Slide 1: First Quarter 2023 Financial Results Call
First Quarter 2023 Financial Results Call May 11, 2023
Slide 2: Disclaimer
DISCLAIMER Certain statements in this press release 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: Holley Vision & Mission: The Enthusiast Platform
HOLLEY VISION & MISSION Vision THE To inspire and enable enthusiasts in their automotive adventures by bringing innovation, discovery, and fun to motor life ENTHUSIAST Mission PLATFORM To accelerate the automotive lifestyle Be the most compelling platform for automotive enthusiasts Apply innovation
Slide 4: Key Near-Term Strategic Priorities
KEY NEAR-TERM STRATEGIC PRIORITIES Proactively Managing the Business to Drive Long-Term Value RESTORE IMPROVE FREE OPTIMIZE DELEVER PROFITABILITY CASH FLOW WORKING CAPITAL BALANCE SHEET • Identified material • Improved EBITDA • Inventory turns • Amended credit cost savings generation drives back inl
Slide 5: Holley at a Glance
HOLLEY AT A GLANCE INVESTMENT HIGHLIGHTS FY22 REVENUE SNAPSHOT Large base of passionate and highly engaged enthusiast 1 Safety consumers with attractive demographics 9% Access. Mechanical Massive $38B U.S. market with decades of uninterrupted 16% 24% 2 growth(1) Exhaust 10% Electronics 3 Powerhouse
Slide 6: Vision & Mission Supported by Focused Strategy
VISION & MISSION SUPPORTED BY FOCUSED STRATEGY STRATEGIC PILLARS Prioritized Product Mergers & Consumer Engage & Inspire Categories & Innovation Acquisitions Focused the Enthusiast Platforms Channel Strategy With the Be the authentic, Deliver best-in- consumer in mind, Grow through relevant, expert
Slide 7: Net Sales Trends by Acquisition Vintage Year
NET SALES TRENDS BY ACQUISITION VINTAGE YEAR Quarterly Net Sales1 by Acquisition Year ($MM) Despite YOY headwinds, 1Q23 legacy business up ~9% CAGR vs. 1Q19, total business up ~18% CAGR2 $5 $18 $7 $2 $31 $14 $31 $14 $6 $3 $2 $1 $2 $29 $26 $30 $12 $11 $2 $2 $27 $2 $2 $24 $2 $4 $12 $2 $23 $2 $23 $1 $3
Slide 8: Net Sales Trends by Product Category
NET SALES TRENDS BY PRODUCT CATEGORY Quarterly Net Sales by Product Category ($MM) Sequential improvement in all categories compared to Q4 2022, but normalization of demand and Electronics challenges from supply chain disruptions drive YOY declines $20 $18 $17 $18 $23 $17 $29 $16 $14 $16 $12 $7 $25
Slide 9: Net Sales Growth Build Up
NET SALES GROWTH BUILD UP Acquisition Vintage ($MM) Product Category Detail1 ($MM) 18% CAGR $172 (TOTAL) $172 $2 $14 $17 9% CAGR $27 $27 (LEGACY) $4 $16 $90 $43 $7 $13 $126 $21 $90 $69 $48 1Q19 1Q23 1Q19 1Q23 Legacy Acq 2019 Acq 2020 Acq 2021 Acq 2022 Elec Mech Exhaust Access Safety Compared to 1Q19
Slide 10: Gross Profit Trends
GROSS PROFIT TRENDS Gross Profit ($MM) and Gross Margin (%) Gross margins in 1Q23 rebounded driven by sales leverage and absence of non-cash product rationalization charges 49% 43% 41% 42% 42% 42% 41% 42% 41% 41% 39% 39% 38% 38% 38% 31% 31% $81 $83 $75 $75 $66 $65 $68 $56 $55 $52 $46 $48 $47 $44 $38
Slide 11: SG&A and R&D Trends
