Holley Q2 2026 Earnings Report

Holley EPS Results

• Actual EPS: $0.20
• Consensus EPS: $0.12
• Beat/Miss: Beat by +$0.08
• One Year Ago EPS: N/A

Holley Revenue Results

• Actual Revenue: $172.01 million
• Expected Revenue: $172.63 million
• Beat/Miss: Missed by -$625.00 thousand
• YoY Revenue Growth: N/A

Holley Announcement Details

• Quarter: Q2 2026
• Date: 8/5/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 5, 2026
• Conference Call Time: 8:30AM ET

Holley (NYSE:HLLY) is a designer, manufacturer and marketer of high‐performance automotive products for the enthusiast market. Through its portfolio of well‐known brands, the company develops fuel delivery systems, intake manifolds, ignition components, nitrous oxide systems, digital controls and other engine‐dress accessories tailored to both street and competition applications. Holley’s products are sold through a network of domestic and international distributors, retailers and directly to professional race teams and hobbyists.

The company’s product offerings span mechanical and electronic fuel injection, carburetion, engine management, add‐on power systems and calibration tools. Key brands in Holley’s family include Holley® Performance Products, MSD® Ignition, NOS® Nitrous Systems, Diablosport® and FiTech® Fuel Injection, each targeting distinct segments of the performance aftermarket. Holley also provides engineering services, custom calibrations and technical support to customers seeking turnkey solutions for drag racing, road course competition and street‐performance builds.

Founded in 1903 by George and Earl Holley, the company gained prominence with the invention of the first successful four‐barrel carburetor in the late 1930s. Over more than a century, Holley has expanded through organic growth and strategic acquisitions, integrating new technologies in electronics and digital controls to meet evolving emissions and performance standards. The firm emerged from a recent corporate restructuring as a publicly traded entity, reflecting its renewed focus on innovation and operational excellence.

Headquartered in Bowling Green, Kentucky, Holley serves customers across North America, Europe, Latin America and select Asian markets. The business is led by a management team with deep roots in automotive performance and motorsports, supporting a global sales and distribution footprint. Holley continues to invest in research and development, leveraging its legacy of performance engineering to address the needs of both classic‐car restorers and professional racing teams.

Holley Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Holley returned to growth in Q2, with net sales up 3.2% to $172 million and core sales up 4.9%; three of four divisions delivered double-digit core growth. Modern Truck & Off-Road, Euro & Import, and Safety & Racing grew 15.7%, 13.1%, and 13.8%, respectively.
• Negative Sentiment: Reported profitability was pressured by tariffs and lower volume, with gross margin down 72 basis points to 41% and adjusted EBITDA margin down 223 basis points to 19.6%. Management said adjusted EBITDA would have been roughly flat year over year excluding a prior-year, non-cash tariff capitalization benefit of approximately $3 million-$3.5 million.
• Positive Sentiment: Free cash flow rose to $40.9 million, leverage fell to 3.74 times, and Holley made an additional $15 million debt repayment after quarter-end, keeping it on track to finish 2026 below 3.5 times leverage. The company also repurchased approximately $2 million of shares during the quarter.
• Positive Sentiment: Management reaffirmed full-year guidance and cited approximately $12 million of new national retailer placements scheduled for Q3, a strong second-half product pipeline, normalized channel inventories, improved marketing execution, and continued contributions from HRX as support for stronger momentum.
• Neutral Sentiment: Holley completed the divestiture of its non-core Restoration brands and has now divested four of five targeted businesses, eliminated two facilities, reduced its warehouse footprint by about 95,000 square feet, and removed roughly 7,000 low-margin SKUs. These actions are intended to simplify operations and generate annualized margin and cash-flow benefits, but the divestiture produced a GAAP net loss in Q2.

Presentation

[Operator]

Good morning, ladies and gentlemen, welcome to the conference call to discuss Holley's second quarter 2026 earnings results. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions for asking questions will be provided at that time. We ask that participants limit themselves to one question and one related follow-up during the Q&A period.

[Operator]

Please be advised that reproduction of this call, in whole or in part, is not permitted without written authorization of Holley. As a reminder, this call is being recorded and will be made available for future playback. I would now like to introduce your host for today's call, Anthony Rozmus with Investor Relations. Please go ahead.

[Anthony Rozmus, Investor Relations at Holley]

Good morning, welcome to Holley's second quarter 2026 earnings conference call. On the call with me today are President and Chief Executive Officer, Matthew Stevenson, and Chief Financial Officer, Jesse Weaver. This webcast and the presentation materials, including non-GAAP reconciliations, are available on our investor relations website.

[Anthony Rozmus, Investor Relations at Holley]

Our discussion today includes forward-looking statements that are based off our best view of the world and of our businesses as we see them today and are subject to risks and uncertainties, including the ones described in our SEC filings. This morning, we'll review our financial results for the second quarter 2026. At the conclusion of the prepared remarks, we'll open up the line for questions. With that, I'll turn the call over to our CEO, Matthew Stevenson.

[Matthew Stevenson, President and CEO at Holley]

Thank you, Anthony, good morning to everyone joining us today. Before we get into our second quarter results, I'd like to build on the context we provided last quarter. As we discussed on our previous call, the first quarter was impacted by two temporary headwinds: elevated distributor inventories and a slower start to the spring selling season due to unfavorable weather.

[Matthew Stevenson, President and CEO at Holley]

We also noted at the time that those headwinds were already beginning to wane, evidenced by a strong year-over-year growth in April, and that we expected the general momentum to carry through the rest of the quarter. I am pleased to say that's what happened, and it carried throughout the second quarter as well, resulting in a return to net sales growth. In fact, three of our four divisions delivered double-digit core sales growth year-over-year.

[Matthew Stevenson, President and CEO at Holley]

That's the meaningful acceleration from where we began the year and reflects both the underlying strength and the breadth of our portfolio, as well as the disciplined execution of our strategic priorities. We also made significant progress on our portfolio rebalancing initiative during the quarter, completing the divestiture of our non-core Restoration brands.

[Matthew Stevenson, President and CEO at Holley]

While the transaction resulted in a GAAP net loss for the quarter, it further simplifies our operation and allows us to focus our resources and capital on the areas of the business with the greatest long-term growth potential.

