Results driven by robust sales growth and
strong underlying consumer demand
Provides outlook and guidance for full year
2022
Holley Inc. (NYSE: HLLY), the largest and fastest growing
platform serving performance automotive enthusiasts, today
announced financial results for its fourth quarter and full year
ended December 31, 2021.
Fourth Quarter Highlights vs. Prior
Year Period
- Net Sales increased 29.9% to $179.8 million compared to $138.4
million in 2020
- Gross Profit increased 37.0% to $74.7 million compared to $54.6
million last year
- Net Loss of $(18.0) million, or $(0.16) per share, compared to
Net Income of $2.0 million, or $0.03 per share, in fourth quarter
2020
- Adjusted Net Income1 of $9.0 million, compared to Adjusted Net
Income of $2.0 million reported last year
- Adjusted EBITDA1 rose to $36.1 million compared to $30.4
million in 2020
Full Year 2021 Highlights vs. Prior
Year Period
- Net Sales increased 37.4% to $692.8 million compared to $504.2
million in 2020
- Gross Profit increased 37.7% to $286.8 million compared to
$208.2 million last year
- Net Loss of $(27.1) million, or $(0.30) per share, compared to
Net Income of $32.9 million, or $0.49 per share, in 2020
- Adjusted Net Income1 of $61.8 million, compared to Adjusted Net
Income of $32.9 million reported last year
- Adjusted EBITDA1 rose to $169.5 million compared to $126.2
million in 2020
1See "Use and Reconciliation of Non-GAAP Financial Measures"
below.
“Holley delivered very solid fourth quarter results, capping off
what has been a milestone year for the Company,” said Tom
Tomlinson, Holley’s President and Chief Executive Officer. “Strong
consumer demand for our products continues to drive growth across
our various sales channels and we look forward to driving further
consumer engagement as we enter 2022.”
Fourth Quarter 2021 Financial
Results
Net sales increased 29.9% to $179.8 million in the fourth
quarter of 2021, up from $138.4 million in the fourth quarter of
2020. Non-comparable sales associated with acquisitions contributed
$24.0 million, or 17.3% of year-over-year net sales growth in the
fourth quarter. Sales excluding the impact of acquisitions
increased by $17.4 million and contributed 12.6% of year-over-year
growth.
Cost of goods sold increased $21.2 million, or 25.3%, to $105.1
million, as compared to $83.9 million for the fourth quarter of
2020 and is primarily attributable to the increase in product
sales. Gross profit for the fourth quarter of 2021 increased $20.2
million, or 37.0%, to $74.7 million, as compared to $54.6 million
for the fourth quarter of 2020. The increase in gross profit was
driven by the increase in sales. Gross margin for the fourth
quarter of 2021 was 41.6% compared to a gross margin of 39.4% for
the fourth quarter of 2020. The increase in margin is attributable
to price increases, increased leverage from the higher sales, and
product mix.
Selling, general and administrative costs for the quarter
increased $15.6 million to $37.7 million, representing an increase
of 70.7% when compared to $22.1 million in 2020. Incremental
SG&A from recent acquisitions were responsible for $4.1 million
of the increase in the quarter. Additional cost drivers include an
increase in non-cash compensation expense related to equity awards,
increased costs associated with operating as a public company, an
increase in outbound shipping costs related to higher sales, and an
increase in professional fees related to acquisitions.
Net income for the fourth quarter of 2021 was impacted by a
non-cash liability increase for warrants and earn-out shares, and a
loss on early extinguishment of debt. Growth in operating income
was more than offset by these expenses. As a result, we recorded a
net loss of $(18.0) million in the fourth quarter compared to net
income of $2.0 million in 2020.
Adjusted for the special transaction and non-cash items noted
above this quarter, Adjusted Net Income was $9.0 million, compared
to last year’s Adjusted Net Income of $2.0 million. Reconciliation
to GAAP Net Income is included in the “Use and Reconciliation of
Non-GAAP Financial Measures” table below.
Adjusted EBITDA grew to $36.1 million in the fourth quarter
compared to $30.4 million in the fourth quarter last year.
Reconciliation to GAAP Net Income is included in the “Use and
Reconciliation of Non-GAAP Financial Measures” table below.
EPS of $(0.16) for the fourth quarter of 2021 compared to $0.03
in 2020.
Significant Events During the
Quarter
On November 19, 2021, Holley announced the successful
refinancing of its 2018 credit facility with a new $825 million
credit facility.
