Q1 2026 Holley Earnings Call

May 6, 2026

Operator: Good morning, ladies and gentlemen, welcome to the conference call to discuss Holley's Q1 2026 earnings results. 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 limit themselves to 1 question and 1 related follow-up during the Q&A period. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization of Holley. As a reminder, this call is being recorded and will be made available for future playback. I would now like to introduce your host for today's call, Anthony Rozmus with Investor Relations. Please go ahead.

Speaker #2: Later, we will conduct a question-and-answer session. An instruction for asking questions will be provided at that time. We ask that participants limit themselves to one question and one related follow-up during the Q&A period.

Speaker #2: Please be advised that reproduction of this call in whole or in part is not permitted without written authorization of Holley. And as a reminder, this call is being recorded and will be made available for future playback.

Speaker #2: I would now like to introduce your host for today's call, Anthony Rozmus, with Investor Relations. Please go ahead. Good morning and welcome to Holley's first quarter 2026 earnings conference call.

Anthony Rozmus: Good morning, welcome to Holley's Q1 2026 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 our businesses as we see them today and are subject to risks and uncertainties, including the ones described in our SEC filings. This morning, we'll review our financial results for the Q1 2026. At the conclusion of the prepared remarks, we will open the call up for questions. With that, I'll turn the call over to our CEO, Matthew Stevenson.

Speaker #2: 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.

Speaker #2: Our discussion today includes forward-looking statements that are based on our best view of the world and our businesses as we see them today and our subject to risks and uncertainties including the ones described in our SEC filings.

Speaker #2: This morning, we'll review our financial results for the first quarter 2026 at the conclusion of the prepared remarks we'll open the call up for questions.

Speaker #2: With that, I'll turn the call over to our CEO, Matthew Stevenson.

Speaker #3: Thank you, Anthony, and good morning to everyone joining us today. Before we get into the first quarter details, I wanted to provide some context for the quarter.

Matthew Stevenson: Thank you, Anthony, and good morning to everyone joining us today. Before we get into the Q1 details, I wanted to provide some context for the quarter. As discussed on our last earnings call, Q1 began with a couple of temporary headwinds. Distributor inventories were elevated coming into the year as partners worked towards their year-end rebate targets and stocked up in advance of our January first price increase. We expected this inventory to normalize through January and February, but more severe winter weather slowed retail activity and delayed that process, shifting some demand out of the quarter. That said, here's the key takeaway for Q1. Beginning in week 8, as weather conditions improved and channel dynamics normalized, we saw steady improvement in purchasing patterns. We exited the quarter with momentum and early Q2 trends are encouraging with healthier inventory levels across the channel and improving order activity.

Speaker #3: As discussed on our last earnings call, Q1 began with a couple of temporary headwinds. Distributor inventories were elevated coming into the year as partners worked towards their year-end rebate targets and stocked up in advance of our January 1st price increase.

Speaker #3: We expected this inventory to normalize through January and February but more severe winter weather slowed retail activity and delayed that process, shifting some demand out of the quarter.

Speaker #3: That said, here's the key takeaway for Q1. Beginning in week 8, as weather conditions improved and China dynamics normalized, we saw steady improvement in purchasing patterns.

Matthew Stevenson: That said, here's the key takeaway for Q1. Beginning in week 8, as weather conditions improved and channel dynamics normalized, we saw steady improvement in purchasing patterns. We exited the quarter with momentum and early Q2 trends are encouraging with healthier inventory levels across the channel and improving order activity. The spring selling season is building. More importantly, the underlying business performed solidly. Adjusted EBITDA remained essentially flat year over year at $27.3 million, despite the revenue decrease, reflecting disciplined execution. Net income increased, margins expanded, and free cash flow improved.

Speaker #3: We exited the quarter with momentum and early Q2 trends are encouraging, with healthier inventory levels across the channel and improving order activity. The spring selling season is building.

Matthew Stevenson: The spring selling season is building. More importantly, the underlying business performed solidly. Adjusted EBITDA remained essentially flat year over year at $27.3 million, despite the revenue decrease, reflecting disciplined execution. Net income increased, margins expanded, and free cash flow improved. We're also making progress on key strategic initiatives, including advancing our new portfolio rebalancing efforts and closing the acquisition of HRX. While we're investing in innovation, deepening our connection with enthusiasts, and competing to gain share, we're also prioritizing cost control and portfolio optimization. We believe that this combination positions us well for the balance of the year. Let's please turn to slide 5. Net sales were $147.3 million, down 3.7% versus the prior year, reflecting the elevated partner inventory levels and weather impacts we just discussed.

Speaker #3: More importantly, the underlying business performed solidly. Adjusted EBITDA remained essentially flat year over year at $27.3 million, despite the revenue decrease. Reflecting disciplined execution, net income increased, margins expanded, and free cash flow improved.

Matthew Stevenson: We're also making progress on key strategic initiatives, including advancing our new portfolio rebalancing efforts and closing the acquisition of HRX. While we're investing in innovation, deepening our connection with enthusiasts, and competing to gain share, we're also prioritizing cost control and portfolio optimization. We believe that this combination positions us well for the balance of the year. Let's please turn to slide 5. Net sales were $147.3 million, down 3.7% versus the prior year, reflecting the elevated partner inventory levels and weather impacts we just discussed.

Speaker #3: We're also making progress on key strategic initiatives, including advancing our new portfolio rebalancing efforts and closing the acquisition of HRX. While we're investing in innovation, deepening our connection with enthusiasts, and competing to gain share, we're also prioritizing cost control and portfolio optimization.

Speaker #3: We believe that this combination positions us well for the balance of the year. Let's please turn to slide 5. Net sales were $147.3 million, down 3.7% versus the prior year, reflecting the elevated partner inventory levels and weather impacts we just discussed.

Speaker #3: Adjusted EBITDA was $27.3 million, in line with the prior year period. Holding EBITDA flat on lower revenue reflects the progress we've made in our continuous improvement efforts as adjusted EBITDA expanded 71 basis points year over year, to 18.5%.

Matthew Stevenson: Adjusted EBITDA was $27.3 million, in line with the prior year period. Holding EBITDA flat on lower revenue reflects the progress we've made in our continuous improvement efforts as adjusted EBITDA expanded 71 basis points year over year to 18.5%. Free cash flow was -$6.3 million, an improvement of approximately $4.5 million year over year. Still negative for the quarter, but trending in the right direction, and we expect meaningful improvement through the remainder of the year. We delivered $6.5 million in cost savings in Q1 through purchasing discipline, tariff mitigation, and operational improvements. 3 of the 4 divisions grew, and 12 brands performed positively across B2B and B2C. That reflects the breadth of the portfolio working as intended.

Speaker #3: Free cash flow was -6.3 million, an improvement of approximately 4.5 million year over year. Still negative for the quarter but trending in the right direction, and we expect meaningful improvement through the remainder of the year.

Speaker #3: We delivered $6.5 million in cost savings in Q1 through purchasing discipline, tariff mitigation, and operational improvements. Three of the four divisions grew, and 12 brands performed positively across B2B and D2C.

Speaker #3: That reflects the breadth of the portfolio working as intended. Strategically, we closed HRX, and we are advancing our portfolio rebalancing initiative which we expect to generate more than $15 million in proceeds to reinvest in higher growth areas of the business.

Matthew Stevenson: Strategically, we closed HRX, and we are advancing our portfolio rebalancing initiative, which we expect to generate more than $15 million of proceeds to reinvest in higher growth areas of the business. Slide six provides additional insight into recent highlights across the business. Since our last earnings call, we've introduced several new products, including our engine swap solution packages and the Holley Performance car care line, both of which have been well-received by our enthusiast customer base. On the operational front, we continue to make solid progress. We maintained approximately a 92% in-stock rate on our top 2,500 SKUs and delivered $3.8 million in purchasing and tariff savings and $2.7 million in operational improvements during the quarter. We also reengaged our M&A efforts with the closing of HRX.

Speaker #3: Slide 6 provides additional insight into recent highlights across the business. Since our last earnings call, we've introduced several new products including our engine swap solution packages and the Holley Performance Car Care line, both of which have been well received by our enthusiastic customer base.

Speaker #3: On the operational front, we continue to make solid progress. We've maintained approximately a 92% in-stock rate on our top 2,500 SKUs, and delivered $3.8 million in purchasing and tariff savings, as well as $2.7 million in operational improvements during the quarter.

Speaker #3: We also reengaged our M&A efforts with a closing of HRX. And further slides, I'll provide more detail on its strategic importance in the broader approach we're taking to rebalance our portfolio.

Matthew Stevenson: In further slides, I'll provide more detail on its strategic importance and the broader approach we're taking to rebalance our portfolio. Slide 7 breaks out the Q1 divisional performance. I think the story here is clear once you understand the context. American performance declined 9.7% in the quarter. This segment saw the most impact from weather and some temporary inventory dynamics at a small number of key partners. As conditions improved over the course of the quarter, demand trends strengthened, and we expect the business to return to growth. Truck and off road was up 3.8%, a solid result given the market dynamics. The truck category continues to have real momentum, and the product introductions we've been building out over the past year are gaining commercial traction. Euro and import was up 1%.

Speaker #3: Slide 7 breaks out the Q1 divisional performance, and I think the story here is clear once you understand the context. American Performance declined 9.7% in the quarter.

Speaker #3: This segment saw the most impact from weather and some temporary inventory dynamics at a small number of key partners. As conditions improved over the course of the quarter, demand trends strengthened, and we expect the business to return to growth.

Speaker #3: Truck and Off-Road was up 3.8%, a solid result given the market dynamics. The truck category continues to have real momentum, and the product introductions we've been building out over the past year are gaining commercial traction.

