Holley Inc. · NYSE:HLLY
Holley — Q2 2024 Earnings Presentation
29 slides from Holley's earnings presentation, Aug 7, 2024
Slide 1: Second Quarter 2024 Financial Results Call
Second Quarter 2024 Financial Results Call August 7, 2024
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 Introductions & Anthony Rozmus Forward-Looking Statements Investor Relations Matthew Stevenson Results and Highlights President & CEO Jesse Weaver Financial Results CFO Q&A Group Matthew Stevenson Outlook President & CEO 3
Slide 4: Results & Highlights
RESULTS & HIGHLIGHTS Matthew Stevenson President & CEO 4
Slide 5: Q2 Executive Summary
Q2 EXECUTIVE SUMMARY The Market Is Challenging but We Are Gaining Share In Overall Out-the-Door Sales Progress in Transformation Driving YoY Growth in DTC, Focused on B2B Partnerships Achieving Margin Targets And FCF Through Disciplined Operations & Cost Reductions Continuing To Deliver Improvements
Slide 6: Q2 Financial Results & Ongoing Business Highlights
Q2 FINANCIAL RESULTS & ONGOING BUSINESS HIGHLIGHTS 2024 Q2 Results Business Highlights New Products Launched in Q2 Across Verticals Net Adj. Gross Flowmaster F150 Sales Margin1 Expansion 30 Modern Truck and $169.5M 41.0% Baer Classic Brakes Simpson Devil Ray (3.3%) vs. PY 170bps vs. PY Elevating Pro
Slide 7: Steering Principals Guide Our Success
STEERING PRINCIPALS GUIDE OUR SUCCESS Listening to Enhancing Our Teammates Operations Optimizing Putting ALL Acquisitions Customers First 7
Slide 8: Q2 Progress Unlocking Transformative Growth
Q2 PROGRESS UNLOCKING TRANSFORMATIVE GROWTH ▪ Completed filling final key leadership positions for transformation Develop a High ▪ SVP of Ops & Supply Chain to drive operational excellence & cost savings Performing Team ▪ Director of Pricing Strategy focused on delivering profitable growth ▪ Dramati
Slide 9: Focusing on the Consumer Verticals
FOCUSING ON THE CONSUMER VERTICALS Dedicating Resources Across Each Vertical to Drive Focus and Innovation 9
Slide 10: Launching Exciting New Products
LAUNCHING EXCITING NEW PRODUCTS Domestic Modern Truck & Euro & Import Safety Muscle Off-Road Q2 Q2 Q2 Q2 Baer Classic Brakes Flowmaster F150 Expansion AEM VCU275 Simpson Devil Ray Helmets Q2 Q3 Q2 Q4 Baer Eradispeed+ Rotors Baer Big Claw Brakes Volkswagen Chassis Solutions Simpson Adventure MC Helme
Slide 11: Financial Results
FINANCIAL RESULTS Jesse Weaver Chief Financial Officer 11
Slide 12: Financial Priorities – Four Pillars
FINANCIAL PRIORITIES – FOUR PILLARS Proactively Leading the Business to Drive Sustainable Results RESTORE IMPROVE FREE OPTIMIZE DELEVER PROFITABILITY CASH FLOW WORKING CAPITAL BALANCE SHEET • Identified material • Improved free • Optimizing • Cash flow cost savings cash flow from portfolio by genera
Slide 13: 2Q24 Key Metric Recap
2Q24 KEY METRIC RECAP ($MM) 2Q24 2Q23 B/(W) Net Sales $169.5 $175.3 (3.3%) Adj. Gross Margin1 41.0% 39.3% 170 bps SG&A (incl. R&D) $38.9 $35.3 ($3.6) Adj. EBITDA1 $37.4 $37.9 ($0.5) Adj. EBITDA Margin1 22.1% 21.6% 50 bps Interest Expense $13.2 $9.9 ($3.3) Adj. Net Income1 $12.6 $16.0 ($3.3) Adj. Dil
Slide 14: Free Cash Flow Generation Improving
FREE CASH FLOW1 GENERATION IMPROVING Free Cash Flow Pre-M&A ($MM) $29 $29 $30 $24 $24 $24 $22 $18 $16 $16 $13 $11 $3 ($1) ($1) ($8) ($11) ($25) 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 Significant Improvement in 2024 YTD Free Cash Flow Compared to 202
Slide 15: Net Debt to EBITDA Leverage Ratio
NET DEBT TO EBITDA LEVERAGE RATIO1 Net Leverage Ratio (Net Debt/TTM Covenant EBITDA) 4.89 x 5.0x Original 4.21 x 4.16 x Covenant 4.02 x 3Q23 4Q23 1Q24 2Q24 $ millions 3Q23 4Q23 1Q24 2Q24 Net Debt $584.4 $553.4 $536.0 $515.3 Adj. EBITDA (TTM)2 116.7 130.1 126.8 126.3 Covenant Add-backs 2.8 1.5 1.9 1.
