Summary of Holley Inc. (HLLY) Q4 2025 Earnings Call

1Key Financial Results and Metrics

Q4 2025 Results:

Net sales: $155.4 million, up 10.9% YoY.

Core net sales growth: 13.5%, marking the strongest performance of the year.

Gross margin: 46.8%, up 120 basis points YoY.

Adjusted EBITDA: $33.2 million, with a margin of 21.4%, an increase of 56 basis points YoY.

Net income: $6.3 million, a significant improvement from a loss in the prior year due to goodwill and trademark impairments.

Free cash flow: $3.9 million in Q4, totaling $34.2 million for the year.

Full Year 2025 Results:

Total net sales: $613.5 million, representing 1.9% growth YoY.

Adjusted EBITDA margin: 20.2%, achieving over 20% for the first time since 2021.

Net income: $19.2 million, up $42.4 million YoY.

2Strategic Updates and Business Highlights

Holley achieved full-year net sales growth for the first time since 2021, driven by consistent core growth across all quarters.

The company executed a disciplined strategy focusing on volume-led growth, pricing execution, and operational improvements, resulting in $20 million in cost savings.

New product launches contributed approximately $23 million in sales for the year, showcasing ongoing innovation.

Participation in key industry events (SEMA and PRI) strengthened relationships with enthusiasts and partners.

The company maintained a solid balance sheet, reducing net leverage to below 3.8 times.

3Forward Guidance and Outlook

For 2026, Holley expects revenue between $625 million and $655 million, implying 4% to 4.5% growth.

Adjusted EBITDA guidance is set between $127 million and $137 million, indicating approximately 6.5% growth.

Capital expenditures are projected at $15 million to $20 million, aimed at enhancing operational efficiency and supporting product development.

The company aims to achieve further leverage reduction to below 3.5 times by year-end 2026.

4Bad News, Challenges, or Points of Concern

The consumer backdrop remains uneven, particularly affecting middle- and lower-income households, which may impact demand.

Weather events in early 2026 have already disrupted consumer spending, creating uncertainty in the first quarter.

The company acknowledged that pricing actions may not be as aggressive in 2026 due to market conditions, which could affect margins.

Inventory levels are slightly elevated, reflecting operational adjustments rather than a robust demand outlook.

5Notable Q&A Insights

Management indicated that market growth in 2025 was approximately 3% to 4%, with Holley gaining share.

Pricing strategies will be more conservative in 2026, with modest increases anticipated.

The company is focused on surgical pricing actions to manage volume impacts and maintain margins.

Distributors are not aggressively stockpiling inventory in anticipation of demand, suggesting a cautious approach to inventory management.

Holley is preparing for ERP and warehouse management system implementations, with a focus on minimizing disruptions during the transition. Overall, Holley Inc. demonstrated strong performance in 2025, achieving significant growth and operational improvements while preparing for a cautious but optimistic outlook in 2026.