Speaker #3: Your own import was up 1%. This business would have been stronger, but some product availability constraints earlier in the quarter which have since been addressed limited performance.

Matthew Stevenson: This business would have been stronger but some product availability constraints earlier in the quarter, which have since been addressed, limited performance. Safety and racing grew 10.2%, driven by the Snell 2025 helmet certification cycle, strong demand for our Stilo brand, and continued strength in motorcycle safety. There is a solid foundation here as we move through the year. 3 of our 4 divisions delivered growth, with a fourth impacted by a defined set of weather and inventory-related factors that are normalizing and are actively improving. Our divisional operating model anchored in clear prioritization, accountability, and resource alignment continues to support consistent progress across the company. Slide 8, which we have shared in the past, outlines our long-term strategic framework, which continues to guide how we operate and allocate resources. It's built around 8 pillars, starting with making Holley a great place to work.

Speaker #3: Safety and Racing grew 10.2% driven by the Snell 2025 helmet certification cycle, strong demand for our Steelo brand, and continued strength in motorcycle safety.

Speaker #3: There is a solid foundation here as we move through the year. Three of our four divisions delivered growth, with a fourth impacted by a defined set of weather and inventory-related factors that are normalizing and are actively improving.

Speaker #3: Our divisional operating model anchored in clear prioritization, accountability, and resource alignment continues to support consistent progress across the company. Slide 8, which we have shared in the past, outlines our long-term strategic framework which continues to guide how we operate and allocate resources.

Matthew Stevenson: Slide 8, which we have shared in the past, outlines our long-term strategic framework, which continues to guide how we operate and allocate resources. It's built around 8 pillars, starting with making Holley a great place to work. Premier consumer journey, trailblazing trusted partner, product innovation, portfolio management, global expansion in new markets, transformational M&A, funding the growth, and our operational improvements, all culminating with delivering results.

Speaker #3: It's built around eight pillars: starting with making Holley a great place to work, then premier consumer journey, trailblazing trusted partner, product innovation, and portfolio management, global expansion to new markets, transformational M&A, funding the growth, our operational improvements, all culminating with delivering results.

Matthew Stevenson: Premier consumer journey, trailblazing trusted partner, product innovation, portfolio management, global expansion in new markets, transformational M&A, funding the growth, and our operational improvements, all culminating with delivering results. The value of a framework like this is how it keeps the organization aligned and focused, particularly in a more dynamic environment. Through Q1, our teams remained disciplined, stayed focused on execution, and continued to deliver against our priorities. You'll see that reflected in our initiative progress. Slide 9 outlines some of the highlights for each of these initiatives within the strategic framework for 2026, which we introduced on our last call. There was solid underlying progress across these initiatives in Q1. This includes innovative new products such as our package engine swap solutions and the new Car Care line, along with continued momentum in national retail accounts and international markets.

Matthew Stevenson: The value of a framework like this is how it keeps the organization aligned and focused, particularly in a more dynamic environment. Through Q1, our teams remained disciplined, stayed focused on execution, and continued to deliver against our priorities. You'll see that reflected in our initiative progress. Slide 9 outlines some of the highlights for each of these initiatives within the strategic framework for 2026, which we introduced on our last call. There was solid underlying progress across these initiatives in Q1. This includes innovative new products such as our package engine swap solutions and the new Car Care line, along with continued momentum in national retail accounts and international markets.

Speaker #3: The value of the framework like this is how it keeps the organization aligned and focused, particularly in a more dynamic environment. Through the first quarter, our teams remained disciplined, stayed focused on execution, and continued to deliver against our priorities, you'll see that reflected in our initiative progress.

Speaker #3: Slide 9 outlines some of the highlights for each of these initiatives within the strategic framework for 2026, which we introduced on our last call.

Speaker #3: There was solid underlying progress across these initiatives in the first quarter. This includes innovative new products such as our package engine swap solutions and the new car care line, along with continued momentum in national retail accounts and international markets.

Speaker #3: On the operations side, the team is tracking ahead of our 2026 targets, delivering meaningful material cost savings, mitigating tariff exposure, and driving improved efficiency and productivity across our manufacturing facilities.

Matthew Stevenson: On the operations side, the team is tracking ahead of our 2026 targets, delivering meaningful material cost savings, mitigating tariff exposure, driving improved efficiency and productivity across our manufacturing facilities. Overall, these efforts position us well to continue execution against our plan and delivering on our objectives for 2026. With that, let's turn to the detailed initiative tracker on slide 10. The strategic initiative tracker provides a clear view of our Q1 performance, highlighting both areas of progress and those impacted by temporary external factors. Trailblazing trusted partner was down $7.9 million versus the prior year, reflecting elevated inventory levels at a handful of larger accounts and slower seasonal sell-through due to weather.

Speaker #3: Overall, these efforts position us well to continue execution against our plan and delivering on our objectives for 2026. With that, let's turn to the detailed initiative tracker on slide 10.

Speaker #3: The strategic initiative tracker provides a clear view of our Q1 performance, highlighting both areas of progress and those impacted by temporary external factors. Trailblazing trusted partner was down 7.9 million versus the prior year, reflecting elevated inventory levels at a handful of larger accounts and slower seasonal sell-through due to weather.

Matthew Stevenson: Encouragingly, roughly half of the B2B portfolio delivered positive momentum, and our national retailer channel grew approximately 10%, supported by improved SKU penetration, enhanced product data, expanded e-commerce presence, and enhanced in-store placement. Now, as inventory levels are normalizing and seasonal demand builds, we are seeing growth in the B2B channel. Premier consumer journey was essentially flat to the prior year. Direct-to-consumer performance was impacted by weather early in the quarter, but improved as conditions normalized, returning to year-over-year growth in March. Third-party marketplaces, led by Amazon, delivered growth of approximately 3%. The improvement in March is a positive indicator as we move into the next quarter. Product innovation contributed approximately $3.6 million, driven by solid performance and safety with new motorcycle helmets and the Snell 2025 motorsports offerings, as well as in modern truck and off-road with new tuning solutions.

Speaker #3: Encouragingly, roughly half of the B2B portfolio delivered positive momentum, and our national retailer channel grew approximately 10%. Supported by improved SKU penetration and enhanced product data, expanded e-commerce presence, and enhanced in-store placement.

Speaker #3: Now, as inventory levels are normalizing and seasonal demand builds, we are seeing growth in the B2B channel. Premier consumer journey was essentially flat to the prior year.

Speaker #3: Directed consumer performance was impacted by weather early in the quarter, but improved as conditions normalized, returning to year-over-year growth in March. Third-party marketplaces led by Amazon delivered growth of approximately 3%.

Speaker #3: The improvement in March is a positive indicator as we move into the next quarter. Product innovation, contributed approximately 3.6 million, driven by solid performance and safety, with new motorcycle helmets, and the Snell 2025 Motorsports offerings, as well as in modern truck and off-road with new tuning solutions.

Matthew Stevenson: Global expansion in new markets contributed approximately 2 million, including $1.4 million from international distributor growth, with continued expansion planned in Q2, and approximately $0.6 million from the globalization of power sports and safety categories, led by the Simpson brand of motorcycle helmets. Fund the growth delivered approximately $ six and a half million in savings, including $3.8 million from purchasing initiatives and tariff mitigations and $2.7 million from operational improvements. Our focus on managing input costs and tariffs continues to contribute positively to results. Overall, the tracker highlights our discipline, execution, and strategic progress, effectively navigating near-term external pressures while delivering strong performance across new product innovations, expansion into new markets, and cost reduction initiatives, all progressing as expected. Slide 11 outlines our new portfolio rebalancing initiative, which we view as an important driver of long-term value creation.

Speaker #3: Global expansion in new markets contributed to approximately 2 million, including 1.4 million from international distributor growth, with continued expansion planned in Q2. And approximately 0.6 million from the globalization of power sports and safety categories, led by the Simpson brand and motorcycle helmets.

Speaker #3: On the growth delivered approximately 6.5 million in savings, including 3.8 million from purchasing initiatives and tariff mitigations, and 2.7 million from operational improvements. Our focus on managing input costs and tariffs continues to contribute positively to results.

Speaker #3: Overall, the tracker highlights our disciplined execution and strategic progress, effectively navigating near-term external pressures while delivering strong performance across new product innovations, expansion into new markets, and cost reduction initiatives, all progressing as expected.

Speaker #3: Now, slide 11 outlines our new portfolio rebalancing initiative, which we view as an important driver of long-term value creation. The first step is to exit brands that are not meeting our growth, profitability, or strategic criteria.

Matthew Stevenson: The first step is to exit brands that are not meeting our growth, profitability, or strategic criteria. These businesses tend to consume a disproportionate amount of time and capital relative to their returns. Second, these actions, along with facility consolidations, help simplify the portfolio, reduce complexity, and improve free cash flow and cost structure. Third, we redeploy that capital into disciplined bolt-on acquisitions. Our focus is on businesses with attractive growth profiles, strong margins, and positive cash flow characteristics. The recent HRX acquisition is a good example of this approach in action. Finally, over time, we anticipate these higher growth additions will contribute to improved earnings and cash generation, supporting further reinvestment and balance sheet strength. We are targeting five to 10 bolt-on acquisitions over the next 24 months. While this is a focus goal, we believe we have the pipeline and processes in place to execute effectively.

Speaker #3: These businesses tend to consume a disproportionate amount of time and capital relative to their returns. Second, these actions along with facility consolidations help simplify the portfolio, reduce complexity, and improve free cash flow and cost structure.

Speaker #3: Third, we redeploy that capital into disciplined bolt-on acquisitions. Our focus is on businesses with attractive growth profiles, strong margins, and positive cash flow characteristics.

