Holley Inc. Q4 FY2025 earnings call

• 2025 was a pivotal year with sustained performance across all four quarters, delivering four-year net sales growth and adjusted EBITDA margins above 20%. • Core business generated net sales growth in every quarter of 2025, with double-digit growth in the fourth quarter. • Operated with focus and rigor, driving volume-led growth, sharpening pricing execution, strengthening operational capabilities, and maintaining financial discipline. • Reinforced financial foundation with meaningful free cash flow, net leverage below target, consistent growth, expanding margins, strong cash generation, and leverage reduction. • Strategic initiatives drove tangible results, including revenue programs, cost and efficiency actions, and innovation. • Divisions contributed to fourth quarter growth, with each division showing progress.

Fourth quarter core growth translated across each division: American performance increased 10% year-over-year, Truck and off-road grew 5.4%, Year-on-import finished the quarter up 21.5%, Safety and racing closed the quarter 13.3%. Full year net sales totaled $613.5 million, core net sales increased 6.6% driven by 3.8% volume growth and 2.8% pricing. Core net sales grew in every quarter of 2025, accelerating to 13.5% growth in Q4.

• For 2026, revenue is expected to range from $625 to $655 million, implying approximately 4% to 4.5% growth at the midpoint. • Adjusted EBITDA guidance is 127 to 137 million, representing approximately 6.5% growth at the midpoint. • Expect to invest between $15 and $20 million in capital expenditures in 2026. • Target incremental 5 to 7 million in savings through continued network optimization, facility consolidation, and disciplined cost actions. • Target 10 to 15 million in inventory reduction by year end. • Positioned to exit 2026 below three and a half times leverage and progress toward approximately three times in 2027.

Q: Market growth in 2025, can you guys quantify that and what your expectation is for 2026?

A: Market growth last year was in the 3% to 4% range, and for 2026, plan indicates share gains continue though maybe not at the pace of 2025.

Q: On pricing, 2025 volumes are better than we would have thought. Can you remind us of the timing and frequency of pricing you take in a typical year and how much pricing growth is contemplated in guidance?

A: Typically pricing cadence is middle of year, took 8.75% price in end of Q2, this year expecting modest price increase with partnership with distribution partners.

Q: How you're thinking about elasticity as you annualize the impact of tariffs into the second half?

A: Continuing to see out-the-door sales growth, team focused on surgical pricing actions, sales cadence may shift due to weather.

Q: Any of the four segments more cyclical than others?

A: Euro business and safety business around Stilo brand are more tied to affluent buyers, showing stronger growth.

Q: Share a little more color on the ERP and the WMS system?

A: Most preparation alignment and capital expense for ERP implementation in early 2027, new ERP will allow incorporation of AI for better design and demand visibility.

Q: Any color on operating expense savings?

A: Operating savings will flow through gross margin line, margin expansion on SG&A side through leverage on fixed costs