- Tom Tomlinson retires as President and Chief Executive
Officer
- Director Michelle Gloeckler named Interim President and
Chief Executive Officer
- Matthew Rubel appointed Executive Chairman
- Graham Clempson appointed as a new Director
- Company provides preliminary fourth quarter and full year
2022 results
Holley Inc. (NYSE: HLLY), the leading platform serving
performance automotive enthusiasts, today announced that Tom
Tomlinson will retire as President and Chief Executive Officer
(“CEO”) and resign from the Board. The Board has appointed current
Director, Michelle Gloeckler, as Interim President and CEO while it
conducts a comprehensive search process to identify a permanent
CEO. The search will be conducted with the assistance of Heidrick
& Struggles, who was retained by the Board in September 2022
for a comprehensive review of succession planning. Ms. Gloeckler
has been a member of the Board since July 2021 and has over 30
years of experience in consumer-packaged goods, merchandising,
sourcing, manufacturing and strategy.
In addition, Matthew Rubel, the Company’s current Chairman of
the Board, was designated and appointed Executive Chairman of the
Board, and expects to serve in such role until a permanent CEO has
been selected. Further, Graham Clempson, an observer on the Board
since the Company’s business combination with Empower Ltd. in July
2021, was appointed to serve as a member of the Board, effective
immediately. Mr. Clempson will serve as the Chair and member of the
Compensation and Talent Committee and as a member of the Audit
Committee. Anita Sehgal, who joined the Board in May of 2022, will
become the Chair of the Nominating and Governance Committee.
“The Board thanks Tom for his many contributions and leadership
during his twelve years as CEO and nearly twenty years at Holley,”
said Mr. Rubel. “Tom’s commitment to the business and passion for
automotive enthusiasts have helped grow Holley into a recognized
leader in the growing enthusiast market with a solid foundation for
future growth. We wish Tom well in his future endeavors.”
Mr. Rubel continued, “Holley has an industry leading position in
high performance aftermarket products for car and truck
enthusiasts, and we are well positioned to execute on our vision of
enabling them in their automotive journeys. We are fortunate to
have Michelle lead Holley while the Board conducts the search for a
permanent CEO. She has a demonstrated ability to connect with
customers, drive growth and build teams in consumer portfolio
businesses that will serve Holley well.”
Ms. Gloeckler said, “I have tremendous respect for the Holley
team and their commitment to our customers. I look forward to
working closely with the Board and Holley’s Executive Leadership
team to lead the Company and execute on the strategic vision.”
“It has been an honor to lead Holley since 2009 and I would like
to thank all of our employees for their commitment and service to
the Company,” said Tomlinson. “We have accomplished a great deal
together, and I believe this team will continue to drive strong
long-term growth well into the future.”
Preliminary Fourth Quarter and Full
Year 2022 Results
While the Company is still conducting its financial closing
procedures for the quarter and year ended on December 31, 2022, and
the audit by the independent auditor is still underway, the Company
today announced preliminary results for the 13-week period and full
year ended December 31, 2022.
Fourth Quarter Highlights vs. Prior
Year Period
- Preliminary Net Sales of $153-$155 million compared to $180
million in the fourth quarter 2021
- Preliminary Gross Profit of $46-$48 million compared to $75
million in the fourth quarter of 2021
- Preliminary Net Loss of $19-$17 million compared to a Net Loss
of $18 million in the fourth quarter of 2021
- Preliminary Adjusted EBITDA1 of $13 to $15 million, compared to
$36 million in the fourth quarter of 2021
Full Year 2022 Highlights vs. Prior
Year Period
- Preliminary Net Sales of $687-$689 million, compared to $693
million in 2021
- Preliminary Gross Profit of $253-$255 million, compared to $287
million in 2021
- Preliminary Net Income of $70-$72 million, compared to a Net
Loss of $27 million in 2021
- Preliminary Adjusted EBITDA1 range of $113 to $115 million,
compared to $169 million in 2021
1See “Use and Reconciliation of Non-GAAP Financial Measures”
below.
“We are making the necessary changes to return Holley to
profitable growth, including adding a highly experienced Interim
Chief Operating Officer in December 2022, Brian Appelgate, who is
leading our cost reduction initiatives,” said Interim President and
CEO Michelle Gloeckler. “The entire Holley team is committed to
delivering on the Holley Strategic Vision – to inspire and enable
enthusiasts in their automotive adventures while bringing
innovation, discovery, and fun to motor life.”
