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Holley Inc. (HLLY)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $153.0M, up sequentially from Q4 2024 and above S&P Global consensus, while diluted EPS of $0.02 missed consensus; adjusted EBITDA rose year-over-year to $27.3M with margin at 17.8% .
  • Management maintained full‑year 2025 guidance (Net Sales $580–$600M, Adjusted EBITDA $113–$130M, Capex $12–$16M, D&A $22–$24M, Interest $47–$52M), explicitly excluding tariff impacts .
  • Core business net sales grew 3.3% year-over-year (ex divestitures and discontinued SKUs); DTC orders +10%, third‑party marketplaces >50%, with B2B “Top 50” +~2.5% .
  • Near‑term stock narrative catalysts: tariff trajectory and pricing action (8.75% effective June 9) implementation, with management indicating more clarity by the August call; negative Q1 free cash flow reflects receivables timing, expected to reverse in Q2 .

What Went Well and What Went Wrong

What Went Well

  • Core business growth of 3.3% YoY and broad-based gains across 25+ brands; “We achieved substantial growth in both our direct-to-consumer (DTC) and business-to-business (B2B) channels…DTC orders grew over 10%…third‑party marketplace strategy…focus on Amazon” .
  • Gross margin improved to 41.9% on labor/overhead efficiency and reduced warranty costs; adjusted EBITDA margin improved to 17.8% (+460 bps YoY) .
  • Product innovation and strategic pricing generated ~$8.1M revenue contribution in the quarter (new products ~$4M; pricing ~$4M) .

What Went Wrong

  • GAAP net sales declined 3.5% YoY to $153.0M and diluted EPS fell to $0.02 vs $0.03 prior year; net income margin declined to 1.8% .
  • Free cash flow was negative $10.8M in Q1 due to March-weighted sales driving AR +$14.9M and normalization of prior-year AP tailwinds; management expects FCF generation in Q2 .
  • Heightened tariff uncertainty forced a broad mitigation program and pricing actions; management cannot yet quantify exposure, expects more clarity by August .

Financial Results

P&L and Margins vs Prior Periods and Estimates

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$134.0 $140.1 $153.0
Diluted EPS ($USD)$(0.05) $(0.32) $0.02
Adjusted EBITDA ($USD Millions)$22.1 $29.1 $27.3
Adjusted EBITDA Margin (%)16.5% 20.8% 17.8%
Gross Margin (%)39.0% 45.6% 41.9%
Net Income Margin (%)(4.7%) (27.0%) 1.8%

Results vs S&P Global Consensus (Q1 2025)

MetricQ1 2025 ActualQ1 2025 ConsensusBeat/Miss
Revenue ($USD Millions)$153.0 $148.3*Beat by ~$4.8M*
Diluted EPS ($USD)$0.02 $0.051*Miss by ~$(0.031)*
Adjusted EBITDA ($USD Millions)$27.3 $28.6*Miss by ~$(1.3)M*

Values retrieved from S&P Global.*

Segment/Vertical Core Growth (YoY)

DivisionQ1 2025 Core YoY Growth
Domestic Muscle+3%
Modern Truck & Off‑Road+2%
Euro & Import+17%
Safety & Racing+3%

KPIs and Operating Metrics

KPIQ1 2025
DTC orders growth>10%
Third‑party marketplaces (Amazon/eBay)>50% growth
B2B “Top 50” accounts growth~2.5%
New product revenue contribution~$4M
Strategic pricing revenue contribution~$4M
Adjusted EBITDA margin17.8%
Free Cash Flow$(10.8)M
Net cash used in operating activities$(7.85)M
Accounts receivable change driverMarch‑weighted sales +$14.9M AR (timing)
Inventory reduction since year‑end~$3.4M
Bank‑adjusted EBITDA leverage4.32x