Speaker #3: The recent HRX acquisition is a good example of this approach in action. Finally, over time, we anticipate these higher growth additions will contribute to improved earnings and cash generation, supporting further reinvestment and balanced sheet strength.

Matthew Stevenson: Finally, over time, we anticipate these higher growth additions will contribute to improved earnings and cash generation, supporting further reinvestment and balance sheet strength. We are targeting five to 10 bolt-on acquisitions over the next 24 months. While this is a focus goal, we believe we have the pipeline and processes in place to execute effectively. Overall, portfolio rebalancing is a key component of how we are positioning the business for sustained long-term growth.

Speaker #3: We are targeting 5 to 10 bolt-on acquisitions over the next 24 months. While this is a focused goal, we believe we have the pipeline and processes in place to execute effectively.

Speaker #3: Overall, portfolio rebalancing is a key component of how we are positioning the business for sustained long-term growth. Slide 12 outlines our site and brand optimization program, which represents the operational component of our broader portfolio rebalancing efforts.

Matthew Stevenson: Overall, portfolio rebalancing is a key component of how we are positioning the business for sustained long-term growth. Slide 12 outlines our site and brand optimization program, which represents the operational component of our broader portfolio rebalancing efforts. As part of this initiative, we are in the process of exiting 5 brands and consolidating 5 facilities, and we are approximately halfway through this work. This includes reducing our warehouse footprint by approximately 100,000 square feet and streamlining our workforce by about 9%. We are also rationalizing roughly 11,000 SKUs, about 25% of our portfolio by count, reflecting a focus on reducing complexity while maintaining core capabilities.

Matthew Stevenson: Slide 12 outlines our site and brand optimization program, which represents the operational component of our broader portfolio rebalancing efforts. As part of this initiative, we are in the process of exiting 5 brands and consolidating 5 facilities, and we are approximately halfway through this work. This includes reducing our warehouse footprint by approximately 100,000 square feet and streamlining our workforce by about 9%. We are also rationalizing roughly 11,000 SKUs, about 25% of our portfolio by count, reflecting a focus on reducing complexity while maintaining core capabilities.

Speaker #3: As part of this initiative, we are in the process of exiting five brands and consolidating five facilities, and we are approximately halfway through this work.

Speaker #3: This includes reducing our warehouse footprint by approximately 100,000 square feet and streamlining our workforce by about 9%. We are also rationalizing roughly 11,000 SKUs, about 25% of our portfolio by count, reflecting a focus on reducing complexity, while maintaining core capabilities.

Matthew Stevenson: From a financial standpoint, we expect our portfolio rebalancing efforts to generate more than $15 million in one-time net cash, along with adjusted EBITDA margin expansion of approximately 75 to 150 basis points, including at least $1 million in annualized benefits. We also expect a modest improvement in leverage of around 0.15 times and approximately a 5% improvement in inventory turns. Overall, we are creating a more streamlined and focused operating model, enhancing efficiency, strengthening margins, and improving cash generation while positioning the business around its strongest opportunities for growth. Slide 13 outlines our M&A acquisition profile, reflecting a disciplined and thoughtful approach to bolt-on acquisitions, as well as how these efforts connect to our broader portfolio optimization work.

Speaker #3: From a financial standpoint, we expect our portfolio rebalancing efforts to generate more than $15 million in one-time net cash, along with adjusted EBITDA margin expansion of approximately $75 to $150 basis points.

Speaker #3: Including at least $1 million in annualized benefits. We also expect a modest improvement in leverage of around 0.15 times and approximately a 5% improvement in inventory returns.

Speaker #3: Overall, we are creating a more streamlined and focused operating model, enhancing efficiencies, strengthening margins, and improving cash generation, while positioning the business around its strongest opportunities for growth.

Speaker #3: Slide 13 outlines our M&A acquisition profile, reflecting a disciplined and thoughtful approach to bolt-on acquisitions. As well as how these efforts connect to our broader portfolio optimization work.

Speaker #3: As we streamline the business through our site and brand optimization initiatives, reducing complexity, and generating incremental cash, we are focused on redeploying that capital into higher growth opportunities that we can scale over time.

Matthew Stevenson: As we streamline the business through our site and brand optimization initiatives, reducing complexity and generating incremental cash, we are focused on redeploying that capital into higher growth opportunities that we can scale over time. Within M&A, we are primarily targeting founder-led businesses. These companies often bring strong brand equity, deep customer relationships, and a proven operating capability. Our role is to support and accelerate that foundation through our distribution network, commercial infrastructure, and broader customer reach. We structure transactions with alignment in mind, including shared business plans and incentives that encourage continued growth post-close. Our financial criteria is consistent and disciplined. Typically, $5 to 10 million in revenue at acquisition, established double-digit revenue growth, and the ability to achieve EBITDA margins of 20% or greater post synergies with positive free cash flow.

Speaker #3: Within M&A, we are primarily targeting founder-led businesses. These companies often bring strong brand equity, deep customer relationships, and a proven operating capability. Our role is to support and accelerate that foundation through our distribution network, commercial infrastructure, and broader customer reach.

Speaker #3: We structure transactions with alignment in mind, including shared business plans and incentives that encourage continued growth post-close. Our financial criteria is consistent and disciplined.

Speaker #3: Typically, 5 to 10 million in revenue at acquisition, established double-digit revenue growth, and the ability to achieve EBITDA margins of 20% or greater post-synergies, with positive free cash flow.

Speaker #3: These are not turnaround situations. But rather, businesses with solid fundamentals where we believe that we can help unlock additional value. Strategic fit is equally important.

Matthew Stevenson: These are not turnaround situations, but rather businesses with solid fundamentals where we believe that we can help unlock additional value. Strategic fit is equally important. We prioritize businesses that align well with our existing portfolio, where we can leverage shared customers, channels, and capabilities to drive incremental growth. Overall, we believe that this approach allows us to take the benefits of our optimization efforts and reinvest them in scalable higher growth brands. Slide 14 provides additional detail on the HRX acquisition, which is a strong example of the M&A framework I just outlined in action. HRX is based in Turin, Italy, and specializes in premium racing apparel and safety equipment, including suits, gloves, shoes, and team wear.

Speaker #3: We prioritize businesses that align well with our existing portfolio, where we can leverage shared customers, channels, and capabilities to drive incremental growth. Overall, we believe that this approach allows us to take the benefits of our optimization efforts and reinvest them in scalable, higher growth brands.

Speaker #3: Slide 14 provides additional detail on the HRX acquisition, which is a strong example of the M&A framework I just outlined in action. HRX is based in Turin, Italy, and specializes in premium racing apparel and safety equipment, including suits, gloves, shoes, and teamwear.

Matthew Stevenson: The product line is FIA homologated, and the business has developed a proprietary digital platform that enables scalable customization, an important differentiator in a category where fit, performance, and certification are critical to the customer. The company is founder-led with established double-digit revenue growth, strong EBITDA margin characteristics, and positive free cash flow. It also has a growing international presence, particularly in Europe, with additional opportunities as we leverage Holley's broader distribution and commercial capabilities. From a strategic standpoint, HRX is a strong fit within our safety division. It enhances our position in motorsport safety as premium manufacturing capabilities and expands our presence in the European market, an area we see meaningful opportunity for growth. More broadly, HRX reflects the type of discipline, strategic aligned acquisition we are targeting.

Speaker #3: The product line is FIA homologated, and the business has developed a proprietary digital platform that enables scalable customization. An important differentiator in a category where fit, performance, and certification are critical to the customer.

Speaker #3: The company is founder-led, with established double-digit revenue growth, strong EBITDA margin characteristics, and positive free cash flow. It also has a growing international presence, particularly in Europe, with additional opportunities as we leverage Holley's broader distribution and commercial capabilities.

Speaker #3: From a strategic standpoint, HRX is a strong fit within our safety division. It enhances our position in motorsport safety, as premium manufacturing capabilities, and expands our presence in the European market.

Speaker #3: An area we see meaningful opportunity for growth. More broadly, HRX reflects the type of disciplined, strategic-aligned acquisition we are targeting. It demonstrates how we can deploy capital-generated through our optimization efforts into higher growth opportunities.

Matthew Stevenson: It demonstrates how we can deploy capital generated through our optimization efforts into higher growth opportunities, and we expect to continue pursuing similar transactions over time. Stepping back, while Q1 was impacted by temporary external factors, primarily weather and channel inventory, the underlying business performed well. We expanded margins, improved cash flow, and made meaningful progress on our strategic priorities. As conditions normalized, demand improved, and we exited the quarter with momentum that's carrying into Q2. With that, I'll turn it over to Jesse to walk through the full financials and provide additional perspective on the 2026 outlook. Jesse.

Speaker #3: And we expect to continue pursuing similar transactions over time. So stepping back, while Q1 was impacted by temporary external factors, primarily weather and channel inventory, the underlying business performed well.

Speaker #3: We expanded margins, improved cash flow, and made meaningful progress on our strategic priorities. And this conditions normalized, demand-improved, and we exited the quarter with momentum that's carrying into Q2.

Speaker #3: With that, I'll turn it over to Jesse to walk through the full financials and provide additional perspective on the 2026 outlook. Jesse, thank you, Matt.

Jesse Weaver: Thank you, Matt. Picking up on Matt's comments, the weather and channel inventory dynamics played out as he previously described, and even with those factors, we delivered strong financial performance in the quarter. This result reflects our consistent commitment as an organization to our financial priorities. Let's take a look at these on slide 16. Our financial priorities for 2026 remain consistent. Restore historical profitability, improve working capital discipline, and continue to deleverage. On profitability, we continue to see tangible progress from disciplined operational execution. In Q1, continuous improvement initiatives delivered $2.7 million of benefit, supporting continued year-over-year adjusted EBITDA margin expansion for the quarter. These efforts are centered on optimized staffing, manufacturing and distribution efficiencies, and targeted facility and network cost actions. For full year 2026, we continue to expect $5 to 7 million of additional operational improvements, reinforcing structural margin expansion.

