10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to         

Commission file number: 001-39599

HOLLEY INC.

(Exact name of registrant as specified in its charter)

Delaware	87-1727560
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1801 Russellville Road, Bowling Green, KY 42101

(Address of principal executive offices)

(270) 782-2900

(Registrant’s telephone number, including area code) (Zip code)

Securities registered pursuant to Section 12(b) of the Act:

	Trading	Name of each exchange
Title of each class	symbol(s)	on which registered
Common Stock, par value $0.0001	HLLY	New York Stock Exchange
Warrants to Purchase Common Stock	HLLY WS	New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.  ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 2, 2023, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s common stock held by non-affiliates, computed by reference to the closing sales price of $4.09 reported on the New York Stock Exchange, was approximately $215 million.

There were 118,801,030 shares of Common Stock, including 1,093,750 restricted earn-out shares, par value $0.0001 per share, issued and outstanding as of March 1, 2024.

Documents incorporated by reference: Parts of the registrant’s Proxy Statement for the registrant’s 2024 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K.

PART I
Item 1.	Business	4
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	32
Item 1C.	Cybersecurity	32
Item 2.	Properties	33
Item 3.	Legal Proceedings	33
Item 4.	Mine Safety Disclosures	33
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	34
Item 6.	Reserved	34
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 8.	Financial Statements and Supplementary Data	48
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	49
Item 9A.	Controls and Procedures	49
Item 9B.	Other Information	49
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	49
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	50
Item 11.	Executive Compensation	50
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	50
Item 13.	Certain Relationships and Related Transactions, and Director Independence	50
Item 14.	Principal Accountant Fees and Services	50
PART IV
Item 15.	Exhibits, Financial Statement Schedules	51
Item 16.	Form 10-K Summary	51

1

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are intended to enjoy the protection of the safe harbor for forward-looking statements provided by the Securities Act and Exchange Act, as well as protections afforded by other federal securities laws. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for the Company’s business. Forward-looking statements may be accompanied by words such as “believe,” “estimate,” “expect,” “project,” “forecast,” “may,” “will,” “should,” “seek,” “plan,” “scheduled,” “anticipate,” “intend” or similar expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside our control. Therefore, you should not place undue reliance on such statements. These forward-looking statements are subject to a number of risks and uncertainties and actual results could differ materially due to numerous factors, including, but not limited to, the Company’s ability to do any of the following:

• execute our business strategy, including monetization of services provided and expansions in and into existing and new lines of business;

• anticipate and manage through disruptions and higher costs in manufacturing, supply chain, logistical operations, and shortages of certain company products in distribution channels;

• anticipate and manage through supply shortages of key component parts used in our products and the need to shift the mix of products offered in response thereto;

• respond to the impact of geopolitical events, including military conflicts (including the conflict in Ukraine, the conflict in Israel and surrounding areas, the possible expansion of such conflicts and potential geopolitical consequences), the interruption from catastrophic events and problems such as terrorism and public health crises;

• maintain key strategic relationships with partners and resellers;

• anticipate and manage through the impact of elevated interest rate levels, which cause the cost of capital to increase, as well as respond to inflationary pressures;

• enhance future operating and financial results;

• respond to uncertainties associated with product and service development and market acceptance;

• anticipate and manage through fluctuations in consumer demand and/or shifts in the mix of products sold;

• attract and retain qualified employees and key personnel;

• protect and enhance the Company’s corporate reputation and brand awareness;

• recognition of goodwill and other intangible asset impairment charges;

• effectively respond to general economic and business conditions;

• acquire and protect intellectual property;

• collect, store, process and use personal and payment information and other consumer data;

• comply with privacy and data protection laws and other legal obligations related to privacy, information security, and data protection;

• manage the impact of any security breaches, cyber-attacks, or other cybersecurity threats or incidents, or the failure of any key information technology systems;

• meet future liquidity requirements and comply with restrictive covenants related to long-term indebtedness;

• obtain additional capital, including use of the debt market;

• manage to finance operations on an economically viable basis;

• maintain Holley’s New York Stock Exchange (“NYSE”) listing of our common stock (“Common Stock”) and warrants to purchase Common Stock ("Warrants");

• comply with existing and /or future laws and regulations applicable to our business, including laws and regulations related to environmental health and safety and the recently issued required climate-related disclosures;

• respond to litigation, complaints, product liability claims and/or adverse publicity;

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• anticipate the significance and timing of contractual obligations;

• anticipate the impact of, and response to, new accounting standards;

• maintain proper and effective internal controls;

• respond to the impact of changes in U.S. laws and regulations, including the impact on deferred tax assets;

• anticipate the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”);

• anticipate the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, and demographic trends; and

• other risks and factors, listed under the caption “Risk Factors” included in this Annual Report on Form 10-K, and/or as disclosed in any subsequent filings with the SEC.

Forward-looking statements are based on information available as of the date of this Annual Report on Form 10-K and our management’s expectations, forecasts and assumptions, and involve a number of judgements, risks and uncertainties, and actual results, developments and business decisions may differ materially from those envisaged by such forward-looking statements. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. We undertake no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

SUMMARY OF RISK FACTORS

The following summarizes the principal factors that make an investment in Holley speculative or risky. You should carefully consider the following risks as well as the other information included in this Annual Report on Form 10-K, including “Cautionary Note Regarding Forward-Looking Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes thereto included elsewhere herein, before investing in our securities. See “Risk Factors” for a more detailed discussion of the risk factors listed below.

Risk Related to Our Business and Industry

• A downturn in consumer spending, including as a result of a severe or prolonged economic downturn, could adversely impact our financial condition and results of operations.

• Inflation could result in higher costs and decreased profitability.

• Disruptions of supply or shortages of raw materials or components used in our products could harm our business and profitability, as well as the financial condition of our distributors.

• A significant disruption in the operations of our manufacturing facilities or distribution centers could have a material adverse effect on our business, sales, financial condition and results of operations.

• Pandemics, epidemics or other public health crises could adversely affect our business, sales, financial condition and results of operations and our ability to access current or obtain new lending facilities.

• Failure to compete effectively or to develop and market new products and a reduction in demand for our products could reduce our business, financial condition and results of operations.

• Increased electric vehicles ownership could impact our financial condition and results of operations.

• Inaccurate forecasting of product demand could harm our financial performance.

• We may not be able to effectively manage our growth.

• Our growth partially depends on attracting new customers in a cost-effective manner and expanding into additional consumer markets and we may not successfully do so.

• Our failure to protect our brand could harm our financial condition and results of operations.

• Our profitability may decline as a result of increasing pressure on pricing.

• Our failure to maintain relationships with retail partners or increase sales through our direct-to-consumer ("DTC") channel could harm our business.

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• Our success depends on the continuing efforts of our employees and retention of skilled personnel, and our results of operations may be adversely affected by labor shortages, turnover and labor cost increases.

• Our operations and reputation may be negatively impacted if our information technology systems fail to perform adequately or if we experience an interruption in our operations due to security threats or disruptions.

• Adverse developments affecting the financial services industry, such as bank failures, could have an adverse impact on our financial condition and results of operations.

• If our estimates relating to our accounting policies prove to be incorrect, our results of operations could be harmed.

• Our disclosure controls and procedures may not prevent or detect all acts of fraud.

• Our business could be negatively impacted by the effects of global climate change or the increasing scrutiny and evolving expectations with respect to our environment, social and governance practices.

