Executive Summary

Q4 2024 net sales declined 10.1% year over year to $140.1 million, but gross margin expanded 690 bps to 45.6%, and Adjusted EBITDA rose to $29.1 million (20.8% margin); GAAP net loss reflected $40.9 million goodwill and $7.7 million trademark impairments .
Full-year 2024 revenue was $602.2 million (-8.7% YoY), Adjusted EBITDA $110.5 million (18.3% margin), in line with adjusted guidance after the SEC letter changed treatment of the strategic product rationalization .
2025 outlook: revenue $580–$600 million, Adjusted EBITDA $113–$130 million; management expects back-half weighted growth with normalized distributor inventories and ongoing cost-to-serve savings; revolver amended to covenant-lite, maturity extended to Nov 2029, and interest exposure further hedged .
Catalysts: margin expansion despite soft demand, clarified adjusted guidance framework, DTC +8% and national retailer +12% growth, Mexico expansion and Modern Truck & Off-Road packages support share gains even as macro remains cautious .

What Went Well and What Went Wrong

What Went Well

Gross margin improved to 45.6% (+690 bps YoY) and Adjusted EBITDA margin to 20.8% (+250 bps YoY), driven by purchasing price variance benefits, cost-to-serve savings, and mix including DTC .
Direct-to-consumer +8% and national retailer +12% growth in 2024; 17 brands grew YoY with strong performance across power brands (Stilo, Simpson, Dinan, ADS, Cataclean) .
Strategic and financial actions: revolver amended to covenant-lite ($100m availability, 5.0x springing net leverage test), extended to Nov 18, 2029; additional cashless collar to reduce interest rate exposure to term loan maturity in Nov 2028 .

Management quote: “We are demonstrating significant strides… transforming Holley into a fundamentally more sophisticated organization… despite operating in a challenging macroeconomic environment for consumers.” – Matthew Stevenson .

What Went Wrong

Top-line weakness: Q4 net sales down 10.1% YoY to $140.1 million, reflecting soft consumer demand and continued reseller destocking; free cash flow fell to $1.8 million vs $29.9 million in Q4 2023 .
GAAP net loss of $37.8 million in Q4 due to non-cash impairment charges ($40.9m goodwill, $7.7m trademark), overshadowing operational margin gains .
Macro softness and consumer hesitancy post-election; management guides cautious H1 and back-half weighted recovery, noting tariff fluidity and potential impacts not in guidance .

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
Net Sales ($USD Billions)	$0.170	$0.134	$0.140
Gross Margin (%)	41.5%	39.0%	45.6%
Adjusted EBITDA ($USD Millions)	$37.4	$22.1	$29.1
Adjusted EBITDA Margin (%)	22.1%	16.5%	20.8%
Diluted EPS (GAAP, $)	$0.14	$(0.05)	$(0.32)
Adjusted Diluted EPS ($)	$0.10	$(0.01)	$0.11

Q4 2024 YoY highlights:

Net sales: $140.1 million vs $155.7 million (-10.1%) .
Adjusted EBITDA: $29.1 million vs $28.5 million (+2.1%) .
GAAP diluted EPS: $(0.32) vs $0.01 due to impairments .

KPIs

KPI	Q2 2024	Q3 2024	Q4 2024
Net Cash Provided by Operating Activities ($USD Millions)	$25.7	$(1.7)	$4.1
Free Cash Flow ($USD Millions)	$24.4	$(2.1)	$1.8
Inventory Turns (TTM, x)	2.2x	2.2x	2.0x
Bank-adjusted EBITDA Leverage Ratio (TTM, x)	4.02x	4.25x	4.17x

Non-GAAP reconciliation, drivers, and footnotes are provided in the press release/8-K exhibits .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance / Actual	Change
Net Sales	Q4 2024	$133–$143 million	$140.1 million (actual)	Met; near high end
Adjusted EBITDA	Q4 2024	$24–$29 million	$29.1 million (actual)	At high end
Net Sales	FY 2024	$595–$605 million	$602.2 million (actual)	Within range
Adjusted EBITDA	FY 2024	$115–$120 million (pre-SEC treatment)	Adjusted range $106.8–$111.8; actual $110.5 million	Guidance methodology updated; achieved near high end of adjusted range
Net Sales	FY 2025	N/A	$580–$600 million	New
Adjusted EBITDA	FY 2025	N/A	$113–$130 million	New
CapEx	FY 2025	N/A	$12–$16 million	New
D&A	FY 2025	N/A	$22–$24 million	New
Interest Expense	FY 2025	N/A	$47–$52 million	New

