8-K
Holley Inc. (HLLY)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 8, 2023
HOLLEY INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-39599 | 87-1727560 |
|---|---|---|
| (State or other jurisdiction<br> of incorporation) | (Commission<br> File Number) | (IRS Employer<br> Identification No.) |
| 1801 Russellville Road , Bowling Green, KY | 42101 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
(270) 782-2900
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> Symbol(s) | Name of each exchange<br> on which registered |
|---|---|---|
| Common stock, par value $0.0001 per share | HLLY | New York Stock Exchange |
| Warrants, each exercisable for one share of common stock at an exercise price of $11.50 per share | HLLY WS | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On November 8, 2023, Holley Inc. (the “Company”) issued a press release announcing its financial results and operational highlights for the Company’s quarter ended October 1, 2023 and revising certain guidance previously provided by the Company. A copy of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.
The information under Item 2.02 of this Report, including Exhibit 99.1, attached hereto, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Exchange Act or Securities Act of 1933, as amended, expect as expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits
| Exhibit<br> No. | Description |
|---|---|
| 99.1 | Press release dated November 8, 2023 |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL). |
-2-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HOLLEY INC. | ||
|---|---|---|
| By: | /s/ Jesse Weaver | |
| Name: Jesse Weaver | ||
| Date: November 8, 2023 | Title: Chief Financial Officer |
ex_566065.htm
Exhibit 99.1
PRESS RELEASE
| 1801 Russellville Road<br><br> <br>Bowling Green, Kentucky 42101<br><br> <br>Holley.com |
|---|
HOLLEY REPORTS THIRD QUARTER 2023 RESULTS
Strong performance yields year-over-year revenue growth while delivering meaningfully improved margins through operational improvements
Solid cash flow generation and debt paydown significantly reduces net leverage
Comprehensive business transformation underway to unlock growth, improve margins, and become more customer focused
BOWLING GREEN, Ky. – November 8, 2023 – Holley Inc. (NYSE: HLLY), the leading consumer platform for automotive performance enthusiasts, today announced financial results for its third quarter ended October 1, 2023.
Third Quarter Highlights vs. Prior Year Period
| ● | Net Sales increased 1.1% to $156.5 million compared to $154.8 million last year |
|---|---|
| ● | Gross Profit increased 20.6% to $58.4 million compared to $48.4 million last year, and gross margin was 37.3% compared to 31.3% last year |
| --- | --- |
| ● | Net Income was $0.8 million, or $0.01 per diluted share, compared to $31.6 million, or $0.27 per diluted share, last year |
| --- | --- |
| ● | Net Income Margin of 0.5% compared to 20.4% last year^1^ |
| --- | --- |
| ● | Adjusted Net Income^1^ was $3.5 million compared to an Adjusted Net Loss of $(4.1) million last year |
| ● | Adjusted EBITDA^1^ was $29.7 million compared to $16.4 million last year with a margin of 19.0% versus 10.6% last year |
| --- | --- |
| ● | Net Cash Provided by Operating Activities was $22.5 million compared to $(8.7) million last year |
| --- | --- |
| ● | Free Cash Flow^1^ was $21.7 million compared to $(10.6) million last year |
^1^See “Use and Reconciliation of Non-GAAP Financial Measures” below.
“Holley delivered strong third quarter results, highlighted by a return to top-line growth and marked improvement in key profitability metrics,” said Matthew Stevenson, Holley’s President and Chief Executive Officer. “Our efforts to strengthen Holley’s employee and customer relationships and optimize our operations are taking hold, and we are highly confident in our ability to continue delivering on our key strategic priorities and drive long-term sustainable growth for our shareholders.”
“Consumer and customer engagement programs remain central to Holley’s ongoing business transformation, and during the quarter we were proud to celebrate a record-setting season of enthusiast consumer events,” Stevenson continued. “Additionally, in an effort to strategically align our brand and business portfolio with the emerging needs of our customer, we established seven distinct product category teams. This new organizational design is one of many steps underway to further strengthen our customer focus and drive growth.”
Stevenson concluded, “On behalf of our executive leadership team, I would like to thank our employees for their personal commitment and great teamwork as well as our customers and distribution partners for their continued enthusiasm and trust in our products.”
