Strength in consumer demand drives 25%
year-over-year sales growth
Company reaffirms full year 2022
outlook
Holley Inc. (NYSE: HLLY), the largest and fastest growing
platform serving performance automotive enthusiasts, today
announced financial results for its first quarter ended April 3,
2022.
First Quarter Highlights vs. Prior Year
Period
- Net Sales increased 24.8% to $200.1 million compared to $160.3
million in 2021
- Gross Profit increased 25.9% to $82.7 million compared to $65.7
million last year
- Net Income of $16.9 million, or $0.15 per diluted share,
compared to Net Loss of $(2.1) million, or $(0.03) per diluted
share, in first quarter 2021
- Adjusted Net Income1 of $21.5 million, compared to Adjusted Net
Income of $15.1 million reported last year
- Adjusted EBITDA1 rose to $46.0 million compared to $43.8
million in 2021
1See "Use and Reconciliation of Non-GAAP Financial Measures"
below.
“Holley delivered solid first quarter results with strong growth
in consumer demand for our products continuing into 2022,” said Tom
Tomlinson, Holley’s President and Chief Executive Officer. “While
we are facing persistent supply chain disruptions and inflationary
headwinds, we’ve kept our foot on the gas and continued to invest
in the development of innovative new products that will be exciting
to our enthusiast consumers.”
First Quarter 2022 Financial
Results
Net sales increased 24.8% to $200.1 million in the first quarter
of 2022, up from $160.3 million in the first quarter of 2021.
Non-comparable sales associated with acquisitions contributed $18.1
million, or 11.3%, of year-over-year net sales growth in the first
quarter. Sales excluding the impact of acquisitions increased by
$21.6 million and contributed 13.5% of year-over-year growth.
Cost of goods sold increased $22.7 million, or 24.0%, to $117.3
million, as compared to $94.7 million for the first quarter of 2021
and is primarily attributable to the increase in product sales.
Gross profit for the first quarter of 2022 increased $17.0 million,
or 25.9%, to $82.7 million, as compared to $65.7 million for the
first quarter of 2021. The increase in gross profit was driven by
the increase in sales. Gross margin for the first quarter of 2022
was 41.3% compared to a gross margin of 41.0% for the first quarter
of 2021. Gains in price realization fully offset higher freight and
product cost increases and allowed for a slight increase in gross
margin.
Selling, general and administrative costs for the quarter
increased $10.3 million to $34.3 million, representing an increase
of 43.0% when compared to $24.0 million in 2021. Incremental
SG&A from recent acquisitions were responsible for $1.9 million
of the increase in the quarter. Additional cost drivers include an
increase in non-cash compensation expense related to equity awards,
increased administrative and sales personnel costs, reflecting
company growth and the additional requirements of becoming a public
company, and an increase in outbound shipping costs related to
higher sales.
Net income for the first quarter of 2022 was $16.9 million
compared to a net loss of $(2.1) million in 2021. Net income for
the first quarter of 2022 was unfavorably impacted by a $4.6
million non-cash increase in liabilities for warrants and earn-out
shares compared to an unfavorable impact in 2021 of $17.2 million
due to a non-cash adjustment of the earn-out liability for the
Simpson acquisition.
Adjusted for the special transaction and non-cash items noted
above this quarter, Adjusted Net Income was $21.5 million, compared
to last year’s Adjusted Net Income of $15.1 million. Reconciliation
to GAAP Net Income is included in the “Use and Reconciliation of
Non-GAAP Financial Measures” table below.
Adjusted EBITDA grew to $46.0 million in the first quarter of
2022 compared to $43.8 million in the first quarter last year.
Reconciliation to GAAP Net Income is included in the “Use and
Reconciliation of Non-GAAP Financial Measures” table below.
Diluted EPS of $0.15 for the first quarter of 2022 compared to
$(0.03) in 2021.
Full Year 2022 Outlook
Holley reaffirmed the following outlook for 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
“We are off to a strong start in fiscal 2022, delivering on our
financial objectives in the first quarter, and are reaffirming our
previously stated 2022 guidance,” said Dominic Bardos, Holley’s
Chief Financial Officer. “While it is not our policy to provide
quarterly guidance, I believe it is important to recognize that
current economic conditions and supply chain headwinds may continue
to impact margins in the near term. That said, we remain well
positioned to drive long-term growth for our shareholders.”
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 888-428-7458 (Toll Free) or
862-298-0702 (Toll) using the access code of 13729516.
For those unable to participate, a telephone replay recording
will be available until Thursday, May 19, 2022. To access the
replay, please call 877-660-6853 (Toll Free) or 201-612-7415 (Toll)
and enter confirmation code 13729516. 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) 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
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.
HOLLEY INC.