Management noted 2025 growth is expected to be back-half weighted and guidance excludes potential incremental tariff impacts .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
Consumer confidence/macro	Cautious stance amid uncertainty; conservative H2 outlook	Softer confidence early 2025; cautious H1, back-half weighted guidance	Slight deterioration
DTC/channel mix	DTC strength; Memorial Day collaboration; S&P upgrade	DTC +8% YoY; national retailer +12%; enhanced B2B coverage (~80% volume)	Improving mix
Distributor inventory normalization	Improvements; exits covenant relief; leverage 4.02x	Sell-in aligned to sell-through; healthier channel inventories entering 2025	Normalizing
Cost-to-serve savings	Ongoing initiatives	~$7.8 million savings in 2024 supporting margin expansion	Executing ahead of plan
Tariffs	Not detailed	Fluid; moderate exposure; mitigation via sourcing/pricing; excluded from guidance	Risk monitored
Product innovation	New launches across brands	Solution bundles (Modern Truck & Off-Road); new tuning module; NOS Octane Booster; 75% increase in revenue per SKU for new launches	Robust pipeline
Geographic expansion	N/A	Mexico entry with AutoZone/distributors; phased rollout	Expanding internationally
Leverage/credit actions	S&P upgrade; leverage 4.02x	Revolver amendment (covenant-lite); cashless collar; leverage 4.17x	Balance sheet fortified

Management Commentary

“We have assembled an exceptional leadership team… poised to propel us toward becoming a $1 billion enthusiast platform.” – Matthew Stevenson .
“Gross margin… up 690 basis points year-over-year to 45.6%… Adjusted EBITDA margin… 20.8% for the quarter, up 250 basis points year-over-year.” – Matthew Stevenson .
“As we look ahead… by focusing on continuing to strengthen our B2B relationships, we aim to continue gaining market share and driving growth in 2025.” – Matthew Stevenson .
“Our improved working relationships with the distribution partners… left channel inventory levels in a much better position going into ’25.” – Jesse Weaver .
“The amendment [to the revolver]… to a covenant-light structure… extends the maturity date through November of ’29 and updates available borrowing to $100 million.” – Jesse Weaver .

Q&A Highlights

Mexico opportunity: Enthusiast market estimated at $3–$5 billion; AutoZone and national retailer partnerships in U.S. and Mexico support growth .
Guidance assumptions: Back-half weighted growth; assumes consumer confidence does not worsen—improvement would skew to top end of range .
Channel health: Closer coordination with distributors to align sell-in/sell-out; broader B2B investments beyond top-tier partners .
Near-term demand: Q1 trending flat on core business (+/– 1–2% with weeks remaining) .
Category performance: Modern Truck & Off-Road resilient; softness in high-ticket “4-digit” items; safety/motorcycle strong YoY .
Tariffs: Moderate exposure; mitigation via sourcing optimization and modest pricing; not reflected in 2025 guidance .

Estimates Context

S&P Global consensus estimates for Q4 2024 and FY 2025 were unavailable at time of analysis due to a data access limit from SPGI; therefore, explicit beat/miss versus Wall Street consensus cannot be determined. Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

Margin expansion amid soft demand underscores operational improvements; purchasing and cost-to-serve programs are durable drivers supporting 40%+ gross and ~20% EBITDA margin targets .
2025 setup is cleaner: distributor inventories normalized, strategic product rationalization concluded, and guidance is back-half weighted; watch H1 execution and signs of consumer stabilization .
Balance sheet flexibility improved: covenant-lite revolver, extended maturities, and interest collars reduce risk and support strategic optionality (deleveraging vs. targeted M&A) .
Commercial momentum: DTC +8%, national retailers +12%, 17 brands growing; Modern Truck & Off-Road packages and Mexico expansion should aid share gains even if macro remains cautious .
Tariff risk is fluid and excluded from guidance; mitigation options include sourcing optimization and calibrated pricing—monitor policy developments and potential impacts to H2 .
Near-term trading lens: Q4 printed near top-end of guidance on Adjusted EBITDA with strong gross margin, but GAAP loss from impairments may curb enthusiasm; catalysts include continued margin delivery, H1 tracking to plan, and evidence of back-half acceleration .
Watch free cash flow cadence: AP process changes impacted Q4 timing; underlying FCF generation remains a strategic lever for deleveraging and growth investments .

Holley Inc. (HLLY)·Q4 2024 Earnings Summary