[Matthew Stevenson, President and CEO at Holley]

Excluding this one-time impact, the underlying profitability of the business improved substantially with adjusted net income up year-over-year. At the same time, we generated strong free cash flow, reduced leverage to its lowest level in four years, and returned capital to shareholders through share repurchases.

[Matthew Stevenson, President and CEO at Holley]

We believe this combination of returning to growth, improving profitability, strengthening our balance sheet, and executing our strategic initiatives positions us well as we move into the second half of the year. With that, let's turn to slide five to review the key highlights from the quarter, as well as important developments that occurred after quarter end. Net sales increased 3.2% to $172 million.

[Matthew Stevenson, President and CEO at Holley]

Core business net sales, which excludes the impact of our portfolio rebalancing initiatives and divestitures, grew 4.9%, with three of our four divisions delivering double-digit core growth. We also saw core growth across 27 brands in both our direct-to-consumer and B2B channels, highlighting the strength and breadth of the portfolio. We generated strong free cash flow during the quarter and remain on track to end the year with leverage below 3.5x.

[Matthew Stevenson, President and CEO at Holley]

Our strategic initiatives contributed $13.4 million in revenue while delivering $8.3 million in cost savings through purchasing, tariffs, and operational improvements. We also completed a transformation of our marketing organization over the past 120 days. We significantly reduced our reliance on outside agencies, hired more than 20 marketing professionals, and embedded those resources directly within our operating divisions. This brings our teams closer to the enthusiasts, enables faster responses to market trends, and strengthens brand activation.

[Matthew Stevenson, President and CEO at Holley]

While still early, we're already seeing meaningful improvements in consumer engagement, marketing effectiveness, and direct-to-consumer sales. Given where our shares have been trading, we also opportunistically repurchased approximately $2 million of common stock during the quarter. Although our repurchase window was limited due to the blackout period at the end of Q2, this action reflects our confidence in the long-term value creation opportunity we see in Holley.

[Matthew Stevenson, President and CEO at Holley]

We also continue to execute on the portfolio rebalancing initiative we introduced last quarter. During the quarter, we completed the divestiture of our non-core Restoration brands, including Brothers Trucks and Scott Drake. We now have just one remaining business to divest from the five businesses identified in the program, and we continue to have strong interest in that from multiple potential buyers.

[Matthew Stevenson, President and CEO at Holley]

Following the close of the quarter, we made additional progress in our highest capital allocation priority, reducing leverage, by making another $15 million voluntary debt repayment. This brings our total voluntary debt reduction to $115 million since September of 2023. Looking ahead, we believe we are well-positioned for the second half of the year, supported by new national retailer placements, an accelerating pipeline of product launches, and continued execution of our strategic initiatives. I'll discuss those opportunities in more detail later in my remarks.

[Matthew Stevenson, President and CEO at Holley]

Slide six provides additional detail on our second quarter financial results, along with several of the key commercial and operational highlights from the quarter. Net sales were $172 million. Gross margin was 41%, down 72 basis points from the prior year, while adjusted EBITDA was 19.6%, down 223 basis points year-over-year. The decline primarily reflects the impacts of tariffs compared to the second quarter of last year.

[Matthew Stevenson, President and CEO at Holley]

Free cash flow increased versus the prior year. The improvement reflects continued operational discipline, strong working capital management, and the benefits of refunds related to IEEPA tariffs. While our GAAP results reflect a net loss for the quarter due to that divestiture of our non-core Restoration brands, adjusted net income increased to $24 million, more than double the $10.6 million reported in the prior year period.

[Matthew Stevenson, President and CEO at Holley]

Even when adjusting for IEEPA tariff refunds, we believe adjusted net income more accurately reflects the underlying operating performance and earning power of the business. Product innovation remained a key driver of our commercial momentum during the quarter. Across our American Performance division, we continued expanding our highly successful engine swap portfolio with new applications for the GM LS and LT platforms, while also extending the Cataclean product family into the growing diesel performance market.

[Matthew Stevenson, President and CEO at Holley]

Our Safety & Racing division, Simpson, introduced new retro-inspired Bandit motorcycle helmets that build on one of the industry's most iconic models, while appealing to both on and off-road enthusiasts. In our Modern Truck & Off-Road division, we launched a new Range RA0110 module for full-size General Motors trucks and SUVs, giving customers enhanced control over cylinder deactivation, auto start/stop functionality, and throttle response. Operational execution also remained a key focus.

[Matthew Stevenson, President and CEO at Holley]

During the quarter, we generated $5 million of purchasing and tariff related savings and an additional $3.3 million from operational improvement initiatives, delivering a total of $8.3 million in savings. These results reflect a continuous improvement culture we have established across the organization and our ongoing focus on improving our cost structure while investing for future growth.

[Matthew Stevenson, President and CEO at Holley]

Finally, the examples at the bottom of slide six highlight the impact of our newly embedded divisional marketing teams. By placing marketing resources directly within each business, we've moved closer to our enthusiast communities and significantly increased the speed, relevance, and authenticity of our brand engagement.

[Matthew Stevenson, President and CEO at Holley]

Our teams are creating content that resonates with consumers where they spend their time, across enthusiast forums, social media, events, and grassroots communities. We're also seeing encouraging improvement in engagement and direct-to-consumer performance. Slide seven highlights the performance of our four operating divisions.

[Matthew Stevenson, President and CEO at Holley]

Three of the four divisions delivered double-digit core growth during the quarter, reflecting the strength of our innovation pipeline, disciplined execution, and early benefits of our enhanced brand activation strategy. Beginning with American Performance, net sales declined 2.1% in the quarter.

[Matthew Stevenson, President and CEO at Holley]

As we discussed previously, the business continued to work through elevated channel inventory levels, which we believe have now normalized. In addition, we also intentionally moved our product categories from our Q2 marketing calendar into the second half of the year, creating more challenging year-over-year comparisons.

[Matthew Stevenson, President and CEO at Holley]

Despite those temporary factors, the business improved significantly on a sequential basis, with the decline narrowing from 9.7% in the first quarter to 2.1% in the second. With channel inventories now normalized, key product placements at national retailers, and increasing marketing activity, we expect American Performance to continue improving through the balance of the year.