Legal, Regulatory and Compliance Risks Related to Our Business

• We may become involved in legal or regulatory proceedings, including intellectual property claims or lawsuits that could cause us to incur significant costs or that could prohibit us from selling our products.

• Unauthorized sales of our products could harm our reputation.

• We are subject to environmental, health and safety laws and regulations as well as privacy laws, regulations, and standards, which could subject us to liabilities, increase costs or restrict operations in the future.

• Our insurance policies may not provide adequate levels of coverage against all claims, and we may incur losses that are not covered by our insurance.

Risks Related to Ownership of Our Securities

• Certain of our stockholders, including Holley Parent Holdings, LLC (the “Holley Stockholder”) and the Empower Sponsor Holdings LLC (the “Sponsor”) (together with its affiliates), may have conflicts of interest with other stockholders and may limit your ability to influence corporate matters.

• Warrants are exercisable for Common Stock, which could increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

• The Warrants may never be in the money, they may expire worthless, or the terms of the Warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then-outstanding Warrants approve of such amendment.

• The market price and trading volume of Common Stock and Warrants may be volatile.

• Reports published by analysts could adversely affect the market price and trading volume of Common Stock and Warrants.

• Future sales of Common Stock and Warrants in the public market could cause our stock price to fall.

• We may redeem unexpired Warrants to their exercise at a time that is disadvantageous to the Warrant holders, thereby making the Warrants worthless.

PART I

Item 1. Business

About Us

Founded in 1903, Holley, Inc. has been a part of the automotive industry for well over a century. We design, manufacture, and distribute high-performance automotive aftermarket products to car and truck enthusiasts primarily in the United States, Canada and Europe. Our products span a number of automotive platforms and are sold across multiple channels. We are a leading manufacturer of a diversified line of performance automotive products, including carburetors, fuel pumps, fuel injection systems, nitrous oxide injection systems, superchargers, exhaust headers, mufflers, distributors, ignition components, engine tuners and automotive performance plumbing products. We are also a leading manufacturer of exhaust products as well as shifters, converters, transmission kits, transmissions, tuners and automotive software. Our products are designed to enhance street, off-road, recreational and competitive vehicle performance through increased horsepower, torque and drivability. We have locations in the United States, Canada, Italy and China.

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We attribute a major component of our success to our brands, including Holley EFI, Holley, MSD, Simpson, Powerteq, Accel and Flowmaster, among others. In addition, we have recently added to our brand lineup through a series of strategic acquisitions, including our 2022 acquisitions of John’s Ind., Inc., Southern Kentucky Classics, and Vesta Motorsports USA, Inc., d.b.a. RaceQuip, and our 2021 acquisitions of AEM Performance Electronics, Classic Instruments LLC, ADS Precision Machining, Inc., d.b.a. Arizona Desert Shocks, Baer, Inc, d.b.a. Baer Brakes, Brothers Mail Order Industries, Inc., d.b.a. Brothers Trucks, Rocket Performance Machine, Inc., d.b.a. Rocket Racing Wheels, and Speartech Fuel Injections Systems, Inc. Through these strategic acquisitions, we have increased our market position in the otherwise highly fragmented performance automotive aftermarket industry.

We operate in the performance automotive aftermarket parts industry. We believe there is ample opportunity to continue our expansion into new products and markets, such as exterior accessories and mobile electronics, representing a natural progression for us to grow market share as these adjacencies are driven by passionate enthusiasts, consistent with our core categories. See also “Risk Factors—Risks Relating to Holley’s Business and Industry—If the Company is unable to successfully design, develop and market new products, the Company business may be harmed” for a discussion of the risks related to the Company’s new product development.

On July 16, 2021, we consummated a business combination (the “Business Combination”) pursuant to that certain Agreement and Plan of Merger dated March 11, 2021 (the “Merger Agreement”), by and among Empower Ltd., (“Empower”), Empower Merger Sub I Inc., a direct wholly owned subsidiary of Empower (“Merger Sub I”), Empower Merger Sub II LLC, a direct wholly owned subsidiary of Empower (“Merger Sub II”), and Holley Intermediate Holdings, Inc. (“Holley Intermediate”) on July 16, 2021, (the “Closing” and such date, the “Closing Date”). 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 ceased, and Merger Sub II became the surviving limited liability company. On the Closing Date, Empower changed its name to Holley Inc. and its trading symbol on the NYSE from “EMPW” to “HLLY.”

Business Strategy

For over 100 years, we have pursued our mission of bringing innovation, discovery and fun to motor life. Today, as Holley Performance Brands, we are the leader in delivering high performance platform solutions, driven to accelerate the passion of auto enthusiasts around the globe. Through our portfolio of leading brands – ranging from icons of the American Road, to emerging technologies – we serve a large, diverse community of expert partners and enthusiast consumers across nine distinct consumer verticals, including Classic Truck, Classic Muscle, Modern Muscle, Modern Truck, Off-Road, Euro, Import, Safety and Racing. 

We plan to unlock the full potential of Holley’s innovation-led research and development ("R&D") product portfolio and brand powerhouse in the performance automotive aftermarket across all nine verticals through our highly focused Steering Principles of Fueling our Teammates, Supercharging our Customers and Accelerating Profitable Growth.

• Fueling our teammates: At the heart of our growth strategy lies not just innovation, but the people who drive it. Our first objective is to create a premier place to work that attracts, retains, and empowers talented individuals who share our passion for automotive performance. We will do this by creating an environment that excites, empowers, and nurtures our teammates to their full potential by providing them with the resources, knowledge, encouragement, and motivation they need to excel in their roles. This commitment extends beyond traditional employee engagement strategies; it recognizes the critical link between an enthusiast-driven workforce and the development of highly differentiated products that resonate with our target market. By fostering an environment where our teammates’ automotive passions thrive, with shared goals, we will create a synergy that sparks creative solutions, fuels collaboration, and propels us to new heights.

• Supercharging our Customers: As a leading enthusiast platform in the automotive performance aftermarket, our objective is to deliver exceptional value, innovation, and support to our customers, ultimately creating a loyal and satisfied base of consumer and distribution partners who continue to choose Holley Performance Brands for their automotive needs. We have a comprehensive marketing strategy tailored to the specific needs of the targeted consumer verticals. Our objective is sales growth through our DTC channel and our loyal distribution partners. We intend to balance the growth between these two channels based on the needs of the consumer verticals and our overall cost to serve the end customer through each channel. Our comprehensive marketing strategy is focused on creating pull for our products through digital and non-digital platforms and partnering with our distribution partners to ensure our products are available and well represented in their offering. In addition, we have a long history of creating excitement around our brands by hosting and participating in experiential enthusiast events. We believe events create the opportunity for us to remain closely connected to our enthusiast consumer, get feedback directly from enthusiasts on our offering, and broaden our understanding of the latest consumer trends.

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• Accelerating Profitable Growth: Our third strategic objective is to significantly increase revenue by expanding our market share while maintaining and improving profitability. We aim to achieve those objectives more quickly than in the past by focusing on our nine go-to-market consumer verticals and launching innovative new products, entering new product categories, implementing sales and marketing strategies to boost revenue, and through strategic acquisitions. We also intend to achieve sustainable and long-term profitability by lowering our cost to serve, improving operational efficiencies, and focusing on higher-margin products and services.

Competition

The performance automotive industry is highly competitive, and we face substantial competition in all the markets that we serve. The principal factors on which industry participants compete include technical features, performance, product design, innovation, reliability and durability, brand, time to market, customer service, reliable order execution, and price. Our success in the marketplace depends on our ability to execute our Business Strategy discussed above.

