Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations.
Unless the context requires otherwise, references to Holley, we, us, our
and the Company in this section are to the business and operations of Holley Inc. The following discussion and analysis should be read in conjunction with Holleys condensed consolidated financial statements and related notes
thereto included in this quarterly report on Form 10-Q. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties, and assumptions that could
cause Holleys actual results to differ materially from managements expectations. Factors that could cause such differences are discussed herein and under the caption, Cautionary Note Regarding Forward-Looking Statements.
Overview
We are a designer, marketer, and
manufacturer of high performance automotive aftermarket products serving car and truck enthusiasts, with sales, processing, and distribution facilities reaching most major markets in the United States, Canada, Europe and China. Holley designs,
markets, manufactures and distributes a diversified line of performance automotive products including fuel injection systems, tuners, exhaust products, carburetors, safety equipment and various other performance automotive products. The
Companys products are designed to enhance street, off-road, recreational and competitive vehicle performance and safety.
Innovation is at the core of our business and growth strategy with approximately 35% of our 2021 sales coming from products introduced by us into the market
since 2016. We have a history of developing innovative products, including new products in existing product families, product line expansions, and accessories, as well as products that bring us into new categories. We have thoughtfully expanded our
product portfolio over time to adapt to consumer needs.
In addition, we have historically used strategic acquisitions to (i) expand our brand
portfolio, (ii) enter new product categories and consumer segments, (iii) increase direct-to-consumer (DTC) scale and connection, (iv) expand
share in current product categories and (v) realize value-enhancing revenue and cost synergies. While we believe our business is positioned for continued organic growth, we intend to continue evaluating opportunities for strategic acquisitions
that would complement our current business and expand our addressable target market.
Factors Affecting our Performance
We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and
challenges, including those discussed below and those under the caption, Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on
March 15, 2022, and those in our subsequent filings with the SEC.
Business Combination
On July 16, 2021 we consummated a business combination (Business Combination) pursuant to that certain Agreement and Plan of Merger dated
March 11, 2021 (the Merger Agreement), by and among Empower Ltd., (Empower), Empower Merger Sub I Inc., a direct wholly owned subsidiary of Empower (Merger Sub I), Empower Merger Sub II LLC, a direct wholly
owned subsidiary of Empower (Merger Sub II), and Holley Intermediate Holdings, Inc. (Holdings).
The Merger Agreement provided
for, among other things, the following transactions: (i) Merger Sub I merged with and into Holdings, the separate corporate existence of Merger Sub I ceased and Holdings became the surviving corporation, and (ii) Holdings merged with and
into Merger Sub II, the separate corporate existence of Holdings ceased and Merger Sub II became the surviving limited liability company. Upon closing, Empower changed its name to Holley Inc. and its trading symbol on the New York Stock Exchange
(the NYSE) from EMPW to HLLY.
The Business Combination was accounted for as a reverse recapitalization. Holdings was
deemed the accounting acquirer with Holley Inc. as the successor registrant. As such, Empower was treated as the acquired company for financial reporting purposes, and financial statements for periods prior to the Business Combination are those of
Holdings.
As a result of the Business Combination, Holley Inc. listed on the NYSE, which required us to hire additional personnel and implement
procedures and processes to address public company regulatory requirements and customary practices. We have incurred and expect to continue to incur additional annual expenses as a public company for, among other things, directors and
officers liability insurance, director fees, and additional internal and external accounting, legal, and administrative resources, including increased personnel costs, audit and other professional service fees.
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