Strong organic growth and execution against
strategic initiatives drive performance
Discloses quarterly 2020 historical results
and confirms guidance
Holley Inc. (NYSE: HLLY), the largest and fastest growing
platform serving performance automotive enthusiasts, today
announced financial results for its second quarter ended June 27,
2021.
Second Quarter Highlights vs. Prior
Year Period
- Net Sales increased 54% to $193.0 million compared to $125.3
million in 2020
- Gross Profit increased 48% to $81.2 million compared to $54.8
million last year
- Operating Income increased 52% to $40.1 million compared to
$26.3 million in 2020
- Net Income increased 85% to $23.1 million from $12.5 million
last year
- Adjusted EBITDA1 increased 49% to $54.1 million compared to
$36.4 million in 2020
- Acquired AEM Performance Electronics (“AEM”) adding to Holley’s
electronics offering
- Continued execution on direct-to-consumer channel growth
strategy
2021 Outlook
- Company reiterates fiscal 2021 Net Sales expected to range
between $648-$663 million, Pro Forma Net Sales1 between $655-$670
million, and Pro Forma Adjusted EBITDA1 between $165-170
million
1 See “Use and Reconciliation of Non-GAAP Financial Measures”
below.
Tom Tomlinson, Holley’s President and Chief Executive Officer,
said, “Consumer demand for our products was strong in the second
quarter and we continued to see excellent growth in our
direct-to-consumer channel. Our team performed well, captured
significant additional demand in the quarter, and delivered great
overall results.”
Second Quarter 2021 Financial
Results
Net sales increased 54% to $193.0 million in the second quarter
of 2021, up from $125.3 million in the second quarter of 2020.
Non-comparable sales associated with acquisitions, including the
AEM acquisition completed in April and several completed in the
fourth quarter of 2020, contributed $36.7 million of net sales
growth in the quarter. Organic growth for comparable brands
contributed the remaining $31.0 million of year-over-year net sales
growth, representing slightly more than 25% growth over second
quarter 2020 net sales. Consumer demand for electronic performance
products drove the majority of the organic growth in the
quarter.
Cost of goods sold increased $41.4 million, or 59%, to $111.8
million, as compared to $70.5 million for the second quarter of
2020 and is primarily attributable to the increase in product
sales. Gross profit for the thirteen weeks ended June 27, 2021
increased $26.4 million, or 48.1%, to $81.2 million, as compared to
$54.8 million for the second quarter of 2020. The increase in gross
profit was driven by the increase in sales. Gross margin for the
thirteen weeks ended June 27, 2021 was 42.1% compared to a gross
margin of 43.8% for the thirteen weeks ended June 28, 2020.
Selling, general and administrative costs for the quarter
increased $9.9 million to $26.2 million, representing an increase
of 61% when compared to $16.3 million in 2020. Incremental SG&A
from recent acquisitions were responsible for $5.3 million of the
increase in the quarter. Additional cost drivers include a $1.6
million increase in shipping costs related to higher sales and
global supply chain pressure, higher audit fees associated with the
business combination with Empower, and increases in software
licensing that support Holley’s growth.
R&D and other operating expenses provided leverage in the
second quarter, as those expenses increased 26% and 20%,
respectively, against the net sales increase of 54%. Increases in
these other operating expense areas are primarily due to
acquisitions.
Net income for the second quarter 2021 reflects higher sales
volume and the leverage achieved on certain fixed expenses. Net
income improved to $23.1 million in the second quarter compared to
$12.5 million in 2020, an increase of 85%.
Adjusted EBITDA grew from $36.4 million in the second quarter
last year to $54.1 million in the second quarter of 2021,
representing 49% year-over-year growth. Reconciliation to GAAP Net
Income is included in the “Use and Reconciliation of Non-GAAP
Financial Measures” table below.
Significant Event Subsequent to Quarter
End
On July 16, 2021, Holley completed the business combination with
Empower LTD and became a publicly traded company on the New York
Stock Exchange (NYSE: HLLY). Since the transaction closed in
Holley’s third fiscal quarter, the 10-Q Holley will file with the
Securities and Exchange Commission for the second quarter will
reflect the pre-combination results of Empower LTD.
Fiscal 2021 Full Year
Outlook
We reiterate our full-year expectations of recognized net sales
in the range of $648 to $663 million for fiscal 2021. We expect pro
forma net sales in the range of $655 to $670 million, and pro forma
adjusted EBITDA between $165 and $170 million. Additional
information regarding pro forma adjustments is included in the “Use
and Reconciliation of Non-GAAP Financial Measures” table below.
Dominic Bardos, Holley’s Chief Financial Officer, added, “We
continued to execute on our strategy in the second quarter, with
both organic growth and recent acquisitions contributing to our
strong revenue performance. We expect sales growth to moderate in
the back half of 2021, largely due to lapping strong 2020
performance and the three acquisitions made during the fourth
quarter last year. Our full-year guidance also contemplates the
uncertainties surrounding global supply chain challenges and
inflationary pressure on raw material costs. Our markets remain
strong and our consumers continue to be highly engaged.”