[Matthew Stevenson, President and CEO at Holley]

Modern Truck & Off-Road delivered another outstanding quarter, with net sales increasing 15.7%, accelerating from 3.8% growth in the first quarter. The division continues to benefit from strong consumer demand and a highly successful cadence of new product introductions that are gaining meaningful traction across both retail and enthusiast channels.

[Matthew Stevenson, President and CEO at Holley]

Euro & Import grew 13.1%, a significant acceleration from 1% growth in the first quarter. Earlier supply constraints have been resolved, allowing us to meet consumer demand and capitalize on the continued strength of the European enthusiast vehicle market.

[Matthew Stevenson, President and CEO at Holley]

The division continues to benefit from a passionate and resilient enthusiast community, supported by strong demand across our core brands. Safety & Racing continued to be a standout performer, with net sales increasing 13.8% year-over-year, building on the 10.2% growth delivered in the first quarter.

[Matthew Stevenson, President and CEO at Holley]

Growth was driven by a strong cadence of new product introductions, continued innovation across our Stilo and Simpson brands, and sustained demand associated with the Snell SA2025 helmet certification cycle. We also continue to see strong momentum in the motorcycle safety market, where recent product launches are expanding our reach and reinforcing the strength of our portfolio.

[Matthew Stevenson, President and CEO at Holley]

Overall, these results demonstrate the strength and balance of our portfolio. Three of our four divisions delivered double-digit growth, while our largest business continued to improve sequentially as temporary headwinds subsided. More importantly, we believe the underlying drivers of our performance are becoming increasingly durable.

[Matthew Stevenson, President and CEO at Holley]

We believe that our divisional operating model, combined with greater decision-making authority, dedicated marketing resources, and a robust innovation pipeline, is enabling our teams to respond faster to market opportunities. Strengthening engagement with enthusiasts and positioning each division for sustainable long-term growth.

[Matthew Stevenson, President and CEO at Holley]

Slide eight outlines our long-term strategic framework, which many of you've seen before. While the framework itself hasn't changed, our execution against it continues to accelerate. It remains the blueprint for how we allocate capital, prioritize investments, and operate the business every day.

[Matthew Stevenson, President and CEO at Holley]

The framework is built around eight strategic pillars, beginning with making Holley a great place to work, strengthening the Premier Consumer Journey, becoming a Trailblazing Trusted Partner, driving product innovation and portfolio management, expanding into global markets, pursuing transformational M&A, funding the growth, and ultimately delivering results for our shareholders.

[Matthew Stevenson, President and CEO at Holley]

The value of this framework is it creates alignment across the organization and ensures every initiative supports a broader strategic objective. As you already heard throughout this morning's remarks, our teams have remained highly focused on execution, and that discipline is translating into measurable progress across the business.

[Matthew Stevenson, President and CEO at Holley]

As a reminder, slide nine highlights the key focus areas for 2026 that are embedded in the eight pillars of our strategic plan. We are making progress across each of these priorities, and you'll see that reflected in the detailed initiative tracker on the next slide, which brings us to slide 10. The strategic initiative tracker gives you a clear view of our second quarter performance across each pillar of the framework.

[Matthew Stevenson, President and CEO at Holley]

Trailblazing Trusted Partner contributed $1.5 million in revenue. Our mid-sized B2B accounts remained balanced and healthy with a broad number of customers now contributing over $1 million each in the first half. Our national retailer channel continued to grow, supported by planogram wins, expanded SKU distribution, and stronger online traffic conversion. Premier Consumer Journey contributed $1.1 million in revenue.

[Matthew Stevenson, President and CEO at Holley]

Our direct-to-consumer channel showed real strength, with Modern Truck & Off-Road posting approximately 17% year-over-year growth in June alone. Third-party marketplaces in Q2 grew by more than 25% year-over-year, led by strength across all our divisions. Product innovation contributed approximately $4.5 million in revenue, once again led by strong performances in Safety & Racing in Modern Truck & Off-Road.

[Matthew Stevenson, President and CEO at Holley]

Global expansion into new markets contributed $1.6 million in revenue, and our international strategy generated approximately $760,000 of incremental revenue in the quarter through distributor growth and global expansion.

[Matthew Stevenson, President and CEO at Holley]

We also saw growth through our OE dealer channel availment programs with new customer wins, new dealers coming on board. Transformational M&A contributed $4.7 million of revenue, reflecting HRX revenue contribution in the quarter. HRX continues to perform well and is now a meaningful contributor to both growth and earnings.

[Matthew Stevenson, President and CEO at Holley]

As discussed earlier, fund the growth delivered $8.3 million in savings, $5 million from purchasing and tariff-related actions, and $3.3 million from operational improvements. Altogether, our strategic initiatives contributed $13.4 million in revenue and $8.3 million in cost savings this quarter. Disciplined execution across every pillar of the framework.

[Matthew Stevenson, President and CEO at Holley]

Slide 11 revisits our portfolio rebalancing initiative, which we introduced last quarter and remains an important driver of long-term value creation strategy. The framework begins with actively evaluating our portfolio and divesting brands and businesses that no longer meet our growth, profitability, and strategic criteria.

[Matthew Stevenson, President and CEO at Holley]

These businesses often require disproportionate time and capital relative to the value they create. By monetizing these assets, we generate capital that can be redeployed into higher return opportunities while sharpening our strategic focus.

[Matthew Stevenson, President and CEO at Holley]

Those actions naturally lead to facility and complexity reduction, which we believe simplify the organization, improve our cost structure, and enhance free cash flow generation. We plan to redeploy both the capital resources and the higher growth opportunities through disciplined internal investment and targeted bolt-on acquisitions.

[Matthew Stevenson, President and CEO at Holley]

Our acquisition of HRX is an excellent example of the type of business we are looking to add. One with attractive growth prospects, strong margins, solid cash flow generation, and that complements our existing portfolio.

[Matthew Stevenson, President and CEO at Holley]

Over time, we believe this disciplined approach of monetizing non-core assets, simplifying the business, and reinvesting in higher return opportunities will strengthen earnings, improve cash generation, accelerate debt reduction, and create greater long-term shareholder value. The divestiture of our non-core restoration brands, including Brothers Trucks and Scott Drake, completed during the second quarter as continued progress of the strategy in action.

