Holley Reports Fourth Quarter and Full Year 2022 Results

Operational improvements and cost initiatives to drive 2023 margin and free cash flow improvement

Company reaches covenant relief agreement with financial partners and reduces interest rate risk

Provides outlook and guidance for full year 2023

Holley Inc. (NYSE: HLLY), the leading platform serving performance automotive enthusiasts, today announced financial results for its fourth quarter and full year ended December 31, 2022.

Full Year 2022 Highlights vs. Prior Year Period

  • Net Sales decreased 0.6% to $688.4 million in 2022 compared to $692.9 million in 2021
  • Gross Profit decreased 11.6% to $253.7 million in 2022 compared to $286.8 million in 2021
  • Net Income of $73.8 million, or $0.14 per diluted share, in 2022 compared to a Net Loss of $(27.1) million, or $(0.30) per diluted share, in 2021
  • Adjusted Net Income1 of $7.9 million, in 2022 compared to Adjusted Net Income1 of $61.8 million reported in 2021
  • Adjusted EBITDA1 of $114.7 million in 2022 compared to $169.5 million in 2021

Fourth Quarter Highlights vs. Prior Year Period

  • Net Sales decreased 14.3% to $154.2 million compared to $179.8 million in the prior year's fourth quarter
  • Gross Profit decreased 36.8% to $47.3 million compared to $74.7 million in the prior year's fourth quarter
  • Net Loss of $(15.2) million, or $(0.13) per diluted share, compared to a Net Loss of $(18.0) million, or $(0.16) per diluted share, in the prior year's fourth quarter
  • Adjusted Net Loss1 of $(22.6) million, compared to Adjusted Net Income1 of $9.0 million reported in the prior year's fourth quarter
  • Adjusted EBITDA1 of $15.1 million compared to $36.1 million in the prior year's fourth quarter

1See "Use and Reconciliation of Non-GAAP Financial Measures" below.

“Despite ongoing supply-chain disruptions and demand normalization impacting financial results during the quarter, we remain encouraged by the underlying strength of our core enthusiast base and are confident that Holley remains a clear leader in the performance enthusiast automotive space,” said Michelle Gloeckler, Holley’s Interim President and Chief Executive Officer. “We are intently focused on strategically aligning our cost structure, delivering strong free cash flow, and returning the Company’s growth and margin performance to historical levels.”

Key Operating Metrics and Strategic Highlights

  • Record DTC sales of $149 million in 2022, up 27% or $32 million compared to 2021
  • Holley event attendance of 106,000 individuals in 2022, an increase of 16.9% year-over-year
  • Past due orders reduced during the fourth quarter but remain elevated in our Electronics category
  • $30 million of savings in 2023 driven by operational improvements and cost initiatives to help offset cost headwinds

“2022 was a challenging year for Holley, and one that surfaced many areas of improvement for the broader organization,” said Matthew Rubel, Executive Chairman of the Board. “We are extremely focused heading into 2023, with dedicated efforts to realize additional cost savings and M&A synergy capture, prioritize key product categories and platforms, and return to operational excellence through the refinement of our organizational structure.”

“I believe that we are well positioned to take this business to the next level and that our team is highly capable of executing Holley’s strategic vision, which is to inspire and enable enthusiasts in their automotive adventures by bringing innovation, discovery, and fun to motor life,” said Gloeckler. “New products are our Company’s lifeblood, and we are positioned to capitalize on many new opportunities such as the modification of electric vehicles and electric powertrain conversions in the future. Our superior engineering capabilities and unparalleled understanding of the performance enthusiast consumer will benefit this effort and position Holley to remain a leader in the attractive growth market.”

Significant Subsequent Events

The Company reached an agreement with its lending group to amend the net leverage covenant applicable to the revolver. The terms of the agreement now call for a net leverage ratio, as defined in the credit agreement, of 7.25x in Q1 and Q2 of 2023, 6.50x in Q3 of 2023, 5.75x in Q4 of 2023 and Q1 of 2024 before returning to the original agreement level of 5.0x in Q2 of 2024 and thereafter. Additional covenant information is available in the Company’s supplemental earnings materials and full details of the agreement can be found in the Company’s Form 8-K filed on March 8, 2023.

In an effort to reduce exposure to floating interest rates, Holley entered into a costless interest rate collar that hedged $500 million in debt by capping 3-Month SOFR at 5.0%, subject to a floor on 3-Month SOFR of 2.8%, through mid-February of 2026.

