HLLY Holley Inc

Delivered third quarter financial results within guidance Moody’s Ratings Upgrades Holley’s CFR to B2 Targeted efforts and marketing calendar event support normalizing distribution partner inventory levels

Holley Performance Brands (NYSE: HLLY), a leader in automotive aftermarket performance solutions, today announced financial results for its third quarter ended September 29, 2024.

Third Quarter Highlights vs. Prior Year Period

• Net Sales decreased (14.4%) to $134.0 million compared to $156.5 million last year
• Net Loss was $(6.3) million, or $(0.05) per diluted share, compared to a Net Income of $0.8 million, or $0.01 per diluted share, last year
• Net Cash Used in Operating Activities was $(1.7) million compared to Net Cash Provided by Operating Activities of $22.5 million last year
• Adjusted Net Loss1 was $(0.5) million compared to Adjusted Net Income of $3.5 million last year
• Adjusted EBITDA1 was $22.1 million compared to $29.7 million last year
• Free Cash Flow1 was $(2.1) million compared to $21.7 million last year

1See “Use and Reconciliation of Non-GAAP Financial Measures” below.

“We continued our progress in our organizational transformation through the third quarter and are encouraged by the immediate impact that our new team members have made in their short time here. Our organization now operates with unprecedented capabilities and professionalism, as demonstrated by the significant advancements we've made across our business operations, even in a challenging macroeconomic environment. Of note, digital modernization and customer service optimization, B2B sales capabilities, new and targeted product launches and revamped pricing strategy have all been upgraded within the last year and well positioned to drive our organic growth engine,” said Matthew Stevenson, President and CEO of Holley.

Stevenson commented, "We are pleased to report that our well-executed marketing calendar helped drive a 16% year-over-year increase in our direct-to-consumer channel and a 10% median lift in B2B out-the-door sales during the event windows. Our marketing events helped our B2B customers align their inventory positions with overall market demand. Also, through focused effort, strategy, and execution, we are seeing significant growth in some of our power brands year to date, such as ADS, Stilo, Dinan, APR, and Simpson, some up as much as over 30%.

However, overall quarterly sales were impacted by distributor inventory normalization driven by two significant factors: alignment to overall macro demand and our greatly improved order fulfillment capability. Our lead times are significantly better than a year ago, so our major customers are reducing their required safety stock.

Our operational efforts also contributed to the quarter's success, with year-over-year improvements in Gross Margin, a 133% increase in revenue per SKU year-to-date, and a 25% rise in new product revenue year-to-date. Additionally, we concluded the event season with strong attendance at our flagship LS Fest East event in Bowling Green, which attracted record attendance of 45,000 enthusiasts."

Key Operating Metrics and Strategic Highlights

• Growth in significant areas of the business, including DTC and multiple key power brands
• Total net inventory reduced to $179.3 million compared to $207.2 million Q3 of last year; inventory turns improved to 2.2x compared to 1.9x last year
• Moody’s Ratings (Moody’s) upgraded Holley's corporate family rating (CFR) to B2 from B3, probability of default rating to B2-PD from B3-PD and senior secured ratings to B2 from B3, noting that the outlook remains stable and the speculative grade liquidity (SGL) rating is unchanged at SGL-2 on August 8, 2024
• Holley’s bank-adjusted EBITDA leverage ratio1 at quarter end of 4.25x was well below covenant ceiling of 5.00x

1See “Use and Reconciliation of Non-GAAP Financial Measures” below.

Jesse Weaver, Holley's CFO, added, "We continued to make progress with our financial priorities in the third quarter. We were, once again, recognized by the ratings agencies for the work we have done to strengthen our balance sheet shown by the Moody’s ratings upgrades in August.”