[Matthew Stevenson, President and CEO at Holley]

Let's turn to slide 12, where I'll provide an update on the progress we made to-date on the portfolio rebalancing initiative, as well as other activities to lower our overall cost base. Through our portfolio rebalancing initiative, we made meaningful progress simplifying the business.

[Matthew Stevenson, President and CEO at Holley]

Year-to-date, we have divested four brands, eliminated two facilities, reduced our warehouse footprint by approximately 95,000 sq ft, lowered our workforce by approximately 5% through divestitures, and removed roughly 7,000 low margin SKUs or about 16% of the portfolio.

[Matthew Stevenson, President and CEO at Holley]

These actions are reducing complexity, improving our cost structure, generating capital, and allowing us to focus resources on our highest return growth opportunities. In addition to these portfolio actions, we are continuing to take decisive steps to optimize our cost structure across both our operating divisions and shared services.

[Matthew Stevenson, President and CEO at Holley]

As our operational distribution efficiency improves, we are aligning our manufacturing footprint organizational structure along with our cost base with the current needs of the business. During the second quarter alone, we completed two manufacturing site consolidations, reduced our employee and contractor base by more than 115 positions, lowered non-value added SGA spending, and strategically reduced production and distribution activity during seasonal demand slowdowns.

[Matthew Stevenson, President and CEO at Holley]

These actions are creating a leaner, more efficient operating model while preserving our ability to support future growth. On an annualized basis, we expect these two work streams to deliver more than $12 million of one-time net cash, 150 to 200 basis points of EBITDA margin expansion, an additional $3 million-$5 million of annualized benefit, 0.2-0.3 turns deleverage acceleration, and roughly a 5% improvement in inventory turns.

[Matthew Stevenson, President and CEO at Holley]

Taken together, we believe these actions position us with a simpler, more focused portfolio, stronger growth potential, higher margins, improved free cash flow, and a faster path to deleveraging. Slide 13 summarizes why we remain constructive on the second half of 2026. While we continue to operate in a dynamic macroeconomic environment, we believe the business is entering the back half of the year with improving momentum.

[Matthew Stevenson, President and CEO at Holley]

Three of our four operating divisions delivered double-digit core growth during the second quarter, while American Performance improved significantly on a sequential basis. Just as importantly, we believe the elevated channel inventories that impacted our largest business over the past several quarters have now normalized, providing a much stronger foundation as we move through the balance of the year. Against that backdrop, there are five additional factors that support our outlook for the second half.

[Matthew Stevenson, President and CEO at Holley]

First, our portfolio rebalancing and operational improvement initiatives have created a simpler, more focused organization. By exiting non-core businesses, reducing complexity, and aligning our cost structures with the needs of the business, we strengthened our operating foundation with creating additional capacity to invest in our highest return growth opportunities.

[Matthew Stevenson, President and CEO at Holley]

Second, we've secured approximately $12 million of new national retailer placements scheduled to launch during the third quarter, expanding distribution and increasing visibility for our brands with consumers.

[Matthew Stevenson, President and CEO at Holley]

Third, we have a strong pipeline of new product introductions planned across multiple divisions during the second half of the year. Innovation remains one of our core competitive advantages. We believe these launches will provide additional opportunities to drive growth. Fourth, we've completed the transformation of our marketing organization, with dedicated marketing teams now embedded within each division.

[Matthew Stevenson, President and CEO at Holley]

We're already seeing stronger brand activation, deeper engagement with our enthusiast communities, and better alignment between our marketing investments and growth priorities. Finally, HRX continues to perform well and is expected to make another meaningful contribution to both growth and earnings through the remainder of the year. Taken together, these factors provide a solid foundation for the second half, while recognizing that we continue to operate in a dynamic market environment.

[Matthew Stevenson, President and CEO at Holley]

Before I turn the call over to Jesse, I'd like to thank our more than 1,300 team members around the world. Their dedication, resilience, and commitment to executing our strategy have been instrumental in the progress we've made this year.

[Matthew Stevenson, President and CEO at Holley]

While there's still work ahead, I'm proud of what the team has accomplished and appreciative of everything they continue to do for our customers, our brands, and our shareholders. With that, I'll turn the call over to Jesse to walk through our financial results in more details and provide additional perspective on our outlook for the balance of 2026. Jesse?

[Jesse Weaver, CFO at Holley]

Thank you, Matt. As you've heard today, we're continuing to make progress across a number of key operational and strategic initiatives. I'll now walk through our financial results for the quarter and provide an update on our key financial priorities, including profitability, cash flow generation, balance sheet strength, and capital allocation.

[Jesse Weaver, CFO at Holley]

As we move through 2026, we're continuing to execute against the operational roadmap we've outlined over the past several quarters. The work we've done to simplify the business, improve efficiency, strengthen cash generation, and enhance financial flexibility is producing tangible results.

[Jesse Weaver, CFO at Holley]

While there is still more to accomplish, we're encouraged by the momentum across the organization and believe the actions we've taken are building a stronger foundation for profitable growth. Starting with profitability, we're continuing to realize meaningful benefits from our operational improvement initiatives.

[Jesse Weaver, CFO at Holley]

Through the first half of the year, these actions have delivered approximately $6 million of savings driven by optimized staffing levels, manufacturing and distribution efficiencies, and targeted facility and network cost reductions. These efforts are creating a leaner, more efficient operating model and supporting sustainable margin improvement across the organization.

[Jesse Weaver, CFO at Holley]

For the full year 2026, we expect these cost reduction initiatives to deliver at or above the top end of our $5 million-$7 million range by the end of the year. An equally important area of focus has been working capital management. Inventory improved during the quarter, reflecting the benefits of the actions we've taken throughout the year. Our inventory reduction initiatives have delivered more than $10 million of inventory reduction year-to-date after adjusting for portfolio rebalancing efforts, representing meaningful progress toward our full year objective.

[Jesse Weaver, CFO at Holley]

While we're pleased with the results achieved so far, inventory reduction remains a key management priority, and we believe we remain on track to achieve our targeted reduction range for the year. That progress is also contributing to continued balance sheet strengthening. We ended the quarter with a leverage ratio of 3.74x, reflecting the benefits of free cash flow generation, disciplined capital allocation, and operational execution.

