Holley Inc. · NYSE:HLLY
Holley — Empower — SPAC Merger (May 2021)
51 slides from Holley's SPAC merger presentation, May 6, 2021
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Slide 2: Disclaimer
HOLLEY 1 Disclaimer This investor presentation (this “Presentation”) is for informational purposes only to assist interested parties in making their own evaluation with respect to the proposed business combination (the “Business Combination”) between Empower, Ltd. (the “Company”) and Holley Intermed
Slide 3: Disclaimer (cont'd)
HOLLEY 2 Disclaimer (cont’d) Use of Projections This Presentation contains financial forecasts with respect to Holley’s projected financial results, including Revenue and Pro Forma Adjusted EBITDA, Pro Forma EBITDA, Pro Forma Free Cash Flow, Pro Forma Net Sales, Pro Forma Gross Profit, Pro Forma Net
Slide 4: Today's Presenters
HOLLEY 3 Today’s Presenters Tom Tomlinson President and Chief Executive Officer Dominic Bardos Chief Financial Officer The Enthusiast Sean Crawford Chief Marketing Officer Platform Built by Enthusiasts for Enthusiasts Matt Rubel Executive Chairman and Chief Executive Officer Graham Clempson Presiden
Slide 5: Transaction Overview
HOLLEY 4 Transaction Overview Holley Is the Ultimate Enthusiast Platform Pro Forma Valuation ($M) Share price $10.00 #1 Market in the large and attractive (1) performance aftermarket category Leader Pro forma shares outstanding (M) 115.8 Equity value $1,158.1 driven by iconic brands, continuous Stro
Slide 6: Empower Ltd. Overview
HOLLEY 5 Empower Ltd. Overview Led By Operators With Deep Domain Expertise The Empower Difference Independent Directors Robust sector knowledge and capabilities Kandy Anand Extensive investment experience Gina Bianchini Matthew Rubel Graham Clempson Andrew Spring Executive Chairman and President Chi
Slide 7: Holley the Ultimate Enthusiast Platform
HOLLEY 6 HOLLEY the Ultimate Enthusiast Platform The largest and fastest growing platform in the performance enthusiast automotive space reaching consumers with the most iconic brands, continuous product innovation and a powerful distribution network Market New Product Leading Brands Development Eng
Slide 8: The Enthusiast Platform Built by Enthusiasts for Enthusiasts
HOLLEY 7 1 Large base of passionate and highly engaged enthusiast consumers with attractive demographics 2 Massive $34B U.S. market with decades of uninterrupted (1) growth 3 Powerhouse of product innovation with iconic brands The Enthusiast 4 Proven acquisition platform with a robust M&A pipeline P
Slide 9: Mission and Vision
HOLLEY 8 Mission Bring innovation and provide inspiration to automotive enthusiasts Vision n Be the most compelling platform for automotive enthusiasts n To inspire and support enthusiasts’ transition to cleaner, more sustainable technologies n To further accelerate the automotive lifestyle The Enth
Slide 10: We Are Disrupting the Performance Aftermarket
HOLLEY 9 We Are Disrupting the Performance Aftermarket (1) Other Industry Players Core Focus We focus on our consumers Primarily focused on B2B Direct digital and experiential Transactional, with limited consumer Consumer Engagement engagement with enthusiasts interaction DTC strategy is core to wha
Slide 11: We Are Committed to Growth
HOLLEY 10 HOLLEY We Are Committed to Growth New Product Development is The Primary Driver of Our Organic Growth We Will Accelerate Growth by Capitalizing on Our Massive M&A Opportunity We Are Engaging Our Consumers and Growing Our DTC Sales We Have Created a Virtuous Cycle of Engagement, Innovation,
Slide 12: We Love Our Enthusiast Consumers
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Slide 13: Our Consumers Love Their Cars and Trucks
HOLLEY 12 1 Our Consumers Love Their Cars and Trucks Our Consumers Are Obsessive We Reach a Huge About Their Lifestyle Base of Consumers (1) 50M consumers in the U.S. who see their cars and trucks as more than a means of transportation; (2) 15M of these are frequent purchasers Our Consumers Are Pass