Weaver added, "While our sales were at the low end of the guidance range, this was largely due to continued softness in the industry and our distribution partners taking advantage of the successful out-the-door sales events to clean up their inventories going into the back half of the year. Overall, we're encouraged by our out-the-door sales numbers relative to the overall market and believe that, despite being down, our efforts to partner more closely with distribution partners and investments in DTC are allowing us to maintain our share gains in this challenging environment. Given the performance in Q3 and the continued softness impacting our consumer base, we have lowered our expectations for the full year. While we’re excited about continuing our expanded channel partnership going into Holley Days, we believe this revised outlook is warranted given current industry trends and the current level of uncertainty around distribution partner inventory adjustments going into 2025."

Outlook

Holley is providing the following outlook for the fourth quarter and full-year 2024:

Metric

Fourth Quarter 2024 Outlook

Full Year 2024 Outlook

Net Sales

$133 – $143 million

$595 - $605 million

Adjusted EBITDA *

$24 - $29 million

$115 - $120 million

Capital Expenditures

 

$6 - $8 million

Depreciation and Amortization Expense

 

$23 - $25 million

Interest Expense

 

$50 - $55 million

Bank-adjusted EBITDA Leverage Ratio *

 

4. 35x - 4.15x

* Holley is not providing reconciliations of forward-looking fourth quarter 2024 and full year 2024 Adjusted EBITDA outlook and full year 2024 Bank-adjusted EBITDA Leverage Ratio outlook because certain information necessary to calculate the most comparable GAAP measure, net income, is unavailable due to the uncertainty and inherent difficulty of predicting the occurrence and the future financial statement impact of certain items. Therefore, as a result of the uncertainty and variability of the nature and amount of future adjustments, which could be significant, Holley is unable to provide these forward-looking reconciliations without unreasonable effort. Accordingly, Holley is relying on the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K to exclude these reconciliations.

Holley notes that its outlook for the fourth quarter and full-year 2024 may vary due to changes in assumptions or market conditions and other factors described below under “Forward-Looking Statements.”

Conference Call

A conference call and audio webcast has been scheduled for 8:30 a.m. Eastern Time today to discuss these results. Investors, analysts, and members of the media interested in listening to the live presentation are encouraged to join a webcast of the call available on the investor relations portion of the Company’s website at investor.holley.com. For those that cannot join the webcast, you can participate by dialing 877-407-4019 (Toll Free) or 201-689-8337 (Toll) using the access code of 13748642.

For those unable to participate, a telephone replay recording will be available until Friday, November 15, 2024. To access the replay, please call 877-660-6853 (Toll Free) or 201-612-7415 (Toll) and enter confirmation code 13748642. A web-based archive of the conference call will also be available on the Company’s website.

Additional Financial Information

The Investor Relations page of Holley’s website, investor.holley.com contains a significant amount of financial information about Holley, including our earnings presentation, which can be found under Events & Presentations. Holley encourages investors to visit this website regularly, as information is updated, and new information is posted.

About Holley Inc.

Holley Performance Brands (NYSE: HLLY) is a leading designer, marketer, and manufacturer of high-performance products for car and truck enthusiasts. Holley offers a leading portfolio of iconic brands that deliver innovation and inspiration to a large and diverse community of millions of avid automotive enthusiasts who are passionate about the performance and personalization of their classic and modern cars. Holley has disrupted the performance category by putting the enthusiast consumer first, developing innovative new products, and building a robust M&A process that has added meaningful scale and diversity to its platform. For more information on Holley, visit https://www.holley.com.