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
For the thirteen weeks
ended
April 3,
March 28,
%
2022
2021
Variance
Variance
Net Sales
$
200,055
$
160,332
$
39,723
24.8
%
Cost of Goods Sold
117,334
94,653
22,681
24.0
%
Gross Profit
82,721
65,679
17,042
25.9
%
Selling, General, and Administrative
34,342
24,012
10,330
43.0
%
Research and Development Costs
8,161
5,969
2,192
36.7
%
Amortization of Intangible Assets
3,661
3,336
325
9.7
%
Acquisition and Restructuring Costs
290
18,833
(18,543
)
-98.5
%
Related Party Acquisition and Management
Fee Costs
—
881
(881
)
-100.0
%
Other Operating Expense (Income)
222
(133
)
355
-266.9
%
Operating Expense
46,676
52,898
(6,222
)
-11.8
%
Operating Income
36,045
12,781
23,264
182.0
%
Change in Fair Value of Warrant
Liability
2,227
—
2,227
nm
Change in Fair Value of Earn-Out
Liability
2,381
—
2,381
nm
Interest Expense
7,391
10,071
(2,680
)
-26.6
%
Non-Operating Expense
11,999
10,071
1,928
19.1
%
Income Before Income Taxes
24,046
2,710
21,336
787.3
%
Income Tax Expense
7,188
4,766
2,422
50.8
%
Net Income (Loss)
$
16,858
$
(2,056
)
$
18,914
nm
Comprehensive Income (Loss):
Foreign Currency Translation
Adjustment
241
(16
)
257
nm
Total Comprehensive Income (Loss):
$
17,099
$
(2,072
)
$
19,171
nm
Common Share Data:
Basic Net Income (Loss) per Share
$
0.15
$
(0.03
)
$
0.18
nm
Diluted Net Income (Loss) per Share
$
0.15
$
(0.03
)
$
0.18
nm
Weighted Average Common Shares Outstanding
- Basic
115,876
67,674
48,202
71.2
%
Weighted Average Common Shares Outstanding
- Diluted
116,049
67,674
48,375
71.5
%
nm - not meaningful
HOLLEY INC.
CONDENSED CONSOLIDATED BALANCE
SHEET
(In thousands)
(Unaudited)
April 3,
December 31,
2022
2021
Assets
Total Current Assets
$
314,286
$
291,717
Property, Plant and Equipment, Net
55,192
51,495
Goodwill
411,721
411,383
Other Intangibles, Net
434,672
438,461
Right-of-Use Assets
32,814
—
Total Assets
$
1,248,685
$
1,193,056
Liabilities and Stockholders' Equity
Total Current Liabilities
$
96,809
$
91,795
Long-Term Debt, Net of Current Portion
636,303
637,673
Deferred Taxes
68,735
70,045
Other Noncurrent Liabilities
107,401
89,056
Total Liabilities
909,248
888,569
Common Stock
12
12
Additional Paid-In Capital
347,556
329,705
Accumulated Other Comprehensive Loss
(15
)
(256
)
Accumulated Deficit
(8,116
)
(24,974
)
Total Stockholders' Equity
339,437
304,487
Total Liabilities and Stockholders'
Equity
$
1,248,685
$
1,193,056
HOLLEY INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the thirteen weeks
ended
April 3,
March 28,
2022
2021
Operating
Activities
Net Income (Loss)
$
16,858
$
(2,056
)
Adjustments to Reconcile to Net Cash
14,000
24,082
Changes in Operating Assets and
Liabilities
(12,509
)
(3,070
)
Net Cash from Operating Activities
18,349
18,956
Investing
Activities
Capital Expenditures, Net of
Dispositions
(5,587
)
(3,104
)
Acquisitions
(1,617
)
—
Net Cash from Investing Activities
(7,204
)
(3,104
)
Financing
Activities
Net Change in Debt
(3,288
)
(64
)
Net Cash from Financing Activities
(3,288
)
(64
)
Effect of foreign currency rate
fluctuations on cash
(101
)
—
Net Change in Cash and Cash
Equivalents
7,756
15,788
Cash and Cash
Equivalents
Beginning of Period
36,325
71,674
End of Period
$
44,081
$
87,462
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
April 3,
March 28,
2022
2021
Net Income (Loss)
$
16,858
$
(2,056
)
Adjustments:
Interest Expense
7,391
10,071
Income Taxes
7,188
4,766
Depreciation
2,140
2,252
Amortization
3,661
3,336
EBITDA
37,238
18,369
Acquisition and Restructuring Costs
290
1,660
Earn-Out from Simpson Acquisition
—
17,173
Change in Fair Value of Warrant
Liability
2,227
—
Change in Fair Value of Earn-Out
Liability
2,381
—
Equity-Based Compensation Expense
3,162
131
Related Party Acquisition and Management
Fee Costs
—
881
Notable Items
506
5,713
Other Expense
222
(133
)
Adjusted EBITDA
$
46,026
$
43,794
For the thirteen weeks
ended
April 3,
March 28,
2022
2021
Net income (loss)
$
16,858
$
(2,056
)
Special items:
Add back: Change in Fair Value of Warrant
Liability
2,227
—
Add back: Change in Fair Value of Earn-Out
Liability
2,381
—
Add back: Earn-Out from Simpson
Acquisition
—
17,173
Adjusted Net Income
$
21,466
$
15,117
For the thirteen weeks
ended
April 3,
March 28,
2022
2021
Net income (loss) per diluted
share
$
0.15
$
(0.03
)
Special items:
Add back: Change in Fair Value of Warrant
Liability
0.02
—
Add back: Change in Fair Value of Earn-Out
Liability
0.02
—
Add back: Earn-Out from Simpson
Acquisition
—
0.25
Net income per diluted share, as
adjusted
$
0.19
$
0.22
13 Weeks Ended
April 3, 2022
Net Sales
200,055
Less: Sales from Acquisitions
within 365 Days of Purchase (Non-Comparable to Prior Year)
(18,075
)
Organic Sales (Comparable to Prior Year
Period Net Sales)
$
181,980
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 in 2021 due to a change
in the fair value of the Simpson acquisition contingent
consideration payable, (iii) changes in the fair value of the
warrant liability, (iv) changes in the fair value of the earn-out
liability, (v) compensation expense related to equity awards, (vi)
related party acquisition and management fee costs, (vii) 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 (viii) 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/20220512005281/en/
Investor Relations: Ross Collins / Stephen Poe Alpha IR
Group 312-445-2870 HLLY@alpha-ir.com
Holley (NYSE:HLLY)
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