During the fourth quarter, Holley completed the acquisitions of
Arizona Desert Shocks (ADS), Baer Brakes, Brothers Trucks, and
Rocket Racing Wheels for approximately $56 million.
Full Year 2021 Financial
Results
Net sales increased 37.4% to $692.8 million in 2021, up from
$504.2 million in 2020. Non-comparable sales associated with
acquisitions contributed $116.4 million, or 23.1% of year-over-year
growth. Sales excluding the impact of acquisitions increased by
$72.3 million and contributed 14.3% of net sales growth in
2021.
Cost of goods sold increased $110.1 million, or 37.2%, to $406.0
million, as compared to $295.9 million for 2020 and is primarily
attributable to the increase in product sales. Gross profit for
2021 increased $78.6 million, or 37.7%, to $286.8 million, as
compared to $208.2 million for 2020. The increase in gross profit
was driven by the increase in sales. Gross margin in 2021 was 41.4%
compared to a gross margin of 41.3% in 2020.
Selling, general and administrative costs for year increased
$45.9 million to $116.8 million, representing an increase of 64.8%
when compared to $70.9 million in 2020. Incremental SG&A from
recent acquisitions were responsible for $18.5 million of the
increase. Additional cost drivers include increased professional
fees, an increase in outbound shipping costs related to higher
sales and domestic supply chain pressure, and an increase in
non-cash compensation expense related to equity awards.
Net income for the year was impacted by a non-cash liability
increase for warrants and earn-out shares, and a loss on early
extinguishment of debt. As a result, we recorded a net loss of
$(27.1) million in 2021 compared to net income of $32.9 million in
2020.
Adjusted for the special transaction and non-cash items noted
above this year, Adjusted Net Income was $61.8 million, compared to
last year’s Adjusted Net Income of $32.9 million. Reconciliation to
GAAP Net Income is included in the “Use and Reconciliation of
Non-GAAP Financial Measures” table below.
Adjusted EBITDA grew to $169.5 million in 2021 compared to
$126.2 million last year. Reconciliation to GAAP Net Income is
included in the “Use and Reconciliation of Non-GAAP Financial
Measures” table below.
Basic EPS of $(0.30) in 2021 compared to $0.49 in 2020.
Full Year 2022 Outlook
Holley is providing the following outlook for the full-year
2022:
- Net Sales in the range of $765-$790 million
- Adjusted EBITDA of $186-$194 million
- Capital Expenditures in the range of $14-$16 million
- Depreciation and Amortization Expense of $24-$26 million
- Interest Expense in the range of $30-$32 million
Additional information regarding 2022 Outlook is included in the
“Use and Reconciliation of Non-GAAP Financial Measures” table
below.
“We are encouraged by our performance in 2021 with strong
financial results in our first year as a public company,” said
Dominic Bardos, Holley’s Chief Financial Officer. “As we look to
2022, we believe we are positioned to achieve a good balance of
organic and acquired growth while we welcome new enthusiasts to the
Holley family.”
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 13727022.
For those unable to participate, a telephone replay recording
will be available until Thursday, March 10, 2022. To access the
replay, please call 877-660-6853 (Toll Free) or 201-612-7415 (Toll)
and enter confirmation code 13727022. 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 including, 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) 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; and 10) 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 February 23, 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.
HOLLEY INC.