Forward-Looking Statements

Certain statements in this press release may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or Holley’s future financial or operating performance. For example, projections of future revenue and adjusted EBITDA and other metrics, along with statements regarding the impact of organizational changes, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “or” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Holley and its management, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: 1) the ability of Holley to grow and manage growth profitably which may be affected by, among other things, competition; to maintain relationships with customers and suppliers; and to retain its management and key employees; 2) Holley’s ability to compete effectively in our market; 3) Holley’s ability to successfully design, develop, and market new products; 4) Holley’s ability to respond to changes in vehicle ownership and type; 5) Holley’s ability to maintain and strengthen demand for our products; 6) Holley’s ability to effectively manage our growth; 7) Holley’s ability to attract new customers in a cost-effective manner; 8) Holley’s ability to expand into additional consumer markets; 9) costs related to Holley being a public company; 10) disruptions to Holley’s operations, including as a result of cybersecurity incidents; 11) changes in applicable laws or regulations; 12) the outcome of any legal proceedings that have been or may be instituted against Holley; 13) general economic and political conditions, including the current macroeconomic environment, political tensions, and war (including the conflict in Ukraine, the conflict in the Middle East, and the possible expansion of such conflicts and potential geopolitical consequences); 14) the possibility that Holley may be adversely affected by other economic, business, and/or competitive factors, including recent events affecting the financial services industry (such as the closures of certain regional banks); 15) Holley’s estimates and expectations of its financial performance and future growth prospects; 16) Holley’s ability to anticipate and manage through disruptions and higher costs in manufacturing, supply chain, logistical operations, and shortages of certain company products in distribution channels; and 17) other risks and uncertainties set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the Annual Report on Form 10-K for the year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission (“SEC”) on March 14, 2024, and/or disclosed in any subsequent filings with the SEC. Although Holley believes the expectations reflected in the forward-looking statements are reasonable, nothing in this press release should be regarded as a representation by any person that the forward-looking statements or projections set forth herein will be achieved or that any of the contemplated results of such forward looking statements or projections will be achieved. There may be additional risks that Holley presently does not know or that Holley currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Holley undertakes no duty to update these forward-looking statements, except as otherwise required by law.

[Financial Tables to Follow]

  HOLLEY INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

   

 

 

For the thirteen weeks ended

 

For the thirty-nine weeks ended

 

 

September 29,

 

October 1,

 

Variance

 

Variance

 

September 29,

 

October 1,

 

Variance

 

Variance

 

 

 

2024

 

 

 

2023

 

 

($)

 

(%)

 

 

2024

 

 

 

2023

 

 

($)

 

(%)

Net Sales

 

$

134,038

 

 

$

156,530

 

 

$

(22,492

)

 

-14.4

%

 

$

462,170

 

 

$

503,997

 

 

$

(41,827

)

 

-8.3

%

Cost of Goods Sold

 

 

81,732

 

 

 

98,156

 

 

 

(16,424

)

 

-16.7

%

 

 

287,512

 

 

 

308,162

 

 

 

(20,650

)

 

-6.7

%

Gross Profit

 

 

52,306

 

 

 

58,374

 

 

 

(6,068

)

 

-10.4

%

 

 

174,658

 

 

 

195,835

 

 

 

(21,177

)

 

-10.8

%

Selling, General, and Administrative

 

 

30,109

 

 

 

28,880

 

 

 

1,229

 

 

4.3

%

 

 

97,675

 

 

 

87,998

 

 

 

9,677

 

 

11.0

%

Research and Development Costs

 

 

4,620

 

 

 

6,100

 

 

 

(1,480

)

 

-24.3

%

 

 

13,743

 

 

 

18,935

 

 

 

(5,192

)

 

-27.4

%

Amortization of Intangible Assets

 

 

3,436

 

 

 

3,687

 

 

 

(251

)

 

-6.8

%

 

 

10,307

 

 

 

11,040

 

 

 

(733

)

 

-6.6

%

Restructuring Costs

 

 

954

 

 

 

415

 

 

 

539

 

 

129.9

%

 

 

1,566

 

 

 

2,106

 

 

 

(540

)

 

-25.6

%

Write-down of assets held-for-sale

 

 

7,505

 

 

 

-

 

 

 

7,505

 

 

100.0

%

 

 

7,505

 

 

 

-

 

 

 

7,505

 

 

100.0

%

Other Operating Expense (Income)

 

 

119

 

 

 

(28

)

 

 

147

 

 

nm

 

 

