HLLY - Earnings call transcript Q4 2021

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Operator

Greetings. Welcome to the Holley Fourth Quarter and Full Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. is conference this note being recorded. Please now Ross Collins, will turn IR. the host, your to over Managing conference I Director Alpha of Thank you.

may You begin.

Ross Collins

the Good you today. Thank everyone. time taking Alex. us to you, join morning, for Thank

the Officer. the we at Officer; Bardos, for Vice Holley; Crawford, Executive call President and On Tomlinson, Corporate will Development Nimmagadda, Marketing Officer; Dominic with Sean are Chief me Tom After call and remarks, Chief Vinny of Financial open their Executive prepared today New questions. Chief Ventures

Now reference Private Safe call and company's risks provisions Securities In operating statements significant Harbor Litigation certain beyond future are control. financial This uncertainties the to that and contain company. I many XXXX. risks performance the cases, will including the the under and are subject these Reform the Act may uncertainties, forward-looking of of

a S-X in that statements future. only will Exchange this call the call time. Investors in not in reflected the any this assume correct, recent could materially expectations that as its undertakes Important that in cause discussed. forward-looking later should the are statements those any assurance information at filings risk Holley to to XX-Q, update materially reflected statements from will actual the or is of information to remain contained with from and and believes company's of included statements Although the reasonable, no the and in may differ such accurate factors differ The no Securities S-X can actual forward-looking results forward-looking prove company give expectations discussed Commission. expectations. it results in are the obligation operative date and its be relevant

Executive is Tom U.S. this of the posted measures. on call to Investor which discussing Tomlinson, Web will over Chief like we items in Relations Tom? included our to time, press today's Officer. to are certain be Additionally, release, I'd Holley's site. turn The GAAP At also financial reconciliation non-GAAP these

Tom Tomlinson

XXXX Good continued fourth Thank consumer joining milestone capping and thanks our today. demand Ross. results a business. demonstrate everyone morning and growth, for us year strong off sales for year Holley's you, full and quarter robust

highlighted with XX% growth. net our organic by fourth acquisitions As from X, sales XX% in XX% quarter, the Slide on grew

the sales XX% growth. XX% grew net full For acquisitions year, with XX%, from by organic

chain supply consumer been fully While we've performed our able and growth. limited our to meaningful capture challenges ability satisfy to well demand, team

inflationary talk the We allowed executed offset gross price increase the presentation. which in also us maintain during profit a about cost later fourth and will Dominic on which quarter, to solid pressures helped margins,

developing all Looking continue XXXX, and relationships. focus forward with and it turn to Holley's we'll to consumer over on touch enthusiast to engagement. Sean on important Sean? now strong to deepen broaden to those engaging innovative our I'll new consumers products

Sean Crawford

consumers, on to digitally at directly continues and building Tom. focus Thanks, with company in-person our Holley both our relationships owned events.

marketing, efforts was driven digital marketing, the Holley's DTC expand revenues, new media capabilities drive event our were in continue Our to by DTC team's fourth results. quarter expansions content and evidenced integrations. to by sales significantly and brand quarter performance fourth strong social up incremental as

sales represented sales XX% were These results. sales, total up XX% XX% of year XXXX to compared full from $XXX in the million For XXXX up sales DTC $XX roughly DTC XXXX. XXXX, total or million, of

our we purchase what preferences. Our continue sales customers as with to is do, align core enthusiast DTC strategy our we channels to directly

opportunity key and be are our to about with the that consumer act grow our expect result, resonating more to As also engagement as continue we strategy. pillar business. understand learn self-funded above enthusiast to an community. at the DTC a overall a the Holley-owned These customers our of of events truly events or would sales rate invaluable products

we continue XXXX and with of as we're and scalable individuals. We innovate five Our events product are offerings. our consumer attendance events to XX,XXX event total hosted in to grow a calendar, excited our total expand

X, As an rapidly. attendance Holley since seen outlined on the XXXX, is average XX%, we've Slide community annual growing proving growth that of

the excited the inaugural experience attracted Holley we having Tesla. were very launch vehicles. Holly rather, The experience with Ford manufacturers, dedicated High well to event Voltage high-performance TV such some as as quarter, consumer and the and enthusiasts fun electric fourth During our EV many as to event or of influencers, leading

continue and to invest leverage content Finally, in we marketing.

