Holley Inc. ((HLLY)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Holley Inc. Reports Strong Growth and Strategic Advancements in Latest Earnings Call
The latest earnings call from Holley Inc. reflected a robust performance, showcasing significant growth in its core business operations, improved financial metrics, and strategic debt reduction. Despite facing challenges such as weather-impacted event attendance and inventory management issues, the company demonstrated resilience and operational excellence.
Core Business Growth
Holley’s core business delivered a notable growth of 6.4% in the third quarter, marking the third consecutive quarter of year-over-year growth. This consistent performance underscores the company’s strong market position and ability to capitalize on growth opportunities.
B2B Channel Expansion
The B2B channel experienced a 7.3% growth, driven by strategic initiatives that generated approximately $26 million in revenue. This includes $11.3 million from new product innovation and portfolio management, highlighting Holley’s commitment to expanding its business-to-business operations.
Gross Margin Improvement
Holley reported an improvement in gross margins to 43.2%, up more than 400 basis points from the previous year. This increase reflects the company’s strong pricing discipline and operational improvements, contributing to its overall financial health.
Debt Reduction Milestone
The company achieved a significant milestone in debt reduction, with net debt-to-EBITDA leverage reduced to 3.9x, below the year-end target of 4x for the first time since 2022. Additionally, after the quarter ended, another $10 million in debt was prepaid, demonstrating Holley’s commitment to strengthening its balance sheet.
Adjusted EBITDA Growth
Holley saw its adjusted EBITDA margin rise to 19.6%, an increase of over 300 basis points year-over-year. This growth highlights the company’s operating leverage and cost discipline, further enhancing its profitability.
Free Cash Flow Generation
The company generated $5.5 million of free cash flow, marking a $7.6 million improvement from the previous year. This was driven by higher margins and disciplined capital management, underscoring Holley’s effective financial strategies.
Event Attendance Impacted by Weather
Attendance at Holley’s events was roughly flat due to a rainy weekend during the flagship LS Fest East, which impacted momentum. Despite this, the company remains optimistic about future event performance.
Inventory Management Challenges
Inventory reduction moderated from $9 million in Q2 to $5 million in Q3 due to strategic decisions, affecting the pace of achieving the $10 million reduction target for the year. Holley continues to focus on optimizing its inventory management.
Forward-Looking Guidance
During the earnings call, Holley provided comprehensive guidance for the full fiscal year. The company expects revenue to range between $590 million and $605 million, indicating a 3.8% growth at the midpoint over the core business base of approximately $575 million in 2024. Additionally, the bottom end of its adjusted EBITDA guidance has been raised from $116 million to a range of $120 million to $127 million. These projections reflect Holley’s strong execution, operational enhancements, and ongoing strategic initiatives.
In summary, Holley Inc.’s latest earnings call highlighted a strong performance with significant growth in core business operations and strategic advancements. The company’s resilience in the face of challenges and its focus on financial health and operational excellence were evident throughout the discussion, positioning Holley well for future success.