Holley (NYSE:HLLY) Issues Earnings Results, Beats Estimates By $0.08 EPS

Key Points

• Holley beat earnings expectations, reporting quarterly EPS of $0.20 versus the $0.12 consensus estimate, while revenue of $172.01 million came in slightly below expectations.
• Q2 sales returned to growth, rising 3.2%, but tariffs and lower volume pressured profitability, reducing gross margin to 41% and adjusted EBITDA margin to 19.6%.
• Cash flow and deleveraging improved, with $40.9 million in free cash flow and leverage falling to 3.74 times; management reaffirmed full-year guidance and cited new retail placements and a stronger product pipeline.

Holley (NYSE:HLLY - Get Free Report) posted its quarterly earnings results on Wednesday. The company reported $0.20 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $0.12 by $0.08, FiscalAI reports. The firm had revenue of $172.01 million during the quarter, compared to the consensus estimate of $172.63 million. Holley had a return on equity of 8.42% and a net margin of 1.68%.

Here are the key takeaways from Holley's conference call:

• 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.
• 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.
• 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.
• 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.
• 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.

Holley Stock Down 1.2%

Shares of NYSE:HLLY traded down $0.04 during trading on Thursday, hitting $3.00. The company's stock had a trading volume of 926,456 shares, compared to its average volume of 772,520. The company has a market capitalization of $364.99 million, a PE ratio of 9.50 and a beta of 1.31. Holley has a fifty-two week low of $2.33 and a fifty-two week high of $4.48. The company has a debt-to-equity ratio of 1.16, a quick ratio of 1.07 and a current ratio of 3.17. The stock's 50-day moving average price is $2.59 and its two-hundred day moving average price is $3.12.

Wall Street Analyst Weigh In

A number of analysts have recently issued reports on the company. Raymond James Financial set a $4.00 target price on Holley in a report on Thursday, May 7th. Weiss Ratings downgraded shares of Holley from a "hold (c-)" rating to a "sell (d+)" rating in a research note on Wednesday, June 17th. Freedom Capital raised shares of Holley to a "strong-buy" rating in a research note on Tuesday, July 7th. Benchmark reduced their target price on shares of Holley from $4.50 to $4.00 and set a "buy" rating on the stock in a report on Friday, May 8th. Finally, Canaccord Genuity Group reiterated a "buy" rating and issued a $7.00 price target on shares of Holley in a report on Monday, June 29th. One equities research analyst has rated the stock with a Strong Buy rating, four have issued a Buy rating, one has issued a Hold rating and one has issued a Sell rating to the company's stock. According to MarketBeat, Holley currently has a consensus rating of "Moderate Buy" and an average price target of $4.90.

Institutional Investors Weigh In On Holley

Hedge funds and other institutional investors have recently bought and sold shares of the business. Cerity Partners LLC bought a new stake in shares of Holley in the 2nd quarter worth approximately $25,000. Schonfeld Strategic Advisors LLC bought a new stake in Holley in the third quarter worth about $34,000. Sherbrooke Park Advisers LLC acquired a new stake in Holley during the third quarter valued at approximately $38,000. Captrust Financial Advisors acquired a new stake in shares of Holley during the 2nd quarter valued at $44,000. Finally, Brevan Howard Capital Management LP boosted its position in shares of Holley by 103.4% in the 2nd quarter. Brevan Howard Capital Management LP now owns 22,607 shares of the company's stock valued at $45,000 after purchasing an additional 11,494 shares during the period. 39.70% of the stock is currently owned by hedge funds and other institutional investors.

Holley declared that its board has approved a stock buyback program on Tuesday, May 26th that allows the company to repurchase $25.00 million in outstanding shares. This repurchase authorization allows the company to reacquire up to 8.2% of its stock through open market purchases. Stock repurchase programs are typically an indication that the company's board believes its stock is undervalued.

About Holley

Holley Inc 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.

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