Speaker #3: Picking up on Matt's comments, the weather and channel inventory dynamics played out as he previously described. And even with those factors, we delivered strong financial performance in the quarter.

Speaker #3: This result reflects our consistent commitment as an organization to our financial priorities. Let's take a look at these on slide 16. Our financial priorities for '26 remain consistent.

Speaker #3: Restore historical profitability, improve working capital discipline, and continue to deleverage. On profitability, we continue to see tangible progress from disciplined operational execution. In the first quarter, continuous improvement initiatives delivered 2.7 million of benefit.

Jesse Weaver: In Q1, continuous improvement initiatives delivered $2.7 million of benefit, supporting continued year-over-year adjusted EBITDA margin expansion for the quarter. These efforts are centered on optimized staffing, manufacturing and distribution efficiencies, and targeted facility and network cost actions. For full year 2026, we continue to expect $5 to 7 million of additional operational improvements, reinforcing structural margin expansion.

Speaker #3: Supporting continued year-over-year adjusted EBITDA margin expansion for the quarter. These efforts are centered on optimized staffing, manufacturing, and distribution efficiencies, and targeted facility and network cost actions.

Speaker #3: For full year '26, we continue to expect 5 to 7 million of additional operational improvements reinforcing structural margin expansion. Turning to working capital, inventory was up modestly in Q1.

Jesse Weaver: Turning to working capital, inventory was up modestly in Q1, primarily reflecting Q1 sales performance. The actions we put in place starting in January around improved forecasting, right size safety stock, and a more just-in-time approach on high velocity SKUs are starting to pay off in Q2, and we continue to target $10 to 15 million in inventory reduction for the year. On the balance sheet, deleveraging remains a core focus. We ended Q1 at 3.84x net leverage, down 0.48x from a year ago. Based on current trends, we expect steady progress toward our year-end target of below 3.5x. Our actions across operations, working capital, and the balance sheet are strengthening the fundamentals of the business.

Speaker #3: Primarily reflecting Q1 sales performance. The actions we put in place, starting in January, around improved forecasting, right-sized safety stock, and a more just-in-time approach on high-velocity SKUs, are starting to pay off in Q2.

Speaker #3: And we continue to target 10 to 15 million in inventory reduction for the year. On the balance sheet, deleveraging remains a core focus. We ended the first quarter at 3.84 times net leverage down 0.48 times from a year ago.

Speaker #3: Based on current trends, we expect steady progress toward our year-end target of below 3 and a half times. Our actions across operations, working capital, and the balance sheet are strengthening the fundamentals of the business.

Speaker #3: We believe that positions us well to drive sustained profitability, generate free cash flow, and further enhance balance sheet flexibility over the course of 2026.

Jesse Weaver: We believe this positions us well to drive sustained profitability, generate free cash flow, and further enhance balance sheet flexibility over the course of 2026. On slide 17, we'll walk through our key financial metrics for Q1. Net sales for Q1 were $147.3 million versus $153 million in the same period a year ago. Gross profit was $60.7 million in the quarter compared to $64.1 million in the same period last year. Gross margin for the quarter was 41.2%, a decrease of 65 basis points versus 41.9% in the prior year. Margin compression was driven by fixed cost deleverage, partially offset by operational efficiency gains. SG&A, including R&D for Q1, was $39.4 million versus $40.8 million in the same period last year.

Speaker #3: On slide 17, we'll walk through our key financial metrics for the first quarter. Net sales for the first quarter were 147.3 million, versus 153 million in the same period a year ago.

Speaker #3: Gross profit was 60.7 million in the quarter compared to 64.1 million in the same period last year. Gross margin for the quarter was 41.2%, a decrease of 65 basis points versus 41.9% in the prior year.

Speaker #3: Margin compression was driven by fixed cost deleverage, partially offset by operational efficiency gains. SG&A, including R&D for the first quarter, was 39.4 million versus 40.8 million in the same period last year.

Speaker #3: The decrease reflects improved efficiency and legal and marketing spend, as well as reduced outbound freight from lower sales volumes. Net income for the first quarter was 7.3 million, a 4.4 million improvement compared to 2.8 million in the first quarter of '25.

Jesse Weaver: The decrease reflects improved efficiency in legal and marketing spend, as well as reduced outbound freight from lower sales volumes. Net income for Q1 was $7.3 million, a $4.4 million improvement compared to $2.8 million in Q1 2025. Adjusted net income in Q1 was $5.7 million versus $2.6 million in the same period last year. Adjusted EBITDA for Q1 was $27.3 million, in line with the prior year. Adjusted EBITDA margin was 18.5%, a 71 basis point improvement versus 17.8% in Q1 2025. On slide 18, we improved our free cash flow in Q1 year-over-year by $four and a half million.

Speaker #3: Adjusted net income in the first quarter was 5.7 million, versus 2.6 million in the same period last year. Adjusted EBITDA for the first quarter was 27.3 million.

Speaker #3: In line with the prior year. Adjusted EBITDA margin was 18.5%, a 71 basis point improvement versus 17.8% in the first quarter of '25. On slide 18, we improved our free cash flow in the first quarter, year over year, by 4 and a half million.

Jesse Weaver: Similar to last year, Q1 free cash flow is expected to be the low point in the year. With the elevated inventory levels in the quarter anticipated to come back in line in Q2, we expect Q2 free cash flow to meaningfully improve quarter-over-quarter, furthering our progress on leverage, which I'll walk you through on slide 19. Covenant net leverage ended Q1 at 3.84x, down from 4.32x a year ago. We exited 2025 below the 4-turn target we set during the year, and we expect to be below 3.5 turns at the end of 2026. This progress reflects a sustained commitment to margin improvement, working capital discipline, and disciplined capital allocation rather than reliance on any one-time actions.

Speaker #3: Similar to last year, first quarter free cash flow is expected to be the low point in the year. And with the elevated inventory levels in the quarter, anticipated to come back in line in the second quarter, we expect Q2 free cash flow to meaningfully improve quarter over quarter.

Speaker #3: Furthering our progress on leverage, which I'll walk you through on slide 19. Covenant net leverage ended the first quarter at 3.84 times. Down from 4.32 times a year ago.

Speaker #3: We exited 2025 below the four-turn target we set during the year, and we expect to be below 3 and a half turns at the end of '26.

Speaker #3: This progress reflects a sustained commitment to margin improvement, working capital discipline, and disciplined capital allocation rather than reliance on any one-time actions. Note that leverage moved up modestly from year-end, reflecting the seasonal working capital build and the HRX acquisition.

Jesse Weaver: Note that leverage moved up modestly from year-end, reflecting the seasonal working capital build and the HRX acquisition. We expect the trajectory to resume downward through the balance of the year as the team's initiatives on working capital are expected to begin generating incremental free cash flow. We ended the quarter with 33.1 million of cash on hand and $10 million drawn on the revolving credit facility. The revolver drawn was taken proactively to fund the final Cataclean payment and the HRX acquisition. We retained substantial availability under the facility and ample liquidity to run the business, and we plan to fully repay the revolver in the coming weeks with cash on hand. Overall, we have come a long way in strengthening the balance sheet with continued progress expected during the remainder of the year.

Speaker #3: We expect the trajectory to resume downward through the balance of the year, as the team's initiatives on working capital are expected to begin generating incremental free cash flow.

Speaker #3: We ended the quarter with 33.1 million of cash on hand and 10 million drawn on the revolving credit facility. The revolver drawn was taken proactively to fund the final CataClean payment and the HRX acquisition.

Speaker #3: We retained substantial availability under the facility and ample liquidity to run the business, and we plan to fully repay the revolver in the coming weeks with cash on hand.

Speaker #3: Overall, we have come a long way in strengthening the balance sheet. With continued progress expected during the remainder of the year. We remain committed to a conservative financial position, using free cash flow to continue deleveraging while preserving flexibility to support disciplined bolt-on acquisitions.

Jesse Weaver: We remain committed to a conservative financial position using free cash flow to continue deleveraging while preserving flexibility to support disciplined bolt-on acquisitions. Turning to our 2026 outlook. Our core business revenue range is unchanged. We are updating full year net sales guidance to $610 to 640 million, which reflects the net $15 million revenue reduction tied to the portfolio optimization actions Matt previously discussed. Importantly, our 2026 adjusted EBITDA guidance is unchanged at $127 to 137 million. The portfolio optimization is expected to be slightly accreted to adjusted EBITDA on a net basis while generating more than $15 million of incremental cash and reducing operational complexity through the SKU rationalization Matt outlined. Capital expenditures, depreciation and amortization, and interest expense ranges are also unchanged.

Speaker #3: Turning to our '26 outlook, our core business revenue range is unchanged. We are updating full-year net sales guidance to $610 to $640 million, which reflects the net $15 million revenue reduction tied to the portfolio optimization actions met previously discussed.

Speaker #3: Importantly, our '26 adjusted EBITDA guidance is unchanged, at 127 to 137 million. The portfolio optimization is expected to be slightly accreted to adjusted EBITDA on a net basis, while generating more than $15 million of incremental cash and reducing operational complexity through the SKU rationalization Matt outlined.

Speaker #3: Capital expenditures depreciation and amortization and interest expense ranges are also unchanged. Q2 is starting out on a positive note, with mid-single-digit growth in April, supported by winter being behind us and normalizing inventory at our distribution partners.