The performance automotive aftermarket parts industry in the United States is large and highly fragmented. In addition, we have seen consistent growth within the automotive aftermarket parts industry over the last two decades. Products in the performance automotive aftermarket parts industry range from functional products that enhance vehicle performance to products that improve safety, stability, handling and appearance.

Our core competitive set is comprised of four primary types of competitors with fragmentation across the majority of our major product categories:

• Multi-product category providers: legacy brands with coverage across multiple performance aftermarket products with multiple brands often under one banner and built through acquisition. We are one of the largest multi-product category brands in the performance automotive aftermarket based on gross sales.

• Single-product category providers: established companies focused on one product category in the market primarily selling via resellers. Single-product category providers generally offer either lower priced products or higher-quality products focused within one product category.

• E-Tailer Private Labels: traditional online resellers sell other manufactured products and offer private label products, often at a lower price point. E-tailer private labels generally occupy the value end of the market and have a greater presence in less engineered categories with less product-specific brand strength.

• Niche custom manufacturers: while not our core competitors, smaller shops typically focus on fully customizing specific make or model vehicles. Niche custom manufacturers are typically local or regionally focused, and some also may resell customized products from other manufactured brands.

We believe the following factors distinguish Holley from its competitors:

• Brand that resonates with enthusiasts: we actively engage enthusiasts at the platform level across multiple channels (e.g., events, digital media, online communities, etc.), creating reference networks for potential consumers.

• Innovative, product development: we invest heavily in product research, innovation and development, and introduce products that meet latest platform and use case-specific needs of our enthusiast consumers.

• Operational ability that enables efficient order execution: we make significant investments in sourcing, manufacturing and distribution excellence, enabling management of multiple product lines while maintaining scale and attractive relative pricing.

• Differentiated go-to-market strategy: we offer a mix of single product and platform-oriented solutions across DTC and reseller channels, delivering a strong overall consumer experience.

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Brands

We have a strong portfolio of brands covering various product categories. Our portfolio consists of over 70 brands spanning across over 30 product categories. Our top seven brands generated 70% of our sales in 2023.

• Holley EFI: Currently our largest brand and represented 16% of our sales for 2023. Our Holley EFI brand focuses on electronic fuel injection technology and showcases our new product development engine. 

• Holley: Currently our second largest brand and represented 14% of our sales for 2023. The Holley brand resonates with consumers as the majority of automotive enthusiast consumers recognize the Holley brand. Holley offers a variety of products across multiple categories but traces its roots back to carburetors which originally made the brand famous with automotive enthusiasts.

• MSD: Currently our third leading brand and represented 10% of our sales for 2023. MSD has historically been focused on production of ignition products and recently has been more focused on developing electronics for the powertrain category.

• Simpson: Currently our fourth leading brand and represented 8% of our sales for 2023. Simpson is focused on motorsport safety products including helmets, head and neck restraints, seat belts and fire suits.

• Powerteq: Currently our fifth leading brand and represented 8% of our sales for 2023. Powerteq is focused on exhaust, intakes, drivetrain and engine tuning products and accessories.

• Accel: Currently our sixth largest brand and represented 8% of our sales in 2023. Accel is focused on performance fuel and ignition systems.

• Flowmaster: Currently our seventh largest brand and represented 6% of our sales in 2023. Flowmaster's main focus is on developing exhaust products.

We believe the popularity of our brands is the result of consistently delivering high quality, innovative products that resonate with our enthusiast consumers. Our brands have allowed us to build direct, trusted and long-lasting relationships with our consumers and resellers.

Product Development

We offer our enthusiast consumers a comprehensive suite of performance automotive aftermarket products to meet a wide range of needs. We are continuously innovating and evolving our product offerings to meet ever-changing consumer needs. We invest heavily in developing new products, spending an average of $25.1 million per year on research and development since 2019 . We believe our product development capabilities will enable us to create sustainable long-term growth and margin enhancements for our business.

We have a history of developing innovative products, including new products in existing categories like Electronic Fuel Injection, product line expansions, and products that bring us into new markets including components for converting internal combustion engine vehicles to electric powertrains. We have thoughtfully expanded our product portfolio over time to adapt to consumer needs and find solutions to new consumer demands. We expand our existing product families and enter new product categories by creating solutions grounded in our expert insights and relevant market knowledge. We believe we have a meaningful runway across our target product categories and product vintages, and we are well positioned for future growth by expanding in adjacent and transformational categories that present opportunities for further market penetration in the Performance Suspension, Braking and Powertrain Conversion Systems markets. We believe there are also opportunities to capitalize on growing our powertrain agnostic categories like Automotive and Motorcycle Safety.

Suppliers

We run a flexible sourcing model with a mix of global sourcing and in-house manufacturing. Our best value sourcing model decisions are based on a mix of cost, quality and service. We have a diverse global supplier base and no material supplier concentration. Our efficient sourcing model enables strong gross margins and cash conversion.

We believe there is an adequate supply of raw materials and key components; however, there can be no assurance over the long term that the availability of materials and components or increases in commodity prices will not materially affect our business or results of operations. Ongoing supply chain disruptions, resulting in supply shortages and higher shipping charges, have and could continue to impact our ability to maintain supplies of products and the costs associated with obtaining raw materials and key components, including automotive-grade microchips. 

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Marketing

We reach and engage our consumers where they participate in the performance automotive aftermarket – online and in person. Our marketing strategy is centered on strong brand equity, leading new product innovation capabilities and delivering consistently high-quality products. In 2023, we spent approximately $9.9 million (or approximately 1.4% of our 2023 annual gross sales) on marketing and advertising. Going forward, consistent with our value creation strategies, we intend to continue our investments in direct consumer marketing and advertising as well as refocus some of our efforts to support our distribution network to fully meet our customers everywhere they shop. In addition, we have established dedicated consumer verticals that are focusing on our go-to-market strategy for the following nine vertical markets: Classic Truck, Classic Muscle, Modern Muscle, Modern Truck, Off-Road, Euro, Import, Safety and Racing. Our current mix of spending is towards activities believed to generate the highest return on investment. We believe these strategies will have a meaningfully positive impact across our brand portfolio.

In recent years, we have shifted our marketing efforts towards digital advertising and have increased investments in consumer engagement directly via digital and social media platforms and campaigns. Additionally, since mid-2020 we increased resources focused on expanding our e-commerce and digital platforms. These efforts have included turning Holley.com into a destination for automotive enthusiasts and launching Motor Life, our internal digital publication that is available to the public on our website. As a result, we have experienced a significant increase in social media and online engagement since that time. Continued expansion of and investment in digital and social media are expected in the future to support our DTC channel as well as our complete distribution network.

We have also spent significant time and effort in curating engaging, in-person events to build the Holley enthusiast community. These events focus on creating memorable experiences for enthusiasts, celebrate car culture, build community, and show enthusiasts how Holley products can help them get more performance and enjoyment from their vehicles. Our events have grown in total annual attendance from 14,000 in 2015 to125,000 in2023. We hosted seven events in 2023: LS Fest East, LS Fest West, Ford Fest, MoParty, High Voltage, Brother's Truck Show, and LS Fest Texas. 

Sales and Distribution

We have a diverse omni-channel distribution strategy focused on delivering the best customer experience to our enthusiast consumers and distribution partners. Our omni-channel model enables us to reach our consumers through DTC, E-tailer, warehouse distributor, traditional retailer, and jobber/ installer channels. We have mutually beneficial relationships with our resellers and are able to maintain strong pricing discipline across our channels with strict conformance to minimum advertised pricing.