Key Operating Metrics and Strategic Highlights
| ● | Reduced past due orders sequentially by $8.1 million during the third quarter, across all categories |
|---|---|
| ● | Reduced inventory sequentially by $10.3 million during the third quarter |
| ● | $10.4 million of year-over-year savings in the third quarter of 2023 and tracking towards $35 million for the full year driven by operational improvements and cost savings initiatives |
| --- | --- |
| ● | Completed $25 million in early debt paydown against the Company’s first lien term loan facility, saving approximately $1 million annually in interest expense at current rates |
| --- | --- |
| ● | Holley’s bank-adjusted EBITDA leverage ratio at quarter end of 4.89x was well below the amended covenant ceiling of 6.50x for Q3 of 2023 and below the original covenant level of 5.0x |
| --- | --- |
| ● | Completed a record-setting season of consumer-focused Holley events, encompassing five multi-day festivals |
| ● | Implemented a new organizational design, including seven distinct product category teams, to drive growth through expansion of Holley’s portfolio of brands and products into additional consumer verticals |
Full Year 2023 Outlook
Holley revised its outlook for 2023 for certain guidance in comparison to the outlook provided by Holley in its earnings release on August 10, 2023, as follows:
| Full Year 2023 Metric | Previous Outlook | Revised Outlook |
|---|---|---|
| Net Sales | $635 - $675 million | $645 - $675 million |
| Adjusted EBITDA | $118 - $128 million | $123 - $128 million |
| Capital Expenditures | $5 - $10 million | $6 - $8 million |
| Depreciation and Amortization Expense | $23 - $25 million | $24 - $26 million |
| Interest Expense | $58 - $62 million | $58 - $62 million |
“We are pleased with our third quarter financial results, as Holley delivered net sales growth and continued strong year-over-year improvements in gross margin and Adjusted EBITDA,” said Jesse Weaver, Holley’s Chief Financial Officer. “Our strong overall performance benefited from continued progress on reducing our past due orders and reducing inventory levels, both of which contributed to strong free cash flow in the quarter, allowing us to pay down $25 million in debt in September. As a result of this strong performance, we are raising the lower end of both our net sales and Adjusted EBITDA guidance ranges.”
“Going forward, we remain confident in our ability to restore and maintain profitability, deliver strong free cash flow, optimize working capital, and continue de-levering our balance sheet. We are highly focused on driving growth by delivering value to our enthusiast customers and increasing profitability through greater efficiency,” Weaver concluded.
Conference Call
A conference call and audio webcast has been scheduled for 8:30 a.m. Eastern Time today to discuss these results. Investors, analysts, and members of the media interested in listening to the live presentation are encouraged to join a webcast of the call available on the investor relations portion of the Company’s website at investor.holley.com. For those that cannot join the webcast, you can participate by dialing 877-407-4019 (Toll Free) or 201-689-8337 (Toll) using the access code of 13741890.
For those unable to participate, a telephone replay recording will be available until Wednesday, November 15, 2023. To access the replay, please call 877-660-6853 (Toll Free) or 201-612-7415 (Toll) and enter confirmation code 13741890. A web-based archive of the conference call will also be available on the Company’s website.
Additional Financial Information
The Investor Relations page of Holley’s website, investor.holley.com contains a significant amount of financial information about Holley, including our earnings presentation, which can be found under Events & Presentations. Holley encourages investors to visit this website regularly, as information is updated, and new information is posted.
About Holley Inc.
Holley Inc. (NYSE: HLLY) is a leading designer, marketer, and manufacturer of high-performance products for car and truck enthusiasts. Holley offers a leading portfolio of iconic brands that deliver innovation and inspiration to a large and diverse community of millions of avid automotive enthusiasts who are passionate about the performance and personalization of their classic and modern cars. Holley has disrupted the performance category by putting the enthusiast consumer first, developing innovative new products, and building a robust M&A process that has added meaningful scale and diversity to its platform. For more information on Holley, visit https://www.holley.com.