Full Year 2023 Outlook

Holley is providing the following outlook for the full-year 2023:

  • Net Sales in the range of $625-$675 million
  • Adjusted EBITDA of $108-$122 million
  • Capital Expenditures in the range of $10-$15 million
  • Depreciation and Amortization Expense of $23-$25 million
  • Interest Expense in the range of $60-$65 million

“While 2022 results were challenged by multiple factors, the management team at Holley is committed to making the necessary changes to stabilize our Company and drive improved operating and financial performance,” said Jesse Weaver, Holley’s Chief Financial Officer. “Heading into 2023, we believe we are well-equipped to execute our well-defined strategy. There is incredible depth in our leadership, and we have the needed financial flexibility to align our cost structure to current market demand. Despite a normalization to pre-Covid trend growth levels, our end markets remain strong, and Holley is an unquestioned leader across key product categories. We’ve taken several steps to fully capture acquisition synergies, improve our freight strategy, and right size our operating structure. In total, we expect these efforts to deliver approximately $30 million of year-over-year cost savings in 2023, with $15 million coming from SG&A as the result of a recent reduction in force and expected synergy capture and $15 million in gross margin largely driven by improved shipping costs as the result of a recently negotiated contract with a new 3rd party logistics provider. The organization is laser-focused on restoring profitability, optimizing inventories, driving innovation, and de-leveraging our balance sheet in 2023 and beyond.”

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 13736184.

For those unable to participate, a telephone replay recording will be available until Thursday, March 16, 2023. To access the replay, please call 877-660-6853 (Toll Free) or 201-612-7415 (Toll) and enter confirmation code 13736184. A web-based archive of the conference call will also be available at the Company’s website.

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 the largest 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 becoming 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 political tensions and war (such as the ongoing conflict in Ukraine); 7) the possibility that Holley may be adversely affected by other economic, business and/or competitive factors; 8) Holley’s estimates of its financial performance; 9) the impact of the novel coronavirus disease pandemic and its effect on business and financial conditions; 10) our 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 11) 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, 2021 filed with the U.S. Securities and Exchange Commission (“SEC”) on March 15, 2022, and that are otherwise described or updated from time to time in Holley’s 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 any duty to update these forward-looking statements, except as otherwise required by law.

[Financial Tables to Follow]

 

HOLLEY INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

 

For the thirteen weeks ended

 

For the year ended

 

 

December 31,

 

 

 

 

 

Variance

 

 

Variance

 

December 31,

 

 

 

 

 

Variance

 

 

Variance

 

 

2022

 

 

2021

 

 

($)

 

 

(%)

 

2022

 

 

2021

 

 

($)

 

 

(%)

Net Sales

 

$

154,165

 

 

$

179,801

 

 

$

(25,636

)

 

-14.3%

 

$

688,415

 

 

$

692,847

 

 

$

(4,432

)

 

-0.6%

Cost of Goods Sold

 

 

106,908

 

 

 

105,071

 

 

 

1,837

 

 

1.7%

 

 

434,757

 

 

 

406,040

 

 

 

28,717

 

 

7.1%

Gross Profit

 

 

47,257

 

 

 

74,730

 

 

 

(27,473

)

 

-36.8%

 

 

253,658

 

 

 

286,807

 

 

 

(33,149

)

 

-11.6%

Selling, General, and Administrative

 

 

48,196

 

 

 

37,700

 

 

 

10,496

 

 

27.8%

 

 

150,728

 

 

 

116,793

 

 

 

33,935

 

 

29.1%

Research and Development Costs

 

 

6,687

 

 

 

8,113

 

 

 

(1,426

)

 

-17.6%

 

 

29,083

 

 

 

28,280

 

 

 

803

 

 

2.8%

Amortization of Intangible Assets

 

 

3,698

 

 

 

3,608

 

 

 

90

 

 

2.5%

 

 

14,683

 

 

 

13,999

 

 

 

684

 

 

4.9%

Impairment of Indefinite-Lived Intangible Assets

 

 

 

 

 

 

 

 

 

 

 

 

2,395

 

 

 

 

 

 

2,395

 

 

nm

Acquisition and Restructuring Costs

 

 

1,266

 

 

 

1,791

 

 

 

(525

)

 

-29.3%

 

 

4,513

 

 

 

23,668

 

 

 

(19,155

)

 

-80.9%

Related Party Acquisition and Management Fee Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,789

 

 

 

(25,789

)

 

-100.0%

Other Operating Expense

 

 

920

 

 

 

752

 

 

 

168

 

 

22.3%

 

 

1,514

 

 

 

755

 

 

 

759

 

 

100.5%

Operating Expense

 

