# Holley Inc. (HLLY) Informational only - not investment advice. CIK: 0001822928 SIC: 3714 Motor Vehicle Parts & Accessories SIC breadcrumb: [Manufacturing](/division/D/) > [Transportation Equipment](/major-group/37/) > [SIC 3714 Motor Vehicle Parts & Accessories](/industry/3714/) Latest 10-K filed: 2026-03-16 SEC page: https://www.sec.gov/edgar/browse/?CIK=1822928 Filing source: https://www.sec.gov/Archives/edgar/data/1822928/000162828026018218/hlly-20251231.htm ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 613514000 | USD | 2025 | 2026-03-16 | | Net income | 19175000 | USD | 2025 | 2026-03-16 | | Assets | 1163953000 | USD | 2025 | 2026-03-16 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-16. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001822928.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts. | Metric | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | | 368,663,000 | 504,179,000 | 692,847,000 | 688,415,000 | 659,704,000 | 602,224,000 | 613,514,000 | | Net income | | 561,000 | 32,857,000 | -27,139,000 | 73,774,000 | 19,180,000 | -23,235,000 | 19,175,000 | | Operating income | | 46,074,000 | 85,455,000 | 77,523,000 | 50,742,000 | 94,038,000 | 14,668,000 | 82,481,000 | | Gross profit | | 148,779,000 | 208,244,000 | 286,807,000 | 253,658,000 | 256,089,000 | 238,544,000 | 266,235,000 | | Diluted EPS | | 0.01 | 0.49 | -0.30 | 0.14 | 0.16 | -0.20 | 0.16 | | Operating cash flow | | 9,418,000 | 88,413,000 | 21,583,000 | 12,312,000 | 88,092,000 | 46,899,000 | 46,220,000 | | Capital expenditures | | 7,421,000 | 9,433,000 | 15,233,000 | 13,590,000 | 5,934,000 | 6,804,000 | 12,321,000 | | Assets | | | 1,065,330,000 | 1,193,056,000 | 1,249,642,000 | 1,203,343,000 | 1,133,320,000 | 1,163,953,000 | | Liabilities | | | 824,949,000 | 888,569,000 | 833,652,000 | 762,192,000 | 712,168,000 | 715,028,000 | | Stockholders' equity | 204,806,000 | 205,414,000 | 240,381,000 | 304,487,000 | 415,990,000 | 441,151,000 | 421,152,000 | 448,925,000 | | Cash and cash equivalents | 10,963,000 | 8,335,000 | 71,674,000 | 36,325,000 | 26,150,000 | 41,081,000 | 56,087,000 | 37,231,000 | | Free cash flow | | 1,997,000 | 78,980,000 | 6,350,000 | -1,278,000 | 82,158,000 | 40,095,000 | 33,899,000 | ### Ratios ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported. | Metric | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net margin | | 0.15% | 6.52% | -3.92% | 10.72% | 2.91% | -3.86% | 3.13% | | Operating margin | | 12.50% | 16.95% | 11.19% | 7.37% | 14.25% | 2.44% | 13.44% | | Return on equity | | 0.27% | 13.67% | -8.91% | 17.73% | 4.35% | -5.52% | 4.27% | | Return on assets | | | 3.08% | -2.27% | 5.90% | 1.59% | -2.05% | 1.65% | | Liabilities / equity | | | 3.43 | 2.92 | 2.00 | 1.73 | 1.69 | 1.59 | | Current ratio | | | 3.15 | 3.18 | 3.21 | 3.17 | 3.12 | 2.75 | ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-06. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001822928.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2022-Q2 | 2022-07-03 | | | 0.35 | reported discrete quarter | | 2022-Q3 | 2022-10-02 | | | 0.27 | reported discrete quarter | | 2023-Q1 | 2023-04-02 | | | 0.04 | reported discrete quarter | | 2023-Q2 | 2023-04-02 | | 4,247,000 | | reported discrete quarter | | 2023-Q2 | 2023-07-02 | 175,262,000 | | 0.11 | reported discrete quarter | | 2023-Q3 | 2023-07-02 | | 12,979,000 | | reported discrete quarter | | 2023-Q3 | 2023-10-01 | 156,530,000 | | 0.01 | reported discrete quarter | | 2023-Q4 | 2023-12-31 | 155,707,000 | 1,202,000 | | derived Q4 = FY annual - nine-month YTD | | 2024-Q1 | 2024-03-31 | 158,636,000 | 3,730,000 | 0.03 | reported discrete quarter | | 2024-Q2 | 2024-03-31 | | 3,730,000 | | reported discrete quarter | | 2024-Q2 | 2024-06-30 | 169,496,000 | | 0.14 | reported discrete quarter | | 2024-Q3 | 2024-06-30 | | 17,105,000 | | reported discrete quarter | | 2024-Q3 | 2024-09-29 | 134,038,000 | | -0.05 | reported discrete quarter | | 2024-Q4 | 2024-12-31 | 140,054,000 | -37,782,000 | | derived Q4 = FY annual - nine-month YTD | | 2025-Q1 | 2025-03-30 | 153,044,000 | 2,817,000 | 0.02 | reported discrete quarter | | 2025-Q2 | 2025-03-30 | | 2,817,000 | | reported discrete quarter | | 2025-Q2 | 2025-06-29 | 166,661,000 | | 0.09 | reported discrete quarter | | 2025-Q3 | 2025-06-29 | | 10,863,000 | | reported discrete quarter | | 2025-Q3 | 2025-09-28 | 138,373,000 | | -0.01 | reported discrete quarter | | 2025-Q4 | 2025-12-31 | 155,436,000 | 6,301,000 | | derived Q4 = FY annual - nine-month YTD | | 2026-Q1 | 2026-03-29 | 147,330,000 | 7,257,000 | 0.06 | reported discrete quarter | ## Macro Cross-References - [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average - [UNRATE](/indicator/UNRATE/): Unemployment Rate - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private - [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit - [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit - [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity - [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity - [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity - [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy - [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food - [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy - [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter - [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index - [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index - [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities - [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate - [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons - [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm - [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate - [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio - [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed - [CE16OV](/indicator/CE16OV/): Employment Level - [ICSA](/indicator/ICSA/): Initial Claims - [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm - [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm - [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product - [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period - [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index - [TCU](/indicator/TCU/): Capacity Utilization: Total Index - [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units - [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units - [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade - [PCE](/indicator/PCE/): Personal Consumption Expenditures - [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income - [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate - [M2SL](/indicator/M2SL/): M2 - [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance - [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States - [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States - [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States - [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States - [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States - [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized - [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized - [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks - [GDP](/indicator/GDP/): Gross Domestic Product - [GPDI](/indicator/GPDI/): Gross Private Domestic Investment - [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment - [PCEC](/indicator/PCEC/): Personal Consumption Expenditures - [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services - [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt - [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product - [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit - [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts - [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures - [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing - [USCONS](/indicator/USCONS/): All Employees, Construction - [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade - [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities - [USGOVT](/indicator/USGOVT/): All Employees, Government - [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private - [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods - [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft - [BUSINV](/indicator/BUSINV/): Total Business Inventories - [EXPGS](/indicator/EXPGS/): Exports of Goods and Services - [IMPGS](/indicator/IMPGS/): Imports of Goods and Services - [IR](/indicator/IR/): Import Price Index (End Use): All Commodities - [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1822928/000182292826000017/hlly-20260329.htm Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high Filing date: 2026-05-06 Report date: 2026-03-29 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Unless the context otherwise requires or indicates, references to “Holley,” “we,” “us,” “our”, and “the Company” in this section are to the business and operations of Holley Inc. and its subsidiaries. The following discussion and analysis should be read in conjunction with Holley’s condensed consolidated financial statements and related notes thereto included in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties, and assumptions that could cause Holley’s actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed herein and under the caption, “Cautionary Note Regarding Forward-Looking Statements.” Overview We are a designer, marketer, and manufacturer of high-performance automotive aftermarket products serving car and truck enthusiasts, with sales, processing, and distribution facilities reaching most major markets in the United States, Canada, Europe, and China. Holley designs, markets, manufactures and distributes a diversified line of performance automotive products including fuel injection systems, tuners, exhaust products, carburetors, safety equipment and various other performance automotive products. Our products are designed to enhance street, off-road, recreational and competitive vehicle performance and safety. Central to our business and growth strategy is a commitment to innovation. We have a history of developing innovative products, including new additions to existing product families, expansions of product lines, accessory offerings, and ventures into entirely new categories. We believe this strategic approach allows us to continually adapt to evolving consumer needs. Furthermore, strategic acquisitions have played a significant role in our evolution. These acquisitions have enabled us to expand our brand portfolio, enter new product categories and consumer segments, enhance DTC scale and connection, increase market share in existing product categories, and realize valuable revenue and cost synergies. While we anticipate continued organic growth, we intend to continue evaluating opportunities for strategic acquisitions that align with our current business, expanding our reach within the target market. Factors Affecting our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed above, under the caption, "Cautionary Note Regarding Forward-Looking Statements," in this Quarterly Report on Form 10-Q, under the caption, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 16, 2026, and in our subsequent filings with the SEC. Business Environment Our business and results of operations, financial condition, and liquidity are impacted by broad economic conditions including inflation, labor shortages, disruption of the supply chain, and potential tariffs, as well as by geopolitical events, including military conflicts (including the conflict in Ukraine, the conflict in the Middle East, and the possible expansion of such conflicts). Our operations have been adversely impacted, and may continue to be adversely impacted, by inflationary pressures primarily related to transportation, labor and component costs. In response to the global supply chain volatility and inflationary impacts, we have attempted to minimize potential adverse impacts on our business with cost savings initiatives, price increases to customers, and by increasing inventory levels of certain products and working closely with our suppliers and customers to minimize disruptions in delivering products to customers. Our profitability has been, and may continue to be, adversely affected by constrained consumer demand, a shift in sales mix to lower-margin products, which is offset by our cost cutting and operating efficiency gains. Should the ongoing macroeconomic conditions not improve, or worsen, or if our attempts to mitigate the impact on our supply chain, operations and costs is not successful, our business, results of operations and financial condition may be adversely affected. Impact of Tariffs and International Trade Policy on Our Operations In February 2025, the United States government began to impose new tariffs on imports from certain countries and regions, including China, Canada, Mexico, and the European Union. In response, some foreign 30 Table of Contents governments implemented retaliatory measures. These developments introduced new complexities to global supply chains. However, we believe Holley's business model and sourcing strategies have positioned us to manage these challenges effectively. We believe that our international exposure is currently primarily centered in China. Tariffs on Chinese imports have been a factor in our sourcing strategies for several years, and we have proactively developed and implemented plans to mitigate their impact. These initiatives include, but are not limited to, conducting a harmonized tariff code audit to ensure accurate classification and compliance, changing to supplier locations outside of China, reshoring products to North America and exploring direct shipping from suppliers to international customers to reduce tariff exposure on goods entering the United States. We continue to evaluate additional strategies to further minimize the impact of tariffs on our operations. Because our production costs are primarily U.S.-based and we have a broad product portfolio with a strong concentration of manufacturing and sourcing in the United States, we believe our U.S. focus enables us to better manage and mitigate the impact of tariffs on pricing more effectively than competitors who are less diversified and more reliant on single-source imports from China. During the second quarter of 2025, we undertook the initiatives discussed above to mitigate the economic impact of tariffs on our product portfolio. We believe these initiatives combined with our pricing actions have allowed us to successfully manage the impact of the latest tariff decisions. However, if current tariff levels are sustained or increased, there is a risk that our profitability, cash flows and estimates inherent in our financial statements could be negatively affected. On February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). The ultimate availability, timing, and amount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory, and administrative developments. Accordingly, as of March 29, 2026, the Company has not recorded any benefit related to potential refunds of IEEPA tariffs paid. Following the Supreme Court’s decision, the U.S. Administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs may be imposed, modified, or suspended, and the impacts of such actions on our business. There also remains substantial uncertainty regarding how