Slide 14: Our Enthusiasts Love to Modify Their Cars
HOLLEY 13 HOLLEY 1 Our Enthusiasts Love to Modify Their Cars Enthusiasts feel a need for personalization and performance Desire for Desire for self- experiences expression Enthusiasts will replace ordinary working parts with extraordinary ones hours spent weekly on car enhancements 10+ of all enthus
Slide 15: Our Enthusiast Consumers Are Engaged and Active
H HOL OLL LE EY Y 14 Building Going Fast 1 Our Enthusiast Consumers Are Engaged and Active Off-Roading Racing Standing Out CommunityH HOL OLL LE EY Y 14 Building Going Fast 1 Our Enthusiast Consumers Are Engaged and Active Off-Roading Racing Standing Out Community
Slide 16: Our Consumers Have Highly Compelling Attributes
HOLLEY HOLLEY 15 1 Our Consumers Have Highly Compelling Attributes Repeat Purchasers of our consumers view their spend as 87% recurring Spend More higher average spend by Holley consumers 25% relative to broader enthusiast market Young and Active aged 45 or younger vs. 46% of the 76% general populat
Slide 17: Our Market Is Large, Growing and Attractive
| ~ = es OUR MARKET IS LARGE, GROWING AND ATTRACTIVE - y Var 5 wae _ “a
Slide 18: Performance Automotive Aftermarket is Massive and Consistently Growing
HOLLEY 17 2 Performance Automotive Aftermarket is Massive and Consistently Growing Industry Revenue in Billions $34 $32 ~$1.5B 6.5% $30 expansion during 18 year Great Recession CAGR $28 $26 Stability During the Great Recession $23 $20 $19 $18 $18 $17 $17 $16 $16 $15 $13 $12 $11 $11 2001 2002 2003 20
Slide 19: We Have Tremendous Room to Grow in Our Market
HOLLEY 18 2 We Have Tremendous Room to Grow in Our Market U.S. Addressable Performance Aftermarket by Product Group (2019 Revenue in Billions) As a leader in its current Ample Runway for categories, Holley is well Continued Growth positioned to expand into the broader performance automotive aftermar
Slide 20: Our Iconic Brands Resonate with Our Consumers
HOLLEY 19 2 Our Iconic Brands Resonate with Our Consumers Core Our Our Representative Category Brands Market Position Products Electronic #1 Fuel Injection Electronic #1 Tuning Electronic #1 Ignition Carburetor #1 Exhaust #2 Safety #1 Source: Management estimates. Third-party report created by marke
Slide 21: We Are a New Product Development Powerhouse
WE ARE A NEW PRODUCT DEVELOPMENT POWERHOUSE & > A
Slide 22: Our Innovative Products Drive Organic Sales Growth
21 H H OL OL LL EE YY PE PE RFORMANC RFORMANC HOLLE E E ™ Y 3 Our Innovative Products Drive Organic Sales Growth Product New Products are our Lifeblood Innovation Powerhouse $340M+ ~1,850 ~$17M ~40% of 2020 PF sales from products introduced in 135 of potential the last 5 years sales in #1 pipeline n
Slide 23: We Have Thoughtfully Expanded Our Product Portfolio
HOLLEY 22 3 We Have Thoughtfully Expanded Our Product Portfolio (1) PF Gross Sales by Product Category Categories for Category (2) Expansion Size New category $606M Other Electronic Fuel $1.7B $97 Injection Winning categories Wheels & with large opportunity Chassis/Suspension $17 for further growth
Slide 24: Growing Across All Vehicle Vintages
HOLLEY 23 3 Growing Across All Vehicle Vintages (1) PF Gross Sales by Vintage $606M Holley is the leading provider of performance products for Classic Cars 34% Modern and $288 Late Model 2010-2020 (‘90 – Present) Growth CAGR Substantial growth in Late Model and Modern with meaningful untapped whites
Slide 25: Positioned for Growth in the Emerging Performance EV Segment
HOLLEY 24 3 Positioned for Growth in the Emerging Performance EV Segment We are one of the only performance aftermarket companies with the scale and expertise to meaningfully attack the performance EV opportunity ün Substantial expertise ün Demonstrated success in ü n Unparalleled understanding in e