strong traffic allows their our and inspire on truly us educational engage, driving entertainment social incremental while for Holley. media to web sales our consumers content, and Our coupled and with support journey, presence, also

example, Life more views continues prior strong traffic year. digital very growth, For publication own than double the page experience to Holley's Motor with

recent Importantly, the With that, I'll as M&A well now is indicating as unpaid great Holley our coming growth on large online well searches for research majority consumers traffic, web are discuss as it as content. to Holley's from organic their to direct activity. finding returning Vinny of over that this turn

Vinny Nimmagadda

the good on Thank everyone call. and Sean, to you, morning

on closed Racing consumers range several strategic, performance and highlighted items, capabilities, Brothers which enthusiast broader a us in are powertrain-agnostic allow highly suspension, acquisitions separate during going we As to strengthening four product product Rocket our Baer Slide Arizona categories, appearance braking expand the including with such forward. These off-road on further vehicle and quarter, products Brakes, Shocks, fourth wheels. X, these acquisitions Wheels, as our Trucks will platforms. Ultimately, of of brands set Desert across systems, connect and offering

new hand the addressable pipeline the now company. acquisition communicated a like to have who and will of we results I'd call to disciplined we previously, greater the remain in team financial have of Holley will discuss our for of large to and goal markets importance evaluate. Dominic over to Dominic? robust detail. our ultimate with strategic opportunities As unlocking expanding

Dominic Bardos

million morning's of year Thank and in $XXX.X which Vinny, cover quarter full call. of you $XX.X sales net joining an of Thanks, this fourth XX.X% the acquisitions fourth being the with highlighted XX growth I'll in XXXX. results, nature. XX.X for good now year-over-year slides The accounted XX. growth, and sales through fourth the organic us XX.X from million of Holley delivered XX our on morning, in million quarter, on the increase XXXX for quarter or of million balance are million everyone.

increased volume SG&A million the XX.X% organic. XXXX. in increase of to for and of mix. margin the quarter. selling, growth, million sales $X.X from general due administrative was year increase $XX.X leverage million product acquisitions and in responsible in XX.X expenses to the from XX.X% was the margin Incremental The fourth higher acquisitions last sales recent the of be from XX.X% quarter. Total increased was the Gross quarter increased XX.X% to XX.X% can pricing, and So in gross attributed to fourth

sales Additional company in was impacted and due increase to in higher in expenses, include outbound by value warrants professional income equity accounting for sponsor increase cost drivers charges an and reflect earn-out costs Net the the compensation, higher shipping of to an increase volume fees. the public of fourth XXXX and quarter shares.

are in of on of As than November, a reminder, increased items quarter in quarter These those are with income in non-cash reflect in fourth the our associated a required the that which more by the income instruments. to these credit was large debt. early offset million growth income loss operating items recorded Net in liability EBITDA extinguishment the XXXX. in refinancing was facility resulted impacted the fourth million which in Adjusted XXXX. quarter to and same fourth result, of up from to $XX.X quarter quarter, XX.X of in the $X in compares in as $X the of $XX million XXXX. we net million. net income loss to X a a Adjusted the net million million, This the compares increased also

Holley million net from with XXX.X results. Now full balance sales million XX.X% a that delivered growth Net increase organic let's from turn X XXX.X of million, sales XXXX drove an XX.X of acquisitions of million from sales $XXX.X year growth. to comparable XXXX. or of

$XX.X year. Total from from was organic. million was and Incremental XX.X% expenses general growth to XX.X of So, in the year a Gross increased to for acquisitions effectively goods increase. SG&A supply year XX.X% XXXX. and prices in sold total acquisitions was last We recent selling, XXXX, of offset of the cost and pressure. XXX.X the administrative slightly margin sales the chain million during for XX.X% from net to managed of XX.X% increased responsible XX.X% million

included charge and year was full professional related and growth, and in to in quarters, share the fees higher early in the by DTC increase for third shipping earn-out quarter fees impacted accounting the extinguishment volume fourth combination the income in increased paid costs sales debt outbound for Additional the and quarter, Net business first of also the warrants in cost acquisition and of increased earn-out QX. drivers the the charges loss equity compensation. the and third to related