countries with which the U.S. has negotiated or is in the process of negotiating tariff trade deals will respond to any further tariff actions by the U.S. Administration. We continue to monitor and evaluate these developments in order to analyze their impact on our business and identify possible actions to minimize adverse effects. The extent and duration of these tariffs, as well as their broader impact on macroeconomic conditions and our business, remain uncertain and will depend on a variety of factors outside of our control. Nevertheless, we remain committed to optimizing our operations, managing costs and leveraging our diversified supply chain to minimize the impact of tariffs on our results of operations and financial condition. Known or Anticipated Trends As part of our strategic plan, we have launched a portfolio optimization initiative through which we expect to exit non-core, low profit businesses while reinvesting in targeted mergers and acquisitions that align with our strategic priorities. The first divestiture under this initiative, the sale of our Arizona Desert Shocks ("ADS") business, was completed on April 18, 2026, and we continue to evaluate additional divestiture and acquisition opportunities that meet our strategic and financial criteria. See Note 18, "Subsequent Events" in the Notes to the condensed consolidated financial statements included in this Quarterly Report for more details. For a more complete discussion of the risks facing our business, including risks related to our ability to execute our business strategy and to successfully integrate acquisitions or achieve the expected benefits from divestitures, see "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025. 31 Table of Contents Key Components of Results of Operations Net Sales The principal activity from which we generate our sales is the designing, marketing, manufacturing and distribution of performance aftermarket automotive parts for our end consumers. Sales are displayed net of rebates and sales returns allowances. Sales returns are recorded as a charge against gross sales in the period in which the related sales are recognized. Cost of Goods Sold Cost of goods sold consists primarily of the cost of purchased parts and manufactured products, including materials and direct labor costs. In addition, warranty, incoming shipping and handling and inspection and repair costs are also included within costs of goods sold. Reductions in the cost of inventory to its net realizable value are also a component of cost of goods sold. Selling, General, and Administrative Selling, general, and administrative costs consist of payroll and related personnel expenses, IT and office services, office rent expense and professional services. In addition, self-insurance, advertising, research and development, outgoing shipping costs, pre-production and start-up costs are also included within selling, general, and administrative. We have incurred additional expenses as a result of operating as a public company, including expenses necessary to comply with the rules and regulations applicable to companies listed on a national securities exchange and related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and director and officer insurance, investor relations and other professional services. Amortization of Intangible Assets Amortization of intangible assets represents the non‑cash expense related to the systematic write down of our definite‑lived intangible assets. Restructuring Costs Restructuring costs include charges attributable to operational restructuring and integration activities, including professional and consulting services, termination related benefits, facilities relocation, and executive transition costs. Interest Expense Interest expense consists of interest due on the indebtedness under our credit facilities. Interest is based on SOFR or the base rate, at the Company's election, plus the applicable margin rate. As of March 29, 2026, $529.4 million was outstanding under our Credit Agreement. Change in Fair Value of Warrant Liability Change in fair value of warrant liability represents remeasurement gains or losses on outstanding warrant liabilities, driven primaril [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Unless the context requires otherwise, references to “Holley,” “we,” “us,” “our”, and “the Company” in this section are to the business and operations of Holley Inc. The following discussion and analysis should be read in conjunction with Holley’s consolidated financial statements and related notes thereto included in this Annual Report on Form 10-K. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties, and assumptions that could cause Holley’s actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed herein and under the caption, “Cautionary Note Regarding Forward-Looking Statements.” Overview We are a designer, marketer, and manufacturer of high-performance automotive aftermarket products serving car and truck enthusiasts, with sales, processing, and distribution facilities reaching most major markets in the United States, Canada, Europe and China. Holley designs, markets, manufactures and distributes a diversified line of performance automotive products including fuel injection systems, tuners, exhaust products, carburetors, safety equipment and various other performance automotive products. Our products are designed to enhance street, off-road, recreational and competitive vehicle performance and safety. Central to our business and growth strategy is a commitment to innovation. We have a history of developing innovative products, including new additions to existing product families, expansions of product lines, accessory offerings, and ventures into entirely new categories. We believe this strategic approach allows us to continually adapt to evolving consumer needs. Furthermore, strategic acquisitions have played a significant role in our evolution. These acquisitions have enabled us to expand our brand portfolio, enter new product categories and consumer segments, enhance DTC scale and connection, increase market share in existing product categories, and realize valuable revenue and cost synergies. While we anticipate continued organic growth, we intend to continue evaluating opportunities for strategic acquisitions that align with our current business, expanding our reach within the target market. Factors Affecting our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section of this Form 10-K titled “Risk Factors.” Business Combination On July 16, 2021, we consummated the Business Combination pursuant to the Merger Agreement, by and among Empower, Merger Sub I, Merger Sub II, and Holley Intermediate. The Merger Agreement provided for, among other things, the following transactions: (i) Merger Sub I merged with and into Holley Intermediate, the separate corporate existence of Merger Sub I ceased and Holley Intermediate became the surviving corporation, and (ii) Holley Intermediate merged with and into Merger Sub II, the separate corporate existence of Holley Intermediate, and Merger Sub II became the surviving limited liability company. Upon closing of the Business Combination, Empower changed its name to Holley Inc. and its trading symbol on the NYSE from “EMPW” to “HLLY.” The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP"). Holley Intermediate was deemed the accounting acquirer with Holley Inc. as the successor registrant. As such, Empower was treated as the acquired company for financial reporting purposes, and financial statements for periods prior to the Business Combination are those of Holley Intermediate. As a result of the Business Combination, Holley Inc. listed on the NYSE, which required