[Jesse Weaver, CFO at Holley]

While we've made meaningful progress over the last year, we remain committed to further deleveraging and increasing our financial flexibility as we move through the remainder of 2026. The progress we're making across profitability, working capital, and leverage is strengthening the foundation of the business and improving our financial flexibility. We're building a more efficient organization, generating strong free cash flow, and positioning Holley to capitalize on growth opportunities across our portfolio.

[Jesse Weaver, CFO at Holley]

On slide 16, we'll walk through our key financial metrics for the second quarter. Net sales for the second quarter was $172 million, versus $166.7 million in the same period a year ago. The increase was primarily driven by $4.7 million of incremental net sales from acquisitions and improved price realization of approximately $10 million, partially offset by lower sales volume of approximately $9.4 million compared to the prior year.

[Jesse Weaver, CFO at Holley]

On a core business basis, which adjusts for the impacts of our portfolio rebalancing efforts, net core sales grew 4.9%. Gross profit was $70.5 million in the second quarter compared to $69.6 million in the same period last year. Gross margin for the quarter was 41%, a decrease of 72 basis points versus 41.7% in the prior year.

[Jesse Weaver, CFO at Holley]

The margin compression was driven by higher tariff-related costs and fixed cost deleverage on lower net sales volume, partially offset by pricing actions and improvements in operating efficiency. It's also worth noting that the comparison is affected by a one-time non-cash benefit in the prior year quarter from the capitalization of tariff costs into inventory that did not repeat this year, which makes the year-over-year change look larger than the actual shift in our underlying cost structure.

[Jesse Weaver, CFO at Holley]

SG&A, including R&D expenses for the second quarter, was $44.2 million, versus $38 million in the same period last year. The increase in SG&A included $4.4 million related to a combination of legal expenses associated with the finalization of securities class action settlement and portfolio rebalancing costs associated with our ongoing efforts to simplify our portfolio, each of which is excluded from adjusted EBITDA.

[Jesse Weaver, CFO at Holley]

Additionally, SG&A reflected incremental costs from the HRX acquisition integration, which was not part of the business in the same period last year. Net loss for the second quarter was down $2.4 million, compared to net income of $10.9 million in the second quarter of 2025. Adjusted net income in the second quarter was $24 million, versus $10.6 million in the same period of last year.

[Jesse Weaver, CFO at Holley]

Adjusted EBITDA for the second quarter was $33.8 million, versus $36.4 million in the prior year. Adjusted EBITDA margin was 19.6%, which represents a 223 basis point decline versus 21.9% in the second quarter of 2025. As I mentioned on gross margin, that comparison is affected by the same prior year non-cash tariff capitalization benefit that did not repeat this year.

[Jesse Weaver, CFO at Holley]

Adjusting for that item, we believe adjusted EBITDA performance was roughly flat year-over-year, which we think is a more accurate reflection of underlying operating performance of the business. On slide 17, we generated quarterly free cash flow of $40.9 million in the second quarter, which represented a $5.2 million increase year-over-year. This performance reflects continued improved operational execution, disciplined working capital management, and progress across our profitability initiatives, as well as a one-time benefit from IEEPA refunds that occurred in the quarter.

[Jesse Weaver, CFO at Holley]

Strong cash generation enabled us to continue executing our balanced capital allocation strategy, including debt reduction, share repurchases, and strategic investments in M&A. On slide 18, I'd like to spend a moment on capital allocation, which remains a core component of our strategy and reflects our commitment to creating long-term shareholder value. Our framework is straightforward and disciplined.

[Jesse Weaver, CFO at Holley]

First, we prioritize investments in core business, including product innovation, operational improvements, and initiatives that we believe enhance our competitive position and support long-term growth. Second, we evaluate strategic acquisitions that we believe strengthen our portfolio, expand our capabilities, and meet our return thresholds. Third, we remain focused on reducing leverage and improving financial flexibility.

[Jesse Weaver, CFO at Holley]

Finally, as our balance sheet allows, we look to return capital to shareholders through share repurchases when we believe our shares represent an attractive value. Over the past year, we've executed against each of these priorities. The acquisition of HRX added a highly complementary business to our portfolio and is continuing to contribute to both growth and earnings.

[Jesse Weaver, CFO at Holley]

At the same time, we've remained committed to strengthening the balance sheet through debt reduction, including paying down borrowings under our revolving credit facility and further reducing leverage to 3.74x at quarter end.

[Jesse Weaver, CFO at Holley]

In addition, as Matt mentioned previously, during the quarter, we repurchased approximately $2 million of our shares. While deleveraging remains a priority, we believe our share repurchase activity demonstrates confidence in the underlying value of our business and our ability to generate cash flow while continuing to invest in growth and improve the balance sheet.

[Jesse Weaver, CFO at Holley]

Looking ahead, we expect to maintain this balanced and disciplined approach. Our strong cash flow generation provides flexibility to continue investing in the business, pursue strategic opportunities that create shareholder value, further reduce debt, and opportunistically repurchase shares when appropriate.

[Jesse Weaver, CFO at Holley]

Overall, we believe the progress we've made across acquisitions, debt reduction, and capital returns demonstrates both the strength of our cash generation profile and our commitment to thoughtful capital allocation. Turning to slide 19.

[Jesse Weaver, CFO at Holley]

We ended the quarter with total leverage of 3.74x, its lowest level in the last four years, reflecting strong free cash flow generation and continued operational discipline, keeping us on track to end the year below our targeted leverage ratio of 3.5x. Our liquidity profile remains strong as we ended the quarter at $69 million of cash on hand and have paid back the $10 million drawn on our revolving credit facility in the first quarter.

[Jesse Weaver, CFO at Holley]

Since the quarter ended, we proactively prepaid another $15 million on our debt, bringing our total prepayments at September of 2023 to $115 million. We remain committed to further deleveraging while continuing to invest in initiatives that we believe drive strong long-term shareholder value. Turning to our 2026 outlook.

[Jesse Weaver, CFO at Holley]

As we look to the balance of the year, we continue to see a relatively resilient consumer environment, supported by stable demand trends across our enthusiast customer base. At the same time, we recognize that the macroeconomic backdrop remains uncertain, with inflationary pressures, higher fuel and transportation costs, and the evolving tariff landscape creating potential headwinds.