Jesse Weaver: Q2 is starting out on a positive note with mid-single-digit growth in April, supported by winter being behind us and normalizing inventory at our distribution partners. We view that as a constructive signal for the balance of the quarter. With that, we will open the lineup for questions.

Speaker #3: We view that as a constructive signal for the balance of the quarter, and with that, we will open the lineup for questions.

Speaker #1: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. If you would like to ask a question, please press star and one on your telephone keypad.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. We take the first question from the line of Brian McNamara from Canaccord Genuity. Please go ahead.

Speaker #1: A confirmation tone will indicate your line is in the question queue. You may press star and two if you'd like to remove your question from the queue.

Speaker #1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions.

Speaker #1: We take the first question from the line of Brian Malamara from Canaccord Genevieve. Please go ahead.

Brian McNamara: Hey, good morning, guys. Thanks for taking our questions. Apologies if I missed this in the prepared remarks, but what was the gap in Q1 sell-in versus out the door sales, and what was the actual Q1 core sales growth?

Speaker #2: Hey, good morning, guys. Thanks for taking our questions. Apologies if I missed this in the repair remarks, but what was the gap in Q1 sell-in versus out-the-door sales?

Speaker #2: And what was the actual Q1 core sales growth?

Jesse Weaver: Brian McNamara, we didn't talk about the core because in this particular quarter, you know, all the sales were core. We weren't rolling over anything in Q1. What you're seeing reported in the down 3.7 is all core. I would say versus out the door sales, you know, out the door sales were very strong within the quarter for our distribution partners. You know, we, you know, probably in the +4% range, and I think that kind of gets to some of the remarks Matthew Stevenson and I had on the call, which is between the combination of weather, which we're estimating was probably accounts for 3, and then the inventory kind of coming into the quarter a little strong or heavier than we would have liked. That gets you to another 4. That kind of bridges the gap there.

Speaker #3: So, Brian, we didn't talk about the core because in this particular quarter, all the sales were core. We weren't rolling over anything in Q1.

Speaker #3: So what you're seeing reported in the down three seven is all core. I would say versus out-the-door sales, out-the-door sales were very strong within the quarter for our distribution partners.

Speaker #3: And we probably in the plus 4% range. And I think that kind of gets to some of the remarks Matt and I had on the call, which is between the combination of weather, which we're estimating was probably accounts for three, and then the inventory kind of coming into the quarter a little strong or heavier than we would have liked, that gets you to another four.

Speaker #3: That kind of bridges the gap there.

Brian McNamara: Great. That's helpful. On the portfolio optimization, I'm sure you guys consistently review the portfolio, but I guess what drove this decision in terms of the next set of brand and SKU exits, what brands are you calling if you care to opine? Thanks.

Speaker #2: Great. That's helpful. And then on the portfolio optimization, I'm sure you guys consistently review the portfolio, but I guess what drove this decision in terms of the next set of brand and SKU exits?

Speaker #2: And what brands are you calling if you care to opine? Thanks.

Speaker #3: Yeah, Brian, thanks. It's Matt. Yeah, we constantly look at the portfolio just to see where business is taking a disproportionate amount of resources to compared to the contribution they offer.

Matthew Stevenson: Yeah, Brian, thanks. It's Matt. Yeah, we constantly look at the portfolio just to see where business is taking a disproportionate amount of resources compared to the contribution, you know, they offer. There were some things on the bubble and just the changing environment relative to freight rates, tariffs, you know, we monitored that closely. These businesses do not fall in the bucket or performance nor offer that true competitive differentiation and scalability that we look for in the market. You know, we've been looking at these. There was nothing, you know, previously that really stood out, but I'd say over the last 6 months, these businesses came more into focus, as well as the growth opportunities on the other end to reinvest those proceeds into these higher growth businesses.

Speaker #3: And there were some things on the bubble. And just the changing environment relative to freight rates, tariffs, we monitored that closely. And these businesses do not fall in the bucket of performance nor offer that true competitive differentiation and scalability that we look for in the market.

Speaker #3: So we've been looking at these. There was nothing previously that really stood out, but I'd say over the last six months, these businesses came more into focus.

Speaker #3: As well as the growth opportunities on the other end to reinvest those proceeds into these higher growth businesses.

Brian McNamara: Then just finally on M&A, your new commitment there is pretty noteworthy. I think HRX was your first deal in, like, three and a half years.

Speaker #2: And then just finally on M&A, your new commitment there is pretty noteworthy. I think HRX was your first deal in, like, three and a half years.

Brian McNamara: Then just finally on M&A, your new commitment there is pretty noteworthy. I think HRX was your first deal in, like, three and a half years.

Brian McNamara: Yep.

Matthew Stevenson: Yep.

Brian McNamara: I'm assuming that doesn't happen unless you have confidence in your base business. Is the sales contribution from HRX this year material? I'm done there. Thanks, guys.

Speaker #2: I'm assuming that doesn't happen unless you have confidence in your base business. And is the sales contribution from HRX this year material? And I'm done there.

Speaker #2: Thanks, guys.

Matthew Stevenson: Yeah. On HRX, we're really excited. It's a great business and fills an opportunity in our portfolio. You know, for competitive dynamics, we're not giving specifics into this, you know, the size of that business. Generally speaking, Brian, in the prepared remarks that, you know, that those types of businesses that are in that range, you know, the $5 to 10 million in top line revenue, double-digit EBITDA, you know, high growth rates, et cetera, that it squarely fits in that bucket.

Speaker #3: Yeah, on HRX, we're really excited. It's a great business. And it fills an opportunity in our portfolio. For competitive dynamics, you're not giving specifics into the size of that business, but generally speaking, Brian, in the prepared remarks, those types of businesses that are in that range, the 5 to 10 million in top-line revenue, double-digit EBITDA, high growth rates, etc., that it squarely fits in that bucket.

Brian McNamara: Great. Thanks, guys. Pass it on.

Speaker #2: Great. Thanks, guys. Pass it on.

Speaker #3: All right. Thanks, Brian.

Matthew Stevenson: All right. Thanks, Brian.

Operator: Thank you. We take the next question from the line of Christian Carlino from JPMorgan Chase & Co. Please go ahead.

Speaker #1: Thank you. We’ll take the next question from the line of Christian Carlino from Ahead.

Christian Carlino: Hi. Good morning. Thanks for taking our question. You know, you had talked about the, you know, difficult channel inventory position and the storms pressuring some of the orders from the distribution partners when you reported in early March. I guess, could you talk through more, you know, I guess, what drove the miss versus your expectations? Did you expect a more healthy ramp of orders into March that didn't materialize maybe due to the, you know, headline shock of gas prices and consumer sentiment? Just any further color on that.

Speaker #4: Hi, good morning. Thanks for taking our question. You had talked about the difficult channel inventory position and the storms pressuring some of the orders from the distribution partners when you reported in early March.

Speaker #4: So I guess could you talk through more I guess what drove the miss versus your expectations? Did you expect a more healthy ramp of orders into March that didn't materialize?

Speaker #4: Maybe do the headline shock of gas prices and consumer sentiment, just any further color on that?

Matthew Stevenson: Thanks for the question, Christian. You know, as Jesse just mentioned on Brian's question there, you know, in, I think it was the Q&A on the last call, we talked about, hey, we think about 2% to 3% of the growth in Q4, you know, normally would have fell into Q1 due to more working days and some of our distribution partners leaning out to hit their rebate targets. That ended up being from what we surmise here, probably north of 4%. Although, as Jesse just commented, you know, the outdoor doors were healthy, those weeks really impacted the sell-out rates in late January and early February at some of our key partners based on the weather. You got to remember, there's a bit of a seasonality effect in our business.

Speaker #3: Yeah, thanks for the question, Christian. Yeah, it's just mentioned on Brian's question there. In I think it was the Q&A on the last call, we talked about, "Hey, we think about two to three percent of the growth in Q4." Normally would have fell into Q1 due to more working days and some of our distribution partners leaning out to hit their rebate targets.

Speaker #3: That ended up being from what we surmise here, probably north of 4%. And although, as Jesse just commented, the out-the-doors were healthy. Those weeks really impacted the sell-out rates in late January and early February.

Speaker #3: Some of our key partners, based on the weather, you got to remember there's a bit of a seasonality effect in our business. People start working on their cars a lot more earlier in the south.

Matthew Stevenson: You know, people start working on their cars a lot more earlier in the South that really had unprecedented weather conditions, and we saw that, you know, by state in our D2C business, as well, and of course, impacted our D2C business in those weeks.

Speaker #3: That really had unprecedented weather conditions. And we saw that by state in our D2C business as well. And of course, impacted our D2C business in those weeks.

Christian Carlino: Got it. That's really helpful. You know, I know it's small, but, you know, one of the businesses you sold was Arizona Desert Shocks, and I think, you know, that's been a priority growth vertical in the past couple of years. Is it that maybe the vertical simply isn't growing what it was in the post-COVID days, or is it, you know, still a priority, but there was something specific about that business that didn't make sense? I guess more broadly, it seems like, you know, with the bolt-ons that you're planning, it's more about maybe filling in gaps in the portfolio versus expanding the TAM and growing into new verticals.

Speaker #1: Got it. That's really helpful. And I know it's small, but one of the businesses you sold was Arizona Desert Shocks. And I think the that's been a priority growth vertical in the past couple of years.

Speaker #1: So is it that maybe the vertical simply isn't growing what it was in the post-COVID days? Or is it still a priority, but there was something specific about that business that didn't make sense?

Speaker #1: And I guess more broadly, it seems like with the bolt-ons that you're planning, it's more about maybe filling in gaps in the portfolio versus expanding the TAM and growing into new verticals.

Christian Carlino: I guess, could you just talk a bit more about the broader M&A philosophy and sort of what multiples are you looking to pay for these bolt-ons?