Forward-Looking Statements
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 financial or operating performance. For example, projections of future revenue and adjusted EBITDA and other metrics are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “or” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Holley and its management, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: 1) the ability of Holley to grow and manage growth profitably which may be affected by, among other things, competition; to maintain relationships with customers and suppliers; and to retain its management and key employees; 2) costs related to Holley being a public company; 3) disruptions to Holley’s operations, including as a result of cybersecurity incidents; 4) changes in applicable laws or regulations; 5) the outcome of any legal proceedings that may be instituted against Holley; 6) general economic and political conditions, including the current macroeconomic environment, political tensions, and war (including the conflict in Ukraine, the conflict in Israel and surrounding areas, and the possible expansion of such conflicts and potential geopolitical consequences); 7) the possibility that Holley may be adversely affected by other economic, business and/or competitive factors, including recent events affecting the financial services industry (such as the closures of certain regional banks); 8) Holley’s estimates of its financial performance; 9) Holley’s ability to anticipate and manage through disruptions and higher costs in manufacturing, supply chain, logistical operations, and shortages of certain company products in distribution channels; and 10) other risks and uncertainties set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the Annual Report on Form 10-K for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (“SEC”) on March 15, 2023, and/or disclosed in any subsequent filings with the SEC. Although Holley believes the expectations reflected in the forward-looking statements are reasonable, nothing in this press release should be regarded as a representation by any person that the forward-looking statements or projections set forth herein will be achieved or that any of the contemplated results of such forward looking statements or projections will be achieved. There may be additional risks that Holley presently does not know or that Holley currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Holley undertakes no duty to update these forward-looking statements, except as otherwise required by law.
Investor Relations:
Ross Collins / Stephen Poe
Alpha IR Group
312-445-2870
HLLY@alpha-ir.com
Media Relations Contacts:
Paul Oakley, **** poakley@tinymightyco.com / Rachel Withers, rwithers@tinymightyco.com
Tiny Mighty Communications
615-454-2913
[Financial Tables to Follow]
| HOLLEY INC. and SUBSIDIARIES | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| For the thirteen weeks ended | For the thirty-nine weeks ended | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| October 1, | October 2, | Variance | Variance | October 1, | October 2, | Variance | Variance | |||||||||||||||
| 2023 | 2022 | () | (%) | 2023 | 2022 | () | (%) | |||||||||||||||
| Net Sales | $ | 156,530 | $ | 154,775 | 1.1 | % | $ | 503,997 | $ | 534,250 | ) | -5.7 | % | |||||||||
| Cost of Goods Sold | 98,156 | 106,383 | ) | -7.7 | % | 308,162 | 327,849 | ) | -6.0 | % | ||||||||||||
| Gross Profit | 58,374 | 48,392 | 20.6 | % | 195,835 | 206,401 | ) | -5.1 | % | |||||||||||||
| Selling, General, and Administrative | 28,880 | 31,921 | ) | -9.5 | % | 87,998 | 102,532 | ) | -14.2 | % | ||||||||||||
| Research and Development Costs | 6,100 | 6,039 | 1.0 | % | 18,935 | 22,396 | ) | -15.5 | % | |||||||||||||
| Amortization of Intangible Assets | 3,687 | 3,662 | 0.7 | % | 11,040 | 10,985 | 0.5 | % | ||||||||||||||
| Impairment of Indefinite-Lived Intangible Assets | — | 2,395 | ) | -100.0 | % | — | 2,395 | ) | -100.0 | % | ||||||||||||
| Acquisition and Restructuring Costs | 415 | 1,266 | ) | -67.2 | % | 2,106 | 3,247 | ) | -35.1 | % | ||||||||||||
| Other Operating Expense (Benefit) | (28 | ) | 47 | ) | -159.6 | % | 508 | 594 | ) | -14.5 | % | |||||||||||