[Jesse Weaver, CFO at Holley]

We're closely monitoring these external factors as we move through the second half of the year, we'll continue to take actions as necessary to protect the health of the business. Against that backdrop, we're encouraged by the trajectory coming out of the second quarter, we believe channel inventories in our largest division have now normalized. That momentum carries into the back half. As Matt mentioned, we've already secured approximately $12 million of new national retailer placements for the third quarter.

[Jesse Weaver, CFO at Holley]

Our product pipeline remains robust going into the third quarter, with a host of exciting new launches to help continue to drive growth into the back half of the year. We're proud of the discipline our team showed to deliver this quarter, equally grateful for the partnerships of our distributors and retail partners, whose confidence in our brands is what makes placements like these possible. Taken together, these factors give us the confidence to reaffirm the full year guidance we issued last quarter. With that, we will open the line up for questions.

[Operator]

Thank you. We will now be conducting a question and answer session. We ask that you please limit yourself to one question and one follow-up. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue.

[Operator]

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Our first question comes from Phillip Blee with William Blair. Please go ahead.

[Olivia Xu, Analyst at William Blair]

Hi. Good morning. This is Olivia Xu on for Phillip Blee. You've discussed recently aligning portions of your marketing strategy. Can you elaborate on what those changes entail, the key performance indicators you're tracking to measure success, and whether you've seen any early signs of improvement in traffic conversion, customer acquisition, or overall sales productivity?

[Matthew Stevenson, President and CEO at Holley]

Yeah. Good morning, Olivia. This is Matt. The changes in my prepared remarks, I commented, and I'll go into some more detail, that there is a reliance on outside agencies, but I'd say a significant portion of some of our marketing. It was over 20 positions that we then took from outside agency and put those positions internally into our division marketing team.

[Matthew Stevenson, President and CEO at Holley]

Our division marketing teams now have full staffs. We also have a center of excellence that still works on some things that are universally applicable across all our four divisions. What that enables the teams to do is just be closer to the enthusiasts, create content faster, interact more to the forums, social media, and the different means that they engage with enthusiasts.

[Jesse Weaver, CFO at Holley]

Modern Truck & Off-Road has had the complete marketing team the longest, you can see some of the great growth there and the content they're generating. We're tracking that all through a performance marketing funnel from awareness consideration, all the way through the various steps on the activations, the number, the quantity, and the quality they activate, then how that impacts ultimately, the purchase and reorders down through the complete marketing funnel.

[Jesse Weaver, CFO at Holley]

That's how we track it's going really well. It was a lot of work, as you can imagine, hiring that many people in a fairly short amount of time, it's great seeing the results already starting to come through.

[Olivia Xu, Analyst at William Blair]

Okay. That's helpful. Thank you. You've been very optimistic about the momentum you're seeing with national retail partners. You recently announced the addition of a new major partner. How do you view the runway for further retail expansion? Is the larger opportunity today entering new retail accounts or increasing shelf space and distribution within existing partners? Additionally, what do you believe is driving these wins, and how does your approach differ from competitors?

[Matthew Stevenson, President and CEO at Holley]

Okay. I'll maybe start with the end of that. What differentiates Holley Performance Brands than many of our competitors, we are a one-stop-shop performance for national retailers. The breadth and depth of our product line and the professionalism that we operate as an organization, they can come to us for the majority or vastly all their performance needs. That's inventory they like to differentiate, to bring enthusiasts into their locations.

[Matthew Stevenson, President and CEO at Holley]

Now, for us, we see it highly accretive because although we run an omni-channel approach, if you get up on a Saturday or Sunday morning and want to do some car modifications, really the national retailer brick and mortar is your best alternative to get that product there and then. For us, they're long lead sales cycles.

[Matthew Stevenson, President and CEO at Holley]

There's a lot of partnerships, a lot of discussions, a lot of investigation that goes into the proper planogram to get the results they're looking for on turns on their shelf space. We've been working on these partnerships for over two years. We're seeing growth in all our national retailers.

[Matthew Stevenson, President and CEO at Holley]

The one specifically was a retailer we've been working with for some time to just take more of their category leadership on key performance. It's definitely a growth category for us, not only in the U.S., but in the national retailer footprint outside of the U.S. We're pretty excited about it. The team's worked really hard, and it is great seeing the results coming through.

[Olivia Xu, Analyst at William Blair]

All right. Thank you for the color. Good luck with the rest of the quarter.

[Matthew Stevenson, President and CEO at Holley]

Thanks, Olivia.

[Operator]

Our next question comes from Joseph Altobello with Raymond James. Please go ahead.

[Mitch Ingles, Analyst at Raymond James]

Hey, everyone. This is Mitch Ingles on for Joseph Altobello. Yeah. My first question is given the recent retailer wins that we're talking about and the continued product launches, how are you thinking about pricing for the balance of the year?

[Matthew Stevenson, President and CEO at Holley]

Yeah, it's a great question. From a pricing perspective, I know we announced just recently a modest price increase just facing the freight headwinds that we're seeing in terms of surcharges related to fuel and some of the memory chip challenges that globally everyone is experiencing. We have great partnerships with our national retailers, and the majority of them understand this, and we give them the right heads-up in order to make those changes accordingly in their portfolios. Outside of that, no additional pricing expected for the year.

[Mitch Ingles, Analyst at Raymond James]

Got it. That's helpful. My follow-up is on the. You noted the year-over-year EBITDA comparison was impacted by last year's one-time tariff capitalization benefit. Could you help us size that impact and bridge the EBITDA progression?

[Jesse Weaver, CFO at Holley]

Yeah. It's about $3 million-$3.5 million. If you add that back, you would see that we'd be a slight EBITDA dollar-wise better than last year with a decent pickup on the margin rate, which would be much closer to par or much closer to last year on the EBITDA margin rate.

[Mitch Ingles, Analyst at Raymond James]

Thank you. Appreciate it. I'll jump back in the queue.

[Matthew Stevenson, President and CEO at Holley]

Thanks, Mitch.

[Operator]

Our next question comes from Brian McNamara with Canaccord Genuity. Please go ahead.

[Brian McNamara, Analyst at Canaccord Genuity]

Hey, good morning, guys. Thanks for taking the questions here. Matt, on slide 13, I thought it was a helpful slide here. You guys obviously identified five key factors that give you guys optimism for H2 here. Which one of these do you expect to have the largest impact? Any color on the new national retailer partnership you guys announced yesterday would be helpful. Thank you.