 

60,767

 

 

 

51,964

 

 

 

8,803

 

 

16.9%

 

 

202,916

 

 

 

209,284

 

 

 

(6,368

)

 

-3.0%

Operating Income (Loss)

 

 

(13,510

)

 

 

22,766

 

 

 

(36,276

)

 

nm

 

 

50,742

 

 

 

77,523

 

 

 

(26,781

)

 

-34.5%

Change in Fair Value of Warrant Liability

 

 

(5,909

)

 

 

15,307

 

 

 

(21,216

)

 

nm

 

 

(57,021

)

 

 

32,580

 

 

 

(89,601

)

 

nm

Change in Fair Value of Earn-Out Liability

 

 

(1,449

)

 

 

2,009

 

 

 

(3,458

)

 

nm

 

 

(10,731

)

 

 

8,875

 

 

 

(19,606

)

 

nm

Loss on Early Extinguishment of Debt

 

 

 

 

 

12,225

 

 

 

(12,225

)

 

-100.0%

 

 

-

 

 

 

13,650

 

 

 

(13,650

)

 

-100.0%

Interest Expense

 

 

13,447

 

 

 

8,032

 

 

 

5,415

 

 

67.4%

 

 

40,227

 

 

 

39,128

 

 

 

1,099

 

 

2.8%

Non-Operating Expense (Income)

 

 

6,089

 

 

 

37,573

 

 

 

(31,484

)

 

-83.8%

 

 

(27,525

)

 

 

94,233

 

 

 

(121,758

)

 

nm

Income (Loss) Before Income Taxes

 

 

(19,599

)

 

 

(14,807

)

 

 

(4,792

)

 

32.4%

 

 

78,267

 

 

 

(16,710

)

 

 

94,977

 

 

nm

Income Tax Expense (Benefit)

 

 

(4,373

)

 

 

3,174

 

 

 

(7,547

)

 

nm

 

 

4,493

 

 

 

10,429

 

 

 

(5,936

)

 

-56.9%

Net Income (Loss)

 

$

(15,226

)

 

$

(17,981

)

 

$

2,755

 

 

-15.3%

 

$

73,774

 

 

$

(27,139

)

 

$

100,913

 

 

nm

Comprehensive Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Currency Translation Adjustment

 

 

(2,248

)

 

 

42

 

 

 

(2,290

)

 

nm

 

 

(990

)

 

 

30

 

 

 

(1,020

)

 

nm

Pension Liability Gain

 

 

302

 

 

 

388

 

 

 

(86

)

 

-22.2%

 

 

302

 

 

 

388

 

 

 

(86

)

 

-22.2%

Total Comprehensive Income (Loss)

 

$

(17,172

)

 

$

(17,551

)

 

$

379

 

 

-2.2%

 

$

73,086

 

 

$

(26,721

)

 

$

99,807

 

 

nm

Common Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Net Income (Loss) per Share

 

$

(0.13

)

 

$

(0.16

)

 

$

0.03

 

 

-18.8%

 

$

0.63

 

 

$

(0.30

)

 

$

0.93

 

 

nm

Diluted Net Income (Loss) per Share

 

$

(0.13

)

 

$

(0.16

)

 

$

0.03

 

 

-18.8%

 

$

0.14

 

 

$

(0.30

)

 

$

0.44

 

 

nm

Weighted Average Common Shares Outstanding - Basic

 

 

117,148

 

 

 

115,807

 

 

 

1,341

 

 

1.2%

 

 

116,763

 

 

 

89,960

 

 

 

26,803

 

 

29.8%

Weighted Average Common Shares Outstanding - Diluted

 

 

117,179

 

 

 

115,807

 

 

 

1,372

 

 

1.2%

 

 

117,248

 

 

 

89,960

 

 

 

27,288

 

 

30.3%

nm - not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HOLLEY INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(In thousands)

(Unaudited)

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

 

 

Total Current Assets

 

$

324,963

 

 

$

291,717

 

Property, Plant and Equipment, Net

 

 

52,181

 

 

 

51,495

 

Goodwill

 

 

418,121

 

 

 

411,383

 

Other Intangibles, Net

 

 

424,855

 

 

 

438,461

 

Right-of-Use Assets

 

 

29,522

 

 

 

 

Total Assets

 

$

1,249,642

 

 

$

1,193,056

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Total Current Liabilities

 

$

101,259

 

 

$

91,795

 

Long-Term Debt, Net of Current Portion

 

 

643,563

 

 

 

637,673

 

Deferred Taxes

 

 

58,390

 