was up net Adjusted to loss a million from XXX.X contains to we $XX.X XXXX. XXXX for income to XXX.X net Slide I a $XX.X As the net million want net quarterly the in to the items our XX take sales compared for EBITDA of moment aforementioned Adjusted in million of for removed. compared are quarterly cadence result, the touch to million year increased when year XX.X of on recorded XXXX. a XXXX. year, the million sales. from income

outlined XXXX. due return half are In and XX. we a to of the sales our capacity in being are organic in to These the expect reseller be to acquisitions growth previously, always annual of that full facility. in available provide impacted acquisitions sales and we fluctuations new have I'll year, the due potential our the are in the normal XXXX over now quarter ranges that to ranges, only. exploring largely XX% credit we pandemic of sales XXXX, quarter new stated our strategic percentages is first seasonality a Slide we've guidance, No quarterly saw we As realized buying in to projected acquisitions the on pattern although typical more COVID-XX unusual saw include with year year, sales XXXX date these XXXX in on second the largest completed growth have which patterns. we year. our The in

EBITDA projecting $XXX in of to $XXX and $XXX the year range full For to million are a XXXX, net range the million sales million. million $XXX of we adjusted in

purposes, also modeling guidance amortization for For and providing interest. and depreciation we're CapEx,

million concludes results $XX $XX million between We and $XX expense now and a $XX our $XX depreciation amortization $XX of range million. include remarks. to of That expect XXXX million capital and million million, prepared expenditures in to interest to

turn open So the to to questions. Ross? I'd up back over to for call the call like Ross

Ross Collins

Absolutely, Dominic.

we one please line related needed. follow is to with yourself As one our limit ask the questions open up from Alex, please a participants. question you reminder, that for

Operator

we will be this question-and-answer Thank [Operator conducting a At you. Instructions]. time, session.

with James. question line Altobello your first question. from Please proceed Raymond Joe of Our the with comes

Joseph Altobello

Hi, Thanks. guys. Good morning.

of their four guess on I first, in negligible assume a I that did to quarter. fairly the terms and contribution So the you questions the were few that the correct? sales in quarter Is EBITDA. tuck-ins

Dominic Bardos

Joe, late Yes, they timing the quarter. those, this Dominic. is of were in the

So immaterial. it was

Joseph Altobello

Okay, great.

versus fairly what look I smaller on beat And you your obviously you guide, you I in sales the amount. and the the a but guess the if on sizably EBITDA OpEx front? side? at quarter guide the much positively surprised sales So by What your implied sales negatively guide EBITDA surprised

Dominic Bardos

Yes, challenges year strong so into the ability to us basically the as And knew it. the going very into wildcard was big of had that supply the entered our couple overcome chain for a to things. we One, we consumer demand. meet half, we second

had defer recall, our that on already the If in quarter. $X QX, we of side in the did assist which us guidance. into contemplated been million sales did But out QX you

Joseph Altobello

Right.

Dominic Bardos

guidance the some with from the perspective, fourth the of right on been I in did It we surprised. we think side, forma word, SG&A released pro want on has fees think knew of did added on another So expenses in were surprise basis, some know basis EBITDA. just the as some but robust necessarily and were acquisitions encouraged the past with $X work another of to standpoint. on we to that the as did without in the forma a from guidance We coming. We or we've higher. we the if consumer guess, a regards is don't see With were didn't pleasantly, EBITDA. pleasantly pro raising would $XX million quarter, in increase refinancing continuing those a And demand. some million entire and in associated sales past, I raise Those to have sales we $X the very the the sales million professional I have the an public discussed in time. our the of I company

the So we range. were above guidance

So we maintaining comfortable guide given. we felt very the that had

Joseph Altobello

sort of flattish you're implies perspective? And this year. Can Okay, headwinds guidance about what your maybe tailwind from to of talk 'XX, that's and EBITDA helpful. turning you margins that expecting sort

Dominic Bardos

Yes.

things public you we company, have first talked expenses. to not a we be the year, of know before. just have those if have those expenses about of When absorbed. our been still we And company that lapped And all out. adjustment as privately would the half So recall, held, an public just