DTC channel: Our DTC channel provides consumers full access to all of our brands, our unique branded content and our full product assortment. We have turned Holley.com into our primary hub for consumer communication and continue to add features and brands that make it an increasingly attractive digital destination for our consumers. Our DTC channel enables us to directly interact with our customers, more effectively control our brand experience, better understand consumer behavior and preferences, and offer exclusive products, content, and customization capabilities. We believe our control over our DTC channel provides our customers with quality brand engagement and further builds customer loyalty, while generating attractive margins.

Resellers: We have historically sold the majority of our products through resellers who purchase our products and resell them through various channels. These resellers consist of E-tailers, warehouse distributors, traditional retailers, and jobber/installers with E-tailers and warehouse distributors accounting for 59% of our sales in 2023, and our top ten resellers accounting for 42% of our sales in 2023 with our largest reseller making up 21% of our sales in 2023.

We have established mutually beneficial and long-term relationships with our resellers. We believe resellers benefit from our broad suite of product offerings that they can leverage to meet consumer demand across multiple product categories. Based on the value that we offer to our resellers, we are able to operate with pricing discipline that supports the value of our products in the marketplace and buttresses our profit margins. We believe our approach to pricing allows us to better understand consumer demand and identify what our end consumers are buying.

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Intellectual Property

Patents, trademarks, and other proprietary rights are important to the continued success of our business. We own and have licensing arrangements for a number of U.S. and foreign patents, trademarks, and other proprietary rights related to our products and business. We also rely upon continuing technological innovation and licensing opportunities to develop and maintain our competitive position. We protect our proprietary rights through a variety of methods, including the use of confidentiality and other similar agreements. We do not consider our business to be dependent on any single patent, nor is the expiration of any patent expected to materially affect our business. Our current patents will expire over various periods and we continue to file new patent applications on newly developed technology. From time to time, we become aware of potential infringement of our patent, trademark, or other proprietary rights, and we investigate instances of alleged infringement where we believe it is merited and take appropriate actions under applicable intellectual property laws in response to such infringements where we determine it is valuable to do so. Similarly, from time to time we are the subject of intellectual property and other proprietary rights related suits and other litigation.

Seasonality

Holley’s operating results have fluctuated on a quarterly and annual basis in the past and can be expected to continue to fluctuate in the future as a result of a number of factors, some of which are beyond the Company’s control. Traditionally, our sales in the first half of the year are generally higher than in the second half of the year. Due to these factors and others, which may be unknown to the Company at this time, operating results in future periods can be expected to fluctuate. Accordingly, the Company’s historical results of operations may not be indicative of future performance.

Regulations

We are subject to a variety of federal, state, local and foreign laws and regulations, including those governing the discharge of pollutants into the air or water, the management and disposal of hazardous substances or wastes, and the cleanup of contaminated sites. Some of our operations require environmental permits and controls to prevent and reduce air and water pollution. These permits are subject to modification, renewal and revocation by issuing authorities. We believe we are in substantial compliance with all material environmental laws and regulations applicable to our plants and operations. Historically, our annual costs of achieving and maintaining compliance with environmental, health and safety requirements have not been material to our financial results.

Increasing global efforts to control emissions of carbon dioxide, methane, ozone, nitrogen oxide and other greenhouse gases and pollutants, as well as the shifting focus of regulatory efforts towards total emissions output, have the potential to impact our facilities, costs, products and customers. The U.S. Environmental Protection Agency has taken action to control greenhouse gases from certain stationary and mobile sources. In addition, several states have taken steps, such as adoption of cap-and-trade programs or other regulatory systems, to address greenhouse gases. There have also been international efforts seeking legally binding reductions in emissions of greenhouse gases. These developments and further actions that may be taken in the U.S. and in other countries, states or provinces could affect our operations both positively and negatively (e.g., by affecting the demand for or suitability of some of our products).

We also may be subject to liability as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act and similar state or foreign laws for contaminated properties that we currently own, lease or operate or that we or our predecessors have previously owned, leased or operated, and sites to which we or our predecessors sent hazardous substances. Such liability may be joint and several so that we may be liable for more than our share of any contamination, and any such liability may be determined without regard to causation or knowledge of contamination. We or our predecessors have been named potentially responsible parties at contaminated sites from time to time. We do not anticipate any potential liability relating to contaminated sites to be material to our financial results.

Employees

Holley’s employees are integral to our strategic growth and success. We consider our team members to be our most valuable asset and seek to attract and maintain the highest quality talent by offering competitive benefits and wellness services, opportunities to grow professionally, and regular evaluations, among other initiatives. On December 31, 2023, we employed 1,594 full-time employees and 39 temporary employees. Approximately 49% of our full-time employees are based primarily in our Bowling Green, KY headquarters, distribution center and manufacturing plants. None of our employees are subject to collective bargaining agreements or represented by a labor union. We believe our facilities are in labor markets with ready access to adequate numbers of skilled and unskilled workers, and we believe our relations with our employees are good.

Many of our employees are automotive enthusiasts. We pride ourselves on having a platform built for enthusiasts by enthusiasts. On December 31, 2023, our Engineering function included approximately 146 employees, including many enthusiast-focused engineers who are passionate about cars. We continue to seek out top level talent that will help accomplish our mission and vision moving forward. Our goal is to create an inclusive and safe environment for our employees that keeps them engaged in their work.

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Compensation and Benefits. We strive to hire, develop and retain top talent. We attract and reward our employees by providing competitive benefits, including market-competitive compensation, medical, dental and vision insurance, short-term and long-term disability insurance, basic life and accidental death and dismemberment insurance, voluntary supplemental coverages, flexible spending accounts, paid time off, and our 401(k) program. Holley matches employee contributions to the 401(k) Plan up to 3.5% each pay period, and an additional discretionary match of up to 1.5% is made based on company performance to targets. We are committed to providing an array of benefits that meet the needs of our workforce, as demonstrated by the addition of an HSA-eligible health plan in 2024.

Health, Safety and Wellness. Holley is committed to the health and well-being of its employees and designs its compensation and benefit programs to demonstrate this commitment. Our programs are intended to support the physical and mental well-being of our employees and their families by providing the tools and resources for employees to improve or maintain their health and to lessen concerns about missing work and the potential financial impact.

Employee health and safety in the workplace is one of our top priorities. We have implemented programs and training designed to eliminate workplace incidents, risks and hazards. The core training provided includes Emergency Response, OSHA Reporting, Fire Safety, Slips, Trips and Falls, and Office Ergonomics. We also review and monitor our performance closely. We follow local, state and federal regulations issued by the Occupational Safety and Health Administration and are prepared to implement any applicable workplace requirements in order to keep our employees safe. 

Inclusion. We know that diversity throughout our company creates stronger teams, leads to innovation, and results in an organization that provides the best service to our customers. We have a recruitment strategy that encourages diversity across the company. We leverage our employee referral program to identify diverse talent during the recruitment process. We also engage with a local development board and a local refugee center in Bowling Green, KY to increase our diverse talent candidate pool. 

We believe our employees should reflect the customers we serve. Notably, approximately 30% of Holley consumers are female. Accordingly, we recognize the benefits of female representation in our workforce, and in 2023 over 35% of our workforce were women. We are committed to closing the gender gap and our recruitment and retention strategies support improving women’s representation in leadership roles.