SG&A AND R&D TRENDS Quarterly SG&A ($MM), R&D ($MM), Equity Based Comp ($MM) and % of Sales SG&A % in line with historical levels, due to reduced costs and sequential sales improvement from Q4 2022 $15 $2 $3 $3 $8 $8 $3 $7 $2 $8 $6 $7 $7 $7 20% 22% 16% 14% 19% 17% $35 18% 17% $33 $33 $31 $30 $29 $26
Slide 12: Adjusted EBITDA Trends
ADJUSTED EBITDA1 TRENDS Adjusted EBITDA ($MM), Net Sales ($MM) and Adjusted EBITDA Margin (%) Adjusted EBITDA in 1Q23 rebounded meaningfully due to reduced costs and positive operating leverage from higher sales vs 4Q22 29% 28% $200 27% $193 26% 28% $180 $179 $172 23% 23% 22% $160 $160 21% 20% $155
Slide 13: Inventory Levels Helping Reduce Past Dues
INVENTORY LEVELS HELPING REDUCE PAST DUES Past Due Order Trends by Product Category ($MM) Past due orders began rising with supply chain disruptions in mid/late 2020, with Non-Electronics Product Categories seeing improvements starting in 2H22 $55 $56 $53 $51 $47 $44 Inventory levels in- $36 3.0 x l
Slide 14: Net Debt to EBITDA Leverage Ratio
NET DEBT TO EBITDA LEVERAGE RATIO1 Net Leverage Ratio (Net Debt/TTM Covenant EBITDA) 7.25x Amended Q1 Covenant Q1 Net Leverage Ratio was meaningfully below Amended Credit 5.67 x Agreement Covenant of 7.25x 4.96 x 3.88 x 4.10 x 2Q22 3Q22 4Q22 1Q23 $ millions 2Q22 3Q22 4Q22 1Q23 Net Debt $624.9 $637.0
Slide 15: Reaffirming Full Year 2023 Guidance
REAFFIRMING FULL YEAR 2023 GUIDANCE Key Drivers of Initial 2023 Guidance ▪ Ongoing normalization of demand back to trend line growth versus pre-COVID levels ▪ Continuing microchip availability constraints with Holley EFI ▪ Savings from our cost-reduction initiatives ▪ Amended credit agreement and in
Slide 16: Appendix
Appendix
Slide 17: Holley Products Serve Needs Across the Vehicle
HOLLEY PRODUCTS SERVE NEEDS ACROSS THE VEHICLE * *Brands listed are representative of Key Holley Brands in each category 17
Slide 18: Orders vs Shipments, Past Due Orders
ORDERS VS SHIPMENTS, PAST DUE ORDERS Orders vs Shipments ($MM) $217 $211 $188 $185 $184 $181 $206 $165 $200 $165 $185 $160 $161 $185 $179 $163 $149 $152 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Orders Shipments Past Due Orders ($MM) $55 $53 $56 $51 $47 $44 $36 $27 $26 1Q21 2Q21 3Q21 4Q21 1Q22 2Q
Slide 19: Demand Normalization Illustration
DEMAND NORMALIZATION ILLUSTRATION Legacy1 vs. Hist. Industry Order Growth Indexed to 2019 Base Line Normalization of demand implies a YOY order headwind of 4.0-4.5% when compared to historical industry growth rate of ~6.5% 4.0-4.5% YOY 157 Headwind 135 134 129 100 Historical Industry Benchmark would
Slide 20: Reconciliation Tables
RECONCILIATION TABLES HOLLEY INC. and SUBSIDIARIES USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In millions) (Unaudited) 1019 2019 3019 4019 1020 2020 3020 4020 1021 2021 3021 4021 1022 2022 #302 402 1023 Net Income (Loss) $(8) $) $(11) $ 2 $ 5 $13 $13 $ 2 $ (2) $23 $0) $(18) $17 $41 $31 $
Slide 21: Reconciliation Tables
RECONCILIATION TABLES HOLLEY INC. and SUBSIDIARIES USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In millions) (Unaudited) TTM 2Q22 3Q22 4Q22 1Q23 Net Income (Loss) $ 9.2 $71.0 $73.8 $ 61.2 Adjustments: Interest Expense 34.2 34.8 40.2 51.1 Income Taxes 10.1 12.1 4.5 (1.1) Depreciation 11.8 1