Speaker #1: So I guess could you just talk a bit more about the broader M&A philosophy and sort of what multiples are you looking to pay for these bolt-ons?

Matthew Stevenson: Yeah. On Arizona Desert Shocks, I mean, great brand, great team, but effectively what we found is the scalability of that business, where they concentrated on really high-end racing shocks was just not something that was not scalable. When we looked at that business and the great team down there, it just made sense to return that business back to its former owner. That is a, you know, a segment that, you know, the core more of OE replacement plus, that you see in Fox and King and Bilstein and other things. It is a nice growing segment. We were just at the very upper end of that and missing the meat of what that market truly is.

Speaker #3: Yeah. So on Arizona Desert Shocks, I mean, great brand, great team. But effectively, what we found is the scalability of that business, where they concentrated on really high-end racing shocks, was just not something that was not scalable.

Speaker #3: And so when we looked at that business and the great team down there, it just made sense to return that business back to its former owner.

Speaker #3: But that is a segment that the core more of OE replacement plus that you see in Fox and King and Bilstein and other things, it is a nice growing segment.

Speaker #3: We were just at the very upper end of that. And missing the meat of what that market truly is. Now, when you take a look at HRX, I mean, you saw it in the numbers here, and you saw it in the fourth quarter.

Matthew Stevenson: When you take a look at HRX, I mean, you saw it in the numbers here and you saw it in Q4 2025, that our safety business is growing really nicely. When you look at our portfolio, you know, one of the things that was really an extension of it here was getting into more European kind of fit design racing suits that really are the preferred cut and look of racers around the world. We have, of course, racing suits with Simpson, and those are more of the Americana, NHRA, NASCAR type suits. HRX filled an opportunity for us for FIA suits in that aesthetic around the world. We're very excited about the business. It's growing really nicely. Got a great team over there. We're happy to have part of the family.

Speaker #3: Of '25, our safety business is growing really nicely. And when you look at our portfolio, one of the things that was really an extension of it here was getting into more European kind of fit design racing suits that really are the preferred cut and look of racers around the world.

Speaker #3: We have, of course, racing suits with Simpson. And those are more of the Americana and HRA, NASCAR-type suits. And HRX filled an opportunity for us for FIA suits in that aesthetic around the world.

Speaker #3: So we're very excited about the business. It's growing really nicely. Got a great team over there. We're happy to have part of the family.

Christian Carlino: Got it. Thank you very much. Best of luck.

Speaker #1: Got it. Thank you very much. Best of luck.

Speaker #3: Thanks, Christian.

Matthew Stevenson: Thanks, Christian.

Operator: Thank you. We take the next question from the line of Phillip Blee from William Blair. Please go ahead.

Speaker #1: Thank you. We take the next question from the line of Philip Blee from William Blair. Please go ahead.

Olivia Witty: Hey, guys. This is Olivia Witty on for Phillip. First, I wanted to ask, could you talk about your exposure to rising transportation costs as well as changes in tariff policy? Do you have any concerns there? Are you embedding any price increases into your guide to help offset?

Speaker #5: Hey, guys. This is Olivia Witty on for Philip. First, I wanted to ask, could you talk about your exposure to rising transportation costs as well as changes in tariff policy?

Speaker #5: Do you have any concerns there? And are you embedding any price increases into your guide to help offset?

Matthew Stevenson: Good morning, Olivia. Thanks for the question here. Just based on what's going on the kind of the macro environment, we're seeing some increases relative to freight and some other PPV coming through on resins and other components driven by some of the increases in oil prices. We'll be looking to take a moderate price increase. We're still finalizing the exact number, somewhere around the mid-June timeframe, and give our distributors ample notice in advance. Now when you look at the tariff landscape, of course, there's been a lot of puts and takes over time on there. You know, some of the IEPIs were reduced, of course, but that really was the minority of our tariff costs on the annual basis.

Speaker #3: Yeah, good morning, Olivia. Thanks for the question here. Yeah, just based on what's going on, kind of the macro environment, we're seeing some increases relative to freight and some other PPV coming through on resins.

Speaker #3: And other components driven by some of the increases in oil prices. So we'll be looking to take moderate price increase. We're still finalizing the exact number.

Speaker #3: Somewhere around give our distributors ample notice in advance. Now, when you look at the tariff landscape, of course, there's been a lot of puts and takes over time on there.

Matthew Stevenson: Now when you look at the tariff landscape, of course, there's been a lot of puts and takes over time on there. You know, some of the IEPIs were reduced, of course, but that really was the minority of our tariff costs on the annual basis. You know, those got reduced, other tariffs came in, ended up being somewhat of a wash overall when you looked at our overall tariff exposure on an annual run rate.

Speaker #3: So some of the IEPAs were reduced, of course. But that really was the minority of our tariff costs on annual basis. Those got reduced.

Matthew Stevenson: You know, those got reduced, other tariffs came in, ended up being somewhat of a wash overall when you looked at our overall tariff exposure on an annual run rate.

Speaker #3: Other tariffs came in, ended up being somewhat of a wash overall when you looked at our overall tariff exposure on an annual run rate.

Olivia Witty: Okay, great. That's helpful. Could you also talk about, obviously, Q1 was choppy across the board broader retail environment with weather and whatnot. Curious how you view your performance versus the industry during the quarter. Do you think you maintained the level of share gains that you saw during Q4?

Speaker #5: Okay, great. That's helpful. And then could you also talk about, obviously, the first quarter was choppy across the board, broader retail environment with weather and whatnot.

Speaker #5: But curious how you view your performance for the industry during the quarter? Do you think you maintained the level of share gains that you saw during the fourth quarter?

Speaker #3: Yeah, I mean, ultimately, the out-the-door is the true testament. Our consumers preferring our brands and buying our products. And as Jesse commented there a few minutes ago, the out-the-door is generally speaking, we're pretty healthy when you take out the weather effect.

Matthew Stevenson: Yeah, I mean, ultimately, the out the door is the true testament, you know, our consumers preferring our brands and buying our products. You know, as Jesse commented there a few minutes ago, you know, the out the doors, generally speaking, were pretty healthy when you take out the weather effect. You know, as we continue to maintain share in our key categories, we're seeing growth in other categories. Overall, we think that momentum we've built over the last, you know, 12 to 18 months is continuing. Jesse, we had this temporary effect of the weather that, as you just commented, you know, we're seeing in a lot of consumer businesses in the Q1.

Speaker #3: So as we continue to maintain share in our key categories, we're seeing growth in other categories. So overall, we think that momentum we've built over the last 12 to 18 months is continuing.

Speaker #3: And Jesse, we had this temporary effect with the weather that as you just commented was seen in a lot of consumer businesses in the first quarter.

Speaker #5: Okay, great. Thank you. I'll pass it on.

Olivia Witty: Okay, great. Thank you. I'll pass it on.

Speaker #3: Thank you.

Matthew Stevenson: Thank you.

Speaker #1: Thank you. We take the next question from the line of Joseph Altibello from Raymond James. Please go ahead.

Operator: Thank you. We take the next question from the line of Joseph Altobello from Raymond James. Please go ahead.

[Analyst] (Raymond James): Hey, good morning. This is Martin on for Joe. I just want to really quickly touch on the weather impact. You've quantified around $3 million. I'm wondering if you view that as completely lost, or could we see some recovery of it sort of in Q2?

Speaker #4: Hey, good morning. This is Martin on for Joe. I want to really quickly touch on the weather impact you've quantified around $3 million wondering if you view that as completely lost, or could we see some recovery of it sort of in the second quarter?

Matthew Stevenson: I think ultimately, Martin, you know, we got to see how the quarter continues to play out. You know, as we sit here, you know, early May, April was, you know, over 6% growth, right? It was a nice recovery going to the month of April, and we're seeing those demand trends stay consistent into May. You know, ultimately, we got to see if that demand washed out of the quarter completely or is recoverable here as we go through the remainder of the year.

Speaker #3: I think ultimately, Martin, we got to see how the quarter continues to play out. As we sit here in our early May, April was over 6% growth, right?

Speaker #3: So it was a nice recovery going on the month of April. And we're seeing those demand trends stay consistent into May. So ultimately, we got to see if that demand washed out of the quarter completely, or it's recoverable here as we go through the remainder of the year.

[Analyst] (Raymond James): All right, thank you. Just really quickly touching on the guidance you've taken down, the sales guidance of it, is that entirely the product, optimization? Just sort of, have you seen any kind of retailer concern on, consumer confidence because of the Iran war and the, increased, energy pricing?

Speaker #4: All right. Thank you. And just really quickly, touching on the guidance you've taken down the sales guidance of it, is that entirely the product optimization?

Speaker #4: And just sort of have you seen any kind of retailer concern on consumer confidence because of the Iran war and the increased energy pricing?

Speaker #3: Yeah, this is Jesse. Good question. On the guide, adjustment, that's purely the net impact of the portfolio optimization. So that includes both the businesses that we've identified that we need to find new homes for, offset by what we're getting picking up in HRX.

Jesse Weaver: Yeah, this is Jesse. Good question. On the guide adjustment, that's purely the net impact of the portfolio optimization. That includes both the businesses that we've identified that we need to, you know, find new homes for, offset by what we're picking up in HRX. On the question around retailers, can you restate that one?

Speaker #3: And then on the question around retailers, can you restate that one?

Speaker #4: Yeah, just have you had any concern from retailers about consumer confidence? I think you've said at least ordering patterns have normalized. But are you hearing anything about consumer confidence concerns?

[Analyst] (Raymond James): Just have you had any concern from retailers about consumer confidence? You know, I think you've said at least ordering patterns have normalized, but are you hearing anything about consumer confidence concerns?