Our Culture. At Holley, we believe that an engaged workforce leads to a more innovative, productive, and profitable organization. For this reason, we measure employee engagement through periodic culture surveys. These surveys allow our employees to provide confidential feedback on culture, company strategy and trust in their direct leaders. This feedback helps create action plans to improve the engagement of our employees. These survey results have demonstrated that our employees have a strong sense of belonging, trust in management, and confidence in Holley. These strengths provide a foundation for our success, and we are dedicated to enhancing the employee experience at Holley.

Talent Development. The development of our employees’ skills and knowledge is critical to Holley’s success. Our educational assistance program is designed to encourage personal development by helping employees maintain and improve their skills or knowledge related to their current job or a potential future position at Holley through reimbursement of certain educational expenses, including external training programs or educational courses, pursuit and maintenance of job-related professional licenses and certifications, workshops, seminars, and professional conferences. Further, we are introducing an internship program designed to provide students in the community with an opportunity to gain practical experience. We are committed to fostering an equitable work environment that seeks to ensure fair treatment, equality of opportunity, and fairness in access to information and resources.

Social Responsibility. We are committed to social responsibility. Our socially responsible initiatives include donations to community organizations, sponsorship of local sports teams and weekend family events. Through these programs, Holley and its employees are able to give back to the community through monetary donations and by providing community services. Holley gives its subsidiaries the ability to lead their own community engagement initiatives through contributions to charities and participation in fundraising events. This is demonstrated by both the Company’s and its team members’ participation in philanthropic causes such as local food drives and programs that provide holiday gifts to those in need.

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Available Information

Our principal executive offices are located at 1801 Russellville Rd., Bowling Green, KY 42101, and our telephone number is (270) 782-2900. Our Internet address is www.holley.com. The information on our website is not, and should not be considered, part of this Form 10-K and is not incorporated by reference in this Form 10-K. The website is, and is only intended to be, for reference purposes only. We make available free of charge on or through our website our Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. These reports and other information are also available, free of charge, at www.sec.gov. In addition, we will provide, at no cost, paper or electronic copies of our reports and other filings made with the SEC. Requests can be made in writing or by phone.

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Item 1A. Risk Factors

The following discussion of "Risk Factors" identifies factors that may adversely affect our business, operations, financial condition or future performance. This information should be read in conjunction with “Cautionary Note Regarding Forward-Looking Statements,” "Management’s Discussion and Analysis of Financial Condition and Result of Operations" and the consolidated financial statements and related notes. The following discussion of risks is not all-inclusive but is designed to highlight what we believe are the material factors to consider when evaluating our business and expectations. These factors could cause our future results to differ materially from our historical results and from expectations reflected in forward-looking statements.

Risks Relating to Our Business and Industry

Global economic and financial market conditions beyond our control might materially and negatively impact us.

General economic factors beyond our control could adversely affect our business and results of operations. These factors include, but are not limited to, recent supply chain disruptions, labor shortages, wage pressures, rising inflation and potential economic slowdown or growing recession risk, as well as input costs including fuel and energy costs (for example, the price of gasoline), foreign currency exchange rate fluctuations, and other matters that influence consumer spending and preferences.

In addition, public health crises, geopolitical instability (including the conflicts in Ukraine and Israel and surrounding areas, and the possible expansion of such conflicts), as well as other global events have significantly increased global macroeconomic uncertainty and volatility. In response to unfavorable economic conditions, there has been and, in the future, could be a reduction in discretionary spending, which may lead to reduced net sales or cause a shift in our product mix from higher-margin to lower-margin product offerings or a shift of consumer purchasing patterns to lower cost options. This shift could force us to reduce prices for our products in order to compete. Conversely, rapid increases in demand due to improving economic conditions could lead to supply chain challenges.

Global markets continued to face threats and uncertainty during fiscal year 2023. Uncertain economic and financial market conditions may also adversely affect the financial condition of our customers, suppliers and other business partners. Any significant decrease in purchases of our products or our inability to collect accounts receivable resulting from an adverse impact of the global markets on customers’ financial condition could have a material adverse effect on our business, financial condition and results of operations. Additionally, disruptions in financial markets could reduce our access to debt and equity capital markets, negatively affecting our ability to implement our business strategy.

We must successfully manage the demand, supply, and operational challenges brought about by any disease outbreak, including epidemics, pandemics, or similar widespread public health concerns.

Our operations are impacted by consumer spending levels, the availability of our products to retailers and our ability to manufacture, store and distribute products to our customers in an effective and efficient manner. The fear of exposure to or actual effects of a disease outbreak or similar widespread public health concern, could negatively impact our overall business, financial condition and results of operations. These impacts may include, but are not limited to:

▪ Significant reductions, shifts or fluctuations in demand for one or more of our products;

▪ Inability to meet our customers’ needs due to disruptions in our manufacturing and supply chain arrangements caused by the loss or disruption of essential manufacturing and supply chain elements. In addition, we may incur higher costs for transportation, workforce and distribution capability in order to maintain the supply of product to our customers;

▪ Failure of third parties upon which we rely, including our suppliers, contract manufacturers, distributors, contractors and commercial banks, to meet their obligations to us in a timely manner; and

▪ Significant changes in the political and regulatory landscape in the markets in which we manufacture, sell or distribute our products, which may include, but are not limited to, restrictions on international trade, governmental or regulatory actions, closures or other restrictions that limit or suspend our or our third-party partners' or customers' operating and/or manufacturing capabilities, including operations necessary for the production, distribution, sale, and support of our products, which could adversely impact our results.

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Unfavorable economic conditions could have an adverse impact on consumer discretionary spending and therefore adversely impact our business, sales, financial condition and results of operations.

Our products are largely recreational in nature and are therefore discretionary purchases for consumers. Consumers are generally more willing to make discretionary purchases of automotive products during favorable economic conditions and when consumers are feeling confident and prosperous. Discretionary spending is also affected by many other factors, including general business conditions, inflation, interest rates, the availability of consumer credit, taxes, and consumer confidence in future economic conditions. Purchases of our products could decline during periods when disposable income is lower, or during periods of actual or perceived unfavorable economic conditions. A significant or prolonged decline in general economic conditions or uncertainties regarding future economic prospects that adversely affect consumer discretionary spending, whether in the United States or in our international markets, could result in reduced sales of our products, which in turn would have an adverse impact on our business, sales, financial condition and results of operations.

Inflation could result in higher costs and decreased profitability.

Inflation may continue to adversely affect us by increasing the cost of raw materials. Our products contain various raw materials, including corrosion-resistant steel, non-ferrous metals such as aluminum and nickel, and precious metals such as platinum and palladium. We use raw materials directly in manufacturing and in components that we purchase from our suppliers. We generally purchase components with significant raw material content on the open market. Volatility in the prices of raw materials such as steel, aluminum and nickel could continue to increase the cost of manufacturing our products. In some cases, those cost increases can be passed on to customers in the form of price increases, in other cases, they cannot. Transportation and freight service costs are susceptible to volatility and inflationary pressures due to fuel costs, limited capacity and/or availability of containers, shipping vessels, and/or receiving port services. If the prices of raw material and other inputs increase, and we are not able to charge our customers higher prices to compensate, our results of operations would be adversely affected. 

