Holley Inc. · NYSE:HLLY
Holley — Q1 2024 Earnings Presentation
31 slides from Holley's earnings presentation, May 8, 2024
Slide 1: First Quarter 2024 Financial Results Call
First Quarter 2024 Financial Results Call May 8, 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: Key Takeaways for Q1
KEY TAKEAWAYS FOR Q1 Focused on Unlocking A Path For Growth and Delivering Annual Gross Margin of ~40% and ≥ 20% Adj. EBITDA Margin Continued delivery of strong adjusted gross margin and adjusted EBITDA Strong free cash flow generation and additional $15M debt paydown Cost to Serve program generatin
Slide 6: Q1 Financial Results & Ongoing Business Highlights
Q1 FINANCIAL RESULTS & ONGOING BUSINESS HIGHLIGHTS FY2024 Q1 Results Business Highlights New Products Launched in Q1 Across Verticals Net Adj. Gross Sales Margin1 48 Modern Truck and $158.6M 38.9% 23+ GM Mid-Size Truck Exhaust 21+ Bronco Chassis Components Simpson Off-Road Seats (7.9%) vs. PY (40bps
Slide 7: Steering Principles Guide Our Success
STEERING PRINCIPALS GUIDE OUR SUCCESS Listening to Enhancing Our Teammates Operations Optimizing Putting ALL Acquisitions Customers First 7
Slide 8: A Comprehensive Transformation Is Underway
A COMPREHENSIVE TRANSFORMATION IS UNDERWAY Midway through our journey in developing essential building blocks to drive growth Focus the Drive Accountability Organization on the Develop a High- Unlock Transformative and Empowerment Greatest Areas of Performing Team Growth Opportunities • Foster trans
Slide 9: New Leaders to Fuel the Organic Growth Engine
NEW LEADERS TO FUEL THE ORGANIC GROWTH ENGINE Jordon Musser Chet Baker Charlie Taylor Will Robbins Senior Vice President Senior Vice President Vice President Vice President Safety and Electronics Sales Digital Strategy Consumer Product Strategy Former professional race car Family legacy in the auto
Slide 10: Keys to Unlocking Transformative Growth
KEYS TO UNLOCKING TRANSFORMATIVE GROWTH Status ▪ Segmentation and Consumer Insights Product ▪ Transformative SKU Rationalization Innovation ▪ Innovation Phase Gate System ▪ Enhancing Launch Capabilities ▪ Digital Transformation (Data, CRM, etc.) Promotional ▪ 3rd Party Marketplace Optimization Excel
Slide 11: Focusing on the Consumer Verticals
FOCUSING ON THE CONSUMER VERTICALS Dedicating Resources Across Each Vertical to Drive Focus and Innovation 11
Slide 12: Launching Exciting New Products
LAUNCHING EXCITING NEW PRODUCTS Domestic Modern Truck & Euro & Import Safety Muscle Off-Road Q1 Q1 Q1 Q1 GM Mid-Size Truck Exhaust APR Ultralink Tuner Simpson Prima Printed Suits Holley Sniper2 Bluetooth Q2 Q2 Q1 Q2 PredatorX BT Tuner Simpson Off-Road Seats AEM EV Vehicle Control Unit Baer Classic B
Slide 13: Financial Results
FINANCIAL RESULTS Jesse Weaver Chief Financial Officer 13
Slide 14: 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 15: 1Q24 Key Metric Recap
1Q24 KEY METRIC RECAP ($MM) 1Q24 1Q23 B/(W) Net Sales $158.6 $172.2 (7.9%) Adj. Gross Margin1 38.9% 39.3% (40 bps) SG&A (incl. R&D) $37.8 $36.7 ($1.1) Adj. EBITDA1 $30.7 $33.9 ($3.2) Adj. EBITDA Margin1 19.3% 19.7% (40 bps) Interest Expense $11.0 $18.3 $7.3 Adj. Net Income1 $0.1 $6.1 ($6.0) Adj. Dil
Slide 16: Free Cash Flow Generation Improving
FREE CASH FLOW1 GENERATION IMPROVING Free Cash Flow Pre-M&A ($MM) $29 $29 $30 $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 Free Cash Flow in 1Q24 up ~$15M YOY due to improved working capital strateg
Slide 17: Net Debt to EBITDA Leverage Ratio
NET DEBT TO EBITDA LEVERAGE RATIO1 Net Leverage Ratio (Net Debt/TTM Covenant EBITDA) 5.75x Amended 5.58 x Covenant 5.0x 4.89 x Original Covenant 4.21 x 4.16 x 2Q23 3Q23 4Q23 1Q24 $ millions 2Q23 3Q23 4Q23 1Q24 Net Debt $605.3 $584.4 $553.4 $536.0 Adj. EBITDA (TTM)2 103.3 116.7 130.1 126.8 Covenant A
Slide 18: Financial Guidance – Q2 and Full Year 2024
FINANCIAL GUIDANCE – Q2 AND FULL YEAR 2024 Outlook ($ millions) 2Q24 FY24 Net Sales $165 – $175 $640 – $680 Adjusted EBITDA1 $34 – $40 $125 – $145 Capital Expenditures $8 – $12 Depreciation and $24 – $26 Amortization Interest Expense $50 – $55 (excluding Mark-to-Market on Collar) Bank-adjusted EBITD
Slide 19: Q&A
Q&A Matthew Stevenson President & CEO Jesse Weaver Chief Financial Officer 19
Slide 20: Outlook
OUTLOOK Matthew Stevenson President & CEO 20
Slide 21: 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 $39B U.S. market with decades of uninterrupted growth1 ~40% Gross Margin Target Powerhouse of product innovation with iconic
Slide 22: Appendix
Floll . Appendix Performance Brands
Slide 23: Holley Products Serve Needs Across the Vehicle
HOLLEY PRODUCTS SERVE NEEDS ACROSS THE VEHICLE * *Brands listed are representative of Key Holley Brands in each category 23
Slide 24: Orders and Past Due Balances
ORDERS AND PAST DUE BALANCES Orders ($MM) $211 $185 $182 $185 $184 $162 $149 $163 $152 $147 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Orders Past Due Orders ($MM) $56 $51 $47 $36 $27 $26 $22 $14 $9 $8 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 24
Slide 25: 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 2.1 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 Inventory Turns Improving Inventory Turns
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 Hedge Level $500MM With the collar in place, YTD effective cash interest rate of ~8.9% 26
Slide 27: TTM EBITDA and Adjusted EBITDA Reconciliation
TTM EBITDA AND ADJUSTED EBITDA RECONCILIATION 27
Slide 28: EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation
EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN RECONCILIATION 28
Slide 29: Adjusted Gross Profit and Adjusted Gross Margin Reconciliation
ADJUSTED GROSS PROFIT AND ADJUSTED GROSS MARGIN RECONCILIATION 29
Slide 30: Quarterly Free Cash Flow Reconciliation
QUARTERLY FREE CASH FLOW RECONCILIATION 30
Slide 31: Adjusted Net Income and Adjusted Diluted EPS Reconciliation
ADJUSTED NET INCOME AND ADJUSTED DILUTED EPS RECONCILIATION 31