us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. We have incurred and expect to continue to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees, and additional internal and external accounting, legal, and administrative resources, including increased personnel costs, audit and other professional service fees. 36 Table of Contents Acquisitions We have historically pursued a growth strategy through both organic growth and acquisitions. We have pursued acquisitions that we believe will help drive profitability, cash flow and stockholder value. We target companies that we believe are market leaders, expand our geographic presence, provide a highly synergistic opportunity and/or enhance our ability to provide a wide array of our products to our customers through our distribution network. The acquisitions have all been accounted for in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 805, Business Combinations, and the operations of the acquired entities are included in our historical results for the periods following the closing of the applicable acquisition. See Note 1, “Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information related to our acquisitions and investments. Business Environment Our business and results of operations, financial condition, and liquidity are impacted by broad economic conditions including inflation, labor shortages, disruption of the supply chain, and potential tariffs, as well as by geopolitical events, including military conflicts (including the conflict in Ukraine, the conflict in Israel and surrounding areas, and the possible expansion of such conflicts). Our operations have been adversely impacted, and may continue to be adversely impacted, by inflationary pressures primarily related to transportation, labor and component costs. In response to the global supply chain volatility and inflationary impacts, we have attempted to minimize potential adverse impacts on our business with cost savings initiatives, price increases to customers, and by increasing inventory levels of certain products and working closely with our suppliers and customers to minimize disruptions in delivering products to customers. Our profitability has been, and may continue to be, adversely affected by constrained consumer demand, a shift in sales mix to lower-margin products, which is offset by our cost cutting and operating efficiency gains. Should the ongoing macroeconomic conditions not improve, or worsen, or if our attempts to mitigate the impact on our supply chain, operations and costs is not successful, our business, results of operations and financial condition may be adversely affected. Key Components of Results of Operations Net Sales The principal activity from which we generate our sales is the designing, marketing, manufacturing and distribution of performance aftermarket automotive parts for our end consumers. Sales are displayed net of rebates and sales returns allowances. Sales returns are recorded as a charge against gross sales in the period in which the related sales are recognized. Cost of Goods Sold Cost of goods sold consists primarily of the cost of purchased parts and manufactured products, including materials and direct labor costs. In addition, warranty, incoming shipping and handling and inspection and repair costs are also included within costs of goods sold. Reductions in the cost of inventory to its net realizable value are also a component of cost of goods sold. Selling, General, and Administrative Selling, general, and administrative consist of payroll and related personnel expenses, IT and office services, office rent expense and professional services. In addition, self-insurance, advertising, research and development, outgoing shipping costs, pre-production and start-up costs are also included within selling, general, and administrative. We have incurred additional expenses as a result of operating as a public company, including expenses necessary to comply with the rules and regulations applicable to companies listed on a national securities exchange and related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and director and officer insurance, investor relations and other professional services. Amortization of Intangible Assets Amortization of intangible assets represents the non‑cash expense related to the systematic write down of our definite‑lived intangible assets. 37 Table of Contents Impairment of Indefinite-lived Assets Impairment of indefinite-lived assets relates to indefinite-live trade name impairment charges. Impairment of Goodwill Impairment of goodwill relates to goodwill impairment charges. Loss on Sale of Assets Loss on sale of assets relates to the loss incurred related to the sale of Detroit Speed Engineering in the year ended December 31, 2024. Restructuring Costs Restructuring costs consist of professional fees for legal, accounting, consulting, administrative, and other professional services directly attributable to restructuring. Interest Expense Interest expense consists of interest due on the indebtedness under our credit facilities. On December 31, 2025, $529.4 million was outstanding under the Credit Agreement. Interest is based on the secured overnight financing rate ("SOFR") or prime rate, plus the applicable margin rate. Change in Fair Value of Warrant Liability Change in fair value of warrant liability represents remeasurement gains or losses on outstanding warrant liabilities, driven primarily by changes in our stock price and related valuation inputs. Change in Fair Value of Earn-out Liability Change in fair value of earn‑out liability reflects adjustments to contingent consideration based on revised expectations of earn‑out performance and updated valuation assumptions. Loss (Gain) on Early Extinguishment of Debt Extinguishment of debt consists of gains or losses recognized in connection with the termination, refinancing, or repayment of existing debt arrangements. These amounts include the write‑off of unamortized deferred financing costs, prepayment penalties, and the impact of any negotiated settlement amounts differing from the carrying value of the extinguished debt. 38 Table of Contents Results of Operations Year Ended December 31, 2025 Compared With Year Ended December 31, 2024 The table below presents our results of operations for the years ended December 31, 2025 and 2024 (dollars in thousands): For the years ended December 31, 2025 2024 Change ($) Change (%) Net sales $ 613,514  $ 602,224  $ 11,290  1.9  % Cost of goods sold 347,279  363,680  (16,401) (4.5) % Gross profit 266,235  238,544  27,691  11.6  % Selling, general, and administrative 146,132  132,149  13,983  10.6  % Research and development costs 18,831  18,710  121  0.6  % Amortization of intangible assets 13,778  13,884  (106) (0.8) % Impairment of indefinite-lived intangible assets —  7,695  (7,695) (100.0) % Impairment of goodwill —  40,906  (40,906) (100.0) % Loss on sale of assets —  9,234  (9,234) (100.0) % Restructuring costs 2,903  1,566  1,337  85.4  % Other expense (income) 2,110  (268) 2,378  (887.3) % Operating income 82,481  14,668  67,813  462.3  % Change in fair value of warrant liability 1,211  (7,570) 8,781  (116.0) % Change in fair value of earn-out liability 897  (2,333) 3,230  (138.4) % Loss (gain) on early extinguishment of debt (93) 141  (234) (166.0) % Interest expense 51,833  50,690  1,143  2.3  % Income (loss) before income taxes 28,633  (26,260) 54,893  (209.0) % Income tax expense (benefit) 9,458  (3,025) 12,483  (412.7) % Net income (loss) 19,175  (23,235) 42,410  (182.5) % Foreign currency translation adjustment 1,282  (452) 1,734  (383.6) % Total comprehensive income (loss) $ 20,457  $ (23,687) $ 44,144  (186.4) % Net Sales Net sales