Holley (HLLY) Q2 Revenue Tops Estimates

Holley (HLLY 31.37%), a major supplier of branded performance automotive products, reported its latest quarterly results on August 6, 2025. The highlight of the release was stronger-than-expected GAAP revenue, which hit $166.7 million, beating analyst estimates by $4.0 million. Core business sales rose 3.9%, showing resilient momentum in core business after adjustments for business exits and discontinued items. Profitability remained under pressure, with margins slipping compared to Q2 2024. Overall, the quarter demonstrated strength in channels and innovation, but bottom-line growth lagged estimates as input cost and interest expenses weighed.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Snapshot and Current Focus

Holley designs, manufactures, and markets high-performance automotive aftermarket products, serving car and truck enthusiasts through a portfolio of more than 70 brands. Its core categories include engine management, exhaust, safety gear, and fuel delivery, touching markets from “street muscle” to off-road and racing segments.

Recently, Holley has homed in on channel expansion, digital sales, and direct-to-consumer (DTC) connections. Its main priorities are strengthening its multi-brand portfolio, boosting product innovation, and managing omni-channel distribution. Events, digital marketing, and a focus on B2B relationships have become key success factors. The company’s strategic approach to managing tariffs, cost control, and product mix remains central amid industry volatility.

Quarterly Performance and Developments

Quarterly GAAP revenue of $166.7 million outperformed Wall Street forecasts, reaching $166.7 million (GAAP) against the expected $162.7 million, even as headline sales (GAAP) fell 1.7% year-over-year. The core business grew 3.9%, once the impact of divestitures and discontinued stock-keeping units (SKUs) was removed.

Holley’s channels stood out this quarter. B2B channel sales advanced 6.5% year over year, DTC orders grew over 8.6%. Notably, third-party marketplace activity—including on Amazon and eBay—jumped more than 28%. The company attributed roughly $8 million in new product revenue to new product launches, lifting year-to-date contributions from new product innovation and strategic pricing to $18.7 million as of Q2 2025. These efforts underline management's focus on both launching new innovations and responding to industry pricing changes.

Profitability, however, fell under pressure. Adjusted EBITDA, a metric that gives a view of operating profits after removing certain non-recurring items, dropped to $36.4 million (down from $38.3 million in the same period last year). This margin slip, from 22.6% to 21.9%, reflected cost headwinds. Net income margin (GAAP) declined to 6.5%, and bottom-line net income (GAAP) fell sharply to $10.9 million.

On the cash front, Holley produced record free cash flow (non-GAAP) at $35.7 million, a 46.2% increase over Q2 2024’s $24.4 million. This momentum was largely due to working capital changes—especially the reversal of timing effects related to accounts receivable that built up in Q1 2025. Holley’s inventory (GAAP) fell to $180.8 million as of June 29, 2025 from $192.5 million at the end of December 2024, signaling progress on cost and efficiency programs. Cash and equivalents stood at $63.8 million.

The quarter also saw Holley pressing forward on flagship brand engagement and broadening product offerings. The company's events portfolio, which is a linchpin of its brand engagement, continued to grow in following and importance, though figures for the period were not detailed. In R&D, spending rose 18.0% to $5.1 million, as Holley kept up the pace of new launches—ranging from engine management solutions like Holley EFI (electronic fuel injection controllers) to new lines from brands such as Dinan (BMW performance products) and Simpson (safety helmets and racing seats).

Pricing actions in response to tariffs took center stage this spring, with an average price increase of 8.75% effective June 9, 2025. Management has indicated that, thanks to mitigation steps, they forecast very limited impact from these tariffs for the remainder of FY2025. Cost-cutting and direct action on supply chain, logistics, and SKU management have also become prominent parts of Holley’s approach. The company reduced selling, general, and administrative (SG&A) expenses by $1.6 million year over year (GAAP), and operating costs decreased slightly overall, reflecting a sharp eye on expense management.

There were no new or adjusted dividends announced as Holley does not currently pay a dividend.

Looking Ahead: Guidance and Priorities

Management updated its fiscal 2025 outlook to reflect current tariff expectations. For FY2025, Holley projects revenue between $580 and $595 million. This guides to 0.8% to 3.4% growth after normalizing for recent portfolio changes. Adjusted EBITDA is expected to range from $116 to $127 million, with capital expenditures forecast between $10 and $14 million for the full year. Operating assumptions now include tariff-related impacts, which distinguishes this outlook from prior guidance issued in the spring.

Guidance signals that the company expects low single-digit growth in its core segments, underpinned by channel momentum, continued new product introductions, and proactive pricing strategy. Investors should watch operating leverage, margin progress, and overall consumer demand in the second half of the year, especially as shifts in working capital timing and interest rates could sway free cash flow outcomes. Persistent focus on inventory, channel expansion, and mitigation of tariff and input cost risks will remain key themes in the coming quarters.

HLLY does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.