Slide 16: Financial Guidance – Q3 and Full Year 2024
FINANCIAL GUIDANCE – Q3 AND FULL YEAR 2024 Outlook ($ millions) 3Q24 FY24 Net Sales $133 – $153 $605 – $645 Adjusted EBITDA1 $20 – $30 $117 – $132 Capital Expenditures $6 – $8 Depreciation and $24 – $26 Amortization Interest Expense $50 – $55 (excluding Mark-to-Market on Collar) Bank-adjusted EBITDA
Slide 17: Q&A
Q&A Matthew Stevenson President & CEO Jesse Weaver Chief Financial Officer 17
Slide 18: Outlook
OUTLOOK Matthew Stevenson President & CEO 18
Slide 19: Working Together to Drive Financial Success
WORKING TOGETHER TO DRIVE FINANCIAL SUCCESS Large base of passionate and highly engaged enthusiast 6-7% Organic consumers with attractive demographics Top Line Growth Massive $39B U.S. market with decades of uninterrupted growth1 ~40% Gross Margin Target Powerhouse of product innovation with iconic
Slide 20: Appendix
Floll . Appendix Performance Brands
Slide 21: Holley Brands Serve Needs Across the Vehicle
HOLLEY BRANDS SERVE NEEDS ACROSS THE VEHICLE * *Brands listed are representative of Key Holley Brands in each category 21
Slide 22: Orders and Past Due Balances
ORDERS AND PAST DUE BALANCES Orders ($MM) $211 $185 $182 $173 $185 $184 $162 $149 $163 $152 $147 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 Past Due Orders ($MM) $56 $51 $47 $36 $27 $26 $22 $14 $9 $8 $9 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 22
Slide 23: Inventory Levels Improving
INVENTORY LEVELS IMPROVING Inventory Turnover1 (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 2.1 x 2.1 x 1.9 x 2.0 x 1.9 x 2.0 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 Inventory Turns Sequential Impr
Slide 24: 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 Hedge Level $500MM With the collar in place, YTD effective cash interest rate of ~8.6% 24
Slide 25: TTM EBITDA and Adjusted EBITDA Reconciliation
TTM EBITDA AND ADJUSTED EBITDA RECONCILIATION HOLLEY INC. USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In millions) (Unaudited) TTM 3Q23 4Q23 1Q24 2Q24 Net Income $ 2.8 $ 19.2 $ 18.7 $ 22.8 Adjustments: Interest Expense, Net 55.4 60.7 53.5 56.7 Income Tax Expense 3.4 8.4 5.9 3.9 Depreciati
Slide 26: EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation
EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN RECONCILIATION HOLLEY INC. USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In millions) (Unaudited) For the thirteen weeks ended For the twenty-six weeks June 30, July 2, June 30, July 2, 2024 2023 2024 2023 Net Income $ 17.1 $ 13.0 $ 20.8 $
Slide 27: Adjusted Gross Profit and Adjusted Gross Margin Reconciliation
ADJUSTED GROSS PROFIT AND ADJUSTED GROSS MARGIN RECONCILIATION USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In millions) (Unaudited) For the thirteen weeks ended For the twenty-six weeks June 30, July 2, June 30, July 2, 2024 2023 2024 2023 Gross Profit $ 70.3 $ 69.7 $ 122.4 $ 137.5 Adjust
Slide 28: 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 Net Cash Provided by Operating Activities $ 17 $ 26 $ 32 $ 13
Slide 29: Adjusted Net Income and Adjusted Diluted EPS Reconciliation
ADJUSTED NET INCOME AND ADJUSTED DILUTED EPS RECONCILIATION HOLLEY INC. USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In millions) (Unaudited) For the thirteen weeks ended For the twenty-six weeks June 30, July 2, June 30, July 2, 2024 2023 2024 2023 Net Income $ 17.1 $ 13.0 $ 20.8 $ 17.2 S