 

 

70,045

 

Other Noncurrent Liabilities

 

 

30,440

 

 

 

89,056

 

Total Liabilities

 

 

833,652

 

 

 

888,569

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

12

 

 

 

12

 

Additional Paid-In Capital

 

 

368,122

 

 

 

329,705

 

Accumulated Other Comprehensive Loss

 

 

(944

)

 

 

(256

)

Retained Earnings (Accumulated Deficit)

 

 

48,800

 

 

 

(24,974

)

Total Stockholders' Equity

 

 

415,990

 

 

 

304,487

 

Total Liabilities and Stockholders' Equity

 

$

1,249,642

 

 

$

1,193,056

 

HOLLEY INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

For the thirteen weeks ended

 

 

For the year ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

(15,226

)

 

$

(17,981

)

 

$

73,774

 

 

$

(27,139

)

Adjustments to Reconcile to Net Cash

 

 

17,465

 

 

 

21,300

 

 

 

(5,155

)

 

 

93,003

 

Changes in Operating Assets and Liabilities

 

 

(2,091

)

 

 

(6,653

)

 

 

(56,307

)

 

 

(44,281

)

Net Cash provided by (used in) Operating Activities

 

 

148

 

 

 

(3,334

)

 

 

12,312

 

 

 

21,583

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures, Net of Dispositions

 

 

(1,430

)

 

 

(4,724

)

 

 

(12,702

)

 

 

(14,869

)

Acquisitions / Divestitures, net

 

 

1,742

 

 

 

(57,434

)

 

 

(12,335

)

 

 

(119,220

)

Net Cash provided by (used in) Investing Activities

 

 

312

 

 

 

(62,158

)

 

 

(25,037

)

 

 

(134,089

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Change in Debt

 

 

8,307

 

 

 

57,090

 

 

 

3,517

 

 

 

(45,942

)

Recapitalization

 

 

 

 

 

 

 

 

 

 

 

132,299

 

Payment of acquisition contingent consideration

 

 

 

 

 

(9,200

)

 

 

 

 

 

(9,200

)

Payments from Stock-Based Award Activities

 

 

 

 

 

 

 

 

(1,050

)

 

 

 

Proceeds from Issuance of Common Stock Due to Exercise of Warrants

 

 

 

 

 

 

 

 

383

 

 

 

 

Net Cash provided by Financing Activities

 

 

8,307

 

 

 

47,890

 

 

 

2,850

 

 

 

77,157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of Foreign Currency Rate Fluctuations on Cash

 

 

777

 

 

 

 

 

 

(300

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Change in Cash and Cash Equivalents

 

 

9,544

 

 

 

(17,602

)

 

 

(10,175

)

 

 

(35,349

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of Period

 

 

16,606

 

 

 

53,927

 

 

 

36,325

 

 

 

71,674

 

End of Period

 

$

26,150

 

 

$

36,325

 

 

$

26,150

 

 

$

36,325

 

Holley believes EBITDA, Adjusted EBITDA, Adjusted Net Income, and Organic Sales are useful to investors in evaluating the Company’s financial 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 the Company 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 year ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net Income (Loss)

 

$

(15,226

)

 

$

(17,981

)

 

$

73,774

 

 

$

(27,139

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

13,447

 

 

 

8,032

 

 

 

40,227

 

 

 

39,128

 

Income Taxes

 

 

(4,373

)

 

 

3,174

 

 

 

4,493

 

 

 

10,429

 

Depreciation

 

 

2,607

 

 

 

4,199

 

 

 

10,107

 

 

 

11,527

 

Amortization

 

 

3,698

 

 

 

3,608

 

 

 

14,683

 

 

 

13,999

 

EBITDA

 

 

153

 

 

 

1,032

 

 

 

143,284

 

 

 

47,944

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition and Restructuring Costs

 

 

1,266

 

 

 

1,791

 

 

 

4,513

 

 

 

6,495

 

Earn-Out from Simpson Acquisition

 

 

 

 

 

 

 

 

 

 

 

17,173

 

Impairment of Indefinite-Lived Intangible Assets

 

 

 

 

 

 

 

 

2,395

 

 

 

 

Change in Fair Value of Warrant Liability

 

 

(5,909

)

 

 

15,307

 

 

 

(57,021

)

 

 

32,580

 

Change in Fair Value of Earn-Out Liability

 

 

(1,449

)

 

 

2,009

 

 

 

(10,731

)

 

 

8,875

 

Loss on Early Extinguishment of Debt

 

 

 

 

 

12,225

 

 

