Holley Inc. reported third‑quarter 2025 results that surpassed revenue expectations but fell short on earnings per share. Net sales rose to $138.4 million, beating the consensus estimate of $131.8 million by $6.6 million, or 5.0%. Core business net sales grew 6.4% year‑over‑year, driven by a 4.2% volume increase and a 1.0% pricing benefit that offset modest cost inflation. EPS of $0.03 missed the consensus of $0.04 by $0.01, a 25% shortfall, largely because the company’s operating income was compressed by higher raw‑material costs and a one‑time restructuring charge that was not fully offset by the pricing gains.
The quarter delivered $5.5 million in free cash flow, and Holley completed a $15 million debt prepayment during the quarter, followed by an additional $10 million repayment after the quarter’s close. Total debt repaid since September 2023 reached $100 million, lowering the leverage ratio to 3.9× at the end of Q3—below the year‑end target of 4.0×. Non‑core sales, which include divestiture and product rationalization revenue, totaled approximately $4.0 million for Q3 2025, not the $2.8 million and $1.3 million figures reported for Q3 2024.
Gross margin expanded to 43.2%, up 422 basis points from 38.8% a year earlier, while Adjusted EBITDA margin rose to 19.6%, an increase of 300 basis points. The margin gains stem from disciplined pricing in the performance‑parts segment, a shift toward higher‑margin aftermarket products, and cost‑control initiatives that reduced manufacturing overhead. The company’s operating leverage also improved as revenue grew faster than variable costs, allowing the margin expansion to translate into higher adjusted earnings.
Management raised its full‑year revenue guidance to $590 million–$605 million, up from the previous $580 million–$595 million range, and increased Adjusted EBITDA guidance to $120 million–$127 million, reflecting confidence in sustained demand and the effectiveness of its tariff‑mitigation strategy. The guidance hike signals that Holley expects the momentum in core sales to continue, supported by the strong pricing power and volume gains observed in the quarter.
CEO Matthew Stevenson said the quarter “demonstrated the effectiveness of our strategic framework, with core sales growth, margin expansion, and a significant debt‑reduction milestone.” Analysts noted that the market’s 21% pre‑market surge was driven by the revenue beat, margin expansion, and the leverage ratio falling below 4× for the first time since 2022—factors that outweighed the EPS miss. The company’s focus on high‑margin performance parts and its disciplined cost management position it well to navigate potential headwinds such as raw‑material price volatility while capitalizing on tailwinds from the growing performance‑parts market.
The results reinforce Holley’s trajectory toward a stronger balance sheet and higher profitability. The debt‑reduction milestone and the raised guidance underscore management’s belief that the company can sustain growth momentum into 2026, even as it continues to mitigate tariff impacts and invest in its strategic framework. The combination of robust revenue, expanding margins, and a healthier leverage profile suggests that Holley is well positioned to capitalize on opportunities in the competitive automotive aftermarket sector.
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