Slide 26: Proven Acquisition Platform with Robust M&A Pipeline
¥ | PROVEN ACQUISITION PLATFORM WITH ROBUST M&A PIPELINE
Slide 27: We Have Proven Capabilities and a Focused Strategy
HOLLEY 26 4 We Have Proven Capabilities and a Focused Strategy Powerful Proven Integration Robust Pipeline Acquisition Platform Expertise of Targets Focused on Highly Accretive $35M 20+ Hundreds 9 Highly Synergistic Acquisitions acquisitions executed platform cost saving synergies driven by exceptio
Slide 28: We Have Unlocked Incredible Value
HOLLEY 27 4 We Have Unlocked Incredible Value Proven Ability to Execute and Integrate Accretive M&A (2015) (2018) (2019) (2020) (2020) (2020) (2021) Creating Highly Synergistic Outcomes 2014 – 2020 Total CAGR: ~39% $ in Millions $145 $22 $35 Acquired AEM EBITDA and $68 cost-savings from recent acqui
Slide 29: Opportunity to Accelerate Growth Through M&A
HOLLEY 28 HOLLEY 4 Opportunity to Accelerate Growth AEM: A Quintessential Through M&A Holley Deal Highly Active M&A Pipeline Leading developer and supplier of electronic control and monitoring systems for M&A targets 285+ performance automotive applications reviewed § Acquired April 2021 § Expect $2
Slide 30: We Reach Our Consumers Where They Shop
ws WE REACH OUR CONSUMERS WHERE THEY SHOP
Slide 31: We Focus on Digital and Experiential Engagement
HOLLEY 30 5 We Focus on Digital and Experiential Engagement Powerful marketing strategy As business has scaled the Continued digital evolution, combined with multiple consumer touch points brand the story has simplified with effective data capture, drives significant growth Experiential Digital Webs
Slide 32: Experiential Marketing Builds Emotional Connections
HOLLEY 31 5 Experiential Marketing Builds Emotional Connections and Drives Lifetime Value Building the “Holley Tribe” Directly Engaging Enthusiasts Celebrating Car Culture and Building (Attendees in thousands) Community 77 9 62 Events are rooted in popular engine and car 16 14 platforms and drive ex
Slide 33: Omni-Channel Presence with Rapidly Growing DTC
HOLLEY 32 5 Omni-Channel Presence with Rapidly Growing DTC We reach our Consumer Strong pull Power position in all consumers demand pulls our through affords channels, including where they product through our brands must- higher margin DTC choose to shop each channel carry status channel Low Growth,
Slide 34: We Are the Online Leader in the Performance Aftermarket
33 HOLLEY 5 We Are the Online Leader in the Performance Aftermarket The Performance Aftermarket is We are Well-Positioned to Moving Online Continue Driving the Shift Online $17B ~40% ~$84M $286 performance aftermarket consumers expect to PF DTC sales average (1) online sales increase DTC spend 2020
Slide 35: Flexible Operating Model with Attractive Economics
DRAFT FLEXIBLE OPERATING MODEL WITH APPENDIX ATTRACTIVE ECONOMICSDRAFT FLEXIBLE OPERATING MODEL WITH APPENDIX ATTRACTIVE ECONOMICS
Slide 36: We Have a Proven, Efficient and Flexible Operating Model
HOLLEY 35 HOLLEY 6 We Have a Proven, Efficient and Flexible Operating Model Best-Value Distribution In-House Tightly Integrated Sourcing Model Expertise Manufacturing Business We leverage a “best value sourcing” model to create Automated Order 10 One operational flexibility and Processing Facilities
Slide 37: Attractive Margin Profile and Robust Cash Flow Generation
HOLLEY 36 6 Attractive Margin Profile and Robust Cash Flow ~12.7% Generation ’19A – ’22E PF Net Sales CAGR (1) (1) PF Net Sales PF Gross Profit $ in Millions $ in Millions $665 $290 $624 $584 $268 ~25% $245 $464 $466 2020A PF $203 $202 EBITDA margin 2018A 2019A 2020A 2021E 2022E 2018A 2019A 2020A 20
Slide 38: 2019 Was a Transformative Year for Our Business