213

 

 

 

508

 

 

 

(295

)

 

-58.1

%

Operating Expense

 

 

46,743

 

 

 

39,054

 

 

 

7,689

 

 

19.7

%

 

 

131,009

 

 

 

120,587

 

 

 

10,422

 

 

8.6

%

Operating Income

 

 

5,563

 

 

 

19,320

 

 

 

(13,757

)

 

-71.2

%

 

 

43,649

 

 

 

75,248

 

 

 

(31,599

)

 

-42.0

%

Change in Fair Value of Warrant Liability

 

 

(1,041

)

 

 

2,064

 

 

 

(3,105

)

 

nm

 

 

(7,570

)

 

 

5,516

 

 

 

(13,086

)

 

-237.2

%

Change in Fair Value of Earn-Out Liability

 

 

(634

)

 

 

700

 

 

 

(1,334

)

 

nm

 

 

(2,341

)

 

 

2,089

 

 

 

(4,430

)

 

-212.1

%

Loss on Early Extinguishment of Debt

 

 

—

 

 

 

—

 

 

 

-

 

 

nm

 

 

141

 

 

 

—

 

 

 

141

 

 

100.0

%

Interest Expense, Net

 

 

15,010

 

 

 

13,712

 

 

 

1,298

 

 

9.5

%

 

 

39,192

 

 

 

41,909

 

 

 

(2,717

)

 

-6.5

%

Non-Operating Expense

 

 

13,335

 

 

 

16,476

 

 

 

(3,141

)

 

-19.1

%

 

 

29,422

 

 

 

49,514

 

 

 

(20,092

)

 

-40.6

%

Income Before Income Taxes

 

 

(7,772

)

 

 

2,844

 

 

 

(10,616

)

 

-373.3

%

 

 

14,227

 

 

 

25,734

 

 

 

(11,507

)

 

-44.7

%

Income Tax Expense (Benefit)

 

 

(1,484

)

 

 

2,092

 

 

 

(3,576

)

 

nm

 

 

(320

)

 

 

7,756

 

 

 

(8,076

)

 

-104.1

%

Net Income

 

$

(6,288

)

 

$

752

 

 

$

(7,040

)

 

-936.2

%

 

$

14,547

 

 

$

17,978

 

 

$

(3,431

)

 

-19.1

%

Comprehensive Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Currency Translation Adjustment

 

 

386

 

 

 

(176

)

 

 

562

 

 

-319.3

%

 

 

244

 

 

 

(103

)

 

 

347

 

 

-336.9

%

Total Comprehensive Income

 

$

(5,902

)

 

$

576

 

 

$

(6,478

)

 

-1124.7

%

 

$

14,791

 

 

$

17,875

 

 

$

(3,084

)

 

-17.3

%

Common Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Net Income per Share

 

$

(0.05

)

 

$

0.01

 

 

$

(0.06

)

 

-600.0

%

 

$

0.12

 

 

$

0.15

 

 

$

(0.03

)

 

-20.0

%

Diluted Net Income per Share

 

$

(0.05

)

 

$

0.01

 

 

$

(0.06

)

 

-600.0

%

 

$

0.12

 

 

$

0.15

 

 

$

(0.03

)

 

-20.0

%

Weighted Average Common Shares Outstanding - Basic

 

 

118,694

 

 

 

117,397

 

 

 

1,297

 

 

1.1

%

 

 

118,345

 

 

 

117,257

 

 

 

1,088

 

 

0.9

%

Weighted Average Common Shares Outstanding - Diluted

 

 

118,694

 

 

 

119,246

 

 

 

(552

)

 

-0.5

%

 

 

119,154

 

 

 

118,120

 

 

 

1,034

 

 

0.9

%

nm - not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HOLLEY INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(In thousands)

(Unaudited)

   

 

 

As of

 

 

September 29,

 

December 31,

 

 

 

2024

 

 

 

2023

 

Assets

 

 