| Operating Expense | 39,054 | 45,330 | ) | -13.8 | % | 120,587 | 142,149 | ) | -15.2 | % | ||||||||||||
| Operating Income | 19,320 | 3,062 | 531.0 | % | 75,248 | 64,252 | 17.1 | % | ||||||||||||||
| Change in Fair Value of Warrant Liability | 2,064 | (30,171 | ) | nm | 5,516 | (51,112 | ) | nm | ||||||||||||||
| Change in Fair Value of Earn-Out Liability | 700 | (7,429 | ) | nm | 2,089 | (9,282 | ) | nm | ||||||||||||||
| Interest Expense, Net | 13,712 | 10,428 | 31.5 | % | 41,909 | 26,780 | 56.5 | % | ||||||||||||||
| Non-Operating Expense | 16,476 | (27,172 | ) | nm | 49,514 | (33,614 | ) | nm | ||||||||||||||
| Income Before Income Taxes | 2,844 | 30,234 | ) | -90.6 | % | 25,734 | 97,866 | ) | -73.7 | % | ||||||||||||
| Income Tax Expense (Benefit) | 2,092 | (1,345 | ) | nm | 7,756 | 8,866 | ) | -12.5 | % | |||||||||||||
| Net Income | $ | 752 | $ | 31,579 | ) | -97.6 | % | $ | 17,978 | $ | 89,000 | ) | -79.8 | % | ||||||||
| Comprehensive Income: | **** | **** | **** | **** | **** | **** | **** | **** | ||||||||||||||
| Foreign Currency Translation Adjustment | (176 | ) | 516 | ) | nm | (103 | ) | 1,258 | ) | nm | ||||||||||||
| Total Comprehensive Income | $ | 576 | $ | 32,095 | ) | -98.2 | % | $ | 17,875 | $ | 90,258 | ) | -80.2 | % | ||||||||
| Common Share Data: | **** | **** | **** | **** | **** | **** | **** | **** | ||||||||||||||
| Basic Net Income per Share | $ | 0.01 | $ | 0.27 | ) | -96.3 | % | $ | 0.15 | $ | 0.76 | ) | -80.3 | % | ||||||||
| Diluted Net Income per Share | $ | 0.01 | $ | 0.27 | ) | -96.3 | % | $ | 0.15 | $ | 0.32 | ) | -53.1 | % | ||||||||
| Weighted Average Common Shares Outstanding - Basic | 117,397 | 117,120 | 0.2 | % | 117,257 | 116,637 | 0.5 | % | ||||||||||||||
| Weighted Average Common Shares Outstanding - Diluted | 119,246 | 117,138 | 1.8 | % | 118,120 | 117,274 | 0.7 | % | ||||||||||||||
| nm - not meaningful |
All values are in US Dollars.
| HOLLEY INC. and SUBSIDIARIES | ||||||
|---|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED BALANCE SHEET | ||||||
| (In thousands) | ||||||
| (Unaudited) | ||||||
| As of | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| October 1, | December 31, | |||||
| 2023 | 2022 | |||||
| Assets | **** | **** | ||||
| Total Current Assets | $ | 304,667 | $ | 324,963 | ||
| Property, Plant and Equipment, Net | 48,026 | 52,181 | ||||
| Goodwill | 419,056 | 418,121 | ||||
| Other Intangibles, Net | 413,774 | 424,855 | ||||
| Other Noncurrent Assets | 33,600 | 29,522 | ||||
| Total Assets | $ | 1,219,123 | $ | 1,249,642 | ||
| Liabilities and Stockholders’ Equity | **** | **** | ||||
| Total Current Liabilities | $ | 88,882 | $ | 101,259 | ||
| Long-Term Debt, Net of Current Portion | 603,507 | 643,563 | ||||
| Deferred Taxes | 49,774 | 58,390 | ||||
| Other Noncurrent Liabilities | 39,059 | 30,440 | ||||
| Total Liabilities | 781,222 | 833,652 | ||||
| Common Stock | 12 | 12 | ||||
| Additional Paid-In Capital | 372,158 | 368,122 | ||||
| Accumulated Other Comprehensive Loss | (1,047 | ) | (944 | ) | ||
| Retained Earnings | 66,778 | 48,800 | ||||
| Total Stockholders’ Equity | 437,901 | 415,990 | ||||
| Total Liabilities and Stockholders’ Equity | $ | 1,219,123 | $ | 1,249,642 |
| HOLLEY INC. and SUBSIDIARIES | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| (In thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| For the thirteen weeks ended | For the thirty-nine weeks ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| October 1, | October 2, | October 1, | October 2, | |||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Operating Activities | **** | **** | **** | **** | ||||||||
| Net Income | $ | 752 | $ | 31,579 | $ | 17,978 | $ | 89,000 | ||||
| Adjustments to Reconcile to Net Cash | 15,463 | (23,955 | ) | 29,446 | (22,620 | ) | ||||||
| Changes in Operating Assets and Liabilities | 6,265 | (16,291 | ) | 9,439 | (54,216 | ) | ||||||
| Net Cash Provided by Operating Activities | 22,480 | (8,667 | ) | 56,863 | 12,164 | |||||||
| Investing Activities | **** | **** | **** | **** | ||||||||
| Capital Expenditures, Net of Dispositions | (743 | ) | (1,907 | ) | (3,125 | ) | (11,272 | ) | ||||
| Acquisitions / Divestitures, net | — | — | — | (14,077 | ) | |||||||