“Holley’s results for the fourth quarter and full year 2022 were
below our expectations,” said Chief Financial Officer, Jesse
Weaver. “Ongoing supply chain challenges and normalization of
consumer demand to pre-covid levels reduced sales in the second
half of 2022. Adjusted EBITDA results were disappointing, as
continued deleveraging of fixed cost, inflation, and manufacturing
challenges from the unpredictable supply chain significantly
impacted our profitability. While we reduced our past-due orders by
over 25% in the fourth quarter, the improvement came in product
categories outside of electronics, which has been a key growth area
for the Company in recent years.”
Mr. Weaver continued, “As Holley executed its acquisition growth
strategy in recent years, the Company underwent a significant
transformation. In the last three years, we’ve closed 16
acquisitions, integrated 13 ERP systems and consolidated more than
160,000 square feet across 10 locations. To fully maximize the
value of these transactions and position the Company for the next
wave of growth, our focus in 2023 will be accelerating deal synergy
capture and improving free cash flow across the Company through a
combination of realigning teams to key strategic focus areas,
streamlining operations, and working with vendors to bring cost
back in line. Furthermore, targeted cost and inventory management
efforts aim to improve profitability and support debt reduction,
while a recently implemented interest rate collar should help to
minimize the effects of rising interest rates on the Company. We
are actively engaged in discussions with our lenders to ensure
maximum flexibility as we execute these plans.”
Mr. Weaver continued, “We intend to provide our initial 2023
financial guidance on our upcoming fourth quarter 2022 earnings
call in early March, and we will include more detail around these
efforts and their expected impact during the call.”
Michelle Gloeckler Biography
Ms. Gloeckler, 56, has served as a member of the Board since
July 2021, and, prior to her appointment as Interim Chief Executive
Officer, she served as the Chair of each of the Board’s
Compensation and Talent Committee and Nominating and Governance
Committee. Ms. Gloeckler is a former retail executive with more
than thirty years of experience in retail, consumer-packaged goods,
merchandising, sourcing, manufacturing and strategy. In December
2021, Ms. Gloeckler was appointed as an independent member of the
Board of Directors of Pairwise. Ms. Gloeckler has been a member of
the board of directors of BJ’s Wholesale Club (NYSE: BJ) since
September 2019, where she serves on the nominating and governance
committee. In May 2021, Ms. Gloeckler was appointed as a member of
the Board of Directors of The Duckhorn Portfolio, Inc. (NYSE:
NAPA), where she serves on the audit committee and nominating and
corporate governance committee. Ms. Gloeckler served as an
independent director on Benson Hill Biosystems, Inc.’s board and
audit committee from 2019 to 2021, and was the Chief Merchant &
President International for Academy Sports & Outdoors
(NASDAQ:ASO), a sporting goods retailer, from August 2016 to
January 2019. Ms. Gloeckler was an executive at Walmart Inc. (NYSE:
WMT), from 2009 to 2016, where she held various executive roles.
Most recently she served as Executive Vice President, Consumables,
Health and Wellness, and led their US manufacturing initiative.
Prior to that, Ms. Gloeckler held leadership roles at The Hershey
Company, a global confectionary manufacturer, for more than 20
years. Ms. Gloeckler served on The University of Michigan Dean’s
Advisory Council from 2015 to 2022. She holds a bachelor’s degree
in Communication and Psychology from the University of
Michigan.
Matthew Rubel Biography
Mr. Rubel has been the Company’s non-executive Chairman of the
Board since its business combination with Empower Ltd. (“Empower”)
in July 2021. Prior to the business combination, Mr. Rubel served
as Empower’s Chief Executive Officer and Chairman since August
2020. Mr. Rubel has served as the Chairman of MidOcean Partners’
(“MidOcean”) Executive Board since joining the firm in 2018, where
he leads the Executive Board’s efforts to provide industry insights
to MidOcean Partners’ investment teams and portfolio companies. Mr.
Rubel is a renowned retail and brand Chief Executive Officer,
having led many successful global brands and businesses. Most
recently, Mr. Rubel served as Chief Executive Officer, President,
and Board Member of Varsity Brands, a leader in sport, spirit and
achievement products, which he strategically focused and
integrated. Previously, Mr. Rubel served as Chairman, Chief
Executive Officer and President of Collective Brands, Inc., which
included Payless ShoeSource, Sperry Topsider, Saucony, Stride Rite
and Keds. Prior to Collective Brands, Mr. Rubel was Chairman, Chief
Executive Officer and President of Cole Haan LLC, from 1999 to
2005. Prior to Cole Haan, he served in senior management roles at
J. Crew Group, Revlon and Murjani International Ltd. Mr. Rubel
holds a Bachelor of Science from Ohio University and an MBA from
the University of Miami.
