Holley Reports Q4 and Full Year 2022 Results

Holley Inc., a platform serving performance automotive enthusiasts, has announced financial results for its fourth quarter and full year ended Dec. 31, 2022.

Full Year 2022 Highlights vs. Prior Year Period

Net Sales decreased 0.6% to $688.4 million in 2022 compared to $692.9 million in 2021
Gross Profit decreased 11.6% to $253.7 million in 2022 compared to $286.8 million in 2021
Net Income of $73.8 million, or $0.14 per diluted share, in 2022 compared to a Net Loss of $(27.1) million, or $(0.30) per diluted share, in 2021
Adjusted Net Income1 of $7.9 million, in 2022 compared to Adjusted Net Income1 of $61.8 million reported in 2021
Adjusted EBITDA1 of $114.7 million in 2022 compared to $169.5 million in 2021
Fourth Quarter Highlights vs. Prior Year Period
Net Sales decreased 14.3% to $154.2 million compared to $179.8 million in the prior year’s fourth quarter
Gross Profit decreased 36.8% to $47.3 million compared to $74.7 million in the prior year’s fourth quarter
Net Loss of $(15.2) million, or $(0.13) per diluted share, compared to a Net Loss of $(18.0) million, or $(0.16) per diluted share, in the prior year’s fourth quarter
Adjusted Net Loss1 of $(22.6) million, compared to Adjusted Net Income1 of $9.0 million reported in the prior year’s fourth quarter
Adjusted EBITDA1 of $15.1 million compared to $36.1 million in the prior year’s fourth quarter

“Despite ongoing supply-chain disruptions and demand normalization impacting financial results during the quarter, we remain encouraged by the underlying strength of our core enthusiast base and are confident that Holley remains a clear leader in the performance enthusiast automotive space,” said Michelle Gloeckler, Holley’s interim president and CEO. “We are intently focused on strategically aligning our cost structure, delivering strong free cash flow, and returning the Company’s growth and margin performance to historical levels.”

Key Operating Metrics and Strategic Highlights

Record DTC sales of $149 million in 2022, up 27% or $32 million compared to 2021
Holley event attendance of 106,000 individuals in 2022, an increase of 16.9% year-over-year
Past due orders reduced during the fourth quarter but remain elevated in our Electronics category
$30 million of savings in 2023 driven by operational improvements and cost initiatives to help offset cost headwinds

“2022 was a challenging year for Holley, and one that surfaced many areas of improvement for the broader organization,” said Matthew Rubel, Executive Chairman of the Board. “We are extremely focused heading into 2023, with dedicated efforts to realize additional cost savings and M&A synergy capture, prioritize key product categories and platforms, and return to operational excellence through the refinement of our organizational structure.”

“I believe that we are well positioned to take this business to the next level and that our team is highly capable of executing Holley’s strategic vision, which is to inspire and enable enthusiasts in their automotive adventures by bringing innovation, discovery, and fun to motor life,” said Gloeckler. “New products are our Company’s lifeblood, and we are positioned to capitalize on many new opportunities such as the modification of electric vehicles and electric powertrain conversions in the future. Our superior engineering capabilities and unparalleled understanding of the performance enthusiast consumer will benefit this effort and position Holley to remain a leader in the attractive growth market.”

In an effort to reduce exposure to floating interest rates, Holley entered into a costless interest rate collar that hedged $500 million in debt by capping 3-Month SOFR at 5.0%, subject to a floor on 3-Month SOFR of 2.8%, through mid-February of 2026.

Full Year 2023 Outlook

Holley is providing the following outlook for the full-year 2023:
Net Sales in the range of $625-$675 million
Adjusted EBITDA of $108-$122 million
Capital Expenditures in the range of $10-$15 million
Depreciation and Amortization Expense of $23-$25 million
Interest Expense in the range of $60-$65 million

“While 2022 results were challenged by multiple factors, the management team at Holley is committed to making the necessary changes to stabilize our Company and drive improved operating and financial performance,” said Jesse Weaver, Holley’s CFO. “Heading into 2023, we believe we are well-equipped to execute our well-defined strategy. There is incredible depth in our leadership, and we have the needed financial flexibility to align our cost structure to current market demand. Despite a normalization to pre-Covid trend growth levels, our end markets remain strong, and Holley is an unquestioned leader across key product categories. We’ve taken several steps to fully capture acquisition synergies, improve our freight strategy, and right size our operating structure. In total, we expect these efforts to deliver approximately $30 million of year-over-year cost savings in 2023, with $15 million coming from SG&A as the result of a recent reduction in force and expected synergy capture and $15 million in gross margin largely driven by improved shipping costs as the result of a recently negotiated contract with a new 3rd party logistics provider. The organization is laser-focused on restoring profitability, optimizing inventories, driving innovation, and de-leveraging our balance sheet in 2023 and beyond.”