| Net Cash Used in Investing Activities | (743 | ) | (1,907 | ) | (3,125 | ) | (25,349 | ) | ||||
| Financing Activities | **** | **** | **** | **** | ||||||||
| Net Change in Debt | (26,365 | ) | (1,691 | ) | (40,437 | ) | (4,790 | ) | ||||
| Deferred financing fees | — | — | (1,427 | ) | — | |||||||
| Payments from Stock-Based Award Activities | (1,061 | ) | (1,050 | ) | (1,134 | ) | (1,050 | ) | ||||
| Proceeds from Issuance of Common Stock Due to Exercise of Warrants | — | — | — | 383 | ||||||||
| Net Cash Used in Financing Activities | (27,426 | ) | (2,741 | ) | (42,998 | ) | (5,457 | ) | ||||
| Effect of Foreign Currency Rate Fluctuations on Cash | (218 | ) | (634 | ) | (57 | ) | (1,077 | ) | ||||
| Net Change in Cash and Cash Equivalents | (5,907 | ) | (13,949 | ) | 10,683 | (19,719 | ) | |||||
| Cash and Cash Equivalents | **** | **** | **** | **** | ||||||||
| Beginning of Period | 42,740 | 30,555 | 26,150 | 36,325 | ||||||||
| End of Period | $ | 36,833 | $ | 16,606 | $ | 36,833 | $ | 16,606 |
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Free Cash Flow are not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and may be different from non-GAAP and other financial measures used by other companies. These measures should not be considered as measures of financial performance under GAAP, and the items excluded from or included in these metrics are significant components in understanding and assessing Holley’s financial performance. These metrics should not be considered as alternatives to net income, net cash provided by operating activities, or any other performance measures, as applicable, derived in accordance with GAAP.
Holley believes EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Free Cash Flow are useful to investors in evaluating the Company’s financial performance and in comparing the Company’s financial results between periods because they exclude the impact of certain items that we do not consider indicative of our ongoing operating performance. In addition, Holley uses these measures internally to establish forecasts, budgets, and operational goals to manage and monitor its business. Holley believes that these non-GAAP and other financial measures help to depict a more realistic representation of the performance of the underlying business, enabling Holley to evaluate and plan more effectively for the future.
| HOLLEY INC. and SUBSIDIARIES | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||
| (In thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| For the thirteen weeks ended | For the thirty-nine weeks ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| October 1, | October 2, | October 1, | October 2, | |||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Net Income | $ | 752 | $ | 31,579 | $ | 17,978 | $ | 89,000 | ||||
| Adjustments: | **** | **** | **** | **** | ||||||||
| Interest Expense, Net | 13,712 | 10,428 | 41,909 | 26,780 | ||||||||
| Income Tax Expense (Benefit) | 2,092 | (1,345 | ) | 7,756 | 8,866 | |||||||
| Depreciation | 2,785 | 2,837 | 7,738 | 7,500 | ||||||||
| Amortization | 3,687 | 3,662 | 11,040 | 10,985 | ||||||||
| EBITDA | 23,028 | 47,161 | 86,421 | 143,131 | ||||||||
| Acquisition and Restructuring Costs | 415 | 1,266 | 2,106 | 3,247 | ||||||||
| Impairment of Indefinite-Lived Intangible Assets | — | 2,395 | — | 2,395 | ||||||||
| Change in Fair Value of Warrant Liability | 2,064 | (30,171 | ) | 5,516 | (51,112 | ) | ||||||
| Change in Fair Value of Earn-Out Liability | 700 | (7,429 | ) | 2,089 | (9,282 | ) | ||||||
| Product Rationalization | — | — | (800 | ) | — | |||||||
| Equity-Based Compensation Expense | 2,970 | 2,873 | 5,170 | 9,518 | ||||||||
| Notable Items | 556 | 213 | 564 | 1,097 | ||||||||
| Other Expense (Benefit) | (28 | ) | 47 | 508 | 594 | |||||||
| Adjusted EBITDA | $ | 29,705 | $ | 16,355 | $ | 101,574 | $ | 99,588 | ||||
| Total Revenues | $ | 156,530 | $ | 154,775 | $ | 503,997 | $ | 534,250 | ||||
| Net Income Margin | 0.5 | % | 20.4 | % | 3.6 | % | 16.7 | % | ||||
| Adjusted EBITDA Margin | 19.0 | % | 10.6 | % | 20.2 | % | 18.6 | % | ||||
