Holley Q2 2026 Earnings Call: Complete Transcript

Holley (NYSE: HLLY ) reported second-quarter financial results on Wednesday. The transcript from the company's second-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

9%, driven by strong performance in three of its four divisions. The company completed the divestiture of non-core restoration brands, contributing to a GAAP net loss but improving adjusted net income to $24 million, over double from the prior year. Holley reduced leverage to its lowest level in four years, generated strong free cash flow, and repurchased approximately $2 million of common stock, reflecting confidence in long-term value. Significant progress in marketing transformation with reduced reliance on outside agencies and hiring of over 20 marketing professionals has resulted in improved consumer engagement and sales.

The company reaffirmed its full-year guidance, expecting continued growth supported by new national retailer placements, a robust pipeline of product launches, and strategic initiatives. Holley aims to maintain stable organic top-line growth of at least 6%, 40% gross margins, and greater than 20% adjusted EBITDA margins, focusing on sustainable free cash flow generation. Full Transcript OPERATOR Good morning, ladies and gentlemen, and welcome to the conference call to discuss Holley's second quarter 2026 earnings results. At this time, all participants are in listen-only mode.

Later, we will conduct a question-and-answer session, and instructions for asking questions will be provided. At that time, we ask that participants limit themselves to one question and one related follow-up during the Q&A period. Please be advised that reproduction of this call, in whole or in part, is not permitted without written authorization of Holley. And as a reminder, this call is being recorded and will be made available for future playback.

I would now like to introduce your host for today's call, Anthony Rosmus with Investor Relations. Please go ahead. Anthony Rosmus, Investor Relations Good morning and welcome to Holley's second quarter 2026 earnings conference call. On the call with me today are President and Chief Executive Officer Matthew Stevenson and Chief Financial Officer Jesse Weaver.

This webcast and the presentation materials, including non-GAAP reconciliations, are available on our Investor Relations website. Our discussion today includes forward-looking statements that are based off our best view of the world and of our businesses as we see them today and are subject to risks and uncertainties, including the ones described in our SEC filings. This morning we'll review our financial results for the second quarter 2026. At the conclusion of the prepared remarks, we'll open up the line for questions.

With that, I'll turn the call over to our CEO, Matthew Stevenson. Matthew Stevenson, President & Chief Executive Officer Thank you, Anthony, and good morning to everyone joining us today. Before we get into our second quarter results, I'd like to build on the context we provided last quarter. As we discussed on our previous call, the first quarter was impacted by two temporary headwinds, elevated distributor inventories and a slower start to the spring selling season due to unfavorable weather.

We also noted at the time that those headwinds were already beginning to wane, evidenced by strong year-over-year growth in April, and that we expected the general momentum to carry through the rest of the quarter. I am pleased to say that's what happened, and it carried throughout the second quarter as well, resulting in a return to net sales growth. In fact, three of our four divisions delivered double-digit core sales growth year over year. That's a meaningful acceleration from where we began the year and reflects both the underlying strength and breadth of our portfolio as well as the disciplined execution of our strategic priorities.

We also made significant progress on our portfolio rebalancing initiative during the quarter, completing the divestiture of our non-core restoration brands. While the transaction resulted in a GAAP net loss for the quarter, it further simplifies our operation and allows us to focus our resources and capital on the areas of the business with the greatest long-term growth potential. Excluding this one-time impact, the underlying profitability of the business improves substantially, with adjusted net income up year over year.

At the same time, we generated strong free cash flow, reduced leverage to its lowest level in four years, and returned capital to shareholders through share repurchases. We believe this combination of returning to growth, improving profitability, strengthening our balance sheet, and executing our strategic initiatives positions us well as we move into the second half of the year. With that, let's turn to Slide 5 to review the key highlights from the quarter as well as important developments that occurred after quarter end. 2% to 172 million.

9%, with three of our four divisions delivering double-digit core growth. We also saw core growth across 27 brands in both our direct-to-consumer and B2B channels, highlighting the strength and breadth of the portfolio. 5 times. 3 million in cost savings through purchasing, tariffs, and operational improvements.