 

 

Cash and cash equivalents

 

$

50,751

 

 

$

41,081

 

Accounts receivable

 

 

44,492

 

 

 

48,360

 

Inventory

 

 

179,285

 

 

 

192,260

 

Prepaids and other current assets

 

 

16,332

 

 

 

15,665

 

Assets held for sale

 

 

7,696

 

 

 

-

 

Total Current Assets

 

 

298,556

 

 

 

297,366

 

Property, Plant and Equipment, Net

 

 

42,718

 

 

 

47,206

 

Goodwill

 

 

413,245

 

 

 

419,056

 

Other Intangibles, Net

 

 

398,804

 

 

 

410,465

 

Other Noncurrent Assets

 

 

30,911

 

 

 

29,250

 

Total Assets

 

$

1,184,234

 

 

$

1,203,343

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

Accounts payable

 

$

52,738

 

 

$

43,692

 

Accrued interest

 

 

487

 

 

 

455

 

Accrued liabilities

 

 

41,164

 

 

 

42,129

 

Current portion of long-term debt

 

 

7,479

 

 

 

7,461

 

Total Current Liabilities

 

 

101,868

 

 

 

93,737

 

Long-Term Debt, Net of Current Portion

 

 

548,905

 

 

 

576,710

 

Deferred Taxes

 

 

45,008

 

 

 

53,542

 

Other Noncurrent Liabilities

 

 

29,710

 

 

 

38,203

 

Total Liabilities

 

 

725,491

 

 

 

762,192

 

 

 

 

 

 

Common Stock

 

 

12

 

 

 

12

 

Additional Paid-In Capital

 

 

376,670

 

 

 

373,869

 

Accumulated Other Comprehensive Loss

 

 

(466

)

 

 

(710

)

Retained Earnings

 

 

82,527

 

 

 

67,980

 

Total Stockholders’ Equity

 

 

458,743

 

 

 

441,151

 

Total Liabilities and Stockholders’ Equity

 

$

1,184,234

 

 

$

1,203,343

 

 

 

HOLLEY INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

   

 

 

For the thirteen weeks ended

 

For the thirty-nine weeks ended

 

 

September 29,

 

October 1,

 

September 29,

 

October 1,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Operating Activities

 

 

 

 

 

 

 

 

Net Income

 

$

(6,288

)

 

$

752

 

 

$

14,547

 

 

$

17,978

 

Adjustments to Reconcile to Net Cash

 

 

12,879

 

 

 

15,463

 

 

 

26,832

 

 

 

29,446

 

Changes in Operating Assets and Liabilities

 

 

(8,339

)

 

 

6,265

 

 

 

1,394

 

 

 

9,439

 

Net Cash Provided by (Used in) Operating Activities

 

 

(1,748

)

 

 

22,480

 

 

 

42,773

 

 

 

56,863

 

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

Capital Expenditures, Net of Dispositions

 

 

(311

)

 

 

(743

)

 

 

(2,727

)

 

 

(3,125

)

Net Cash Used in Investing Activities

 

 

(311

)

 

 

(743

)

 

 

(2,727

)

 

 

(3,125

)

 

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

Net Change in Debt

 

 

(227

)

 

 

(26,365

)

 

 

(28,832

)

 

 

(40,437

)

Deferred financing fees

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,427

)

Payments from Stock-Based Award Activities

 

 

(45

)

 

 

(1,061

)

 

 

(1,482

)

 

 

(1,134

)

Net Cash Used in Financing Activities

 

 

(272

)

 

 

(27,426

)

 

 

(30,314

)

 

 

(42,998

)

 

 

 

 

 

 

 

 

 

Effect of Foreign Currency Rate Fluctuations on Cash

 

 

2

 

 

 

(218

)

 

 

(62

)

 

 

(57

)

 

 

 

 

 

 

 

 

 

Net Change in Cash and Cash Equivalents

 

 

(2,329

)

 

 