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
For the thirteen weeks
ended
For the year ended
December 31,
%
December 31,
%
2021
2020
Variance
Variance
2021
2020
Variance
Variance
Net Sales
$
179,801
$
138,419
$
41,382
29.9
%
$
692,847
$
504,179
$
188,668
37.4
%
Cost of Goods Sold
105,071
83,865
21,206
25.3
%
406,040
295,935
110,105
37.2
%
Gross Profit
74,730
54,554
20,176
37.0
%
286,807
208,244
78,563
37.7
%
Selling, General, and Administrative
37,700
22,085
15,615
70.7
%
116,793
70,875
45,918
64.8
%
Research and Development Costs
8,113
6,285
1,828
29.1
%
28,280
23,483
4,797
20.4
%
Amortization of Intangible Assets
3,608
2,983
625
21.0
%
13,999
11,082
2,917
26.3
%
Acquisition and Restructuring Costs
1,791
4,119
(2,328
)
-56.5
%
23,668
9,743
13,925
142.9
%
Related Party Acquisition and Management
Fee Costs
-
3,424
(3,424
)
-100.0
%
25,789
6,089
19,700
323.5
%
Other Operating Expense
752
2,606
(1,854
)
-71.1
%
755
1,517
(762
)
-50.2
%
Operating Expense
51,964
41,502
10,462
25.2
%
209,284
122,789
86,495
70.4
%
Operating Income
22,766
13,052
9,714
74.4
%
77,523
85,455
(7,932
)
-9.3
%
Change in Fair Value of Warrant
Liability
15,307
-
15,307
nm
32,580
-
32,580
nm
Change in Fair Value of Earn-Out
Liability
2,009
-
2,009
nm
8,875
-
8,875
nm
Loss on Early Extinguishment of Debt
12,225
-
12,225
nm
13,650
-
13,650
nm
Interest Expense
8,032
11,929
(3,897
)
-32.7
%
39,128
43,772
(4,644
)
-10.6
%
Non-Operating Expense
37,573
11,929
25,644
215.0
%
94,233
43,772
50,461
115.3
%
Income (Loss) Before Income Taxes
(14,807
)
1,123
(15,930
)
nm
(16,710
)
41,683
(58,393
)
nm
Income Tax Expense (Benefit)
3,174
(830
)
4,004
nm
10,429
8,826
1,603
18.2
%
Net Income (Loss)
$
(17,981
)
$
1,953
$
(19,934
)
nm
$
(27,139
)
$
32,857
$
(59,996
)
nm
Comprehensive Income (Loss):
Foreign Currency Translation
Adjustment
42
16
26
162.5
%
30
16
14
87.5
%
Pension liability gain (loss)
388
(293
)
681
nm
388
(293
)
681
nm
Total Comprehensive Net Income (Loss):
$
(17,551
)
$
1,676
$
(19,227
)
nm
$
(26,721
)
$
32,580
$
(59,301
)
nm
Common Share Data:
Basic and Diluted Earnings per Common
Share
$
(0.16
)
$
0.03
$
(0.18
)
nm
$
(0.30
)
$
0.49
$
(0.79
)
nm
Average Shares of Common Stock Outstanding
- Basic and Diluted
115,807
67,674
48,133
71.1
%
89,960
67,674
22,286
32.9
%
nm - not meaningful
HOLLEY INC.
CONDENSED CONSOLIDATED BALANCE
SHEET
(In thousands)
(Unaudited)
December 31,
2021
2020
Assets
Total Current Assets
$
291,717
$
257,980
Property, Plant and Equipment, Net
51,495
43,729
Goodwill
411,383
359,099
Other Intangibles, Net
438,461
404,522
Total Assets
$
1,193,056
$
1,065,330
Liabilities and Stockholders'
Equity
Total Current Liabilities
$
90,816
$
82,009
Long-Term Debt, Net of Current Portion
637,673
649,458
Deferred Taxes
70,045
71,336
Other Noncurrent Liabilities
90,035
22,146
Total Liabilities
888,569
824,949
Common Stock
12
7
Additional Paid-In Capital
329,705
238,883
Accumulated Other Comprehensive Loss
(256
)
(674
)
Retained Earnings
(24,974
)
2,165
Total Stockholders' Equity
304,487
240,381
Total Liabilities and Stockholders'
Equity
$
1,193,056
$
1,065,330
HOLLEY INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the thirteen weeks
ended
For the year ended
December 31,
December 31,
2021
2020
2021
2020
Operating Activities
Net Income (Loss)
$
(17,981
)
$
1,953
$
(27,139
)
$
32,857
Adjustments to Reconcile to Net Cash
25,858
13,960
93,002
31,837
Changes in Operating Assets and
Liabilities
(11,211
)
(3,104
)
(44,280
)
23,719
Net Cash from Operating Activities
(3,334
)
12,809
21,583
88,413
Investing Activities
Capital Expenditures, Net of
Dispositions
(4,724
)
(2,082
)
(14,869
)
(8,735
)
Acquisitions
(57,434
)
(156,833
)
(119,220
)
(156,883
)
Net Cash from Investing Activities
(62,158
)
(158,915
)
(134,089
)
(165,618
)
Financing Activities
Net Change in Debt
57,090
163,044
(45,942
)
140,544
Recapitalization
-
-
132,299
-
Payment of acquisition contingent
consideration
(9,200
)
-
(9,200
)
-
Net cash from Financing Activities
47,890
163,044
77,157
140,544
Net Change in Cash and Cash
Equivalents
(17,602
)
16,938
(35,349
)
63,339
Cash and Cash Equivalents
Beginning of Period
53,927
54,736
71,674
8,335
End of Period
$
36,325
$
71,674
$
36,325
$
71,674
Holley believes EBITDA, Adjusted EBITDA, Adjusted Net Income,
Adjusted Net Income Per Share, 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 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.
