Holley 2025 Q2 Earnings Revenue Falls 1.7% as Net Income Declines 36.5%

Holley Performance Brands (NYSE: HLLY) reported its fiscal 2025 Q2 earnings on August 6, 2025. Total revenue fell 1.7% to $166.66 million, and net income dropped 36.5% to $10.86 million. The company also lowered its EPS by 35.7% to $0.09 per share. Management attributed the revenue decline to macroeconomic pressures and tariff-related challenges, though core business growth improved slightly amid strategic mitigation efforts.

Revenue
Holley’s total revenue declined 1.7% to $166.66 million in 2025 Q2, compared to $169.50 million in 2024 Q2. The domestic muscle segment remained the strongest contributor, generating $101.41 million in revenue. The truck & off-road division added $35.02 million, while the safety & racing segment contributed $18.02 million. The euro & import division brought in $12.21 million. Despite the overall revenue decline, the company reported 3.9% growth in core business net sales, excluding non-core revenue from divestitures and product rationalization. This core growth reflects the company’s focus on its primary markets and ongoing product innovation.

Earnings/Net Income
Holley’s net income fell 36.5% to $10.86 million in 2025 Q2, down from $17.11 million in 2024 Q2. Earnings per share (EPS) also dropped 35.7% to $0.09 compared to $0.14 in the prior-year period. The decline in profitability was driven by higher non-operating expenses, particularly those tied to the fair value changes of the warrant and earn-out liabilities. Despite the drop in income, the company generated $40.5 million in net cash from operating activities, up from $25.7 million in the prior year.

Price Action
Holley’s stock has seen a significant surge recently, with a 27.01% rise on the latest trading day, 24.07% in the full week, and 22.37% month-to-date. However, the stock experienced underperformance following the earnings report. A strategy of buying shares after a revenue increase quarter-over-quarter and holding for 30 days returned -50.11%, far below the 48.58% benchmark return. The negative returns reflect a -21.34% compound annual growth rate and a maximum drawdown of 0.00%, indicating poor risk-adjusted performance with a Sharpe ratio of -0.32.

Post-Earnings Price Action Review
The stock’s performance after the earnings report showed a marked divergence from market benchmarks, with a negative return of -50.11% compared to a 48.58% benchmark. The excess return of -98.69% highlights the underperformance, and the strategy's CAGR of -21.34% points to a high-risk, low-reward scenario. With a Sharpe ratio of -0.32 and a maximum drawdown of 0.00%, the investment approach appears to be poorly aligned with the company’s earnings momentum. Despite short-term gains in price, the post-earnings strategy suggests a need for caution and further analysis before entering or maintaining a position in Holley’s stock.

CEO Commentary
Matthew Stevenson, Holley’s CEO, emphasized the company’s continued momentum and progress in its strategic framework. He highlighted the success of tariff mitigation efforts, stating, “Due to these efforts, we’re currently not forecasting any meaningful impact to free cash flow or margins this year or next.” The CEO also noted the importance of the omnichannel strategy, with D2C and B2B growth reflecting balanced performance. Stevenson pointed to key product launches, such as the Terminator X Bluetooth module and Arizona Desert Shocks, as growth drivers. He expressed cautious optimism for the second half of the year while acknowledging macroeconomic uncertainties and reinforcing long-term confidence in the business’s resilience and strategic direction.

Guidance
Holley revised its full-year 2025 guidance, tightening revenue to $580 million to $595 million, implying approximately 2.2% growth at the midpoint over 2024's core business. Adjusted EBITDA guidance was also refined to $116 million to $127 million. The company anticipates maintaining gross margins near 40% and adjusted EBITDA margins above 20%, with free cash flow generation expected to remain strong, supported by operational efficiency and tariff mitigation efforts. Management emphasized a cautious approach to the back half due to macroeconomic uncertainty, with flat sales in Q3 and a conservative outlook for unit demand.

Additional News
In a related press release, Holley announced its fiscal 2025 Q2 financial results, highlighting continued core business growth and successful tariff mitigation through strategic sourcing and pricing. The company reported core business net sales growth of 3.9% year-over-year, excluding non-core revenue from divestitures and product rationalization. Holley also announced its highest Free Cash Flow to date at $35.7 million for the quarter. The CEO emphasized the company’s progress in key initiatives, including product innovation and go-to-market strategy, contributing to $10.8 million in revenue for the quarter and $18.7 million year-to-date. Looking ahead, Holley has refined its full-year 2025 guidance, reflecting increased visibility into the impact of tariffs and demonstrating confidence in its strategic initiatives.