Holley 2025 Q2 Earnings Misses Targets as Net Income Dips 36.5%

Holley Performance Brands reported mixed results for the second quarter of 2025, with revenue slightly declining and earnings significantly down year-over-year. The company lowered its guidance range for revenue and Adjusted EBITDA to reflect the impact of new tariffs, though it emphasized mitigation efforts have kept the hit negligible. Management remains optimistic about its strategic direction and operational execution.

Holley’s total revenue declined by 1.7% to $166.66 million in Q2 2025, compared to $169.50 million in the same period the previous year. Despite the revenue decline, the company saw 3.9% year-over-year growth in core net sales. The Domestic Muscle segment led the way with $101.41 million in revenue, while Euro & Import, Truck & Off-Road, and Safety & Racing segments generated $12.21 million, $35.02 million, and $18.02 million, respectively. These figures reflect a well-diversified revenue stream across key automotive performance categories.

Holley’s earnings showed a significant downturn, with net income falling to $10.86 million, or $0.09 per diluted share, compared to $17.11 million, or $0.14 per diluted share, in the prior year. This represented a 36.5% decline in net income and a 35.7% drop in EPS, underscoring the pressure on profitability despite efforts to stabilize the core business.

The stock price of Holley demonstrated strong performance in the immediate aftermath of the earnings report. The stock climbed 7.38% during the latest trading day, surged 39.90% over the full trading week, and gained 32.27% month-to-date. Despite these positive short-term movements, the long-term post-earnings strategy of buying shares following a revenue rise and holding for 30 days performed poorly. This strategy resulted in a -50.11% return, far below the 48.58% benchmark, leading to an excess return of -98.69%. The negative performance was compounded by a CAGR of -21.34% and a Sharpe ratio of -0.32, highlighting the high risk and unprofitability of such a strategy.

Post-earnings trading activity revealed a strategy of buying shares after a revenue increase and holding for 30 days underperformed significantly. The strategy yielded a -50.11% return, compared to a 48.58% benchmark, resulting in an excess return of -98.69%. This was accompanied by a CAGR of -21.34%, a maximum drawdown of 0% (indicating no loss in capital), and a Sharpe ratio of -0.32, underscoring the strategy’s high risk and poor returns.

Matthew Stevenson, Holley’s CEO, highlighted continued momentum in the core business, with a 3.9% year-over-year increase in core net sales. He emphasized the company's success in mitigating the impact of tariffs through strategic sourcing and pricing, which improved guidance visibility. Stevenson also pointed to $8 million in new product revenue during the quarter as a testament to the company’s product innovation and go-to-market strategy. Despite the challenging environment, he expressed confidence in Holley’s ability to execute its 2025 strategic framework and deliver sustained results.

Holley has provided full-year 2025 guidance, forecasting revenue between $580 million and $595 million, with a negligible impact from tariffs due to mitigation efforts. The company expects Adjusted EBITDA to range from $116 million to $127 million, capital expenditures from $10 million to $14 million, depreciation and amortization from $22 million to $24 million, and interest expense (excluding collar revaluation) from $45 million to $50 million. These projections reflect the company’s confidence in navigating the current operating environment while maintaining a strong strategic focus.

In a related development, Holley announced the second consecutive quarter of core net sales growth, with a 3.9% increase year-over-year. This growth was driven by the successful execution of its 2025 strategic framework and ongoing efforts to mitigate the impact of tariffs. The company reported $27 million in revenue from key initiatives during the quarter, highlighting its progress in expanding across more than 20 brands in both direct-to-consumer and business-to-business channels.

Additionally, Holley emphasized its strengthened B2B partnerships, which contributed to a 6.5% growth in the B2B channel compared to the previous year. Direct-to-consumer orders also saw significant growth, rising over 8.6% during the quarter, with third-party platforms like Amazon and eBay increasing by more than 28%. The company attributed much of this success to its product innovation and strategic pricing initiatives, which generated $10.8 million in revenue for the quarter and $18.7 million year-to-date.