Holley Inc.

Good morning, ladies and gentlemen, and welcome to the conference call to discuss Holly's fourth quarter and full year 2025 earnings result. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session, and instructions for asking questions will be provided at that time. We ask that participants to limit themselves to one question and one related follow-up during the Q&A period. Please be advised The reproduction of this call in whole or in part is not permitted without written authorization of Holly. And as a reminder, this call is being recorded and will be made available for future playback. I would now like to turn the call over to your host, Anthony Rasmus, with Investor Relations. Anthony, please go ahead.

Good morning, and welcome to Holly's fourth quarter and full year 2025 earnings conference call. On the call with me today are President and Chief Executive Officer Matthew Stevenson and Chief Financial Officer Jesse Weaver. This webcast and the presentation materials, including non-GAAP reconciliations, are available on our investor relations website. Our discussion today includes forward-looking statements that are based on our best view of the world and of our businesses as we see them today and are subject to risk and uncertainties, including the ones described in our SEC filings. This morning, we will review our financial results for the fourth quarter and full year 2025 and discuss guidance for the full year 2026. At the conclusion of the prepared remarks, we'll open the line up for questions. With that, I'll turn the call over to our CEO, Matthew Stevenson.

Matthew Stevenson Thank you, Anthony, and good morning to everyone joining us. As we reflect on 2025, I am pleased to report that our disciplined approach delivered strong fourth quarter results in a year of meaningful progress for Holly. This was a pivotal year. and not because of one standout quarter, but because of sustained performance across all four quarters. For the first time since 2021, we delivered four-year net sales growth while achieving adjusted EBITDA margins above 20%, highlighting the earnings capability of our business model. Our core business generated net sales growth in every quarter of 2025, culminating in double-digit growth in the fourth quarter, our strongest performance of the year and clear evidence of the accelerating momentum as we enter 2026. When we refer to core, we are excluding divested operations and strategically rationalized product lines. Four straight quarters of core growth demonstrate that the underlying business is performing and that our strategy is producing measurable results. Throughout the year, we operated with focus and rigor. driving volume-led growth, sharpening pricing execution, strengthening operational capabilities, and maintaining financial discipline. Whole-year net sales growth was driven primarily by volume, complemented by pricing, a balanced mix that reflects solid underlying demand for our leading brands. In the fourth quarter, we saw growth across B2B and direct-to-consumer channels. underscoring the resilience of our omnichannel platform and the strength of our relationships with distributors, e-tailers, marketplaces, installers, and our own digital ecosystem. This strategy, centered on serving enthusiasts wherever they choose to engage, drove growth across all four divisions and 22 key brands in 2025. Just as importantly, We reinforced our financial foundation. We generated meaningful free cash flow in end of the year with net leverage below the target we set out at the beginning of 2025, demonstrating balance sheet discipline and strong financial control. Consistent growth, expanding margins, strong cash generation, and leverage reduction all achieved simultaneously. That combination reflects disciplined, focused performance. Let's turn to slide five, which outlines how the sustained performance translated into measurable financial results for both the fourth quarter and full year 2025. As noted, for the first time since 2021, we delivered both full year net sales growth and adjusted the EBITDA margins above 20%, a clear indication that our multi-year transformation is taking hold. Core net sales grew in every quarter of 2025, accelerating to 13.5% growth in Q4, reflecting solid demand and stronger commercial execution. For the full year, net sales totaled $613.5 million. Core net sales increased 6.6%, driven primarily by 3.8% volume growth with an additional 2.8% contribution from pricing. a healthy mix that speaks to the quality of our growth. Performance was broad-based, with growth across all divisions, 22 key brands, and in both the B2B and direct-to-consumer channels, demonstrating the strength and diversification of our portfolio. Our strategic initiatives continued to drive tangible results. Revenue programs contributed meaningfully in 2025, while cost and efficiency actions delivered approximately $20 million in savings, through purchasing discipline, tariff mitigation, operational improvements, and productivity efforts. We generated $34.2 million of free cash flow for the year, including $3.9 million in the fourth quarter, an improvement year over year, even as we continued investing in the business. We also prepaid an additional $10 million of debt in Q4, bringing total prepayments to $100 million since September of 2023. We ended the year below 3.8 times leverage, achieving our stated target, and enhancing our financial flexibility. The takeaway from the slide is alignment. Revenue growth, margin expansion, cost discipline, cash generation, and leverage reduction all progressed together, reinforcing the durability of our operating model. Turning to slide six, let's take a closer look at the fourth quarter results. Net sales were $155.4 million, increasing 10.9% year-over-year, with 13.5% core growth, our strongest core growth performance of 2025. Growth margin expanded to 46.8%, up 120 basis points versus the prior year, driven by pricing discipline, favorable mix, and continued operational improvements across sourcing and manufacturing. Adjusted EBITDA margin improved to 21.4% of 56 basis points year over year, with an adjusted EBITDA increasing to 33.2 million from 29.1 million last year. We delivered net income of 6.3 million in the fourth quarter, representing a meaningful year over year improvement. Now, innovation remains central to our strategy. During the quarter, we launched new products from all four divisions, including multiple Snell 2025 certified motorsports helmets, such as the popular Stilo ST6, new APR power packages for Volkswagen Audi and Porsche platforms, and plug and play Edge module for late model GM trucks and SUVs, enabling consistent full-time VA performance. New product launches contributed to approximately 23 million in new product sales for the full year, underscoring the ongoing vitality of our portfolio. Operationally, we