On August 7, 2024, Holley Inc (HLLY, Financial) released its 8-K filing detailing the financial results for the second quarter ended June 30, 2024. Holley Inc, a designer, marketer, and manufacturer of high-performance automotive aftermarket products, reported significant financial achievements despite a challenging macroeconomic environment.
Company Overview
Holley Inc is renowned for its portfolio of iconic brands serving the car and truck industry. The company offers a diversified line of performance automotive products, including fuel injection systems, tuners, exhaust products, carburetors, safety equipment, and various other performance automotive products. Holley's products are designed to enhance vehicle performance through increased horsepower, torque, and drivability. The company's brands include Holley, APR, MSD, and Flowmaster, among others. Holley derives the majority of its revenue from the U.S., with additional contributions from Italy.
Financial Performance and Challenges
Holley Inc reported net sales of $169.5 million for Q2 2024, slightly below the analyst estimate of $170.56 million. Despite this, the company achieved a net income of $17.1 million, marking a 31.8% increase year-over-year. This performance is noteworthy given the broader market conditions and highlights the company's resilience and strategic focus.
However, the company faced challenges, including a 3.3% decline in net sales compared to the same period last year. The cost of goods sold decreased by 6.0%, contributing to a gross profit of $70.3 million, a marginal increase of 0.8% year-over-year. Operating expenses rose by 6.6%, driven by higher selling, general, and administrative costs, which increased by 18.8%.
Key Financial Achievements
Holley Inc's financial achievements include a significant improvement in net income and adjusted EBITDA margin. The company's adjusted EBITDA margin increased by 50 basis points year-over-year, reflecting improved operational efficiency. Additionally, Holley exited its covenant relief period and made a $10 million prepayment towards deleveraging, which contributed to an upgraded credit and debt rating by S&P Global Ratings.
"In the second quarter, amidst a challenging macroeconomic landscape, we achieved significant strides in the pivotal areas of our transformation, which may not be immediately apparent due to the broader market conditions," said Matthew Stevenson, President and CEO of Holley.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | Variance ($) | Variance (%) |
|---|---|---|---|---|
| Net Sales | $169,496 | $175,262 | $(5,766) | -3.3% |
| Gross Profit | $70,293 | $69,748 | $545 | 0.8% |
| Operating Income | $27,878 | $29,954 | $(2,076) | -6.9% |
| Net Income | $17,105 | $12,979 | $4,126 | 31.8% |
Balance Sheet and Cash Flow
As of June 30, 2024, Holley Inc reported total assets of $1.198 billion, with cash and cash equivalents amounting to $53.1 million. The company's total liabilities stood at $734.9 million, with long-term debt, net of current portion, at $548.7 million. Holley's total stockholders' equity was $463.2 million, reflecting a strong financial position.
Analysis and Outlook
Holley Inc's performance in Q2 2024 demonstrates its ability to navigate a challenging macroeconomic environment while achieving significant financial milestones. The company's focus on operational efficiency, deleveraging, and strategic growth initiatives has positioned it well for future success. However, the overall macroeconomic uncertainty necessitates a conservative outlook for the latter half of the year.
"This quarter, we once again met our financial priorities. Our improved leverage ratio, backed by robust profitability, debt reduction, and more consistent free cash flow generation, was recognized by S&P Global Ratings with an upgraded credit and debt rating in June," said Jesse Weaver, Holley's CFO.
Holley Inc's outlook for Q3 2024 includes net sales between $133 million and $153 million and adjusted EBITDA between $20 million and $30 million. For the full year 2024, the company expects net sales between $605 million and $645 million and adjusted EBITDA between $117 million and $132 million.
For more detailed financial information, visit the Holley Inc Investor Relations page.
Explore the complete 8-K earnings release (here) from Holley Inc for further details.
