Holley (NYSE:HLLY) executives highlighted a return to full-year sales growth and improved profitability in the company’s fourth-quarter and full-year 2025 earnings call, pointing to four consecutive quarters of core growth, expanding margins, positive free cash flow, and lower leverage as key milestones. Management also provided 2026 guidance that calls for continued growth and incremental cost savings, while acknowledging an uneven consumer backdrop and early-year weather disruptions.
Fourth-quarter results driven by broad-based core growth
Holley reported fourth-quarter net sales of $155.4 million, up 10.9% year over year, with core net sales growth of 13.5%—the company’s strongest core growth performance of 2025. CEO Matthew Stevenson said the quarter saw growth across both B2B and direct-to-consumer channels, reflecting the company’s omni-channel strategy and relationships with distributors, e-tailers, marketplaces, installers, and Holley’s own digital ecosystem.
The company posted net income of $6.3 million for the quarter, which CFO Jesse Weaver said improved by $44.1 million versus the prior year period, when Holley recorded approximately $49 million of combined goodwill and trademark impairment. Adjusted net income was $4.6 million, down from $12.6 million in the prior-year quarter.
Weaver noted that quarter-over-quarter comparisons were also affected by calendar timing, estimating that the way the Christmas and New Year holidays fell provided 2 to 3 percentage points of benefit from incremental in-office days among major partners.
Full-year 2025: first reported sales growth since 2021 and EBITDA margin above 20%
For fiscal 2025, Holley reported net sales of $613.5 million, up 1.9% from 2024. Excluding $26.8 million of prior-year sales related to divestitures and strategic product rationalization, the company reported core growth of 6.6%, driven by 3.8% volume growth and 2.8% pricing.
Holley’s gross margin for the year was 43.4%, an expansion of 378 basis points year over year. Management cited pricing benefits and operational progress, including facility-level efficiencies, lower excess inventory adjustments, and improved product quality reflected in reduced warranty claims. Weaver also pointed to the absence of an $8.2 million strategic product rationalization charge recorded in 2024 that negatively impacted the prior-year gross margin and EBITDA.
Adjusted EBITDA for the year totaled $124 million, up $13.5 million from 2024, and adjusted EBITDA margin rose to 20.2%, which management said marked the first time since 2021 the company achieved adjusted EBITDA margins above 20%.
Division performance and product initiatives
Stevenson said fourth-quarter growth was supported by all four divisions:
- American Performance: up 10% year over year.
- Truck & Off-Road: up 5.4%, led by Baer Brakes and new truck-focused offerings.
- Euro & Import: up 21.5%.
- Safety & Racing: up 13.3%, following earlier headwinds tied to the October transition to Snell 2025 motorsport helmet certification.
Management emphasized new product activity across the portfolio, including multiple Snell 2025 certified motorsports helmets (including the Stilo ST6), new APR power packages for Volkswagen, Audi, and Porsche platforms, and a plug-and-play Edge model for late-model GM trucks and SUVs. Stevenson said new product launches contributed approximately $23 million in new product sales for the full year.
In Q&A, executives also discussed performance differences within the portfolio tied to what Weaver called a “K-shaped economy.” Stevenson said Euro buyers tend to be more affluent and less sensitive, and he also cited strength in ultra-premium Stilo helmets within the safety business.
On performance chemicals, Stevenson said the category is included within American Performance under the accessories group and described chemicals as “great margin products” for the company. He cited the recently introduced NOS Octane Booster gaining placement at national retailers and said Holley expects to introduce a new car care line in the back half of 2026, with an eventual goal of broader shelf placement along with third-party marketplaces and Holley’s own e-commerce platform.
Cash flow, cost actions, and balance sheet progress
Holley generated free cash flow of $3.9 million in the fourth quarter and $34.2 million for the year, marking its third consecutive year of positive free cash flow, according to management. Stevenson said the company also completed approximately $20 million in combined purchasing savings, tariff mitigation, and operational improvements during 2025.
On the balance sheet, Holley prepaid an additional $10 million of debt in the fourth quarter. Weaver said total debt prepayments were $25 million in 2025 and exceeded $100 million since September 2023. Covenant net leverage ended 2025 at 3.75x, down from 3.91x in the third quarter and 4.17x a year ago; Weaver said leverage has declined from a peak of 5.67x in the first quarter of 2023. Holley ended the quarter with $37 million in cash and no outstanding balance on its revolver.
Weaver also discussed working capital progress, stating that excluding tariff impacts on product costs, the company closed the year with a $9 million improvement, including $4.5 million in the fourth quarter. Inventory levels did not fully reach original reduction targets, which management attributed to deliberate operational decisions aimed at improving supply chain efficiency.
2026 outlook: growth, cost savings, and elevated capex for ERP and other initiatives
For 2026, management guided to revenue of $625 million to $655 million and adjusted EBITDA of $127 million to $137 million. Weaver said the outlook reflects an uneven consumer environment, with middle and lower income households pressured by elevated prices and tighter credit, while higher-income consumers remain willing to spend. He also noted that significant winter weather events affected consumer spending early in the year.
Holley expects 2026 capital expenditures of $15 million to $20 million, above its historical range. Weaver said the increase is tied to investments in facility consolidations, ERP implementation to improve operational scalability, and incremental product development supporting the next generation EFI platform. In Q&A, the company said 2026 is largely a preparation year for ERP and warehouse management systems, with go-live expected in early 2027. Management also said a more modern ERP will allow additional API plug-ins, including AI-related tools.
Weaver outlined 2026 operational targets that include $5 million to $7 million of incremental savings from network optimization, facility consolidation, and disciplined cost actions, as well as $10 million to $15 million of inventory reduction by year-end. The company said it expects to exit 2026 below 3.5x leverage, with a longer-term objective of approximately 3x in 2027.
About Holley (NYSE:HLLY)
Holley Inc is a designer, manufacturer and marketer of high‐performance automotive products for the enthusiast market. Through its portfolio of well‐known brands, the company develops fuel delivery systems, intake manifolds, ignition components, nitrous oxide systems, digital controls and other engine‐dress accessories tailored to both street and competition applications. Holley’s products are sold through a network of domestic and international distributors, retailers and directly to professional race teams and hobbyists.
The company’s product offerings span mechanical and electronic fuel injection, carburetion, engine management, add‐on power systems and calibration tools.