 

 

 

 

13,650

 

Product Rationalization

 

 

4,519

 

 

 

 

 

 

4,519

 

 

 

 

Equity-Based Compensation Expense

 

 

14,877

 

 

 

2,215

 

 

 

24,395

 

 

 

4,963

 

Related Party Acquisition and Management Fee Costs

 

 

 

 

 

 

 

 

 

 

 

25,789

 

Notable Items

 

 

741

 

 

 

757

 

 

 

1,838

 

 

 

11,270

 

Other Expense

 

 

920

 

 

 

752

 

 

 

1,514

 

 

 

755

 

Adjusted EBITDA

 

$

15,118

 

 

$

36,088

 

 

$

114,706

 

 

$

169,494

 

 

 

For the thirteen weeks ended

 

 

For the year ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net Income (Loss)

 

$

(15,226

)

 

$

(17,981

)

 

$

73,774

 

 

$

(27,139

)

Special items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,892

 

 

 

 

Adjust for: Change in Fair Value of Warrant Liability

 

 

(5,909

)

 

 

15,307

 

 

 

(57,021

)

 

 

32,580

 

Adjust for: Change in Fair Value of Earn-Out Liability

 

 

(1,449

)

 

 

2,009

 

 

 

(10,731

)

 

 

8,875

 

Adjust for: Earn-Out from Simpson Acquisition

 

 

 

 

 

 

 

 

 

 

 

17,173

 

Adjust for: Loss on Early Extinguishment of Debt

 

 

 

 

 

9,658

 

 

 

 

 

 

10,784

 

Adjust for: Fees paid related to the Business Combination

 

 

 

 

 

 

 

 

 

 

 

19,561

 

Adjusted Net Income (Loss)

 

$

(22,584

)

 

$

8,993

 

 

$

7,914

 

 

$

61,834

 

 

 

 

13 Weeks Ended

 

 

 

December 31, 2022

 

Net Sales

 

 

154,165

 

Less: Sales from Acquisitions within 365 Days of Purchase (Non-Comparable to Prior Year)

 

 

(7,322

)

Organic Sales (Comparable to Prior Year Period Net Sales)

 

$

146,843

 

 

 

 

 

 

 

 

 

 

 

 

2023 Forecast

 

 

 

Low Range

 

 

High Range

 

Net Sales

 

$

625,000

 

 

$

675,000

 

Adjusted EBITDA

 

 

108,000

 

 

 

122,000

 

Depreciation and Amortization

 

 

23,000

 

 

 

25,000

 

Interest Expense

 

 

60,000

 

 

 

65,000

 

Capital Expenditures

 

 

10,000

 

 

 

15,000

 

Holley defines EBITDA as earnings before (a) interest expense, (b) income taxes and (c) depreciation and amortization. Holley defines Adjusted EBITDA as EBITDA plus (i) acquisition integration and restructuring costs, (ii) an adjustment in 2021 due to a change in the fair value of the Simpson acquisition contingent consideration payable, (iii) impairment of indefinite-lived intangible assets (iv) changes in the fair value of the warrant liability, (v) changes in the fair value of the earn-out liability, (vi) loss on the early extinguishment of debt (vii) product rationalization initiatives aimed at eliminating unprofitable or slow-moving stock keeping units, (viii) compensation expense related to equity awards, (ix) related party acquisition and management fee costs, (x) notable items that in 2022 consist primarily of non-cash adjustments related to the adoption of ASC 842, "Leases," and in 2021 consist primarily of the amortization of the fair market value increase in inventory due to acquisitions, and (xi) other expenses, which for 2022 includes a $1.0 million loss on the sale of a business and for all periods includes net losses from disposal of fixed assets and foreign currency transactions. We have included within the definition of Adjusted EBITDA impairment of indefinite-lived intangible assets, changes in the fair value of warrant liabilities, changes in the fair value of the earn-out liability, and losses from the early extinguishment of debt, as management believes such matters, when they occur, do not directly reflect the performance of the underlying business.

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.

Organic sales, or sales excluding the impact of acquisitions, excludes the impact from sales from acquisitions within 365 days of the consummation of such acquisition. Holley believes organic sales provides investors with useful supplemental information regarding Holley's underlying sales trends.

EBITDA, Adjusted EBITDA, Adjusted Net Income, and organic sales 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 or any other performance measures derived in accordance with GAAP.

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 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 these measures without unreasonable effort.

Contacts

Investor Relations:

Ross Collins / Stephen Poe

Alpha IR Group

312-445-2870

HLLY@alpha-ir.com

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