Holley Inc. (HLLY) Q2 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 28, 2026, and the twenty-six weeks ended on that date. Holley Inc. is a designer, marketer, and manufacturer of high-performance automotive aftermarket products. The company operates as a single segment, focusing on performance parts for street, off-road, and competitive vehicles. The reporting period was characterized by a strategic portfolio rebalance, including the acquisition of HRX S.r.l. and the divestiture of three non-core brands (ADS, Speartech, and Drake Brands).
Key Financial Metrics
| Metric (in thousands) | 13 Weeks Ended June 28, 2026 | 26 Weeks Ended June 28, 2026 |
|---|---|---|
| Net Sales | $172,007 | $319,337 |
| Gross Profit | $70,544 | $131,280 |
| Gross Margin | 41.0% | 41.1% |
| Operating Income | $2,765 | $20,273 |
| Net Income (Loss) | $(2,430) | $4,826 |
| Diluted EPS | $(0.02) | $0.04 |
| Operating Cash Flow (26 weeks) | $44,254 | |
| Free Cash Flow (26 weeks) | $34,614 | |
| Cash and Equivalents (End of Period) | $69,020 | |
| Total Debt (Long-term + Current) | $526,813 |
Material Changes vs. Prior Period
- Revenue: Net sales increased 3.2% quarter-over-quarter (QoQ) to $172.0 million, driven by the HRX acquisition and price realization, partially offset by lower volume. Year-to-date (YTD) sales were flat (-0.1%) at $319.3 million.
- Profitability: Operating income decreased 89.9% QoQ to $2.8 million and 56.7% YTD to $20.3 million. This decline was primarily due to a $28.3 million loss on the sale of assets related to the divestitures of ADS, Speartech, and Drake Brands.
- Expenses: Selling, General, and Administrative (SG&A) expenses increased 22.7% QoQ due to higher legal fees (securities class action), insurance costs, and consulting fees related to portfolio rebalancing. Restructuring costs also increased significantly.
- Interest Expense: Net interest expense decreased 38.7% QoQ to $8.2 million, aided by a favorable change in the fair value of the interest rate collar and a lower debt balance.
- Tariff Refunds: The company received approximately $11.1 million in tariff refunds following a U.S. Supreme Court ruling, with $8.9 million recorded as other income.
Guidance, Outlook, and Risks
- Strategic Initiatives: Management is executing a portfolio rebalance to exit non-core, low-profit businesses and reinvest in strategic acquisitions. The company recently acquired HRX S.r.l. to expand its European motorsports presence.
- Liquidity: As of June 28, 2026, the company held $69.0 million in cash and had $97.5 million available under its revolving credit facility. On July 13, 2026 (subsequent event), the company repaid $15.0 million on its term loan.
- Share Repurchases: A $25.0 million share repurchase program was authorized in May 2026. As of June 28, 2026, $23.0 million remained available, with 707,113 shares repurchased during the quarter.
- Risks: Key risks include ongoing geopolitical conflicts, supply chain disruptions, inflationary pressures, and the impact of changing trade policies and tariffs. The company is also managing a putative securities class action lawsuit, though a settlement agreement in principle was reached in April 2026.
- Non-GAAP Measures: Adjusted EBITDA for the quarter was $33.8 million (19.6% margin), and Adjusted Net Income was $24.0 million, excluding the impact of asset sales and fair value adjustments.
Investor Verification Checklist
- Divestiture Impact: Verify the long-term strategic benefit of the $28.3 million loss on asset sales and the integration progress of the HRX acquisition.
- Tariff Exposure: Monitor the sustainability of the $11.1 million tariff refund and the company's ability to mitigate future tariff risks through supply chain diversification.
- Legal Settlement: Track the finalization of the securities class action settlement and confirm the extent of insurance coverage for the settlement amount.
- Debt Covenants: Confirm continued compliance with the Total Leverage Ratio covenant (currently 5.00:1.00) and the minimum liquidity test.
- Margin Pressure: Assess whether the decline in gross margin (41.0% vs 41.7% prior year) is a temporary result of volume deleverage or a structural shift due to tariffs and product mix.