Holley 2025 Q1 Earnings Misses Targets as Net Income Falls 24.5%

Holley (HLLY) reported its fiscal 2025 Q1 earnings on May 07th, 2025. The company missed analyst expectations with revenue slightly exceeding estimates, but earnings per share fell short by 60%. Despite this, Holley maintained its full-year guidance, projecting net sales between $580 million and $600 million. The company remains focused on mitigating potential tariff impacts and navigating softening consumer sentiment, demonstrating strategic resilience in a challenging market environment.

Revenue

Holley's total revenue experienced a 3.5% decline to $153.04 million in the first quarter of 2025, compared to $158.64 million in the same period the previous year. The Domestic Muscle segment generated $91.84 million, demonstrating its market strength. Meanwhile, the Euro & Import division contributed $10.96 million, and the Truck & Off-Road segment accounted for $31.23 million. Lastly, Safety & Racing brought in $19.02 million, completing the revenue picture for this quarter.

Earnings/Net Income

Holley's earnings per share decreased by 33.3% to $0.02 in Q1 2025 from $0.03 in Q1 2024, with net income dropping 24.5% to $2.82 million. This decline indicates a challenging quarter for the company.

Price Action

The stock price of Holley has plummeted 16.51% during the latest trading day, has plummeted 17.67% during the most recent full trading week, and has plummeted 26.25% month-to-date.

Post-Earnings Price Action Review

Historically, buying Holley shares after revenue increases and holding them for 30 days has yielded moderate returns, averaging a 7.5% annualized gain over the past five years. This strategy benefited from Holley's consistent revenue growth and cash generation, as reflected in improved adjusted EBITDA and free cash flow. However, broader economic challenges, including inflation and supply chain disruptions, have affected consumer demand and product margins, posing obstacles for this approach. Despite these difficulties, Holley has demonstrated resilience by maintaining steady growth, underscoring the importance of strategic adaptability in navigating economic uncertainties.

CEO Commentary

"We are delighted with our strong quarterly results, which we believe reflect significant progress against our strategic framework," said Matthew Stevenson, President and CEO of Holley. The company achieved core business growth of 3.3%, with substantial advancements in direct-to-consumer and business-to-business channels. DTC orders grew over 10%, driven by a successful third-party marketplace strategy. Stevenson noted the importance of mitigating external uncertainties, including ongoing tariff issues and softening consumer sentiment, while expressing confidence in the company's ability to execute its strategic initiatives and navigate near-term challenges effectively.

Guidance

For 2025, Holley maintains its full-year guidance, projecting net sales between $580 million and $600 million, reflecting a year-over-year increase of 0.8% to 4.3%. The company expects adjusted EBITDA of $113 million to $130 million and capital expenditures ranging from $12 million to $16 million. This guidance excludes potential impacts from tariffs, which remain uncertain and fluid, with the company actively working on strategic sourcing and targeted pricing initiatives to mitigate these effects.

Additional News

Recent developments at Holley include Bamco Inc. NY acquiring 1,000,000 shares of Holley Inc., highlighting investor confidence in the company's long-term prospects. Additionally, Holley has expanded its strategic partnerships in the B2B sector, enhancing data quality and collaboration with its Top 50 accounts. This expansion is part of Holley's broader initiative to strengthen its market presence. Furthermore, Holley has implemented cost-reduction measures, achieving $3.0 million in savings through purchasing efficiencies and operational improvements, showcasing its commitment to optimizing business processes amidst external challenges.