for the year ended December 31, 2025, increased $11.3 million, or 1.9%, to $613.5 million as compared to $602.2 million for the year ended December 31, 2024. Higher price realization, based upon core business sales data, resulted in an increase of approximately $16.0 million, offset partially by decrease in sales volume of approximately $4.7 million compared to the prior year period. The table below presents our net sales for the years ended December 31, 2025 and 2024, as well as sales related to divestitures and sales associated with our strategic product rationalization project. The divestitures sales relate to divested businesses prior to the divestiture date. The divestitures include Detroit Speed Engineering, Gear FX, and Proforged. The strategic product rationalization sales relate to discontinued stock keeping units ("SKUs"). For the year ended December 31, 2025 2024 Net Sales $ 613,514  $ 602,224  Divestitures —  12,821  Strategic Product Rationalization —  13,953  Cost of Goods Sold Cost of goods sold for year ended December 31, 2025, decreased $16.4 million, or 4.5%, to $347.3 million as compared to $363.7 million for the year ended December 31, 2024. The decrease in cost of goods sold during 39 Table of Contents the year ended December 31, 2025, was primarily due to higher manufacturing efficiency, stronger inventory discipline reducing obsolete product charges, and improved product quality that lowered warranty costs. These operational improvements along with prior year's $8.2 million of product rationalization initiative more than offset cost pressures despite a 1.9% increase in product sales Gross Profit and Gross Margin Gross profit for the year ended December 31, 2025, increased $27.7 million, or 11.6%, to $266.2 million as compared to $238.5 million for the year ended December 31, 2024. Gross margin for the year ended December 31, 2025, was 43.4% as compared to a gross margin of 39.6% for the year ended December 31, 2024. The increase in gross profit was primarily due to higher sales volume, reduced warranty claims, and the absence of $8.2 million related to the strategic product rationalization charge in prior year. Gross margin improvement for the year primarily reflects the absence of prior year inventory and clearance charges, pricing flow‑through, operational efficiencies across our facilities, improved product quality resulting in lower warranty costs, and reduced freight expense. Selling, General and Administrative Selling, general and administrative ("SG&A") costs for the year ended December 31, 2025, increased $14.0 million, or 10.6%, to $146.1 million as compared to $132.1 million for the year ended December 31, 2024. When expressed as a percentage of sales, selling, general and administrative costs increased to 23.8% of sales for the year ended December 31, 2025, compared to 21.9% of sales in 2024. The increase was driven primarily by higher salary and personnel-related expenses, reflecting the absence of prior-year furlough activity, higher incentive compensation, and incremental investments in personnel to support SOX compliance and related governance initiatives. SG&A also reflects increased external sales support and greater brand-building marketing expenditures to enhance brand awareness and support overall sales growth. Research and Development Costs Research and development costs for the year ended December 31, 2025, increased $0.1 million, or 0.6%, to $18.8 million as compared to $18.7 million for the year ended December 31, 2024. The increase was primarily due to the Company's realignment of employees' roles and responsibilities from selling, general and administrative to research and development. Amortization of Intangible Assets Amortization of intangible assets for the year ended December 31, 2025, decreased $0.1 million, or 0.8%, to $13.8 million as compared to $13.9 million for the year ended December 31, 2024. Impairment of Indefinite-lived Assets There was no impairment of indefinite-lived assets for the year ended December 31, 2025. Impairment of indefinite-lived assets for the year ended December 31, 2024 was $7.7 million, which related to our trade names. Refer to Note 5, “Goodwill and Other Intangible Assets” in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information related to our recognition of impairment charges. Impairment of Goodwill There was no impairment of goodwill for the year ended December 31, 2025. Impairment for goodwill for the year ended December 31, 2024 was $40.9 million. Refer Note 5, “Goodwill and Other Intangible Assets” in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information related to our recognition of impairment charges. Loss on Sale of Assets There was no loss on sale of assets for the year ended December 31, 2025. Loss on sale of assets for the year ended December 31, 2024 was $9.2 million, which relates to the sale of Detroit Speed Engineering. Restructuring Costs Restructuring costs for the year ended December 31, 2025, increased $1.3 million to $2.9 million, as compared to $1.6 million for the year ended December 31, 2024, reflecting restructuring and integration activities 40 Table of Contents associated with our implementation of resource allocation efforts in support of portfolio development optimization. Operating Income As a result of factors described above, operating income for the year ended December 31, 2025, increased $67.8 million, or 462.3%, to $82.5 million as compared to $14.7 million for the year ended December 31, 2024, which is primarily attributable to the $48.6 million impairment charges in the prior year. Change in Fair Value of Warrant Liability For the year ended December 31, 2025, we recognized a loss of $1.2 million due to the change in fair value of the warrant liability. This compares to a gain of $7.6 million for the year ended December 31, 2024. The warrant liability reflects the fair value of the Warrants issued in connection with the Business Combination. Change in Fair Value of Earn-Out Liability For the year ended December 31, 2025, we recognized a loss of $0.9 million due to the change in fair value of the earn-out liability. This compares to a gain of $2.3 million for the year ended December 31, 2024. The earn-out liability reflects the fair value of the unvested Earn-Out Shares resulting from the Business Combination. Loss (Gain) on Early Extinguishment of Debt For the year ended December 31, 2025, we recognized a gain of $0.1 million on the early extinguishment of debt as compared to a loss of $0.1 million for the year ended December 31, 2024. The gain in the year ended December 31, 2025 was recognized on the repurchase of $25.0 million of our first lien term loan at a discount to par, net of the write-off of unamortized debt issuance costs. The loss in the year ended December 31, 2024 was recognized on the repurchase of $25.0 million of our first lien term loan at a discount to par, net of the write-off of unamortized debt issuance costs. (Refer to Note 7, “Debt” for further discussion). Interest Expense Interest expense for the year ended December 31, 2025, increased $1.1 million, or 2.3%, to $51.8 million as compared to $50.7 million for the year ended December 31, 2024. The increase was primarily attributable to the unfavorable impact of the interest rate collar, which resulted in recognized interest expense of $3.4 million and interest income of $1.1 million related to the interest rate collar for the year ended December 31, 2025 and 2024, respectively. This increase was partially offset by lower interest expense on outstanding debt due to a decrease in our debt balance. Excluding the impact of the interest rate collar, underlying interest expense declined as a result of lower average