| For the thirteen weeks ended | For the thirty-nine weeks ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| October 1, | October 2, | October 1, | October 2, | |||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Net Income | $ | 752 | $ | 31,579 | $ | 17,978 | $ | 89,000 | ||||
| Special items: | ||||||||||||
| Impairment of Indefinite-Lived Intangible Assets | — | 1,892 | — | 1,892 | ||||||||
| Adjust for: Change in Fair Value of Warrant Liability | 2,064 | (30,171 | ) | 5,516 | (51,112 | ) | ||||||
| Adjust for: Change in Fair Value of Earn-Out Liability | 700 | (7,429 | ) | 2,089 | (9,282 | ) | ||||||
| Adjusted Net Income | $ | 3,516 | $ | (4,129 | ) | $ | 25,583 | $ | 30,498 |
| For the thirteen weeks ended | ||||||
|---|---|---|---|---|---|---|
| October 1, | October 2, | |||||
| 2023 | 2022 | |||||
| Net Cash Provided by Operating Activities | $ | 22,480 | $ | (8,667 | ) | |
| Capital Expenditures, Net of Dispositions | (743 | ) | (1,907 | ) | ||
| Free Cash Flow | $ | 21,737 | $ | (10,574 | ) | |
| 2023 Forecast | ||||||
| --- | --- | --- | --- | --- | ||
| Low Range | High Range | |||||
| Net Sales | $ | 645,000 | $ | 675,000 | ||
| Adjusted EBITDA | 123,000 | 128,000 | ||||
| Depreciation and Amortization | 24,000 | 26,000 | ||||
| Interest Expense | 58,000 | 62,000 | ||||
| Capital Expenditures | 6,000 | 8,000 |
Holley defines EBITDA as earnings before depreciation, amortization of intangible assets, interest expense, and income tax expense. Holley defines Adjusted EBITDA as EBITDA adjusted to exclude, to the extent applicable, acquisition and restructuring costs, which includes transaction fees and expenses, termination related benefits, facilities relocation, and executive transition costs; changes in the fair value of the warrant liability; changes in the fair value of the earn-out liability; equity-based compensation expense; impairment of intangible assets; gain or loss on the early extinguishment of debt; non-cash charges due to a product rationalization initiative aimed at eliminating unprofitable or slow-moving stock keeping units, for which a partial reversal of the initial reserve was recognized during the thirty-nine weeks ended October 1, 2023; notable items that we do not believe are reflective of our underlying operating performance, which for the 39-week period ended October 1, 2023, includes certain costs incurred for advisory services related to identifying performance initiatives, and for the 39-week period ended October 2, 2022, includes a non-cash adjustment related to the adoption of ASC Topic 842, “Leases,” and legal fees and costs related to a settlement; and other expenses or gains, which includes gains or losses from disposal of fixed assets, franchise taxes, and gains or losses from foreign currency transactions. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues.
Holley calculates Adjusted Net Income by excluding the after-tax effect of items considered by management to be special items from the earnings reported under U.S. GAAP. Management uses this measure to focus on on-going operations and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present consolidated operating results. Holley believes that using this information, along with net income, provides for a more complete analysis of the results of operations.
Holley defines Free Cash Flow as net cash provided by operating activities minus cash payments for capital expenditures, net of dispositions. Management believes providing Free Cash Flow is useful for investors to understand the Company's performance and results of cash generation after making capital investments required to support ongoing business operations.
A forecast for full year 2023 Adjusted EBITDA is provided on a non-GAAP basis only because certain information necessary to calculate the most comparable GAAP measure, net income, is unavailable due to the uncertainty and inherent difficulty of predicting the occurrence and the future financial statement impact of certain items. Therefore, as a result of the uncertainty and variability of the nature and amount of future adjustments, which could be significant, Holley is unable to provide a reconciliation of its forecasted 2023 Adjusted EBITDA without unreasonable effort.