[Matthew Stevenson, President and CEO at Holley]

Hey, thanks, Brian. Good morning. It's Matt. Yeah, we're excited about the back half of the year and the five calls we had here. I think generally speaking, they're listed here because they're all impactful relative to how we see the back half. No doubt simplifying the operation with the divesture of those brands and getting out a large chunk of, generally speaking, unproductive inventory makes the operations that much more efficient.

[Matthew Stevenson, President and CEO at Holley]

Commented a bit on the national retailers, but that's been a long time coming and developing those partnerships. That was in our forecast for Q3 as well as we're seeing some great product innovations get some nice take rate in the market. There's two big ones planned for late in Q4 that we're also very excited about.

[Matthew Stevenson, President and CEO at Holley]

One of the earlier questions Olivia had asked on this marketing empowerment relative to the division structure and putting those resources in, it's just enabling them to be much closer to the enthusiasts and react a lot faster to trends and comments they're seeing in the marketplace. We're seeing all that culminate. In addition, the HRX continues to outperform the original estimates, the team's doing a great job continuing to expand their portfolio. We're excited about all these factors and looking forward to the back half of the year.

[Brian McNamara, Analyst at Canaccord Genuity]

Great. Secondly, the gap between your core and your net sales was different than we had it, probably because HRX was higher than we expected, at least that contribution. Jesse, can you quantify the sales you had last year that didn't repeat due to the divestitures? Is it fair to run rate HRX's Q2 performance for a full year, obviously not this full year, or is there seasonality?

[Jesse Weaver, CFO at Holley]

There's definitely seasonality in that, Brian. You're asking for what's the base that we've worked off of, like if I was stripping out the prior year quarter-

[Brian McNamara, Analyst at Canaccord Genuity]

Yeah. Yep.

[Jesse Weaver, CFO at Holley]

... items? Let's look at this real quick for you. Just as we talked about on the last quarter, whenever you kind of adjust all of the items in it, restoration was a big part of the down, the adjustment. I think to break that out, Brian, it's probably a more nuanced piece that we probably don't want to get into on the call. We can definitely kind of give you the impact for Q3, Q4 that we discussed on the last quarter, which when you look on a year-over-year basis, you're looking at about $6 million-$7 million on a year-over-year basis that you'd want to pull out of last year, and that takes into account everything we've divested plus HRX.

[Brian McNamara, Analyst at Canaccord Genuity]

Finally, maybe one for Matt, but Jesse, you can opine here. From our vantage point, you did your first deal in March since 2022. You authorized an inaugural share repurchase program. You continue to pay down debt. It feels like there's a lot of good stuff going on in your base business here, and the market's not giving your stock the credit here. I'm just curious, any thoughts here, guys?

[Matthew Stevenson, President and CEO at Holley]

Yeah, Brian, as you pointed out, there's a lot of great initiatives going. Those have been in the works for some time. We see that continued momentum and what the team's been working on and now executing in the market. We just continue to do what we do and make sure we're having the right priorities relative to our capital allocation.

[Matthew Stevenson, President and CEO at Holley]

First and foremost, continue to pay down debt. We also have a robust pipeline of M&A targets there that we continue to look at, but we're very selective on what we're going to choose, and we want that criteria to be much like HRX, founder-led, double-digit growth, positive free cash flow, very complementary to the portfolio.

[Matthew Stevenson, President and CEO at Holley]

We remain opportunistic where we see that share price just that disconnected from what we feel the results are of the company. We're going to take that opportunity to buy back some shares. Like you said, there's a lot happening. We're excited about the back half.

[Brian McNamara, Analyst at Canaccord Genuity]

Thanks for the call, guys. Appreciate it. I'll pass it on.

[Operator]

Our next question comes from Michael Baker with D.A. Davidson. Please go ahead.

[Michael Baker, Analyst at D.A. Davidson]

Thank you. I wanted to start by asking you about slide 12. Some of the numbers have changed since the last quarter. For instance, the annualized impact is now $12 million net cash versus $15 before. Is that because of buyback? When you say net cash generation, is that after the buybacks? I am just wondering why that is down, whereas the EBITDA benefit is up now, right? $3 million-$5 million. It was $1 million-$2 million.

[Jesse Weaver, CFO at Holley]

Yeah, great question, Michael. Just to kind of clarify, whenever we did that the last time, it was just focused on financial impact of the box on the far left, and it was our original estimation. Our original estimation is we get $15 million, and all of that clearly excludes cash tax benefits, which obviously you guys had seen as we took a write-down on that. We will be getting even more from a cash tax perspective.

[Jesse Weaver, CFO at Holley]

We have generated $12 of the $15, as Matt had called out or we had discussed. There are some other things that we are looking at that could get us to close the gap on the $15, but we generally feel like $12 was a pretty good result relative to our forecast. The difference on the EBITDA piece, that takes into account the additional work that we have done since the last call when it comes to just lowering the overall operating cost of the organization. Since that time, we have decided to close a couple of other facilities. Obviously, the team member and contractor impacts play a big role as well, and those kind of increase the impact overall.

[Michael Baker, Analyst at D.A. Davidson]

Okay. Makes sense then. A follow-up, I suppose, would be, first of all, was that $12 million from the new retail deal that you talked about? Was that in the previous guidance? If the EBITDA savings are greater, why does the EBITDA guidance not change?

[Jesse Weaver, CFO at Holley]

Yeah, I think on the $12 million that we talked about, that's been a part of the guidance from the beginning. It's a de minimis change on the EBITDA change from what we'd shown before. Also keep in mind, that's an annualized impact. That's not all going to impact this year. To your previous comment, Michael, on share buyback, that's not even contemplated in here.

[Michael Baker, Analyst at D.A. Davidson]

Okay. Great. Makes sense. I'll pass it on.

[Jesse Weaver, CFO at Holley]

Thank you.

[Operator]

Once again, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from Joe Feldman with Telsey Advisory Group. Please go ahead.