outstanding borrowings from debt prepayments, partially offset by higher average interest rates. Income (Loss) before Income Taxes As a result of factors described above, we recognized $28.6 million of net income before income taxes for the year ended December 31, 2025, as compared to a loss before income taxes of $26.3 million for the year ended December 31, 2024. Income Tax Expense (Benefit) We recognized income tax expense of $9.5 million for the year ended December 31, 2025, as compared to income tax benefit of $3.0 million for the year ended December 31, 2024. The effective tax rate was 33.0% and 11.5% for the years ended December 31, 2025 and 2024, respectively. The difference between the effective tax rate and the federal statutory rate in 2025 was primarily due to permanent differences related to changes in fair value of the warrant and earn-out liabilities recognized during the period, state taxes, the impact of foreign taxes in higher tax rate jurisdictions, and excess tax deficiencies from share-based compensation recognized during the period. The difference between the effective tax rate and the federal statutory rate in 2024 was primarily due to permanent differences resulting from state income taxes, foreign rate differentials, compensation limits with respect to covered employees, goodwill asset impairment, valuation allowance and the change in fair value of warrant and earn-out liabilities. Net Income (Loss) and Total Comprehensive Income (Loss) As a result of factors described above, we recognized net income of $19.2 million for the year ended December 31, 2025, as compared to net loss of $23.2 million for the year ended December 31, 2024. 41 Table of Contents Additionally, we recognized total comprehensive income of $20.5 million for the year ended December 31, 2025, as compared to total comprehensive loss of $23.7 million for the year ended December 31, 2024. Comprehensive income includes the effect of foreign currency translation. Non-GAAP Financial Measures We present EBITDA and Adjusted EBITDA as supplemental measures of our operating performance and believe that such non-GAAP financial measures provide useful information to investors, because they exclude the impact of certain items that we do not consider indicative of our ongoing operating performance and we believe are useful in comparing our results of operations between periods. We believe that the presentation of EBITDA and Adjusted EBITDA enhances the usefulness of our financial information by presenting measures that management uses internally to establish forecasts, budgets and operational goals to manage and monitor our business. We believe that these non-GAAP financial measures help to depict a more realistic representation of the performance of our underlying business, enabling us to evaluate and plan more effectively for the future. EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Diluted EPS, and Free Cash Flow are not prepared in accordance with U.S. GAAP and may be different from non-GAAP financial measures used by other companies. These measures should not be considered as measures of financial performance under U.S. GAAP, and the items excluded from or included in these metrics are significant components in understanding and assessing our financial performance. These metrics should not be considered as alternatives to net income, gross profit, net cash provided by operating activities, or any other performance measures, as applicable, derived in accordance with U.S. GAAP. Adjusted EBITDA We define EBITDA as earnings before depreciation, amortization of intangible assets, interest expense, and income tax expense. We define Adjusted EBITDA as EBITDA adjusted to exclude, to the extent applicable, restructuring costs, which includes transaction fees and expenses, termination related benefits, facilities relocation, and executive transition costs; changes in the fair value of the warrant liability; changes in the fair value of the earn-out liability; equity-based compensation expense; impairment of goodwill and indefinite-lived intangible assets; loss on assets sold; loss or (gain) on the early extinguishment of debt; related party acquisition and management fee costs; notable items that we do not believe are reflective of operating performance, which for the year ended December 31, 2025, includes, $1.8 million non-recurring account remediation, $1.5 million consulting fees and talent acquisition fees; for the year ended December 31, 2024 includes, $2.0 million legal settlement accrual, costs incurred for advisory services related to identifying performance initiatives. EBITDA and Adjusted EBITDA are not prepared in accordance with U.S. GAAP and may be different from non-GAAP financial measures used by other companies. These measures should not be considered as measures of financial performance under U.S. GAAP, and the items excluded from or included in these metrics are significant components in understanding and assessing Holley’s financial performance. These metrics should not be considered as alternatives to net income (loss) or any other performance measures derived in accordance with U.S. GAAP. 42 Table of Contents The following unaudited table presents the reconciliation of net income (loss), the most directly comparable U.S. GAAP measure, to EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for the years ended December 31, 2025 and 2024 (dollars in thousands): For the years ended December 31, 2025 2024 Net income (loss) $ 19,175  $ (23,235) Adjustments: Depreciation 9,704  10,551  Amortization of intangible assets 13,778  13,884  Interest expense, net 51,833  50,690  Income tax expense (benefit) 9,458  (3,025) EBITDA 103,948  48,865  Restructuring costs 2,903  1,372  Change in fair value of warrant liability 1,211  (7,570) Change in fair value of earn-out liability 897  (2,333) Equity-based compensation expense 8,163  5,170  Impairment of indefinite-lived intangible assets —  7,695  Impairment of goodwill —  40,906  Loss on assets sold —  9,234  (Gain) loss on early extinguishment of debt (93) 141  Notable items 4,882  7,100  Other expense (income) 2,110  (86) Adjusted EBITDA $ 124,021  $ 110,494  For 2024, Adjusted EBITDA includes the impact of an $8.2 million non-cash charge and $1.7 million benefit related a strategic product rationalization, netting to $6.5 million non-cash charge. Adjusted Net Income and Adjusted Diluted EPS We define Adjusted Net Income as earnings excluding the after-tax effect of changes in the fair value of the warrant liability, changes in the fair value of the earn-out liability, impairment of goodwill and indefinite-lived intangible assets, loss on sale of assets, and gain or loss on the early extinguishment of debt. We define Adjusted Diluted EPS as Adjusted Net Income on a per share basis. Management uses these measures to focus on on-going operations and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present consolidated operating results. We believe that using this information, along with net income and net income per diluted share, provides for a more complete analysis of the results of operations. 