Guidance Changes

MetricPeriodPrevious Guidance (Mar 11, 2025)Current Guidance (May 7, 2025)Change
Net Sales ($USD Millions)FY 2025$580–$600; 0.8%–4.3% YoY vs core $580–$600; 0.8%–4.3% YoY vs core Maintained
Adjusted EBITDA ($USD Millions)FY 2025$113–$130 $113–$130 Maintained
Capital Expenditures ($USD Millions)FY 2025$12–$16 $12–$16 Maintained
Depreciation & Amortization ($USD Millions)FY 2025$22–$24 $22–$24 Maintained
Interest Expense ($USD Millions)FY 2025$47–$52 $47–$52 (excluding collar revaluation) Maintained
Tariff treatmentFY 2025Excludes tariff impacts Excludes tariff impacts Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q‑2 = Q3’24, Q‑1 = Q4’24)Current Period (Q1’25)Trend
Tariffs & macroQ4: Softening consumer confidence; cautious outlook Significant tariff uncertainty; mitigation program; 8.75% price increase effective June 9; clarity expected by August Intensifying risk
DTC & marketplacesQ3: DTC +16%; events boosted sell‑through DTC orders +10%; third‑party platforms >50% growth Accelerating
B2B partnershipsQ3: Inventory normalization; partner alignment Top 50 account growth; improved data and collaboration Improving
Product innovationQ3: New product revenue up; power brands strength ~$8.1M contribution from new products & pricing initiatives Sustained
Pricing actionsQ4: Precision pricing model on top SKUs 8.75% blended portfolio increase announced Apr 11; effective June 9 Implemented
Working capitalQ3: Inventory turns up; inventory down AR up on March sales; inventory reduced $3.4M since year‑end Mixed (timing)
International expansionQ4: Mexico opportunity discussed 15 distributors signed; phased launch across verticals Early‑stage growth

Management Commentary

  • “We achieved substantial growth in both our direct-to-consumer (DTC) and business-to-business (B2B) channels…DTC orders grew over 10%…third‑party marketplace strategy, particularly with a focus on Amazon.” — Matthew Stevenson, CEO .
  • “Our gross margins also saw a significant improvement…approximately 200 basis points…attributable to…labor and overhead efficiency as well as reduced warranty costs.” — Matthew Stevenson .
  • “We announced a comprehensive pricing action on April 11 with an 8.75% increase to be implemented on June 9…” — Matthew Stevenson .
  • “We are maintaining our 2025 guidance…This guidance does not account for potential tariff impacts, which remain fluid…” — Matthew Stevenson .

Q&A Highlights

  • Tariffs and share gains: “We think Holley is poised to take share just based on the majority of our production costs…being in the U.S.” — Stevenson .
  • Pricing approach and competitor actions: “Our blending approach…we have seen price increases well in excess…as high as 30% or more from some competitors.” — Stevenson .
  • Third‑party marketplaces economics and channel conflict: “Highly incremental…fee structures…we comply with MAP…viable growth channel.” — Weaver .
  • Demand trends and prebuy: “January and February were soft due to weather…March was really good…we have not observed any significant changes one way or the other.” — Stevenson .
  • Guidance excludes tariffs and implies volume/price mix: “It excludes the impact of tariffs…volume offset with higher price later this quarter.” — Weaver .

Estimates Context

  • Q1 2025: Revenue beat consensus; EPS and EBITDA missed modestly. Prior quarter Q4 2024: Revenue and EPS beat; EBITDA above consensus. Q3 2024: Revenue, EPS, EBITDA below consensus .
  • Expect estimate revisions to reflect stronger gross margin execution, core growth, but incorporate tariff/pricing elasticity and near‑term FCF timing dynamics .

Actual vs Consensus (S&P Global)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions) Actual$134.0 $140.1 $153.0
Revenue Consensus ($USD Millions)$142.5*$137.6*$148.3*
EPS Actual ($USD)$(0.05) $0.11 $0.02
EPS Consensus ($USD)$0.027*$0.020*$0.051*
Adjusted EBITDA Actual ($USD Millions)$22.1 $29.1 $27.3
EBITDA Consensus ($USD Millions)$26.1*$25.7*$28.6*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Q1 prints show sequential revenue and margin improvement with a revenue beat; EPS/EBITDA misses were modest, and mix/timing dynamics (AR surge) should reverse FCF in Q2 .
  • Core growth and marketplace momentum (>50% third‑party growth) support share gains even in a softer discretionary backdrop; watch execution on MAP and data quality to preserve margin .
  • Tariff mitigation + blended price increase (8.75% June 9) are critical levers; near‑term demand elasticity and competitive pricing responses will drive estimate and multiple moves .
  • Guidance held; back‑half weighted growth thesis intact, but management will update post tariff clarity in August—setup for narrative volatility around that event .
  • Operational KPIs continue to improve (warranty, labor efficiency, inventory reduction), underpinning gross margin durability toward long‑term 40% target and >20% adjusted EBITDA margins .
  • Balance sheet manageable (4.32x bank‑adjusted leverage; covenant-light revolver); rate hedging in place—reduces downside risk while pursuing organic and selective M&A .
  • Trading: Near‑term catalysts include tariff headlines, price‑increase realization, and Q2 FCF; medium‑term thesis rests on omnichannel growth, product innovation cadence, and disciplined cost execution .