(5,907

)

 

 

9,670

 

 

 

10,683

 

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

 

 

 

 

 

 

 

Beginning of Period

 

 

53,080

 

 

 

42,740

 

 

 

41,081

 

 

 

26,150

 

End of Period

 

$

50,751

 

 

$

36,833

 

 

$

50,751

 

 

$

36,833

 

We present certain information with respect to EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Bank-adjusted EBITDA Leverage Ratio, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Net Income, Adjusted Diluted EPS and Free Cash Flow as supplemental measures of our operating performance and believe that such non-GAAP financial measures are useful to investors in evaluating our financial performance and in comparing our financial results between periods because they exclude the impact of certain items that we do not consider indicative of our ongoing operating performance. We believe that the presentation of these non-GAAP financial measures enhances the usefulness of our financial information by presenting measures that management uses internally to establish forecasts, budgets, and operational goals to manage and monitor our business. We believe that these non-GAAP financial measures help to depict a more realistic representation of the performance of our underlying business, enabling us to evaluate and plan more effectively for the future.

EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Bank-adjusted EBITDA Leverage Ratio, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Net Income, Adjusted Diluted EPS and Free Cash Flow are not prepared in accordance with generally accepted accounting principles (“GAAP”) and may be different from non-GAAP and other financial measures used by other companies. These measures should not be considered as measures of financial performance under GAAP, and the items excluded from or included in these metrics are significant components in understanding and assessing our financial performance. These metrics should not be considered as alternatives to net income, gross profit, net cash provided by operating activities, or any other performance measures, as applicable, derived in accordance with GAAP.

We define EBITDA as earnings before depreciation, amortization of intangible assets, interest expense, and income tax expense. We define Adjusted EBITDA as EBITDA adjusted to exclude, to the extent applicable, restructuring costs, which includes operational restructuring and integration activities, termination related benefits, facilities relocation, and executive transition costs; changes in the fair value of the warrant liability; changes in the fair value of the earn-out liability; equity-based compensation expense; inventory charges primarily due to product rationalization initiatives that are part of a portfolio transformation aimed at eliminating unprofitable or slow-moving SKUs; gain or loss on the early extinguishment of debt; notable items that we do not believe are reflective of our underlying operating performance, including litigation settlements and certain costs incurred for advisory services related to identifying performance initiatives; and other expenses or gains, which includes gains or losses from disposal of fixed assets, franchise taxes, and gains or losses from foreign currency transactions. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by net sales.

 

HOLLEY INC. and SUBSIDIARIES

USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands)

(Unaudited)

   

 

 

For the thirteen weeks ended

 

For the thirty-nine weeks ended

 

 

September 29,

 

October 1,

 

September 29,

 

October 1,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net Income

 

$

(6,288

)

 

$

752

 

 

$

14,547

 

 

$

17,978

 

Adjustments:

 

 

 

 

 

 

 

 

Interest Expense, Net

 

 

15,010

 

 

 

13,712

 

 

 

39,192

 

 

 

41,909

 

Income Tax Expense (Benefit)

 

 

(1,484

)

 

 

2,092

 

 

 

(320

)

 

 

7,756

 

Depreciation

 

 

2,231

 

 

 

2,785

 

 

 

7,364

 

 

 

7,738

 

Amortization

 

 

3,436

 

 

 

3,687

 

 

 

10,307

 

 

 

11,040

 

EBITDA

 

 

12,905

 

 

 

23,028

 

 

 

71,090

 

 

 

86,421

 

Restructuring Costs

 

 

954

 

 

 

415

 

 

 

1,566

 

 

 

2,106

 

Change in Fair Value of Warrant Liability

 

 

(1,041

)

 

 

2,064

 

 

 

(7,570

)

 

 

5,516

 

Change in Fair Value of Earn-Out Liability

 

 

(634

)

 

 

700

 

 

 

(2,341

)

 

 

2,089

 

