Slide 1: Third Quarter 2024 Financial Results Call
Third Quarter 2024 1 Financial Results Call
Slide 2: Disclaimer
Disclaimer Certain statements in this presentation 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
Slide 3: Agenda
Agenda Presenter: Anthony Rozmus Investor Relations Introductions & Forward-Looking Statements Matt Stevenson Results and Highlights President & CEO Jesse Weaver Financial Results CFO Group Q&A Matt Stevenson Outlook President & CEO 3
Slide 4: Results and Highlights
Results and Highlights Matthew Stevenson President and CEO 4 4
Slide 5: Q3 Executive Summary
Q3 Executive Summary Maintaining Out-the-Door Share Gains YTD Despite Continued Softness in Market Demand Well Executed Strategic Marketing Calendar of Events Created a DTC Lift of 110% in the Quarter B2B participation in Marketing Calendar Led to Positive Uplifts and a Reduction in Channel Inventor
Slide 6: Q3 Financial Results & Ongoing Business Highlights
Q3 Financial Results & Ongoing Business Highlights 2024 Q3 Results Business Highlights New Products Launched in Q3 Across Verticals Net Adj. Gross Sales Margin1 Along with $134.0M 39.0% many more! Baer Big Claw Brakes DiabloSport PredatorX ADS Mesa Shocks Range Technology Module (14.4%) vs. PY 170bp
Slide 7: LS Fest East: Our flagship US event
LS Fest East: Our flagship US event A Celebration Of Anything Powered by GM’s Incredible LS Engine Holley Created & Owned Consumer Event Key driver in Holley's success with domestic muscle/LS community Drives massive content & connections with influencers and media ̶ 6M social media impressions (191
Slide 8: Steering Principals Guide our Success
Steering Principals Guide our Success LI STE NI NG TO P UTT ING A LL O U R T E A M M AT E S C U S TO M E R S F I R S T E NH AN CIN G O PTI MIZ ING O P E R AT I O N S A CQUIS ITIONS 8 8
Slide 9: Q3 Progress on Keys to Unlocking Transformative Growth
Q3 Progress on Keys to Unlocking Transformative Growth All key leaders in place and driving increased professionalism & effectiveness Executed a restructuring to further deepen capabilities within the organization Develop a High Performing Team Numerous strategic hires in the within second and third
Slide 10: Multiple Quantifiable Wins Across the Transformation
Multiple Quantifiable Wins Across the Transformation Digital B2B Product Power Brands Modernization & Sales Management & with Notable CXM Optimization Capabilities Innovation Growth YTD +16% DTC Sales Up YOY for the Quarter ~10% Reported Distribution Partner ~133% Improvement in Median Lift from Mar
Slide 11: Launching Exciting New Products
Launching Exciting New Products Modern Truck Domestic Muscle Euro & Import Safety & Off-Road Q3 Q3 Q3 Q3 Sniper 2 EFI Bundle w/ HyperSpark Ignition System Flowmaster Signature Series Dinan M550i/850i Carbon Fiber Cold Air Intake Stilo Venti WRX Q4 Q3 Q3 Q4 Small Block Chevy Hi-Ram Intake Manifolds B
Slide 12: Financial Results
Financial Results Jesse Weaver Chief Financial Officer 12
Slide 13: Financial Priorities – Four Pillars
Financial Priorities – Four Pillars Proactively Leading the Business to Drive Sustainable Results RESTORE IMPROVE FREE OPTIMIZE DELIVER HISTORIC PROFITABILITY CASH FLOW WORKING CAPITAL BALANCE SHEET Target 40% GM & >20% Greater fiscal discipline Optimizing portfolio by Cash flow generation Adj EBITD
Slide 14: 3Q24 Key Metric Recap
3Q24 KEY METRIC RECAP $ millions 3Q24 3Q23 B/(W) Net Sales $134.0 $156.5 (14.4%) Adj. Gross Margin1 39.0% 37.3% 170 bps SG&A (incl. R&D) $34.7 $35.0 $0.3 Adj. EBITDA1 $22.1 $29.7 ($7.6) Adj. EBITDA Margin1 16.5% 19.0% (250 bps) Interest Expense $15.0 $13.7 ($1.3) Adj. Net Loss (Income)1 $(0.5) $3.5
Slide 15: Key Factors of 3Q 2024 Net Sales
Key Factors of 3Q 2024 Net Sales ($MM) Key Factors Magnifying Net Sales Decline Include Overall Market Demand, The Reduction Of Past Dues In 2023, & Distributor Inventory De-stocking 1) Non-GAAP measure. Please see the GAAP to Non-GAAP reconciliation in the Appendix to this presentation 15
Slide 16: Free Cash Flow Generation
Free Cash Flow1 Generation Free Cash Flow Pre-M&A ($MM) ~$40MM YTD $30 $29 $24 $22 $18 $13 $3.8MM excluding AP headwind of $3 $5.9MM ($1) ($1) ($2) ($8) ($11) ($25) 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 YTD Free Cash Flow of ~$40MM supported by Inventory Management & Cost
