Holley (HLLY) investor relations material

Business transformation and growth

• Underwent a major transformation over the past three years, professionalizing operations and leadership to enable scalable growth.

• Returned to growth in five of the last six quarters, outpacing a generally flat industry through innovation and channel expansion.

• Rationalized SKUs and divested non-core brands, removing about half the portfolio but less than 5% of revenue, to focus on scalable, high-margin segments.

• Leadership overhaul replaced 52 of the top 60 leaders, shifting from small business mentality to Fortune 1000-level expertise.

• Enhanced innovation strategy with disciplined, data-driven processes and a seven-stage phase gate system for product development.

Market dynamics and strategy

• Operates in a fragmented $50 billion global performance aftermarket, with significant consolidation opportunities.

• Focuses on product innovation, channel expansion, export markets, and direct-to-consumer sales (22% of business) to drive growth.

• M&A strategy targets high-growth, entrepreneur-led brands with strong EBITDA and cash flow, aiming for four to five acquisitions by 2027.

• Recent acquisition of HRX complements existing offerings and leverages synergies in racing safety products.

• Share repurchase program initiated due to perceived undervaluation, alongside ongoing debt reduction and M&A priorities.

Financial performance and capital allocation

• Consistently generates $40–$50 million in free cash flow annually, with 20% EBITDA margins and a capital-light model.

• Reduced leverage from 5.6x to 3.74x, targeting sub-3x by end of next year through debt prepayment and disciplined capital allocation.

• Margin structure maintained at 40/20 (gross/EBITDA) even in challenging years, driven by continuous cost optimization and facility consolidation.

• Cash flow and margin resilience supported by brand strength, operational improvements, and exit from unprofitable businesses.