Speaker #3: Yeah, I think our large customers and partners they read the headlines and knows the Michigan consumer confidence index and such. But at the same time, they're reporting to us to sell us generally speaking are good.

Matthew Stevenson: Yeah, I think, you know, our large customers and partners, you know, they read the headlines and those like, you know, University of Michigan Consumer Sentiment Index and such. At the same time, you know, they're reporting to us the sell-outs, generally speaking, are good. You know, the enthusiast customer base, this is a passion for them, right? This isn't, you know, something they do every 5 to 10 years or like some of these other consumer durables. Like this is their thing. This is what they go and do in the evenings and the weekends. This is what they do with family and friends. You know, they work on car modifications, or they go race on the track, or they go ride motorcycles. Parts of our business.

Speaker #3: And the enthusiast customer base, this is a passion for them, right? This isn't something they do every 5 to 10 years or like some of these other consumer durables.

Speaker #3: This is their thing. This is what they go and do in the evenings and the weekends. This is what they do with family and friends.

Speaker #3: They work on car modifications or they go race on the track or they go road motorcycles. The parts of our business. So we're cautiously optimistic.

Matthew Stevenson: You know, we're cautiously optimistic. Of course, with the extended conflict in the Middle East, you know, we got to see how that plays out. As of right now, you know, our large partners aren't reporting outside of the weather impact, any negative impact so far.

Speaker #3: Of course, with the extended conflict in the Middle East, we got to see how that plays out because right now, our large partners aren't reporting outside of the weather impact.

Speaker #3: Any negative impact so far.

[Analyst] (Raymond James): Great. Thank you, and best of luck.

Speaker #4: Great. Thank you, and best of luck.

Speaker #3: Thank you.

Matthew Stevenson: Thank you.

Operator: Thank you. We take the next question from the line of Joseph Feldman from Telsey Advisory Group. Please go ahead.

Speaker #1: Thank you. We take the next question from the line of Joe Feldman from Chelsea Advisory Group. Please go ahead.

Joseph Feldman: Yeah, thanks, guys, for taking the questions. With regard to the portfolio rebalancing, did any of that happen already in Q1? Did that impact any sales in Q1? How should it impact, you know, I guess, each of the next few quarters? Is it ratable? Is it all at once in Q2? How should we think about it?

Speaker #4: Yeah, thanks, guys, for taking the questions. With regard to the portfolio rebalancing, did any of that happen already in the first quarter? Did that impact any sales in the first quarter?

Speaker #4: And how should it impact I guess each of the next few quarters? Is it ratable? Is it all at once in the second quarter?

Speaker #4: How should we think about it?

Jesse Weaver: Joe, that's a great question. For Q1, no impact really in Q1. I would say for Q2, Q3, and Q4, to kind of foot to the, you know, $15 million on the top and bottom end of the guidance that was adjusted specifically for this activity, you probably see about $1 million in Q2 and about $7 million in Q3 and $7 million in Q4. The one caveat to that is obviously this is, you know, current estimate of timing of when these transactions would take place. Right now, that's our current pacing, and we'll obviously update as we go forward throughout this year on an apples-to-apples comparison, which as you can see in our guide, that hasn't changed at this point. The range is still the 2% to 7% on the core business, which would exclude the impacts of those pieces.

Speaker #3: Joe, it's a great question. So for Q1, no impact really in Q1. I would say for Q2, 3, and 4, to kind of foot to the 15 million on the top and bottom end of the guidance that was adjusted specifically for this activity.

Speaker #3: You probably see about 1 million in Q2 and about 7 in Q3 and 7 in Q4. The one caveat to that is obviously this is current estimate of timing of when these transactions would take place.

Speaker #3: But right now, that's our current pacing. And we'll obviously update as we go forward throughout this year on an apples-to-apples comparison which, as you can see in our guide, that hasn't changed at this point.

Speaker #3: The range is still the 2 to 7 percent on the core business, which would exclude the impacts of those pieces.

Joseph Feldman: Excellent. Thanks for that. That's helpful. Then with regard to the bolt-on acquisitions that you guys are talking about, is that contemplated in the CapEx guidance that you gave, or is that going to be incremental? I guess, how do we think of that portion of it?

Speaker #4: Excellent. Thanks for that. That's helpful. And then with regard to the bolt-on acquisitions that you guys are talking about, is that contemplated in the CapEx guidance that you gave, or is that going to be incremental or I guess how do we think of that portion of it?

Speaker #3: Yeah, the CapEx guidance would not account for any bolt-on acquisition activity. As it currently is laid out, I would say to Matt's earlier comments, these are businesses that we feel like have sustained long-term double-digit growth trajectory and they're in the relatively small range.

Jesse Weaver: The CapEx guidance would not account for any bolt-on acquisition activity as it currently is laid out. I would say, you know, to Matt's earlier comments, these are businesses that we feel like have sustained long-term, you know, double-digit growth trajectory, and they're in the relatively, you know, small range. I mean, we're talking $5 to 10 million with huge upside and things that we feel very confident we could fund with free cash flow. They're not in the guide at the moment. As they come along, we will absolutely, you know, be funding those with free cash flow.

Speaker #3: I mean, we're talking 5 to 10 million dollars with huge upside. And things that we feel very confident we could fund with free cash flow.

Speaker #3: So they're not in the guide at the moment. But as they come along, we will absolutely be funding those with free cash flow.

Joseph Feldman: Got it. That's helpful. Thanks, guys. Good luck with this Q.

Speaker #4: Got it. That's helpful. Thanks, guys. Good luck with this quarter.

Speaker #3: Thank you.

Jesse Weaver: Thank you.

Matthew Stevenson: Thanks, Joe.

Speaker #4: Thanks, Joe.

Operator: Thank you. We take the next question from the line of Bret Jordan from Jefferies. Please go ahead.

Speaker #1: Thank you. We’ll take the next question from the line of Brett Jordan from Jefferies. Please go ahead.

Bret Jordan: Hey, good morning, guys.

Speaker #5: Hey, good morning, guys.

Jesse Weaver: Hey, Bret.

Speaker #3: Hey, Brett.

Matthew Stevenson: Morning, Bret.

Bret Jordan: What was the contribution, year over year in same SKU price?

Speaker #4: What was the contribution year over year in same SKU price?

Jesse Weaver: Pricing was in the mid-single digits, Bret.

Speaker #3: Pricing was in the mid-single digits, Brett. From a price realization. Similar to kind of how we were pacing more and more throughout the end of last year.

Bret Jordan: Okay

Jesse Weaver: from a price realization, similar to kind of how we were pacing more and more throughout the end of last year, mid-single digits.

Speaker #3: So mid-single digits.

Bret Jordan: Okay. I guess the 12 brands that you saw growth, could you sort of give us just as perspective how many brands in total you are running, I guess, post the SKU call here?

Speaker #5: Okay. And then I guess the 12 brands that you saw growth, could you sort of give us just as perspective, how many brands in total you are running, I guess, post the SKU call here?

Matthew Stevenson: You know, the ones when we're talking about the SKU rationalization, Bret, there are only about 5, relatively speaking, in that bucket. When we talk about our Lifestyle and Power brands, it is roughly about 20 that we really concentrate across our 4 divisions and through our organization. You know, you saw a nice growth in some of the brands. In my prepared comments, I commented Stilo was a bit behind just for some product availability because Q4 demand was quite strong, so that limited some of their growth. You saw nice growth in Simpson and growth in Truck and Off-Road. The decline there on American Performance was really just a concentration of inventory at some key partners that primarily focus on American Performance. That's where you saw the differences across those 4 divisions.

Speaker #3: The ones when we're talking about the SKU rationalization, Brett, there are only about five relatively speaking in that bucket. But when we talk about our lifestyle and power brands, it's roughly about 20 that we really concentrate across our four divisions and through our organization.

Speaker #3: And you saw a nice growth in some of the brands in my prepared comments. I commented Euro was a bit behind just for some product availability because Q4 demand was quite strong.

Speaker #3: So that limited some of the growth. You saw a nice growth in safety, and growth in truck and off-road, and the decline there in American performance was really just a concentration of inventory at some key partners that primarily focus on American performance.

Speaker #3: So that's where you saw the differences across those four divisions.

Speaker #5: Okay. And I guess a quick question on HRX. I guess international distribution, are there other brands that you have in your portfolio that you can leverage into the HRX distribution?

Bret Jordan: Okay. I guess a quick question on HRX. I guess international distribution, are there other brands that you have in your portfolio that you can lever into the HRX, distribution?

Speaker #3: I'd say I'd look at it, Brett, in a broader context. International opportunity for our organization, we believe, is quite extensive. We're underpenetrated in Asia-Pacific, Europe, South America, Mexico, and a number of these areas that we're developing strategies for or executing on—like we are in Mexico and Latin America.

Matthew Stevenson: I'd say I'd look at it, Bret, in a broader context. International opportunity for our organization, we believe is quite extensive. You know, we're under-penetrated in Asia Pacific, Europe, South America, Mexico, a number of these areas that we're developing strategies for or executing on like we are in Mexico and Latin America. We, you know, we include HRX in our Lifestyle and Power brands, and they'll be part of this larger global expansion effort that we'll coordinate.

Speaker #3: So we include HRX in our lifestyle and power brands, and they'll be part of this larger global expansion effort that we will coordinate.

Bret Jordan: Okay, great. Thank you.

Speaker #5: Great. Thank you.

Speaker #3: Thanks, Brett.

Matthew Stevenson: Thanks, Bret.

Operator: Thank you. We take the next question from the line of Michael Baker from D.A. Davidson. Please go ahead.

Speaker #1: Thank you. We take the next question from the line of Mike Baker from DA Davidson. Please go ahead.