So it still we're drive to we want make for to with the have on first we balancing of those engagement consumer year, margin to from well. continue half an initiatives overcome. DTC There's front. the But just standpoint, marketing that to we're overall investments the that as some undergoing expenses

feel that spot, given sweet believe that. and we to XX% we've We can is And the love guide we that to so like manage we great. XX%

Joseph Altobello

guys. Good luck. you, Okay. Thank

Dominic Bardos

you. Thank

Operator

with proceed from question your of comes line Truist question. next Mike Our Swartz Please with Securities. the

Mike Swartz

like the quarter, But thinking four guide, are actually of I impact an XXXX embedding what about guess acquisitions, sound on the Good in I the those in from doesn't guess the Hi. everyone. it fourth acquisitions the estimates quarter. your much acquisitions? from you morning,

Dominic Bardos

This projected Mike. is in deck. Thanks, of the an XXXX. that's are of Dominic, $XX estimated in believe slide million again. I also that And those impact We've

Mike Swartz

And on an basis? EBITDA

Dominic Bardos

I EBITDA, things We that with is disclosed we're we way look would that the we say the best looking at at, what haven't on achieve. but par

Mike Swartz

said just had in think And a you Okay, and then you quarter, got margin. revenue effect some on with increases I price -- the positive the you. fourth which took

further or pricing across about into And on to actions price should Just say go should actions to or expect effect that? early the those in I then, go talk we increases maybe off-cycle into pricing items? effect select Were business broadly 'XX?

Tom Tomlinson

Those But get demonstrated were to cost XXXX, we've portfolio. demand, increase to forward broadly off-cycle Then ability of when we do into one that. applied obviously year. done increases product the in price terms We've generally a going the pressures increases. historically

just year. work our way evaluate kind continue will environment the those make of cost to we So through and the as we decisions

Mike Swartz

Okay, great. should in how we just a operating question, about 'XX And cost relative and about help margins the margin for maybe Dominic, percentage think then maybe us as meaning of just moving sales? parts to a think final 'XX, gross

Dominic Bardos

we're do that overcoming We've before. talked this about increased We Yes. know some SG&A expenses.

around what we're hoping But to XX% the margin anything, always we're target continue drive after. expansion. if profit So, to is EBITDA target gross is the for margin really we're what after,

bit side we we to to us, for So have that of SG&A. out do the know increased overcome margin gross little get some profit a more

that's So you. the can I best give guide

Mike Swartz

Okay, great. Thanks.

Dominic Bardos

You got it. Thanks so much.

Operator

with line Our next Please Ryan of question. with your question Sundby proceed comes Blair. from the William

Ryan Sundby

Thanks Yes, hi. Good my taking morning, questions. guys. for

a bit I'm in higher per of motivated financially this at and seeing we've Over festival or shared the lot. quite enthusiast your about attendance whether more the And metrics your past be repeat consumer rates a spend results. guess year, through base gotten flip to the consumer I Sean a the strong consumer. that average that going hear around little we're ask to about and

when I enthusiast you at like we're in really more I there's about we've you here pricing collector XX% record restoring now? had what you for of auction think average impressive car this. far of some as strong a built kind where I this when passionate trades kind that's about in upgrading see of the impact With base cases. guess some reward financial economic XXXX, these top volumes, back of your Can the look sell-through, performance on right talk you shows so guess incentive seen of in we've vehicles and seeing historically, up seen like

Tom Tomlinson

that the gets This that. it's and say market we're automobile, think see like I like blood. we that's benefit enthusiast. a business. bidding the prices, and activity is excitement lifestyle, company become is contagious more in investors they've there the an is that in we around what But these like feel into we from of most I moving up financial would benefits our your poised that And our feel to Well, trends general

Ryan Sundby

assuming would sales Yes, I'm think less much -- XX% XX% for up there. DTC sales maybe guess were full than penetration the to guess the year. businesses up strong should follow motivator a I the probably why DTC I have that the Then from makes be for don't acquired just I DTC why year? be was yet. But I for year, the sense. up, contribution it's as guess it

Tom Tomlinson

portion, of when Well, for of the XX% large at it. drove it a you look was with from of organic my that's XX% full acquisitions a view growth. balance year, being Basically, that acquisitions. obviously, that The

about I lower should XX% the and I DTC by think organic you but growth. to compare penetration, assumption businesses -- comparing having XX% acquired think your growth think and large right is DTC I the the

Ryan Sundby

makes you, guys. Yes, sense. Thank

Tom Tomlinson

Thank you.

