency rate fluctuations on cash

 

 

 

(101

)

 

 

 

 

 

 

 

 

 

 

 

Net Change in Cash and Cash Equivalents

 

 

 

7,756

 

 

 

15,788

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

 

 

 

 

 

 

Beginning of Period

 

 

 

36,325

 

 

 

71,674

 

End of Period

 

 

$

44,081

 

 

$

87,462

 

Holley believes EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income Per Share, and Organic Sales are useful to investors in evaluating the Company’s financial 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 financial measures help to depict a more realistic representation of the performance of the underlying business, enabling the Company to evaluate and plan more effectively for the future.

HOLLEY INC.

USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands)

(Unaudited)

 

 

 

 

For the thirteen weeks ended

 

 

 

 

April 3,

 

 

March 28,

 

 

 

 

2022

 

 

2021

 

Net Income (Loss)

 

 

$

16,858

 

 

$

(2,056

)

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

Interest Expense

 

 

 

7,391

 

 

 

10,071

 

Income Taxes

 

 

 

7,188

 

 

 

4,766

 

Depreciation

 

 

 

2,140

 

 

 

2,252

 

Amortization

 

 

 

3,661

 

 

 

3,336

 

EBITDA

 

 

 

37,238

 

 

 

18,369

 

 

 

 

 

 

 

 

 

Acquisition and Restructuring Costs

 

 

 

290

 

 

 

1,660

 

Earn-Out from Simpson Acquisition

 

 

 

 

 

 

17,173

 

Change in Fair Value of Warrant Liability

 

 

 

2,227

 

 

 

 

Change in Fair Value of Earn-Out Liability

 

 

 

2,381

 

 

 

 

Equity-Based Compensation Expense

 

 

 

3,162

 

 

 

131

 

Related Party Acquisition and Management Fee Costs

 

 

 

 

 

 

881

 

Notable Items

 

 

 

506

 

 

 

5,713

 

Other Expense

 

 

 

222

 

 

 

(133

)

Adjusted EBITDA

 

 

$

46,026

 

 

$

43,794

 

 

 

 

For the thirteen weeks ended

 

 

 

 

April 3,

 

 

March 28,

 

 

 

 

2022

 

 

2021

 

Net income (loss)

 

 

$

16,858

 

 

$

(2,056

)

Special items:

 

 

 

 

 

 

 

Add back: Change in Fair Value of Warrant Liability

 

 

 

2,227

 

 

 

 

Add back: Change in Fair Value of Earn-Out Liability

 

 

 

2,381

 

 

 

 

Add back: Earn-Out from Simpson Acquisition

 

 

 

 

 

 

17,173

 

Adjusted Net Income

 

 

$

21,466

 

 

$

15,117

 

 

 

 

For the thirteen weeks ended

 

 

 

 

April 3,

 

 

March 28,

 

 

 

 

2022

 

 

2021

 

Net income (loss) per diluted share

 

 

$

0.15

 

 

$

(0.03

)

Special items:

 

 

 

 

 

 

 

Add back: Change in Fair Value of Warrant Liability

 

 

 

0.02

 

 

 

 

Add back: Change in Fair Value of Earn-Out Liability

 

 

 

0.02

 

 

 

 

Add back: Earn-Out from Simpson Acquisition

 

 

 

 

 

 

0.25

 

Net income per diluted share, as adjusted

 

 

$

0.19

 

 

$

0.22

 

 

 

13 Weeks Ended

 

 

 

April 3, 2022

 

Net Sales

 

 

200,055

 

Less: Sales from Acquisitions within 365 Days of Purchase (Non-Comparable to Prior Year)

 

 

(18,075

)

Organic Sales (Comparable to Prior Year Period Net Sales)

 

$

181,980

 

 

 

 

Full Year 2022

 

 

 

 

2022 Forecast

 

 

2022 Forecast

 

 

 

 

Low Range

 

 

High Range

 

Net Sales

 

 

$

765,000

 

 

$

790,000

 

Adjusted EBITDA

 

 

 

186,000

 

 

 

194,000

 

Depreciation and Amortization

 

 

 

24,000

 

 

 

26,000

 

Interest Expense

 

 

 

30,000

 

 

 

32,000

 

Capital Expenditures

 

 

 

14,000

 

 

 

16,000

 

Holley defines EBITDA as earnings before (a) interest expense, (b) income taxes and (c) depreciation and amortization. Holley defines Adjusted EBITDA as EBITDA plus (i) acquisition integration and restructuring costs, (ii) an adjustment in 2021 due to a change in the fair value of the Simpson acquisition contingent consideration payable, (iii) changes in the fair value of the warrant liability, (iv) changes in the fair value of the earn-out liability, (v) compensation expense related to equity awards, (vi) related party acquisition and management fee costs, (vii) notable items that in 2022 consist primarily of non-cash adjustments related to the adoption of ASC 842, "Leases," and in 2021 consist primarily of the amortization of the fair market value increase in inventory due to acquisitions, and (viii) other expenses, which includes losses from disposal of fixed assets and foreign currency transactions. We have included within the definition of Adjusted EBITDA the changes in the fair value of the warrant liability, changes in the fair value of the earn-out liability and losses from the early extinguishment of debt, as management believes such matters, when they occur, do not directly reflect the performance of the underlying business.

Holley calculates Adjusted Net Income and Adjusted Net Income per share 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 (loss) and net income (loss) per share, provides for a more complete analysis of the results of operations.

Organic sales, or sales excluding the impact of acquisitions, excludes 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.

EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per share, and organic sales are not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and may be different from non-GAAP 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 (loss) or any other performance measures derived in accordance with GAAP.

A forecast for full year 2022 Adjusted EBITDA is provided on a non-GAAP basis only because certain information necessary to calculate the most comparable GAAP measure 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 these measures without unreasonable effort.

Contacts

Investor Relations:

Ross Collins / Stephen Poe

Alpha IR Group

312-445-2870

HLLY@alpha-ir.com

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