Michael Baker: Okay, great. Thanks. I guess just to follow up on a previous question, because, you know, it seems like your sales guidance is just in line with the portfolio rebalancing, both, the positive and addition and subtraction. Doesn't that necessarily mean that you expect the lost sales from Q1 to come back? Am I misinterpreting that? I know that was already asked, but I just wanted a clarification on that.

Mike Baker: Okay, great. Thanks. I guess just to follow up on a previous question, because, you know, it seems like your sales guidance is just in line with the portfolio rebalancing, both, the positive and addition and subtraction. Doesn't that necessarily mean that you expect the lost sales from Q1 to come back? Am I misinterpreting that? I know that was already asked, but I just wanted a clarification on that.

Speaker #5: Okay. Great. Thanks. I guess just to follow up on a previous question, because it seems like your sales guidance is just in line with the portfolio rebalancing both the positive and addition and the subtraction.

Speaker #5: Doesn't that necessarily mean that you expect the lost sales from the first quarter to come back? Am I misinterpreting that? I know that was already asked, but I just wanted a clarification on that.

Speaker #3: Yeah, no, it's a good clarification, Mike. I mean, I think that is exactly what that would imply. I mean, we're seeing pretty strong in April, and what that would imply for the balance of the year is 6 to 7 on each of the subsequent quarters.

Jesse Weaver: Yeah, no, it's a good clarification, Mike. I mean, I think that is exactly what that would imply. I mean, we're seeing pretty strong in April, and what that would imply for the balance of the year is, you know, six to seven on each of the subsequent quarters. It may not phase out exactly that way. Based on what we're seeing in April, we still feel like, you know, there's a lot of year left and reason to believe. I mean, some of the things that we've spoken to in the past were pretty significant new product development that's rolling out in Q3 and Q4. I mean, I think we hadn't spoken as much until this quarter about the new car care line, but we've seen really positive feedback from consumers as we started to introduce that at LS Fest West.

Speaker #3: It may not phase out exactly that way, but based on what we're seeing in April, we still feel like there's a lot of year left and reason to believe.

Speaker #3: I mean, some of the things that we've spoken to in the past were pretty significant new product development that's rolling out in Q3 and Q4.

Speaker #3: I mean, I think this we hadn't spoken as much until this quarter about the new car care line, but we've seen really positive feedback from consumers as we started to introduce that at LS Fest West.

Speaker #3: And that's just a really big TAM, something that we always knew could be big, but we feel really good about. In addition to that, you've got our CTS4, which is one of our top products, we also have the continued growth in the Snell cycle, growth in safety, and new products coming out within the EFI product line.

Jesse Weaver: That's just a really big TAM, something that we always knew could be big, but we feel really good about. In addition to that, you've got our CTS3, which is one of our top products. We also have, you know, the continued growth in the Snell cycle, growth in safety, and new products coming out within the EFI product line. That is what's implied.

Speaker #3: So that is what's implied.

Speaker #5: Okay. That's helpful. And maybe two quick related follow-ups. One, I guess with all the moving pieces of the weather shift and the exits and acquisitions, etc., last quarter, you had said expect the year to be 51% in the first half, 49% in the second half versus typically 52, 48.

Michael Baker: Okay. That's helpful. Maybe two quick related follow-ups. One, I guess with all the moving pieces of this, the weather shift, the exits, and acquisitions, et cetera, last quarter, you had said, expect the year to be 51% in H1, 49% in H2, versus typically 52/48. Can you help us sort of adjust that with all these moving parts? Then a related follow-up, the rebound in April and continuing into May, is that primarily on the American business? You know, has that improved from I think the -10 in Q1?

Mike Baker: Okay. That's helpful. Maybe two quick related follow-ups. One, I guess with all the moving pieces of this, the weather shift, the exits, and acquisitions, et cetera, last quarter, you had said, expect the year to be 51% in H1, 49% in H2, versus typically 52/48. Can you help us sort of adjust that with all these moving parts? Then a related follow-up, the rebound in April and continuing into May, is that primarily on the American business? You know, has that improved from I think the -10 in Q1?

Speaker #5: Can you help us sort of adjust that with all these moving parts? And then a related follow-up, the rebound in April and continuing into May, is that primarily on the American business?

Speaker #5: Is that improved from, I think, the minus 10 in the first quarter?

Speaker #3: Yeah. Mike, I'll take the back half of that question and I'll defer to Jesse for the first half. No, we're seeing nice recovery across the portfolio here as we get into April into May.

Matthew Stevenson: Yeah. Mike, I'll take the back half of that question, and I'll defer to Jess for the first half. No, we're seeing a nice recovery across the portfolio here as we get into April into May. Like, like I commented, a lot of that concentration of that inventory is in American Performance from, you know, in Q1, and we're seeing that turn around as that inventory is normalized in the weather and continuing to see, you know, nice growth across the board in all four divisions.

Speaker #3: Like I had commented, a lot of that concentration of that inventory is in American performance. And in Q1, we're seeing that turnaround as that inventory is normalized in the weather.

Speaker #3: And continuing to see nice growth across the board in all four divisions.

Speaker #5: Yeah. And Mike, to answer your question, after all the changes with the portfolio rebalancing, just on the first half, second half, it probably is going to be a bit more of the closer to 50 to 51 in the first half.

Jesse Weaver: Yeah. Mike, to answer your question, after all the changes with the portfolio rebalancing, just on the H1, H2, it probably is going to be a bit more of the closer to 50 to 51 in H1 versus the 51, you know, point guide that we gave before. A little bit less in H1 as a result of these.

Speaker #5: Versus the 51 point guide that we gave before. So a little bit less in the first half as a result of these. Understood. Thank you.

Michael Baker: Understood. Thank you.

Mike Baker: Understood. Thank you.

Speaker #3: Thanks, Mike.

Jesse Weaver: Thanks, Michael.

Speaker #1: Thank you. Ladies and gentlemen, has there are no further questions. With that, we conclude the question and answer session. I would now hand the conference over to Matthew Stevenson for his closing comments.

Operator: Thank you. Ladies and gentlemen, as there are no further questions, with that, we conclude the question and answer session. I will now hand the conference over to Matthew Stevenson for his closing comments.

Speaker #5: All right. Thank you, Ryan. Let's turn to slide 22. First quarter reinforced what we believe about this business. The fundamentals are durable. Despite temporary headwinds early in the quarter, we held adjusted EBITDA essentially flat year over year.

Matthew Stevenson: All right. Thank you, Ryan. Let's turn to slide 22. Q1 reinforced what we believe about this business. The fundamentals are durable. Despite temporary headwinds early in the quarter, we held adjusted EBITDA essentially flat year over year, a reflection of disciplined execution by our team and the resilience of our brand portfolio. With April showing mid-single digit growth and channel inventory normalizing, we are entering Q2 with genuine momentum. We are managing the portfolio with intention, streamlining where it creates value, investing where we see competitive advantage. Adjusted for our planned portfolio optimization actions, our full year outlook for our core business is unchanged. We remain committed to the long-term financial targets we set out, at least 6% organic top line growth, 40% gross margins, and greater than 20% adjusted EBITDA margin. That conviction hasn't wavered.

Speaker #5: A reflection of disciplined execution by our team and the resilience of our brand portfolio. With April showing mid-single-digit growth and channel inventory normalizing, we are entering Q2 with genuine momentum.

Speaker #5: We are managing the portfolio with intention, streamlining where it creates value, investing where we see competitive advantage. Adjusted for our planned portfolio optimization actions, our full-year outlook for our core business is unchanged.

Speaker #5: We remain committed to the long-term financial targets we set out, at least 6% organic top-line growth, 40% gross margins, and greater than 20% adjusted EBITDA margin.

Speaker #5: That conviction hasn't wavered. The automotive enthusiast market is a near $40 billion space driven by passion, loyal, and a culture that extends generations. Holly's portfolio of story brands sits at the center of it.

Matthew Stevenson: The automotive enthusiast market is a near $40 billion dollar space, driven by passion, loyal, and a culture that extends generations. Holley's portfolio of story brands sits at the center of it. We believe we are better positioned than anyone to serve that market and to grow in it through a combination of our brand heritage and the digital platform we are building. The path forward is clear. Disciplined growth, margin expansion, and sustainable free cash flow while continuing to invest in the innovation and experiences that keep our consumers at the heart of everything we do. In closing, I want to thank our team members for their dedication and hard work every single day, our consumers whose passion for performance drives everything we build, our distribution partners whose longstanding commitment has been essential to our success, and all of you on this call for your continued interest in Holley.

Speaker #5: We believe we are better positioned than anyone to serve that market and to grow in it through a combination of our brand heritage and the digital platform we are building.

Speaker #5: The path forward is clear. Disciplined growth, margin expansion, and sustainable free cash flow while continuing to invest in the innovation and experiences that keep our consumers at the heart of everything we do.

Matthew Stevenson: In closing, I want to thank our team members for their dedication and hard work every single day, our consumers whose passion for performance drives everything we build, our distribution partners whose longstanding commitment has been essential to our success, and all of you on this call for your continued interest in Holley. We look forward to updating you on our progress throughout the year. Thank you, and have a great rest of the day.

Speaker #5: In closing, I want to thank our team members for their dedication and hard work every single day. Our consumers whose passion for performance drives everything we build.

Speaker #5: Our distribution partners whose longstanding commitment has been essential to our success. And all of you on this call for your continued interest in Holly.

Speaker #5: We look forward to updating you on our progress throughout the year. Thank you, and have a great rest of the day.

Matthew Stevenson: We look forward to updating you on our progress throughout the year. Thank you, and have a great rest of the day.

Operator: Thank you. Ladies and gentlemen, the conference of Holley has now concluded. Thank you for your participation. You may now disconnect your lines.