Operator

comes proceed question D.A. with Baker the with Please line your from next Our Davidson. Michael question. of

Jeff Walter

have We customers about maintain And the been also Hi, update then talk just kind guys. just an on in taken maybe on you about trends Jeff you could get Walter past, some I program of around customers, guys talked then that kind old wondering that new some you're any to if loyalty the versus new the Baker This about initiatives the and today. for there? if Michael have of Thanks. help is talk we in other initiatives customers? and the seeing or guys were of know can of

Tom Tomlinson

this take do Sean, you one? to want

Sean Crawford

are so lifetime customer Sure, to is you I continue retention going digital be further our acquisition to value. customer our we new enhancing on that to increase and strong. that continues focus enable tell What can capabilities

optimistic we're about can So capabilities, to a to presentation, now it us focus as that, there. is I communicating the what as scaling and big consumer and do relates the in digital right mentioned of we

Operator

you. Thank

Benchmark. question. line from of proceed Please question John with Our next your Lawrence with the comes

John Lawrence

morning, Congratulations. Good guys.

Tom Tomlinson

Thanks, John.

John Lawrence

looking the maybe we some and getting as acquisitions categories bit just And about of just new second half sort little plan about then in the you secondly, talk of and as been these integration at and as some the of third of are where there Tom, a that? [ph] seen, profitability into has out of the far where a these bit sit and dive change little components quarter for? over the year, a you've EM that as would you far fourth look different AEM any AEM of the as Thanks. people

Tom Tomlinson

strength electronic the continued business. tuning, year, second fuel you When our of electronic categories injection, like fuel in look injection, also half John. in Sure, like saw leading our at some we of the exhaust

So there was were we Those all investing growing. do to second of there us. still nothing half in and lot really you -- we've the surprised the progress made that categories context of When year, there. been of the in during work a integration,

products half the with conversions AEM. exciting that progress vehicles, making We're that You so on facilitate the focused the the with very together. of closely working We folded are be teams did second We've electronic with EV mentioned classic providing group. more year. Simpson to side us those excited innovation on in very, integration that. got the to on very in They be start

reminder, a well. a ended was very that there up business so as And very Just there, we one lightly. year tread earn-out and performing

of we process in a now looking that that So of integrated. in did we've we that as well. we're host forward are And half the integrating the other getting to acquisitions got

John Lawrence

thanks. Great,

end lot You talked made a we you to Did extremely as did through that in down in supply sort of come changes Just of well. that -- chain backlog? of against year? move about number the navigated about one What learn -- we What the the execute obviously more. backlog that. everything

Tom Tomlinson

despite effort we only fully think team, call is, of would And The came on the the minimally. weren't satisfy a way down demand. I part to the yeoman's that able interpret what the I backlog to

backlog very a have there. still we out So robust

John Lawrence

for sponsorships? did more ad Right. that I'm see even Sean, question. it Is correct? sorry, other I those you programs? support some the events is last of just marketing on you've the for arranged that So

Sean Crawford

we related if programs sponsored have asking you funding Are that them? events to Sorry. our help

John Lawrence

Yes.

Sean Crawford

in only but of owner a as that that brand the do way Holley the premier we event. and the retains Yes,

event on on X see limited, protected series. Slide of bring But asset presenting just as sure recently Motors can that we their that sponsor a integration did eBay make as to you a event. and Holley we for is communicated want the is as where So brand our so

John Lawrence

luck. Good Great. Thanks, guys. Congrats.

Tom Tomlinson

Thanks, John.

Sean Crawford

Thank you.

Dominic Bardos

John. you, Thank

Operator

today's at [Operator Instructions]. of gentlemen, end Ladies and your time. and participation, your you wonderful the have reached the Thank lines and may conference a day. you have session. we question-and-answer disconnect this concludes for This

Tom Tomlinson

Thanks, everybody.

Dominic Bardos

Thank you.

Holley (HLLY) 3 Mar 222021 Q4 Earnings call transcript