Conference Call
A conference call and audio webcast has been scheduled for 10:00
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 1-844-200-6205 (United
States Toll Free), 1-646-904-5544 (United States Local), or +
44-208-0682-558 (All Other Locations) using the access code of
472207.
For those unable to participate, a telephone replay recording
will be available until Wednesday, September 1, 2021. To access the
replay, please call 1-929-458-6194 (U.S.), 0204-525-0658 (U.K.), or
+ 44-204-525-0658 (All Other Locations) and enter confirmation code
986200. 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 to recognize the anticipated benefits of the business
combination with Empower LTD, which may be affected by, among other
things, competition, the ability of the combined company to grow
and manage growth profitably, maintain relationships with customers
and suppliers and retain its management and key employees; 2) costs
related to the business combination and Holley becoming a public
company; 3) changes in applicable laws or regulations; 4) the
outcome of any legal proceedings that may be instituted against
Holley; 5) the possibility that Holley may be adversely affected by
other economic, business and/or competitive factors; 6) Holley’s
estimates of its financial performance; 7) the impact of the novel
coronavirus disease pandemic and its effect on business and
financial conditions; and 8) other risks and uncertainties set
forth in the section entitled “Risk Factors” and “Cautionary Note
Regarding Forward-Looking Statements” in the Prospectus filed with
the U.S. Securities and Exchange Commission (“SEC”) filed on July
28, 2021. Although Holley believe 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 twenty-six
weeks ended
27-Jun
June 28,
%
27-Jun
June 28,
%
2021
2020
Variance
Variance
2021
2020
Variance
Variance
Net Sales
$
193,041
$
125,296
$
67,745
54.1%
$
353,373
$
232,453
$
120,920
52.0%
Cost of Goods Sold
111,841
70,468
41,373
58.7%
206,494
134,292
72,202
53.8%
Gross Profit
81,200
54,828
26,372
48.1%
146,879
98,161
48,718
49.6%
Operating Expenses
41,138
28,479
12,659
44.5%
94,036
54,138
39,898
73.7%
Operating Income
40,062
26,349
13,713
52.0%
52,843
44,023
8,820
20.0%
Interest Expense
11,174
11,013
161
1.5%
21,245
22,518
(1,273)
-5.7%
Income Before Income Taxes
28,888
15,336
13,552
88.4%
31,598
21,505
10,093
46.9%
Income Tax Expense (Benefit)
5,790
2,827
2,963
104.8%
10,556
4,144
6,412
154.7%
Net Income (Loss)
23,098
12,509
10,589
84.7%
21,042
17,361
3,681
21.2%
Comprehensive Income: Foreign Currency Translation Adj.
35
-
35
-
19
-
19
-
Total Comprehensive Net Income:
23,133
12,509
10,624
84.9%
21,061
17,361
3,700
21.3%
HOLLEY INC. and SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (In thousands) (Unaudited)
For the thirteen weeks ended
March 29,
June 28,
Sept. 27,
Dec. 31,
March 28,
27-Jun
2020
2020
2020
2020
2021
2021
Net Sales
$
107,157
$
125,296
$
133,307
$
138,419
$
160,332
$
193,041
Cost of Goods Sold
63,824
70,468
77,778
83,865
94,653
111,841
Gross Profit
43,333
54,828
55,529
54,554
65,679
81,200
Operating Expenses
25,659
28,479
27,149
41,502
52,898
41,138
Operating Income
17,674
26,349
28,380
13,052
12,781
40,062
Interest Expense
11,505
11,013
9,325
11,929
10,071
11,174
Income Before Income Taxes
6,169
15,336
19,055
1,123
2,710
28,888
Income Tax Expense (Benefit)
1,317
2,827
5,512
(830)
4,766
5,790
Net Income (Loss)
4,852
12,509
13,543
1,953
(2,056)
23,098
Comprehensive Income: Foreign Currency Translation Adj.