maintained an average in-stock rate of approximately 91% across our top 2,500 SKUs, supporting performance through disciplined inventory management and strong product availability. In addition, we completed approximately $20 million in combined purchasing savings, tariff mitigation, and operational improvements during 2025, structural actions that strengthened the business for the long term. The fourth quarter is also an important engagement period for our brands. We participated in both SEMA and PRI, two of the industry's most significant events, further deepening relationships with enthusiasts, installers, and distribution partners. Taken together, our fourth quarter results reflect strong commercial performance, expanding margins, operational discipline, and continued investment in innovation and brand engagement. Turning to slide seven, you can see how fourth quarter core growth translated across each division. American performance increased 10% year-over-year, with several lifestyle and power brands delivering double-digit growth. Truck and off-road grew 5.4%, led by bear breaks as new truck-focused offerings gained traction. Year-on-import maintained strong momentum, finishing the quarter up 21.5% and capping a solid year for the division. Safety and racing faced earlier headwinds as we navigated the October transition to Snell 2025 Motorsport helmet certification. Following the launch, performance accelerated, driven by new helmet introduction and continued strength in motorcycle safety. The division closed up the quarter 13.3%. Importantly, every division contributed to fourth quarter growth, underscoring the breadth of our portfolio. We have structured the organization around focused divisional leadership with clear accountability, supported by shared capabilities across multiple centers of excellence. Fourth quarter results demonstrate the model is working as intended, driving divisional performance while maintaining enterprise alignment. Let's move next to slide eight, where we revisit the strategic framework that continues to guide our execution and support long-term growth. At the foundation of our approach are three clear priorities. Fueling our teammates, strengthening customer relationships, and accelerating profitable growth. These are not abstract concepts. They shape how we allocate capital, how we measure performance, and how we prioritize initiatives across the organization. Throughout 2025, this framework provided clarity and consistency in decision-making. It aligned our teams, sharpened our focus, and ensure the progress you've seen across revenue, margins, cash flow, and leverage was intentional, not incidental. As we walk through the Strategic Initiative Tracker, you'll see how these priorities translate into measurable actions and tangible results. Starting to slide nine, the Strategic Initiative Tracker quantifies the impact of our execution in the fourth quarter and across the full year 2025. Under Trailblazing Trusted Partner, we generated revenue of $14.7 million in Q4 and $43.9 million for the year, driven by improvements in product data quality and deeper collaboration with key customers. Under Premier Consumer Journey, Q4 contributed $4.1 million, bringing the full year total to $12.5 million. Third-party marketplaces grew 24% in 2025, led by strong Amazon performance. Under product innovation and portfolio management, we delivered 10.8 million in Q4 and 40.3 million for the full year. Approximately 23 million came from our new product launches, with an additional 16 million driven by focused portfolio management across our B2B network. Under global expansion and new markets, we contributed 1.2 million in Q4 and 3.7 million for the year. reflecting continued progress in Mexico and expansion within Powersports. Under Fund the Growth, we generated $7 million in Q4 and approximately $20 million for the full year through purchasing, savings, tariff mitigation, and operational efficiencies. Under Great Place to Work, employee engagement improved by four points, while revenue per employee reached approximately $460,000, exceeding our 2025 objective and reinforcing our focus on culture and productivity. Collectively, these initiatives delivered meaningful revenue contribution and significant structural cost savings in 2025, clear evidence that our strategic framework is translating into measurable financial results. Turning to slide 10, our strategic framework and eight key focus areas continue to guide execution and long-term value creation. This slide outlines several of the priority initiatives that will drive performance in 2026. Under Premier Consumer Journey, we are continuing to optimize our product launch process to accelerate adoption and improve speed of market. At the same time, we are enhancing digital merchandising and expanding our presence across key third-party marketplaces, ensuring we meet enthusiasts wherever they choose to shop. Within Trailblazing Trusted Partner, we are deepening relationships with our largest B2B customers while applying the same structured, data-driven approach to midsize accounts. We are also expanding the reach of our direct sales organization and advancing meaningful growth initiatives with national retailers to further strengthen our brick-and-mortar presence. Product innovation remains central to our strategy. In 2026, we will expand our performance chemicals portfolio, including new vehicle care products, while continuing to grow packaged solutions in modern truck through partnerships serving both OEM dealers and consumers. We are applying a similar approach in euro and import, working closely with leading dealers alongside our direct consumer efforts. International expansion continues to represent opportunity as we introduce more of our portfolio to enthusiasts globally. Powersports also remains a growth priority, supported by deeper collaboration with major distributors to increase awareness and adoption of our UTV and safety offerings. While remaining committed to our deleveraging objectives, we will selectively evaluate strategic M&A opportunities that strengthen priority growth categories and unlock operational synergies. Supporting these growth initiatives are focused operational actions, eliminating non-value-added costs, reducing tariff exposure, driving strategic sourcing savings, improving facility efficiency, and optimizing our manufacturing footprint. In 2026, we will also begin the early stages of implementing a new ERP and warehouse management systems to support scalable long-term operational excellence. Collectively, These initiatives position us to deliver over 4% revenue growth and more than $15 million in cost synergies this year. Now, with that, I'll turn it over to Jesse to review our fourth quarter and full year 2025 financial results in more detail and provide additional perspective on our outlook for 2026. Jesse?