Equity-Based Compensation Expense

 

 

1,521

 

 

 

2,970

 

 

 

4,283

 

 

 

5,170

 

Write-down of Assets Held-for-Sale

 

 

7,505

 

 

 

-

 

 

 

7,505

 

 

 

-

 

Strategic Product Rationalization Charge

 

 

—

 

 

 

—

 

 

 

8,835

 

 

 

(800

)

Loss on Early Extinguishment of Debt

 

 

—

 

 

 

—

 

 

 

141

 

 

 

—

 

Notable Items

 

 

785

 

 

 

556

 

 

 

6,479

 

 

 

564

 

Other Expense (Income)

 

 

119

 

 

 

(28

)

 

 

213

 

 

 

508

 

Adjusted EBITDA

 

$

22,114

 

 

$

29,705

 

 

$

90,201

 

 

$

101,574

 

Net Sales

 

$

134,038

 

 

$

156,530

 

 

$

462,170

 

 

$

503,997

 

Net Income Margin

 

 

-4.7

%

 

 

0.5

%

 

 

3.1

%

 

 

3.6

%

 

Adjusted EBITDA Margin

 

 

16.5

%

 

 

19.0

%

 

 

19.5

%

 

 

20.2

%

We define the Bank-adjusted EBITDA Leverage Ratio as Net Debt divided by our Bank-adjusted EBITDA for the trailing twelve-month (“TTM”) period, as defined under our Credit Agreement entered into in November 2021, as amended, which is used in calculating covenant compliance.

 

 

TTM September 29, 2024

Net Income

 

$

15,749

 

Adjustments:

 

 

Interest Expense, Net

 

 

58,029

 

Income Tax Expense (Benefit)

 

 

323

 

Depreciation

 

 

9,934

 

Amortization

 

 

13,824

 

EBITDA

 

 

97,859

 

Restructuring Costs

 

 

2,101

 

Change in Fair Value of Warrant Liability

 

 

(8,975

)

Change in Fair Value of Earn-Out Liability

 

 

(2,127

)

Equity-Based Compensation Expense

 

 

6,404

 

Write-down of Assets Held-for-Sale

 

 

7,505

 

Strategic Product Rationalization Charge

 

 

8,835

 

Gain on Early Extinguishment of Debt

 

 

(560

)

Notable Items

 

 

7,200

 

Other Expense

 

 

470

 

Adjusted EBITDA

 

 

118,712

 

Additional Permitted Charges

 

 

2,441

 

Adjusted EBITDA per Credit Agreement

 

$

121,153

 

Total Debt

 

$

565,126

 

Less: Permitted Cash and Cash Equivalents

 

 

50,000

 

Net Indebtedness per Credit Agreement

 

$

515,126

 

Bank-adjusted EBITDA Leverage Ratio

 

4.25 x

 

We define adjusted gross profit as gross profit excluding inventory charges primarily due to product rationalization initiatives that are part of a portfolio transformation aimed at eliminating unprofitable or slow-moving SKUs. We define Adjusted Gross Margin as Adjusted Gross Profit divided by net sales.

 

 

For the thirteen weeks ended

 

For the thirty-nine weeks ended

 

 

September 29,

 

October 1,

 

September 29,

 

October 1,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Gross Profit

 

$

52,306

 

 

$

58,374

 

 

$

174,658

 

 

$

195,835

 

Adjust for: Strategic Product Rationalization Charge

 

 

—

 

 

 

—

 

 

 

8,835

 

 

 

(800

)

Adjusted Gross Profit

 

$

52,306

 

 

$

58,374

 

 

$

183,493

 

 

$

195,035

 

Net Sales

 

$

134,038

 

 

$

156,530

 

 

$

462,170

 

 

$

503,997

 

Gross Margin

 

 

39.0

%

 

 

37.3

%

 

 

37.8

%

 

 

38.9

%

Adjusted Gross Margin

 

 

39.0

%

 

 

37.3

%

 

 

39.7

%

 

 

38.7

%

 

We define Adjusted Net Income as earnings excluding the after-tax effect of changes in the fair value of the warrant liability, write-downs of assets held-for-sale, changes in the fair value of the earn-out liability, and gain or loss on the early extinguishment of debt. We define Adjusted Diluted EPS as Adjusted Net Income on a per share basis. Management uses these measures to focus on on-going operations and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present consolidated operating results. We believe that using this information, along with net income and net income per diluted share, provides for a more complete analysis of the results of operations.