Slide 17: Net Debt to EBITDA Leverage Ratio
Net Debt to EBITDA Leverage Ratio 1 Net Leverage Ratio (Net Debt/TTM Covenant EBITDA) 5.0x 4.89 x Original Covenant 4.21 x 4.16 x 4.25 x 4.02 x 3Q23 4Q23 1Q24 2Q24 3Q24 $ millions 3Q23 4Q23 1Q24 2Q24 3Q24 Net Debt $584.4 $553.4 $536.0 $515.3 $515.1 Adj. EBITDA (TTM)2 116.7 130.1 126.8 126.3 118.7 Co
Slide 18: Financial Guidance – Q4 and Full Year 2024
FINANCIAL GUIDANCE – Q4 AND FULL YEAR 2024 Outlook ($ millions) 4Q24 FY24 Net Sales $133 – $143 $595 – $605 Adjusted EBITDA1 $24 – $29 $115 – $120 Capital Expenditures $6 – $8 Depreciation and Amortization $23 – $25 Interest Expense $50 – $55 (excluding Mark-to-Market on Collar) Bank-adjusted EBITDA
Slide 19: Q&A
Q&A Matt Stevenson Jesse Weaver Chief Executive Officer Chief Financial Officer 19 19
Slide 20: Outlook
Outlook Matthew Stevenson President and CEO 20 20
Slide 21: Working Together to Drive Financial Success
Working Together to Drive Financial Success Large base of passionate and highly engaged enthusiast consumers with attractive demographics 6-7% Organic Top Massive $39B U.S. market with decades of uninterrupted growth 1 Line Growth ~40% Gross Margin Powerhouse of product innovation with iconic brands
Slide 22: Appendix
Appendix yer
Slide 23: Holley Products Compete Across the Vehicle
Holley Products Compete Across the Vehicle Holley Family of Brands* *Brands listed are representative of Key Holley Brands in each category 23
Slide 24: Orders and Past Due Balances
Orders and Past Due Balances Orders ($MM) $211 $185 $182 $173 $185 $184 $162 $149 $163 $132 $152 $147 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 Past Due Orders ($MM) $56 $51 $47 $36 $27 $26 $22 $14 $9 $8 $9 $6 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 Q3 Destockin
Slide 25: Inventory Levels Improving
Inventory Levels Improving Inventory Turnover (Turns/Year) 3.0 x 3.0 x 2.7 x 2.8 x 2.7 x 2.5 x 2.5 x 2.2 x 2.2 x 2.2 x 2.2 x 2.1 x 2.1 x 2.0 x 2.0 x 1.9 x 1.9 x 1.9 x 1.9 x 1.9 x 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 Year-over-Year Invent
Slide 26: Interest Rate Collar Summary
Interest Rate Collar Summary Key Terms Effective Date 2/18/2023 Maturity Date 2/18/2026 Holley Inc. Buys a Cap 5.000% Holley Inc. Sells a Floor 2.811% Index 3 Month Term SOFR Premium Zero With the collar in place, YTD effective cash interest rate of ~8.5% 26
Slide 27: TTM EBITDA and Adjusted EBITDA Reconciliation
TTM EBITDA and Adjusted EBITDA Reconciliation HOLLEY INC. and SUBSIDIARIES USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In millions) (Unaudited) TTM 4Q23 1Q24 2Q24 3Q24 Net Income $ 19.2 $ 18.7 $ 22.8 $ 15.7 Adjustments: Interest Expense 60.7 53.5 56.7 58.0 Income Taxes 8.4 5.9 3.9 0.3 Dep
Slide 28: EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation HOLLEY INC. and SUBSIDIARIES USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In millions) (Unaudited) For the thirteen weeks ended For the thirty-nine weeks ended September 29,2024 October 1, 2023 September 29,2024 October 1, 2
Slide 29: Adjusted Gross Profit and Adjusted Gross Margin Reconciliation
Adjusted Gross Profit and Adjusted Gross Margin Reconciliation HOLLEY INC. and SUBSIDIARIES USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In millions) (Unaudited) For the thirteen weeks ended For the thirty-nine weeks ended September 29,2024 October 1, 2023 September 29,2024 October 1, 2023
Slide 30: Quarterly Free Cash Flow Reconciliation
Quarterly Free Cash Flow Reconciliation HOLLEY INC. and SUBSIDIARIES USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In millions) (Unaudited) 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 Net cash provided by (used in) operating activities $17.
Slide 31: Adjusted Net income and Adjusted diluted EPS Reconciliation
Adjusted Net income and Adjusted diluted EPS Reconciliation HOLLEY INC. and SUBSIDIARIES USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In millions, except per share data) (Unaudited) For the thirteen weeks ended For the thirty-nine weeks ended September 29,2024 October 1, 2023 September 29,