We also completed a transformation of our marketing organization over the past 120 days. We significantly reduced our reliance on outside agencies, hired more than 20 marketing professionals, and embedded those resources directly within our operating divisions. This brings our teams closer to the enthusiast, enables faster responses to market trends, and strengthens brand activation. While still early, we're already seeing meaningful improvements in consumer engagement, marketing effectiveness, and direct-to-consumer sales.

Given where our shares have been trading, we also opportunistically repurchased approximately 2 million of common stock during the quarter. Although our repurchase window was limited due to the blackout period at the end of Q2, this action reflects our confidence in the long-term value creation opportunity we see in Holley. We also continue to execute on the portfolio rebalancing initiative we introduced last quarter. During the quarter, we completed the divestiture of our non-core restoration brands, including Brothers Trucks and Scott Drake.

We now have just one remaining business to divest from the five businesses identified in the program, and we continue to have strong interest in that from multiple potential buyers. Following the close of the quarter, we made additional progress on our highest capital allocation priority, reducing leverage by making another $15 million voluntary debt repayment. This brings our total voluntary debt reduction to 115 million since September of 2023. Looking ahead, we believe we are well positioned for the second half of the year, supported by new national retailer placements, an accelerating pipeline of product launches, and continued execution of our strategic initiatives.

I'll discuss those opportunities in more detail later in my remarks. Slide 6 provides additional detail on our second quarter financial results, along with several of the key commercial and operational highlights from the quarter. 6%, down 223 basis points year over year. The decline primarily reflects the impact of tariffs.

Compared to the second quarter of last year, free cash flow increased versus the prior year. The improvement reflects continued operational discipline, strong working capital management, and the benefits of refunds related to IEBA tariffs. 6 reported in the prior year period. Even when adjusting for IEVA tariff refunds, we believe adjusted net income more accurately reflects the underlying operating performance and earning power of the business.

Product innovation remained a key driver of our commercial momentum during the quarter. Across our American Performance division, we continued expanding our highly successful engine swap portfolio with new applications for the GM LS and LT platforms while also extending the Cataclean product family into the growing diesel performance market. Within our Safety and Racing division, Simpson introduced new retro-inspired Bandit motorcycle helmets that build on one of the industry's most iconic models while appealing to both on- and off-road enthusiasts.

In our Modern Truck and Off Road division, we launched a new Range RA0110 module for full-size General Motors trucks and SUVs, giving customers enhanced control over cylinder deactivation, auto start-stop functionality, and throttle response. Operational execution also remained a key focus during the quarter. 3 million in savings. These results reflect the continuous improvement culture we have established across the organization and our ongoing focus on improving our cost structure while investing for future growth.

Finally, the examples at the bottom of slide 6 highlight the impact of our newly embedded divisional marketing teams. By placing marketing resources directly within each business, we've moved closer to our enthusiast communities and significantly increased the speed, relevance, and authenticity of our brand engagement. Our teams are creating content that resonates with consumers where they spend their time across enthusiast forums, social media, events, and grassroots communities, and we're also seeing encouraging improvement in engagement and direct-to-consumer performance. Slide 7 highlights the performance of our four operating divisions.

Three of the four divisions delivered double-digit core growth during the quarter, reflecting the strength of our innovation pipeline, disciplined execution, and early benefits of our enhanced brand activation strategy. 1% in the quarter, but as we discussed previously, the business continued to work through elevated channel inventory levels, which we believe have now normalized. In addition, we also intentionally moved out product categories from our Q2 marketing calendar into the second half of the year, creating more challenging year-over-year comparisons. 1% in the second.

With channel inventories now normalized, key product placements at national retailers, and increasing marketing activity, we expect American Performance to continue improving through the balance of the year. 8% growth in the first quarter. The division continues to benefit from strong consumer demand and a highly successful cadence of new product introductions that are gaining meaningful traction across both retail and enthusiast channels. 1%, a significant acceleration from 1% growth in the first quarter.

