Holley . Wt Stock Earnings Reports

Holley reported Q1 2026 net sales of $147.3M, down 3.7% YoY, driven by elevated distributor inventory and severe winter weather that shifted some demand out of the quarter. Adjusted EBITDA held essentially flat at $27.3M (18.5% margin, +71 bps YoY) and net income improved to $7.3M. Free cash flow was negative $6.3M but improved ~$4.5M YoY; the company expects material FCF improvement later in the year as inventory normalizes. Operational execution delivered $6.5M of cost savings in the quarter (purchasing, tariff mitigation and operational improvements). Three of four divisions grew (Truck & Off-Road +3.8%, Euro & Import +1%, Safety & Racing +10.2%; American Performance declined ~9.7% but management attributes that to weather and partner inventory concentration). Strategic actions: closed HRX acquisition (Europe-focused premium racing apparel) and launched a portfolio rebalancing and site/brand optimization program that targets >$15M of one-time net cash proceeds, 75–150 bps of adjusted EBITDA margin expansion, ~0.15x leverage improvement and ~5% improvement in inventory turns. Management reiterated 2026 adjusted EBITDA guidance unchanged at $127M–$137M and updated full-year net sales to $610M–$640M to reflect portfolio optimization (~$15M revenue net reduction). Leverage improved to 3.84x net (down 0.48x YoY) with a year-end target below 3.5x. Early Q2 trends (mid-single-digit growth in April) and normalized channel inventories are encouraging. The company plans 5–10 bolt-on acquisitions over 24 months focused on founder-led, high-margin, double-digit growth businesses.