[Joe Feldman, Analyst at Telsey Advisory Group]

Yeah, good morning, guys. Thanks for taking my question. At a higher level, can you share some thoughts on the industry and what kind of growth you're seeing in the industry? It seems like you guys are starting to really perform a bit better. Just curious what you see there and how you're thinking about it as you kind of head into next year from an industry growth rate standpoint.

[Matthew Stevenson, President and CEO at Holley]

Hey, Joe. Good morning. It's Matt. Generally speaking, it's an imperfect science in our industry based without industry-sponsored index. Generally speaking, as we track out the doors at our larger partners, both of our products and their overall business, we see the business generally flat to low single digits. Obviously you're seeing outperformance in three of our verticals. They're significantly up double digits plus.

[Matthew Stevenson, President and CEO at Holley]

On American Performance, really there was just two things there. It was some hangover, still a bit of inventory that we believe we're now through, as well as changing on our marketing calendar for our Memorial Day event, which we excluded some of the biggest product lines in American Performance for a number of strategic reasons and decided to put those into the calendar in the back half. That's really why you saw that division performance the way it was.

[Joe Feldman, Analyst at Telsey Advisory Group]

That's helpful. Thank you. Maybe, Jesse, as a follow-up, can you talk a bit more about the gross margin in the second half? Are there any other puts and takes that we should think about? Obviously, there was that capitalization cost of tariffs from last year in the second quarter. Anything else that we should be aware of in third and fourth quarters?

[Jesse Weaver, CFO at Holley]

Not anything like that, obviously, Joe. That in particular was a one-time thing, as last year the tariffs were coming in and we needed to capitalize all of those in Q2. Obviously that continued accounting treatment continued throughout the back half of last year as it has throughout this year. It just kind of started in Q2. There's nothing of note on that.

[Joe Feldman, Analyst at Telsey Advisory Group]

Got it. Okay. Is the 41% kind of how we should think about the gross for the second half then? Any adjustments that we should make? Actually it goes up a bit. Sorry. Yeah, usually it's 43%, even higher, 46%.

[Jesse Weaver, CFO at Holley]

Yeah, you would expect it to slightly tick up a little bit, just like you have in previous years between first half and back half. As we talked about, some of the pricing that we've taken into account here will play a bit of a role there. Clearly that was to offset some cost increases we're seeing. You should see a slight uptick.

[Joe Feldman, Analyst at Telsey Advisory Group]

Okay. That's helpful. Thank you.

[Jesse Weaver, CFO at Holley]

Thank you.

[Joe Feldman, Analyst at Telsey Advisory Group]

Good luck this quarter.

[Jesse Weaver, CFO at Holley]

Appreciate it.

[Operator]

Our next question is from Michael Baker with D.A. Davidson. Please go ahead.

[Michael Baker, Analyst at D.A. Davidson]

Sorry. Yeah, I figured I'd jump back in the queue just to follow up on Joe's tariff question. You talked about refunds this quarter. Two-part question here. One, can you talk about how much of a refund did you get? Do you expect that to continue?

[Michael Baker, Analyst at D.A. Davidson]

Maybe more interestingly, one of your, I suppose your competitor, they're another auto parts manufacturer at least, talked about price reductions that they're going to pass through to their retail partners as they get tariff refunds. You're talking about price increases. Can you talk about that dynamic of whether you'll share any of the tariff refunds with some of your retail partners?

[Jesse Weaver, CFO at Holley]

Michael, I think it's worth clarifying, the IEEPA refund is a one-time thing. As you're very well aware, as that was repealed and no longer available as a tool for tariffs, the other tariffs that came in more than offset that. It's not an ongoing cost savings that we've been able to benefit from.

[Jesse Weaver, CFO at Holley]

The refund that we received, you can see it kind of broken out in the 10-Q. It's around 10-11, but it's a one-time thing. Obviously, those costs we've already borne in our P&L, and it's not anything that we're benefiting from other than the one-time cash infusion and something that we've kind of used to kind of offset other costs. Had we not received it, certainly pricing would've gone up even more than we actually passed it through at this point. In some way, we did share in that with our national retail partners, distribution partners, and customers. Again, it's a one-time thing. It was offset by other tariffs.

[Michael Baker, Analyst at D.A. Davidson]

Got it. Fair enough. Appreciate the color.

[Jesse Weaver, CFO at Holley]

Thanks, Michael.

[Operator]

We have reached the end of our question and answer session. I would like to turn the floor back over to Matthew for closing comments.

[Matthew Stevenson, President and CEO at Holley]

All right. Thank you, Dylan. Slide 22 highlights the compelling investment narrative we see surrounding Holley Performance Brands. Our enthusiast marketplace represents a vast, resilient, addressable market approaching $40 billion, and Holley's portfolio of storied brands positions us to lead it. This quarter reinforced that confidence. We returned to net sales growth, with three of our four divisions delivering double-digit core growth.

[Matthew Stevenson, President and CEO at Holley]

We made real progress simplifying our portfolio through the Restoration brand divestiture, strengthened our balance sheet with leverage at its lowest level in four years, and generated strong free cash flow, all while continuing to invest in innovation and marketing capabilities that drive our brands forward. As we look to the back half of the year, we're carrying that momentum with us.

[Matthew Stevenson, President and CEO at Holley]

Normalizing channel inventories, new national retailer placements, a robust new product pipeline, and the continued contribution from HRX all give us confidence in reaffirming our full year guidance. Our long-term commitment remains the same, stable organic top-line growth of at least 6%, 40% gross margins, and greater than 20% adjusted EBITDA margins, underpinned by sustainable free cash flow generation.

[Matthew Stevenson, President and CEO at Holley]

In closing, I would like to thank our team members for their dedication and execution this quarter, our consumers for their continued passion for our brands, and our distribution partners, many of whom have supported Holley for many decades, for their continued confidence in us. We're excited about the momentum we're building and the opportunities ahead as we finish out 2026. Thank you for joining us this morning, and have a great day.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation

Participants

Executives

• Anthony Rozmus, Investor Relations
• Matthew Stevenson, President and CEO
• Jesse Weaver, CFO

Analysts

• Olivia Xu, Analyst at William Blair
• Mitch Ingles, Analyst at Raymond James
• Brian McNamara, Analyst at Canaccord Genuity
• Michael Baker, Analyst at D.A. Davidson
• Joe Feldman, Analyst at Telsey Advisory Group