 

 

For the thirteen weeks ended

 

 

For the thirty-nine weeks ended

 

 

September 29,

 

October 1,

 

 

September 29,

 

October 1,

 

 

 

2024

 

 

2023

 

 

 

2024

 

 

2023

Net Income

 

$

(6,288

)

 

$

752

 

 

$

14,547

 

 

$

17,978

Special items:

 

 

 

 

 

 

 

 

 

Adjust for: Change in Fair Value of Warrant Liability

 

 

(1,041

)

 

 

2,064

 

 

 

(7,570

)

 

 

5,516

Adjust for: Change in Fair Value of Earn-Out Liability

 

 

(634

)

 

 

700

 

 

 

(2,341

)

 

 

2,089

Adjust for: Write-down of Assets Held-for-Sale

 

 

7,505

 

 

 

—

 

 

 

7,505

 

 

 

—

Adjust for: Loss on Early Extinguishment of Debt

 

 

—

 

 

 

—

 

 

 

111

 

 

 

—

Adjusted Net Income

 

$

(458

)

 

$

3,516

 

 

$

12,252

 

 

$

25,583

 

 

 

For the thirteen weeks ended

 

 

For the thirty-nine weeks ended

 

 

September 29,

 

October 1,

 

 

September 29,

 

October 1,

 

 

 

2024

 

 

2023

 

 

 

2024

 

 

2023

Net Income per Diluted Share

 

$

(0.05

)

 

$

0.01

 

 

$

0.12

 

 

$

0.15

Special items:

 

 

 

 

 

 

 

 

 

Adjust for: Change in Fair Value of Warrant Liability

 

 

(0.01

)

 

 

0.02

 

 

 

(0.06

)

 

 

0.05

Adjust for: Change in Fair Value of Earn-Out Liability

 

 

(0.01

)

 

 

0.01

 

 

 

(0.02

)

 

 

0.02

Adjust for: Write-down of Assets Held-for-Sale

 

 

0.06

 

 

 

—

 

 

 

0.06

 

 

 

—

Adjust for: Loss on Early Extinguishment of Debt

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

Adjusted Diluted EPS

 

$

(0.01

)

 

$

0.04

 

 

$

0.10

 

 

$

0.22

 

We define Free Cash Flow as net cash provided by operating activities minus cash payments for capital expenditures, net of dispositions. Management believes providing Free Cash Flow is useful for investors to understand our performance and results of cash generation after making capital investments required to support ongoing business operations.

 

 

For the thirteen weeks ended

 

For the thirty-nine weeks ended

 

 

September 29,

 

October 1,

 

September 29,

 

October 1,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net Cash Provided by (Used in) Operating Activities

 

$

(1,748

)

 

$

22,480

 

 

$

42,773

 

 

$

56,863

 

Capital Expenditures, Net of Dispositions

 

 

(311

)

 

 

(743

)

 

 

(2,727

)

 

 

(3,125

)

Free Cash Flow

 

$

(2,059

)

 

$

21,737

 

 

$

40,046

 

 

$

53,738

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241107801809/en/

Investor Relations: Anthony Rozmus / Neel Sikka Solebury Strategic Communications 203-428-3324 holley@soleburystrat.com Media Relations Contacts: Jordan Moore, jmoore@tinymightyco.com / Rachel Withers, rwithers@tinymightyco.com Tiny Mighty Communications 615-454-2913