Many of the markets in which we sell have been experiencing high levels of inflation, which may depress consumer demand for our products and reduce our profitability. Even in the event that increased costs can be passed through to customers, our gross margin percentages may decline. Additionally, our suppliers are also subject to fluctuations in the prices of raw materials and may attempt to pass all or a portion of such increases on to us. In the event they are successful in doing so, our margins would decline. If prolonged, and if they cannot be passed on to customers in the form of price increases, these fluctuations in the price of raw materials, product components, other inputs, and/or transportation services could have a material adverse effect on our business, sales, financial condition and results of operations.

Disruptions of supply or shortages of raw materials or components used in our products could harm our business and profitability.

We have experienced, and may continue to experience, disruptions and higher costs in manufacturing, supply chain, logistical operations, and shortages of steel, non-ferrous metals and precious metals. Additionally, we have been adversely impacted by the global supply shortage of automotive-grade microchips. This shortage has resulted in increased microchip delivery lead times, delays in production and increased costs to source available automotive-grade microchips. If our supply of these products continues to be adversely affected, there can be no assurance that we will be able to obtain adequate replacements for the existing components or that supplies will be available on terms and prices that are favorable to us, if at all.

Our success depends in part on our ability to anticipate and react to changes in supply costs and disruptions in the supply chain due to factors beyond our control. We have taken steps to minimize the adverse impacts of supply chain volatility and rising inflation by implementing cost savings initiatives, increasing prices to customers, increasing inventory levels of certain products, and working closely with our suppliers and customers to minimize disruptions in delivering products to customers. Despite the actions we have undertaken to minimize these impacts, there can be no assurance that unforeseen future events in the global supply chain and our ability to pass on inflationary costs to our customers could have a material adverse effect on our business, financial condition and results of operations.

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A significant disruption in the operations of our manufacturing facilities or distribution centers could have a material adverse effect on our business, sales, financial condition and results of operations.

A significant disruption at any of our manufacturing facilities or distribution centers could materially and adversely affect our business, sales, financial condition and results of operations. Our manufacturing facilities and distribution centers are highly automated, which means that our operations are complicated and may be subject to a number of risks related to computer viruses, the proper operation of software and hardware, electronic or power interruptions, and other system failures, including failures caused by factors outside of our control, such as political unrest, terrorist attacks, military conflicts (including the conflict in Ukraine, the conflict in Israel and surrounding areas, the possible expansion of such conflicts and potential geopolitical consequences), natural disasters or extreme weather (including events that may be caused or exacerbated by climate change). Risks associated with upgrading or expanding these facilities may significantly disrupt or increase the cost of our operations, which may have an immediate, or in some cases prolonged, impact on our margins. Our risk management, business continuity and disaster recovery plans may not be effective at preventing or mitigating the effects of such disruptions, particularly in the case of catastrophic events or longer-term developments, such as the impacts of climate change.

Failure to compete effectively could reduce our market share and significantly harm our business, sales, financial condition and results of operations.

Our industry is highly competitive, and our success depends on our ability to compete with suppliers of automotive aftermarket products. Due to the diversity of our product offering, we compete with several large and medium-sized companies and a large number of smaller regional and specialty companies and numerous category-specific competitors. In addition, we face competition from original equipment manufacturers, which, through their automotive dealerships, supply many of the same types of replacement parts that we sell. Existing competitors may expand their product offerings and sales strategies, and new competitors may enter the market.

Some of our competitors may have larger customer bases and significantly greater financial, technical and marketing resources than we do. These factors may allow our competitors to respond more quickly than we can to new or emerging technologies and changes in customer requirements by devoting greater resources than we can to the development, promotion and sale of automotive aftermarket products. Increased competition could put additional pressure on us to reduce prices or take other actions, which may have an adverse effect on our business, sales, financial condition and results of operations. We may also lose significant customers or lines of business to competitors.

If we are unable to successfully design, develop and market new products, our business may be harmed.

To maintain and increase sales, we must continue to introduce new products on a timely basis to respond to new and evolving consumer preferences and improve or enhance our existing products. The success of our new and enhanced products depends on many factors, including anticipating consumer preferences, finding innovative solutions to consumer problems, differentiating our products from those of our competitors, and maintaining the strength of our brands. The design and development of our products is costly, and we typically have several products in development at the same time. Problems in the design or quality of our products, or delays in product introduction, may harm our brands, business, sales, financial condition and results of operations. Any new products that we develop and market may not generate sufficient revenues to cover our development, production, marketing, selling and other costs.

A drive toward electric vehicles or away from vehicle ownership in general could impact our business, sales, financial condition and results of operations.

The automotive industry is increasingly focused on the development of hybrid and electric vehicles and of advanced driver assistance technologies, with the goal of developing and introducing a commercially viable, fully automated driving experience, and many manufacturers have announced plans to transition from internal- combustion engines into electric vehicle platforms over the coming years. There has also been an increase in consumer preferences for mobility on demand services, such as car and ride sharing, as opposed to automobile ownership, which may result in a long-term reduction in the number of vehicles per capita. Accordingly, if we do not continue to innovate and develop, or acquire, new and compelling products that capitalize upon new technologies in response to original equipment manufacturer and consumer preferences, or if there is a future shift in consumer preferences towards ownership of more utilitarian vehicles or vehicles that are otherwise less interesting to a large portion of our customers who are automotive enthusiasts, or if there is otherwise a future shift away from automobile ownership among consumers in general, our and our subsidiaries’ business, sales, financial condition and results of operations could be impacted.

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Our business depends on maintaining and strengthening our brands to generate and maintain ongoing demand for our products, and a significant reduction in such demand could harm our business, sales, financial condition and results of operations.

Our success depends on the value and reputation of our brands, which, in turn, depends on factors such as the quality, design, performance, functionality, and durability of our products, the image of our e-commerce platform and retail partner floor spaces, our communication activities, including advertising, social media, and public relations, and our management of the customer experience, including direct interfaces through customer service. Maintaining, promoting, and positioning our brands are important to expanding our customer base, and will largely depend on the success of our marketing and merchandising efforts and our ability to provide consistent, high-quality customer experiences. We intend to continue making investments in these areas in order to maintain and enhance our brands, and such investments may not be successful. Ineffective marketing, negative publicity, product diversion to unauthorized distribution channels, product or manufacturing defects, counterfeit products, unfair labor practices, and failure to protect the intellectual property rights in our brands are some of the potential threats to the strength of our brands, and those and other factors could rapidly and severely diminish our relationships with customers and suppliers. These factors could cause our customers to lose the personal connection they feel with our brands and reduce our ability to attract new customers and lead to suppliers terminating their relationships with us. We believe that maintaining and enhancing the image of our brands in our current markets and in new markets where we have limited brand recognition is important to expanding our customer base. If we are unable to maintain or enhance our brands in current or new markets, our business, sales, financial condition and results of operations could be harmed.

If we inaccurately forecast demand for our products, we may manufacture either insufficient or excess quantities, which, in either case, could adversely affect our financial performance.

We plan our manufacturing capacity based upon the forecasted demand for our products. Forecasting the demand for our products is very difficult given the manufacturing lead time and the amount of specification involved, especially given market volatility. Aside from supply chain disruptions and inflationary pressures, forecasting demand for specific automotive parts can also be challenging due to changing consumer preferences and competitive pressures and longer supply lead times. The nature of our business makes it difficult to quickly adjust our manufacturing capacity if actual demand for our products varies from forecasted demand. If actual demand for our products exceeds forecasted demand, we may not be able to produce sufficient quantities of new products in time to fulfill actual demand, which could limit our sales and adversely affect our financial performance. On the other hand, if actual demand is less than forecasted demand for our products, we could produce excess quantities, resulting in excess inventories and related obsolescence charges that could adversely affect our financial performance.