Graham Clempson Biography
Mr. Clempson has been an observer on the Board since its
business combination with Empower in July 2021. Prior to the
business combination, Mr. Clempson served as Empower’s President
and was a member of Empower’s Board of Directors. He is Vice
Chairman of MidOcean, which he co-founded in 2003, and serves on
MidOcean’s Executive Board with a focus on the firm’s Investment
Strategy, Portfolio Management and Business Development functions
based in New York. Previously, Mr. Clempson was MidOcean’s European
Managing Partner, based in London, from the firm’s inception until
2012. In addition to his role at MidOcean, Mr. Clempson serves as
Managing Partner at Quartic Capital LLP, which he founded in 2012.
Quartic Capital LLP invests in and manages complex portfolios of
secondary private equity assets, in partnership with Coller
Capital, a leading global secondary private equity investment firm.
Prior to co-founding MidOcean, Mr. Clempson held various leadership
positions in the European finance and private equity sectors,
including CEO of Morgan Grenfell Private Equity, European Managing
Partner of Deutsche Bank Capital Partners, and Co-Head of European
Investment Banking at Deutsche Bank, with particular responsibility
for the bank’s Financial Sponsor Coverage, Leveraged Finance and
High Yield departments. Mr. Clempson began his career at Bankers
Trust Company in 1983.
Anita Sehgal Biography
Ms. Sehgal has served as Senior Vice President, Marketing &
Communications with the Houston Astros, a Major League Baseball
team, since 2015. In her role, Ms. Sehgal provides strategic
leadership for the ballclub’s retail, advertising, marketing,
communications, broadcasting, and alumni relations, including
support for a broad variety of sponsorship, ticket, special event,
community, and the Astros Golf Foundation and Houston Open
initiatives. Prior to joining the Houston Astros, Ms. Sehgal spent
over 20 years in various strategic marketing functions with several
organizations, including FGL Sports, Best Buy and most recently
Academy Sports + Outdoors. Ms. Sehgal received a Bachelor of
Business Administration degree, with a focus in marketing and human
resources, from the University of Regina. Ms. Sehgal currently
serves as an independent board director for Reitmans Canada Ltée
and Escalade Inc.
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; 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.
Non-GAAP Financial Measures
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 INC. and
SUBSIDIARIES USE AND RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (In millions) (Unaudited)
For the thirteen weeks
ended
For the year ended
December 31,
December 31,
2022 Preliminary
2021
2022 Preliminary
2021
Low
High
Actual
Low
High
Actual
Net Income (Loss)
$
(19
)
$
(17
)
$
(18
)
$
70
$
72
$
(27
)
Adjustments:
Interest Expense
13
13
8
40
40
39
Income Taxes*
(2
)
(2
)
3
6
6
10
Depreciation
2
2
4
10
10
12
Amortization
4
4
4
15
15
14
EBITDA
(2
)
—
1
141
143
48
Acquisition and Restructuring Costs
1
1
2
5
5
6
Earn-Out from Simpson Acquisition
—
—
—
—
—
17
Impairment of Indefinite-Lived Intangible
Assets
—
—
—
2
2
—
Change in Fair Value of Warrant
Liability
(6
)
(6
)
15
(57
)
(57
)
32
Change in Fair Value of Earn-Out
Liability
(2
)
(2
)
2
(11
)
(11
)
9
Loss on Early Extinguishment of Debt
—
—
12
—
—
14
Product Rationalization
5
5
—
5
5
—
Equity-Based Compensation Expense
15
15
2
24
24
5
Related Party Acquisition and Management
Fee Costs
—
—
—
—
—
26
Notable Items
1
1
1
2
2
11
Other (Income) Expense
1
1
1
2
2
1
Adjusted EBITDA
$
13
$
15
$
36
$
113
$
115
$
169
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.
EBITDA and Adjusted EBITDA 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 or any other performance measures derived in
accordance with GAAP.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230206005598/en/
Investor Relations: Ross Collins / Stephen Poe Alpha IR
Group 312-445-2870 HLLY@alpha-ir.com
Holley (NYSE:HLLY)
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