USE AND RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
For the thirteen weeks
ended
For the year ended
December 31,
December 31,
2021
2020
2021
2020
Net Income (Loss)
$
(17,981
)
$
1,953
$
(27,139
)
$
32,857
Adjustments:
Interest Expense
8,032
11,929
39,128
43,772
Income Taxes
3,174
(830
)
10,429
8,826
Depreciation
4,199
1,847
11,527
7,886
Amortization
3,608
2,983
13,999
11,082
EBITDA
1,032
17,882
47,944
104,423
Acquisition Integration &
Restructuring
1,791
4,119
6,495
9,743
Earn-Out from Simpson Acquisition
-
-
17,173
-
Notable Items
757
2,248
11,270
3,891
Equity-Based Compensation Expense
2,215
131
4,963
487
Change in Fair Value of Warrant
Liability
15,307
-
32,580
-
Change in Fair Value of Earn-Out
Liability
2,009
-
8,875
-
Loss on Early Extinguishment of Debt
12,225
-
13,650
-
Related Party Acquisition and Management
Fee Expenses
-
3,424
25,789
6,089
Other Expense
752
2,606
755
1,517
Adjusted EBITDA
$
36,088
$
30,410
$
169,494
$
126,150
For the thirteen weeks
ended
For the year ended
December 31,
December 31,
2021
2020
2021
2020
Net income (loss)
$
(17,981
)
$
1,953
$
(27,139
)
$
32,857
Special items:
Add back: Change in Fair Value of Warrant
Liability
15,307
-
32,580
-
Add back: Change in Fair Value of Earn-Out
Liability
2,009
-
8,875
-
Add back: Change in Fair Value of
Acquisition Contingent Consideration payable
-
-
17,173
-
Add back: Loss on Early Extinguishment of
Debt
9,658
-
10,784
-
Add back: Fees paid related to the
Business Combination
-
-
19,561
-
Adjusted Net Income
$
8,993
$
1,953
$
61,834
$
32,857
For the thirteen weeks
ended
For the year ended
December 31,
December 31,
2021
2020
2021
2020
Net income (loss) per share
$
(0.16
)
$
0.03
$
(0.30
)
$
0.49
Special items:
Add back: Change in Fair Value of Warrant
Liability
0.13
-
0.36
-
Add back: Change in Fair Value of Earn-Out
Liability
0.02
-
0.10
-
Add back: Change in Fair Value of
Acquisition Contingent Consideration payable
-
-
0.19
-
Add back: Loss on Early Extinguishment of
Debt
0.09
-
0.12
-
Add back: Fees paid related to the
Business Combination
-
-
0.22
-
Net income per share, as
adjusted
$
0.08
$
0.03
$
0.69
$
0.49
13 Weeks Ended
December 31, 2021
Net Sales
179,801
Adjustments:
Sales from Acquisitions within 365 Days of
Purchase (Non-Comparable to Prior Year)
(23,993
)
Organic Sales (Comparable to Prior Year
Period Net Sales)
$
155,808
Full Year 2022
2022 Forecast
2022 Forecast
Low Range
High Range
Net Sales
$
765,000
$
790,000
Adjusted EBITDA
186,000
194,000
Depreciation and Amortization
24,000
26,000
Interest Expense
30,000
32,000
Capital Expenditures
14,000
16,000
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 due to a change in the
fair value of the Simpson acquisition contingent consideration
payable, (iii) notable items that in 2021 consist primarily of the
amortization of the fair market value increase in inventory and in
2020 consist primarily of the amortization of the fair market value
increase in inventory and a legal settlement, (iv) compensation
expense related to equity awards (v) changes in the fair value of
the warrant liability, (vi) changes in the fair value of the
Earn-Out Shares, (vii) losses from the early extinguishment of
debt, (viii) related party acquisition and management fee costs,
and (ix) other expenses, which includes losses from disposal of
fixed assets and foreign currency transactions. We have included
within the definition of Adjusted EBITDA the changes in the fair
value of the warrant liability, 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 and Adjusted Net Income
per share 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 (loss) and net income (loss) per
share, 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, Adjusted Net
Income per share, 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 full year 2022 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/20220303005228/en/
Investor Relations: Ross Collins / Stephen Poe Alpha IR
Group 312-445-2870 HLLY@alpha-ir.com
Holley (NYSE:HLLY)
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