We may not be able to effectively manage our growth.

As we grow our business, slower growing or reduced demand for our products, increased competition, a decrease in the growth rate of our overall market, failure to develop and successfully market new products, or the maturation of our business or markets could harm our business. We have made and expect to continue to make significant investments in our research and development and sales and marketing organizations, expand our operations and infrastructure both domestically and internationally, design and develop new products, and enhance our existing products. If our sales do not increase at a sufficient rate to offset these increases in our operating expenses, our profitability may decline in future periods.

We only have a limited history operating our business as a public company at its current scale. Consequently, if our operations grow at a rapid pace in the future, we may experience difficulties in managing this growth and building the appropriate processes and controls. Future rapid growth may increase the strain on our resources, and we could experience operating difficulties, including difficulties in sourcing, logistics, recruiting, maintaining internal controls, marketing, designing innovative products, and meeting consumer needs. If we do not adapt to meet these evolving challenges, the strength of our brands may erode, the quality of our products may suffer, we may not be able to deliver products on a timely basis to our customers, and our corporate culture may be harmed.

We have set certain growth initiatives for our business to meet long-term strategic objectives and improve stockholder value. We may incur certain costs to achieve our growth initiatives, and we may not meet anticipated implementation timetables or stay within budgeted costs. As these growth initiatives are undertaken, we may not achieve our expected results, which could adversely impact our customer retention or results of operation.

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If we fail to attract new customers, or fail to do so in a cost-effective manner, we may not be able to increase sales.

Our success depends, in part, on our ability to attract customers in a cost-effective manner. In order to expand our customer base, we must appeal to and attract customers ranging from automotive enthusiasts to individuals who simply value products of uncompromising quality and design. We have made, and expect to continue to make, significant investments in attracting new customers, including through the use of traditional, digital, and social media and participation in, and sponsorship of, community events. Marketing campaigns can be expensive and may not result in the cost-effective acquisition of customers. Further, as our brands become more widely known, future marketing campaigns may not attract new customers at the same rate as past campaigns. If we are unable to attract new customers, or fail to do so in a cost-effective manner, our growth could be slower than we expect, and our business may be harmed.

Our growth depends, in part, on expanding into additional consumer markets, and we may not be successful in doing so.

We believe that our future growth depends not only on continuing to reach our current core demographic, but also continuing to broaden our retail partner and customer bases. The growth of our business will depend, in part, on our ability to continue to expand our retail partner and customer bases in the United States, as well as in international markets. In these markets, we may face challenges that are different from those we currently encounter, including competition, merchandising, distribution, hiring, and other difficulties. We may also encounter difficulties in attracting customers due to a lack of consumer familiarity with or acceptance of our brands, or a resistance to paying for premium products, particularly in international markets. We continue to evaluate marketing efforts and other strategies to expand the customer base for our products. In addition, although we are investing in sales and marketing activities to further penetrate newer regions, including expansion of our dedicated sales force, we cannot ensure that we will be successful. If we are not successful, our business, sales, financial condition and results of operations may be harmed.

Competitors have attempted, and will likely continue to attempt to, imitate our products and technology. If we are unable to protect or preserve the image of our brands and proprietary rights, our business, sales, financial condition and results of operations may be harmed.

As our business continues to expand, our competitors have imitated or attempted to imitate, and will likely continue to imitate or attempt to imitate, our product designs and branding, which could harm our business, sales, financial condition and results of operations. Only a portion of the intellectual property used in the manufacture and design of our products is patented, and we, therefore, rely significantly on trade secrets, trade and service marks, trade dress, and the strength of our brands. We regard our patents, trade dress, trademarks, copyrights, trade secrets, and similar proprietary rights as critical to our success. We also rely on trade secret protection and confidentiality agreements with our employees, consultants, suppliers, manufacturers, and others to protect our proprietary rights. Nevertheless, the steps we take to protect our proprietary rights against infringement or other violations may be inadequate, and we may experience difficulty in effectively limiting the unauthorized use of our patents, trademarks, trade dress, and other intellectual property and proprietary rights worldwide. We also cannot guarantee that others will not independently develop technology with the same or similar function to any proprietary technology that we rely on to conduct our business and differentiate Holley from our competitors. Unauthorized use or invalidation of our patents, trademarks, copyrights, trade dress, trade secrets, or other intellectual property or proprietary rights may cause significant damage to our brands and harm our business, sales, financial condition and results of operations.

While we actively develop and protect our intellectual property rights, there can be no assurance that we will be adequately protected in all countries in which we conduct our business or that we will prevail when defending our patent, trademark, and proprietary rights. Additionally, we could incur significant costs and management distraction in pursuing claims to enforce our intellectual property rights through litigation and defending any alleged counterclaims. If we are unable to protect or preserve the value of our patents, trade dress, trademarks, copyrights, or other intellectual property rights for any reason, or if we fail to maintain the image of our brands due to actual or perceived product or service quality issues, adverse publicity, governmental investigations or litigation, or other reasons, our brands and reputation could be damaged, and our business may be harmed.

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Our profitability may decline as a result of increasing pressure on pricing.

Our industry is subject to significant pricing pressure caused by many factors, including unfavorable economic conditions, intense competition, consolidation in the retail industry, pressure from retailers to reduce the costs of products, and changes in consumer demand. The current economic conditions and macroeconomic trends, including heightened inflation, capital market volatility, interest rate and current rate fluctuations, have had and may continue to have an impact on pricing. These factors may cause us to reduce our prices to retailers and customers or engage in more promotional activity than we anticipate, which could adversely impact our margins and cause our profitability to decline if we are unable to offset price reductions with comparable reductions in our operating costs. This could materially harm our business, sales, financial condition and results of operations. In addition, ongoing and sustained promotional activities could harm the image of our brands.

Our current and future products may experience quality problems from time to time that can result in negative publicity, litigation, product recalls, and warranty claims, which could result in decreased sales and operating margin, and harm to our brand.

Although we extensively and rigorously test new and enhanced products, there can be no assurance we will be able to detect, prevent, or fix all defects. Defects in materials or components can unexpectedly interfere with the products’ intended use and safety and damage our reputation. Failure to detect, prevent, or fix defects could result in a variety of consequences, including a greater number of product returns than expected from customers and retail partners, litigation, product recalls, and credit claims, among others, which could harm our business, sales, financial condition and results of operations. The occurrence of real or perceived quality problems or material defects in our current and future products could expose us to product recalls, warranty, or other claims. In addition, any negative publicity or lawsuits filed against us related to the perceived quality and safety of our products could also harm our brand and decrease demand for our products.

Our reliance on foreign suppliers for some of the automotive parts we sell to our customers or include in our products presents risks to the business.

A portion of automotive parts and components we use in our manufacturing processes are imported from suppliers located outside the U.S. As a result, we are subject to various risks of doing business in foreign markets and importing products from abroad, and these risks may become heightened as a result of unfavorable global economic conditions. These risks may include, but are not limited to:

• shortages of key component parts used in our products sourced from non-U.S. suppliers;

• increased transportation costs;

• significant delays in the delivery of cargo due to port security considerations;

• imposition of duties, taxes, tariffs or other charges on imports;

• potential recalls or cancellations of orders for any product that does not meet our quality standards;

• disruption of imports by labor disputes or strikes and local business practices;

• heightened terrorism security concerns, which could subject imported goods to additional, more frequent or more thorough inspections, leading to delays in deliveries or impoundment of goods for extended periods;

• political tensions and military conflicts (including the conflict in Ukraine, the conflict in Israel and surrounding areas, and the possible expansion of such conflicts);

• natural disasters, disease, epidemics and health related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas;

• inability of our non-U.S. suppliers to obtain adequate credit or access liquidity to finance their operations; and

• our ability or inability to enforce any agreements with our foreign suppliers.