HOLLEY 37 6 2019 Was a Transformative Year for Our Business Industry Participants Often Prioritize We Implemented Changes To Support Short-Term Success the Long-Term Health of Our Business Competitors in the performance aftermarket often rely on Prior to its integration into Holley in 2019, Driven u
Slide 39: Led by an Experienced Team of Enthusiasts
| LED BY AN EXPERIENCED TEAM OF ENTHUSIASTS
Slide 40: Team of Passionate Enthusiasts, Serving our Enthusiasts
HOLLEY 39 7 Team of Passionate Enthusiasts, Serving our Enthusiasts Jason Bruce Dominic Bardos Brian Tom Tomlinson Sean Crawford Steve Trussell VP of Business Chief Financial Chief Executive Chief Marketing Appelgate VP of Finance Development Officer Officer Officer Head of M&A (Reseller Sales) Indu
Slide 41: DRAFTDRAFT
DRAFTDRAFT
Slide 42: Peer Valuation and Operating Metrics
HOLLEY 41 Peer Valuation and Operating Metrics Peer median Specialized enthusiast brands Branded products and accessories (1) (3) Equity value ($M) $1,158 $6,054 $5,077 $2,296 $23,033 $7,390 $5,313 $4,863 $3,273 $6,198 $5,129 $2,230 $20,211 $7,271 $6,077 $5,011 $3,489 Firm value ($M) $1,643 X X X X
Slide 43: Valuation Relative to Peers
HOLLEY 42 Valuation Relative to Peers Specialized enthusiast brands Branded products and accessories 30.4x 27.9x 25.0x 22.7x 19.6x 17.3x 14.8x 13.7x 10.3x (1) (2) 24.4x 21.6x 21.8x 19.2x 18.2x 16.5x 14.2x 12.7x 9.3x (1) (2) Source: Management estimates, FactSet as of 4/20/2021 (calendarized to 12/31
Slide 44: Why We Love This Investment Opportunity
HOLLEY 43 Massive and Engaged Attractive Market Enthusiasts Large underpenetrated market Large, vibrant, growing and with exceptional attributes; loyal consumer base leading player of scale Why We Love New Product Acquisition This Investment Development Platform Product development is driven by insi
Slide 45: Q&A Appendix
DRAFT Q&A APPENDIXDRAFT Q&A APPENDIX
Slide 46: Transaction and Offering Summary
HOLLEY 45 Transaction and Offering Summary Transaction Details Offering Summary § Empower Ltd. (NYSE: EMPW), a publicly-listed special purpose Issuer:§ Empower Ltd. Overview acquisition company, proposes to enter into a business combination with Holley Intermediate Holdings Inc. Exchange/Ticker:§ NY
Slide 47: Summary and Projected Financials
HOLLEY 46 Summary and Projected Financials 2021E and 2022E Do Not Include Potential Acquisitions Net Leverage 3.3x < 3.0x Summary P&L Pro Forma 2021E Target at Close Leverage (Figures in millions) Historical Expected CAGR (1) (2) (3) PF 2018A PF 2019A PF 2020A 2021E 2022E '18-'22 Net Sales $466 $464
Slide 48: Reconciliation of Historical PF Non-GAAP EBITDA
HOLLEY 47 Reconciliation of Historical PF Non-GAAP EBITDA (1) (2) (3) Amounts in $M 2018A 2019A 2020E Net Income ($31) $1 $33 Interest Expense 19 50 44 Income Taxes (5) (5) 9 Depreciation 4 9 8 Amortization 4 10 11 EBITDA ($8) $65 $104 Acquisition Integration & Restructuring 4 3 5 One-Time Exit Cost
Slide 49: Financial Impact of Acquisitions
HOLLEY 48 Financial Impact of Acquisitions (1) (2) (3) Amounts in $M 2018A 2019A 2020E Net Sales Holley $378 $373 $491 Drake 29 29 34 Simpson 48 50 47 Detroit Speed 11 12 13 Total $466 $464 $584 % growth (0.5%) 25.9% Gross Profit Holley $165 $163 $206 Drake 10 10 12 Simpson 24 26 23 Detroit Speed 4
Slide 50: Summary Key Risks
HOLLEY 49 Summary Key Risks Investing in the Offering involves a high degree of risk. Certain of the following key risks apply to the business and operations of Holley and will also apply to the business and operations of the Company following the completion of the Business Combination. If any of th
Slide 51: Summary Key Risks (cont'd)
HOLLEY 50 Summary Key Risks (cont’d) n Holley’s current and future products may experience quality problems from time to time that can result in negative publicity, litigation, product recalls, and warranty claims, which could result in decreased sales and operating margin, and harm to Holley’s bran