43 Table of Contents The following unaudited tables present the reconciliation of net income and net income per diluted share, the most directly comparable U.S. GAAP measures, to Adjusted Net Income and Adjusted Diluted EPS for the years ended December 31, 2025 and 2024 (dollars in thousands): For the years ended December 31, 2025 2024 Net income (loss) $ 19,175  $ (23,235) Special items: Adjust for: Change in fair value of warrant liability 1,211  (7,570) Adjust for: Change in fair value of earn-out liability 897  (2,333) Adjust for: Impairment of indefinite-lived intangible assets —  7,695  Adjust for: Impairment of goodwill —  40,906  Adjust for: Loss on sale of assets —  9,234  Adjust for: Loss (gain) on early extinguishment of debt (93) 141  Adjusted Net Income $ 21,190  $ 24,838  For the years ended December 31, 2025 2024 Net income (loss) per diluted share $ 0.16  $ (0.20) Adjustments: Change in fair value of warrant liability 0.01  (0.06) Change in fair value of earn-out liability 0.01  (0.03) Impairment of indefinite-lived intangible assets -  0.06  Impairment of goodwill -  0.35  Loss on sale of assets -  0.08  Loss (gain) on early extinguishment of debt -  -  Adjusted Diluted EPS $ 0.18  $ 0.20  We define Free Cash Flow as net cash provided by operating activities minus cash payments for capital expenditures, net of dispositions. Management believes providing Free Cash Flow is useful for investors to understand our performance and results of cash generation after making capital investments required to support ongoing business operations. The following unaudited table presents the reconciliation of net cash provided by operating activities, the most directly comparable U.S. GAAP measure, to Free Cash Flow for the years ended December 31, 2025 and 2024 (dollars in thousands): For the years ended December 31, 2025 2024 Net cash provided by operating activities $ 46,220  $ 46,899  Capital expenditures (12,321) (6,804) Proceeds from the disposal of fixed assets 322  1,726  Free Cash Flow $ 34,221  $ 41,821  Liquidity and Capital Resources Our primary cash needs are to support working capital, capital expenditures, acquisitions, and debt repayments. We have generally financed our historical needs with operating cash flows, capital contributions and borrowings under our credit facilities. These sources of liquidity may be impacted by various factors, including demand for our products, investments made in acquired businesses, plant and equipment and other capital expenditures, and expenditures on general infrastructure and information technology. 44 Table of Contents On December 31, 2025, we had cash of $37.2 million and availability of $97.5 million under our $100.0 million senior secured revolving credit facility. On December 31, 2025, we had $2.5 million in letters of credit outstanding under the revolving credit facility. We are obligated under various operating leases for facilities, equipment, and automobiles with estimated lease payments of approximately $7.9 million, including short-term leases, due in fiscal year 2026. See Note 15, "Lease Commitments" in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information related to our lease obligations. Our capital expenditures for the year ended December 31, 2025 of $12.3 million are primarily related to ongoing maintenance and improvements, including investments related to upgrading and maintaining our information technology systems, tooling for new products, vehicles for product development, and machinery and equipment for operations. We expect capital expenditures of up to $20.0 million in fiscal year 2026. See Note 7, "Debt" in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further detail of our credit facility and the timing of principal maturities. On December 31, 2025, based on the then current weighted average interest rate of 7.8%, expected interest payments associated with outstanding debt totaled approximately $41.2 million for fiscal year 2026. As discussed under “Business Environment” above, although the future impact of supply chain disruptions, potential tariffs and inflationary pressures are highly uncertain, we believe that our current operating performance, operating plan, cash position, and borrowings available under our revolving credit facility will be sufficient to satisfy our liquidity needs and capital expenditure requirements for at least the next twelve months and thereafter for the foreseeable future. Cash Flows The following table provides a summary of cash flows from operating, investing, and financing activities for the periods presented (dollars in thousands): For the years ended December 31, 2025 2024 Cash flows provided by operating activities $ 46,220  $ 46,899  Cash flows (used in) provided by investing activities (32,229) 2,021  Cash flows used in financing activities (32,612) (34,605) Effect of foreign currency rate fluctuations on cash (235) 691  Net (decrease) increase in cash and cash equivalents $ (18,856) $ 15,006  Operating Activities. Net cash provided by operating activities for the year ended December 31, 2025, was $46.2 million compared to net cash provided by operating activities of $46.9 million for the year ended December 31, 2024. Cash used in operating activities included decreases in accounts receivable, inventories, and prepaids and other current assets of $21.4 million, $17.1 million, and $6.2 million, respectively. Partially offsetting the decrease were positive fluctuations from accounts payable, accrued interest, and accrued and other liabilities of $12.9 million, $0.1 million, $0.1 million, respectively. The changes in accounts receivable, accounts payable, and inventory are impacted by fluctuations in sales and accrued interest, accounts receivable and accounts payable are impacted by the timing of receipts and payments. Investing Activities. Net cash used in investing activities for the year ended December 31, 2025, was $32.2 million, primarily relating to the cash payments related to the acquisition of the perpetual license agreement with Cataclean in January 2025 of $20.2 million and other capital expenditures of $12.3 million. Cash provided by investing activities for the year ended December 31, 2024, was $2.0 million, primarily relating to the sales of Detroit Speed Engineering, which was partially offset by capital expenditures of $6.8 million. Financing Activities. Net cash used in financing activities for the year ended December 31, 2025, was $32.6 million, which primarily reflected principal payments on long-term debt. Cash used in financing activities for the year ended December 31, 2024, was $34.6 million, which primarily reflected principal payments on long-term debt. 45 Table of Contents Working Capital. On December 31, 2025, working capital was $201.0 million compared to $202.2 million on December 31, 2024. For the year ended December 31, 2025, accrued liabilities increased by $5.1 million and cash decreased by $18.9 million. Offsetting this decrease in working capital was an increase in accounts receivable of $21.4 million. Critical Accounting Estimates The discussion and analysis of Holley's financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with U.S. GAAP. See Note 1, "Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies", in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for a complete summary of the significant accounting policies used in the presentation of our financial statements. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts and related disclosures of assets, liabilities, revenue, and expenses. We evaluate our estimates and assumptions on an ongoing basis. The estimates and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, impacting our reported results of operations and financial condition. Critical accounting policies and estimates are those that management considers the most important to the portrayal of our financial condition and results of operations because they require the most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We believe that our most critical accounting estimates are related to accounting for inventory reserves, the fair value of assets and liabilities acquired in the Business Combination and acquisitions, and accounting for goodwill and intangible assets. These critical accounting policies are addressed below. Inventory Reserve Our inventories are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) method. Adjustments to reduce the cost of inventory to its net realizable value are made, if required, for estimated excess, obsolescence or impaired balances. See Part IV, Item 15 in this Annual Report on Form 10-K for additional information related to our inventory valuation reserve. We regularly monitor inventory quantities on hand and on order and record write-downs for excess and obsolete inventories based on our estimate of the demand for our products, potential obsolescence of technology, product life cycles, and when pricing trends or forecast indicate that the carrying value of inventory exceeds our estimated selling price. These factors are affected by market and economic conditions, technology changes, and new product introductions and require estimates that may include elements that are uncertain. Actual demand may differ from forecasted demand and may have a material effect on our gross margin. If inventory is written down, a new cost basis will be established that cannot be increased in future periods. Fair Value of Acquired Assets and Liabilities Assigning fair market values to the assets acquired and liabilities assumed at the date of an acquisition requires knowledge of current market values and the values of assets in use, and often requires the application of significant judgment regarding estimates and assumptions. The same applies to assigning fair market values to the liabilities assumed in the Business Combination at the date of the transaction and at each reporting date thereafter. While the ultimate responsibility resides with management, for certain acquisitions we retain the services of certified valuation specialists to assist with assigning estimated values to certain acquired assets and assumed liabilities, including intangible assets, tangible long- lived assets, and liabilities assumed in the Business Combination. Acquired intangible assets, excluding goodwill, are valued using various methodologies including discounted cash flows, relief from royalty, and multi-period excess earnings depending on the type of intangible asset purchased. These methodologies incorporate various estimates and assumptions, such as projected revenue growth rates, profit margins and forecasted cash flows based on discount rates and terminal growth rates. We use a Monte Carlo simulation model to estimate the fair value of our Private Warrants and earn-out liability assumed in the Business Combination, which requires certain subjective inputs and assumptions, including expected common stock price volatility, expected term, and risk-free interest rates. These estimates and assumptions could vary significantly, which could result in material differences in the fair values assigned to the assets and liabilities. See Note 10, "Fair Value Measurements" in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information related to our assets and liabilities measured at fair value. 46 Table of Contents Goodwill and Intangible Assets Goodwill and intangible assets deemed to have indefinite lives are not amortized but rather are tested at least annually for impairment, or more often if events or changes in circumstances indicate that more likely than not the carrying amount of the asset may not be recoverable. Goodwill is tested for impairment at the reporting unit level. A reporting unit represents an operating segment or a component of an operating segment. Goodwill is tested for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. We may elect not to perform the qualitative assessment and perform a quantitative impairment test. The estimate of the fair value of our reporting unit is based on the best information available as of the date of the assessment. We base our fair value estimate on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. We generally use a blended analysis of the present value of discounted cash flows and the market valuation approach. The discounted cash flow model uses the present values of estimated future cash flows. Considerable management judgment is necessary to evaluate the impact of operating and external economic factors in estimating our future cash flows. The assumptions we use in our evaluations include projections of growth rates and profitability, our estimated working capital needs, as well as our weighted average cost of capital. The market valuation approach indicates the fair value of a reporting unit based on a comparison to comparable publicly traded firms in similar businesses. Estimates used in the market value approach include the identification of similar companies with comparable business factors. These key assumptions are inherently uncertain and require a high degree of estimation and are subject to change based on, among others, industry and geopolitical conditions, our ability to navigate changing macroeconomic conditions and trends and the timing and success of strategic initiatives. Changes in economic and operating conditions impacting the assumptions we made could result in additional goodwill impairment in future periods. If the carrying value of the reporting unit exceeds fair value, goodwill is considered impaired. A goodwill impairment loss is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. The Company completed its annual goodwill impairment analysis in the fourth quarter of fiscal 2025, in conjunction with its budgeting and forecasting process for fiscal year 2026. Based on this analysis, the Company concluded that no goodwill impairment existed for its reporting unit for the year ended December 31, 2025. During our annual impairment assessment and in subsequent interim quarters, we review events that occur or circumstances that change, including the macroeconomic environment, our business performance and our market capitalization, to determine if a quantitative impairment assessment is necessary. If assumptions are not achieved or market conditions decline, potential impairment charges could result. Impairments to goodwill and other intangible assets may be caused by factors outside our control, such as increasing competitive pricing pressures, changes in discount rates based on changes in cost of capital (i.e., as a result of changes in interest rates or other conditions), lower than expected sales and profit growth rates, changes in industry EBITDA multiples, the inability to quickly replace lost co-manufacturing business, or the bankruptcy of a significant customer. Intangible assets include trade names, customer relationships and developed technology obtained through business acquisitions. Acquired finite-lived tangible assets are initially recorded at fair value and are amortized on a straight-line basis over their estimated useful lives. Indefinite life intangible assets are not amortized but are tested for impairment at least annually or more often if circumstances indicate that the carrying amounts may not be recoverable. During the fourth quarter of 2025, the Company completed qualitative and quantitative assessments on indefinite life intangible assets. The Company performed qualitative assessments for certain indefinite‑lived tradenames and quantitative assessments for other indefinite‑lived intangible assets for which indicators of impairment were identified. Based on the qualitative and quantitative assessments, the Company concluded that no material impairment existed for any of its indefinite‑lived tradenames for the year ended December 31, 2025. 47 Table of Contents Recent Accounting Pronouncements For a discussion of Holley’s new or recently adopted accounting pronouncements, see Note 1, “Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.