Holley (HLLY) Q1 2026 earnings summary

Executive summary

• Net sales for Q1 2026 were $147.3 million, down 3.7% year-over-year, primarily due to elevated distributor inventories and severe winter weather, but net income rose to $7.3 million from $2.8 million, driven by improved pricing and lower interest expense.

• Adjusted EBITDA was flat year-over-year at $27.3 million, with margin expanding 71 basis points to 18.5%, reflecting disciplined execution and cost control.

• Free cash flow improved by $4.5 million year-over-year but remained negative at -$6.3 million, reflecting operational discipline.

• Strategic initiatives advanced, including portfolio rebalancing, the acquisition of HRX, and the divestiture of Arizona Desert Shocks.

• Growth was reported in three of four divisions and across 12 brands in both DTC and B2B channels, with momentum improving as weather normalized and inventories stabilized.

Financial highlights

• Net sales were $147.3 million, down 3.7% compared to Q1 2025, mainly due to inventory and weather impacts.

• Adjusted EBITDA was $27.3 million, matching the prior year, with margin expanding to 18.5% from 17.8%.

• Net income rose to $7.3 million from $2.8 million in Q1 2025; adjusted net income was $5.7 million versus $2.6 million.

• Gross profit was $60.7 million (41.2% margin), down from $64.1 million (41.9%) year-over-year.

• Free cash flow improved to $(6.3) million from $(10.8) million year-over-year.

Outlook and guidance

• Full-year 2026 net sales guidance updated to $610–$640 million, reflecting a $15 million reduction from portfolio optimization.

• Adjusted EBITDA guidance unchanged at $127–$137 million; portfolio optimization expected to be accretive to EBITDA.

• Q2 is off to a strong start with mid-single-digit growth in April and normalized inventory levels.

• Portfolio optimization expected to generate over $15 million in incremental cash and improve working capital efficiency.

• Long-term targets reaffirmed: at least 6% organic top-line growth, 40% gross margins, and >20% Adjusted EBITDA margin.