HLLY - Holley: Mixed Q1 2024 Results And Lower Orders Are A Concern (Downgrade)

2024-05-22 03:48:08 ET

Summary

• The company’s net sales declined by 7.9% to $158.6 million in Q1 2024 due to high inventory levels at the end of 2023.
• Holley expects the remainder of the year to be stronger, but I think this could be over-optimistic in light of falling orders.
• In addition, there doesn’t seem to be much room for further margin improvement and free cash flow could decrease in the coming quarters.

Introduction

I’ve been following Holley Performance Products ( HLLY ) closely, and I’ve written six articles about the company on SA to date. The latest of them came out in November 2023 and back then I said that the outlook for the business was improving and that Holley was on track to achieve annualized cost savings of around $35 million....

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