S&P Upgrades Holley Performance Brands’ Credit and Debt Ratings
S&P Global Ratings has upgraded Holley Performance Brands' (NYSE: HLLY) issuer credit rating from 'B-' to 'B' and senior secured issue-level rating from 'B-' to 'B' as of June 13, 2024.
This upgrade reflects Holley's improved leverage ratio, stronger profitability, debt paydown, and consistent free cash flow generation. CFO Jesse Weaver attributed this milestone to the company's focused financial strategies and emphasized the ongoing commitment to reduce leverage, enhance profitability, and improve cash flow.
- S&P upgraded Holley's issuer credit rating from 'B-' to 'B'.
- Improved leverage ratio due to stronger profitability and debt paydown.
- Consistent free cash flow generation acknowledged by S&P.
- Potential to further reduce cost of capital recognized.
- Progress in financial health over several quarters.
- Current rating is still below investment grade (‘B’ rating).
Insights
Holley Performance Brands has received a credit rating upgrade from S&P Global Ratings, improving from ‘B-’ to ‘B’. This is a significant indicator of the company's progress in financial health. Credit ratings are critical as they affect the cost of borrowing and the company's access to capital markets.
The upgrade signifies that Holley has demonstrated improved profitability, debt reduction and consistent free cash flow generation. In simpler terms, the company is making more money, paying down its debt more effectively and managing its cash flows better.
From a short-term perspective, the improved credit rating could lower Holley’s borrowing costs, making it cheaper for them to finance operations and invest in growth. This is beneficial for investors as it can lead to enhanced profitability and potentially higher dividends or stock buybacks.
In the long-term, maintaining a better credit rating can provide strategic financial flexibility and resilience during economic downturns, allowing the company to continue its growth trajectory while managing risks more effectively.
However, it is important for investors to monitor whether the company can sustain these improvements. The automotive aftermarket is competitive and cyclical, with fluctuations in demand potentially impacting future financial performance.
The upgrade in Holley’s credit and debt ratings also provides valuable insights into broader market trends. The automotive aftermarket industry remains robust and Holley’s performance indicates a growing demand for aftermarket performance solutions.
Market analysts might view this upgrade as a positive indicator of sector health. An improved credit rating for a significant industry player like Holley often reflects underlying strength in the market for automotive performance products, which can be a bullish signal for related stocks and investments.
Additionally, Holley’s strides in debt reduction and cash flow management underscore a key trend where companies are focusing more on financial discipline and operational efficiency. This strategy aligns with investor preferences for stable, financially sound companies in economically uncertain times.
Investors should consider whether Holley’s improvements are sustainable and how they compare with peers in the industry. Understanding the company's market position and competitive edge can provide a clearer picture of its potential for continued success.
Company has demonstrated improved financial performance over the past several quarters
S&P highlighted that the upgrade reflects Holley’s improvement in leverage ratio supported by stronger profitability, debt paydown, and more consistent free cash flow generation.
“We are proud of the progress we have made over the past few quarters improving the financial health of Holley,” said Jesse Weaver, Chief Financial Officer, Holley Performance Brands. “The upgrade from S&P denotes a significant milestone as we continue to focus on our key financial priorities. The report recognizes the strengthening of Holley’s balance sheet and our potential to further reduce our cost of capital. We look forward to continuing to execute on our financial priorities while reducing leverage further, driving better profitability and generating improved cash flow.”
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Certain statements in this press release may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties, and other important factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including but not limited to Holley’s ability to (1) successfully design, develop, and market new products, (2) maintain and strengthen demand for our products, (3) attract new customers in a cost-effective manner, (4) expand into additional consumer markets, and (5) and the other risks and uncertainties set forth in the Annual Report on Form 10-K for the year ended December 31, 2023 filed with the
About Holley Performance Brands
Holley Performance Brands (NYSE: HLLY) leads in the design, manufacturing and marketing of high-performance products for automotive enthusiasts. The company owns and manages a portfolio of iconic brands, catering to a diverse community of enthusiasts passionate about the customization and performance of their vehicles. Holley Performance Brands distinguishes itself through a strategic focus on four consumer vertical groupings, including Domestic Muscle, Modern Truck & Off-Road, Euro & Import, and Safety & Racing, ensuring a wide-ranging impact across the automotive aftermarket industry. Renowned for its innovative approach and strategic acquisitions, Holley Performance Brands is committed to enhancing the enthusiast experience and driving growth through innovation. For more information on Holley Performance Brands and its dedication to automotive excellence, visit https://www.holley.com.
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Investor Relations:
Anthony Rozmus / Neel Sikka
Solebury Strategic Communications
203-428-3224
Holley@soleburystrat.com
Source: Holley Performance Brands
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