-
-
-
16
(16)
35
Total Comprehensive Net Income:
4,852
12,509
13,543
1,969
(2,072)
23,133
HOLLEY INC. and SUBSIDIARIES CONDENSED CONSOLIDATED
BALANCE SHEET (In thousands) (Unaudited)
As of
As of
As of
As of
As of
As of
March 29,
June 28,
Sept. 27,
Dec. 31,
March 28,
27-Jun
2020
2020
2020
2020
2021
2021
Assets Total Current Assets
$
200,825
$
221,873
$
190,361
$
257,980
$
275,832
$
261,207
Net Property, Plant & Equipment
32,752
32,929
34,131
43,729
44,581
49,692
Goodwill
297,607
297,607
297,607
359,099
359,099
377,368
Other Net Intangibles
330,807
328,157
325,459
404,522
401,186
425,423
Total Assets
861,991
880,566
847,558
1,065,330
1,080,698
1,113,690
Liabilities and Stockholder's
Equity Total Current Liabilities
46,980
53,046
54,463
82,009
98,175
107,428
Long-term Debt Net of Current Portion
531,078
530,857
482,636
649,458
650,123
649,874
Deferred Taxes
51,656
51,863
51,995
71,336
71,814
72,538
Other Noncurrent Liabilities
21,890
21,890
21,890
22,146
22,146
22,146
Total Liabilities
651,604
657,656
610,984
824,949
842,258
851,986
Common Stock
-
-
-
-
-
-
Additional Paid-In Capital
236,624
236,638
236,759
238,890
239,021
239,152
Accumulated Loss
(397)
(397)
(397)
(674)
(690)
(655)
Retained Earnings
(25,840)
(13,331)
212
2,165
109
23,207
Total Stockholder's Equity
210,387
222,910
236,574
240,381
238,440
261,704
Total Liabilities and Stockholder's Equity
861,991
880,566
847,558
1,065,330
1,080,698
1,113,690
HOLLEY INC. and SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
For the thirteen weeks
ended
March 29,
June 28,
Sept. 27,
Dec. 31,
March 28,
27-Jun
2020
2020
2020
2020
2021
2021
Operating Activities Net Income
$
4,852
$
12,509
$
13,543
$
1,953
$
(2,056)
$
23,098
Adjustments to Reconcile to Net Cash
5,964
5,811
6,102
13,960
7,142
24,855
Changes in Operating Assets & Liabilities
6,764
7,549
12,510
(3,104)
13,870
(20,512)
Net Cash from Operating Activities
17,580
25,869
32,155
12,809
18,956
27,441
Investing Activities
Capital Expenditures, Net of Dispositions
(1,283)
(2,152)
(3,218)
(2,082)
(3,104)
(3,752)
Acquisitions
-
(50)
-
(156,833)
-
(54,011)
Net Cash from Investing Activities
(1,283)
(2,202)
(3,218)
(158,915)
(3,104)
(57,763)
Financing Activities Net
Change and Principal Payments in Debt
27,500
(1,050)
(48,950)
163,044
(64)
(1,475)
Net Change in Cash & Cash Equivalents
43,797
22,617
(20,013)
16,938
15,788
(31,797)
Cash and Cash
Equivalents Beginning of Period
8,335
52,132
74,749
54,736
71,674
87,462
End of Period
52,132
74,749
54,736
71,674
87,462
55,665
HOLLEY INTERMEDIATE HOLDINGS, INC. and SUBSIDIARIES USE
AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In
thousands) (Unaudited)
For the
thirteen weeks ended
June 27,
June 28,
Description
2021
2020
Net Income (Loss)
$
23,098
$
12,509
Adjustments: Interest Expense
11,174
11,013
Income Taxes
5,790
2,827
Depreciation
2,201
1,988
Amortization
3,502
2,701
EBITDA
45,765
31,038
Acquisition Integration & Restructuring
2,676
3,118
Unusual or Nonrecurring Expenses
3,993
1,435
Related Party Acquisition and Management Fee Expenses
1,658
880
Other Expense
47
(109)
Adjusted EBITDA
54,139
36,362
13 Weeks Ended Description June 27,
2021 Net Sales
193,041
Adjustments: Sales from Acquisitions within 365 Days of
Purchase (Non-Comparable to Prior Year)
(36,700)
Organic Sales (Comparable to Prior Year Period Net Sales)
156,341
2021 Forecast 2021 Forecast Description
Low Range High Range Net Sales
$
647,600
$
662,600
Pre-Acquisition Net Sales (AEM Performance Electronics)
7,400
7,400
Pro Forma Net Sales
655,000
670,000
Adjusted EBITDA
$
163,400
$
168,400
Pre-Acquisition Adjusted EBITDA (AEM Performance Electronics)
1,600
1,600
Pro Forma Adjusted EBITDA
165,000
170,000
Holley believes EBITDA and Adjusted EBITDA 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 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 defines EBITDA as earnings before (a) interest expense,
(b) income taxes and (c) depreciation and amortization. Holley
defines Adjusted EBITDA as EBITDA plus (i) unusual or nonrecurring
expenses that consist primarily of the addback of the amortization
of the fair market value increase in inventory in 2019 and 2018
(for 2020, the addbacks consist of the amortization of the fair
market value increase in inventory and legal settlement), (ii)
acquisition and restructuring costs, (iii) related party
acquisition and management fee costs, and (iv) other expenses,
which includes losses from disposal of fixed assets and foreign
currency transactions.
Organic sales 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 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 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 (loss) or any other performance measures derived in
accordance with GAAP.
A forecast for 2021 Adjusted EBITDA and Pro Forma 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210811005424/en/
Investor Relations: Ross Collins / Stephen Poe Alpha IR
Group 312-445-2870 HLLY@alpha-ir.com
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