Earlier supply constraints have been resolved, allowing us to meet consumer demand and capitalize on the continued strength of the European enthusiast vehicle market. The division continues to benefit from a passionate and resilient enthusiast community supported by strong demand across core brands. 2% growth delivered in the first quarter. Growth was driven by a strong cadence of new product introductions, continuing innovation across our Stilo and Simpson brands, and sustained demand associated with the Snell 2025 helmet certification cycle.

We also continue to see strong momentum in the motorcycle safety market where recent product launches are expanding our reach and reinforcing the strength of our portfolio. Overall, these results demonstrate the strength and balance of our portfolio. Three of our four divisions delivered double-digit growth while our largest business continued to improve sequentially as temporary headwinds subsided. More importantly, we believe the underlying drivers of our performance are becoming increasingly durable.

We believe that our divisional operating model—combined with greater decision-making authority, dedicated marketing resources, and a robust innovation pipeline—is enabling our teams to respond faster to market opportunities, strengthening engagement with enthusiasts, and positioning each division for sustainable, long-term growth. Slide 8 outlines our long-term strategic framework, which many of you have seen before. While the framework itself hasn't changed, our execution against it continues to accelerate. It remains the blueprint for how we allocate capital, prioritize investments, and operate the business every day.

The framework is built around eight strategic pillars, beginning with Making Holley a great place to work, Strengthening the Premier Consumer Journey, Becoming a Trailblazing Trusted Partner, Driving Product Innovation and Portfolio Management, Expanding into Global Markets, Pursuing Transformational M&A, Funding the Growth, and ultimately Delivering Results for our Shareholders. The value of the framework is it creates alignment across the organization and ensures every initiative supports a broader strategic objective.

As you already heard throughout this morning's remarks, our teams have remained highly focused on execution, and that discipline is translating into measurable progress across the business. As a reminder, slide nine highlights the key focus areas for 2026 that are embedded in the eight pillars of our plan. We are making progress across each of these priorities, and you'll see that reflected in the detailed initiative tracker on the next slide. Which brings us to slide 10.

The Strategic Initiative Tracker gives you a clear view of our second quarter performance across each pillar of the framework. 5 million in revenue. Our midsize B2B accounts remain balanced and healthy, with a broad number of customers now contributing over 1 million each in the first half. International retailer channel continued to grow, supported by planogram wins, expanded SKU distribution, and stronger online traffic conversion.

1 million in revenue. Our direct-to-consumer channel showed real strength, with Modern Truck and Off Road posting approximately 17% year-over-year growth in June alone, and third-party marketplaces in Q2 grew by more than 25% year over year. 5 million of revenue, once again led by strong performances in Safety and Racing and Modern Truck and Off Road. 6 million in revenue, and our international strategy generated approximately 760,000 of incremental revenue in the quarter through distributor growth and global expansion.

We also saw growth through our OE dealer channel programs with new customer wins and new dealers coming on board. 7 million of revenue, reflecting HRX revenue contribution in the quarter. HRX continues to perform well and is now a meaningful contributor to both growth and earnings. 3 million from operational improvements.

3 million in cost savings this quarter. Disciplined execution across every pillar of the framework. Slide 11 revisits our portfolio rebalancing initiative, which we introduced last quarter and remains an important driver of long-term value creation strategy. The framework begins with actively evaluating our portfolio and divesting brands and businesses that no longer meet our growth, profitability, and strategic criteria.

These businesses often require disproportionate time and capital relative to the value they create. By monetizing these assets, we generate capital that can be redeployed into higher-return opportunities while sharpening our strategic focus. Those actions naturally lead to facility and complexity reduction, which we believe simplify the organization, improve our cost structure, and enhance free cash flow generation. We then plan to redeploy both the capital and resources into higher-growth opportunities through disciplined internal investment and targeted bolt-on acquisitions.

Our acquisition of HRX is an excellent example of the type of business we are looking to add—one with attractive growth prospects, strong margins, solid cash flow generation, and that complements our existing portfolio.