Any of the foregoing factors, or a combination of them, could increase the cost or reduce the supply of products available to us and materially and adversely impact our business, sales, financial condition and results of operations.

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We depend on retail partners to display and present our products to customers, and our failure to maintain and further develop our relationships with retail partners could harm our business.

We sell a significant amount of our products through knowledgeable national, regional, and independent retail partners. Our retail partners service customers by stocking and displaying our products, explaining the attributes of our products, and sharing the story of our brands. Our relationships with these retail partners are important to the authenticity of our brands and the marketing programs we continue to deploy. Our failure to maintain these relationships with our retail partners or financial difficulties experienced by these retail partners could harm our business.

We have key relationships with national retail partners. If we lose any of our key retail partners or any key retail partner reduces their purchases of our existing or new products or their number of stores or operations, or promotes products of our competitors over ours, our sales would be harmed. Because Holley is a premium brand, our sales depend, in part, on retail partners effectively displaying our products, including providing attractive space and point of purchase displays in their stores, and training their sales personnel to sell our products. If our retail partners reduce or terminate those activities, we may experience reduced sales of our products, resulting in lower gross margins, which would harm our business, financial condition and results of operations.

If our plans to increase sales through our DTC channel are not successful, our business, sales, financial condition and results of operations could be harmed.

For 2023, we generated approximately $144 million in gross sales through our DTC channel. Part of our growth strategy involves increasing sales through our DTC channel. The level of customer traffic and volume of customer purchases through our website is substantially dependent on our ability to provide a content-rich and user-friendly website, a hassle-free customer experience, sufficient product availability, and reliable, timely delivery of our products. If we are unable to maintain and increase customers’ use of our website, allocate sufficient product to our website, and increase any sales through our website, our business, sales, financial condition and results of operations could be harmed.

Our future success depends on the continuing efforts of our management and key employees, and on our ability to attract and retain highly skilled personnel and senior management.

We depend on the talents and continued efforts of our senior management and key employees. The loss of members of management or key employees may disrupt our business and harm our business, sales, financial condition and results of operations. Furthermore, our ability to manage further expansion will require us to continue to attract, motivate, and retain additional qualified personnel. Competition for this type of personnel is intense, and we may not be successful in attracting, integrating, and retaining the personnel required to grow and operate our business effectively. There can be no assurance that our current management team or any new members of the management team will be able to successfully execute our business and operating strategies.

Our results of operations may be adversely affected by increases in labor costs, labor shortages, and/or turnover.

An overall labor shortage, lack of skilled labor, increased turnover or labor inflation, increase in federal or state minimum wages, or increase in general labor costs as a result of general macroeconomic factors, could have a material adverse impact on our operations, results of operations, liquidity or cash flows. A sustained labor shortage or increased turnover rates within our employee base, caused by worsening economic conditions or other national or international emergencies, could lead to increased costs, such as increased overtime to meet demand and increased salaries and wage rates to attract and retain employees. Further, labor shortages or increased turnover rates could negatively affect our ability to efficiently operate our business if we are unable to hire and retain employees capable of performing at a high-level, or if mitigation measures we take to respond to a decrease in labor availability have unintended negative consequences. If we are unable to hire or retain skilled personnel, our results of operations would suffer.

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Our operations and reputation may be negatively impacted if our information technology systems fail to perform adequately or if we experience an interruption in our operations due to security threats or disruptions.

Our business operations are dependent on information technology systems, which manage crucial functions such as manufacturing, distribution, sales, accounting, and communications. Effective resource allocation and management are vital for building, sustaining, and safeguarding these systems. Failure to do so, including inadequate oversight of system upgrades or third-party service providers, could negatively impact our business and financial results. The failure of our information technology systems to perform as we anticipate could disrupt our business and could result in transaction or reporting errors, processing inefficiencies and the loss of sales and customers, causing our business and results of operations to suffer. 

Furthermore, our information technology systems, and the systems of our customers, vendors, suppliers, and other third-party service providers, are subject to cyber-attacks or other security incidents including computer viruses or other malicious codes, phishing attacks, unauthorized access attempts, cyber extortion, business email compromise, social engineering schemes, denial of service attacks, hacking, ransomware, or other cyberattacks attempting to exploit vulnerabilities. Cybercriminals have increasingly demonstrated advanced capabilities, such as use of zero-day vulnerabilities, and rapid integration of new technology such as generative artificial intelligence. Such incidents could result in unauthorized access to information including customer, consumer or other company confidential data as well as disruptions to operations. To address the risks to our information technology systems and data, we maintain an information security program that includes updating technology, developing security policies and procedures, implementing and assessing the effectiveness of controls, monitoring and routine testing of our information systems, and designing business processes to mitigate the risk of such breaches. We believe that these preventative actions provide adequate measures of protection against security breaches and generally reduce our cybersecurity risks. However, cyber-threats are constantly evolving, are becoming more sophisticated and are being made by groups of individuals with a wide range of expertise and motives, which increases the difficulty of detecting and successfully defending against them. There can be no assurance that these measures will prevent or limit the impact of a future incident. Moreover, the development and maintenance of these measures requires continuous monitoring as technologies change and efforts to overcome security measures evolve. Additionally, we rely on services provided by third-party vendors for certain information technology processes and functions, which makes our operations vulnerable to a failure by any one of these vendors to perform adequately or maintain effective internal controls. If they fail to deter, detect or report cyber incidents in a timely manner, we may suffer financial and other harm, including to our information, operations, performance, and reputation. We face additional cybersecurity risks due to our reliance on internet technology and hybrid work arrangements, which could strain our technology resources or create additional opportunities for cybercriminals to exploit vulnerabilities. We are also subject to increasing and evolving government, customer and other cyber and security requirements, including disclosure obligations. If we are unable to prevent or adequately respond to and resolve a cybersecurity incident, it may have a material, negative impact on our operations or business reputation, and we may experience other adverse consequences such as loss of assets, remediation costs, litigation, regulatory investigations, and the failure by us to retain or attract customers following such an event, any of which could adversely affect our reputation, operations, financial performance and condition.

Our information systems are also vulnerable to damage or interruption from computer system failures, software defects, natural disasters, power loss, human error, and network failures. Such incidents could adversely affect our company, including incurring unanticipated costs to remediate impacts and lost business. Our customers and suppliers face similar risks that, if realized, could also adversely impact our operations. 

We have experienced in the past, and expect to continue to experience, cybersecurity threats and attacks, including an external cyber-attack in 2021 that resulted in a temporary suspension of services to our customers. To date these incidents have not had a material adverse effect on our business and results of operations; however, there can be no assurance that such impacts will not be material in the future. The occurrence and impact of these various risks are difficult to predict, but one or more of them could temporarily disrupt our ability to manage our operations, provide services to our customers and perform vital financial processes, any of which could have a materially adverse effect on our business, cash flows, financial condition and results of operations. While we have contingency plans and insurance coverage for potential liabilities of this nature, they may not be sufficient to cover all claims and liabilities and in some cases are subject to deductibles and layers of self-insured retention.

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We are exposed to risks related to the failure to protect the integrity of individually identifiable information of our customers, vendors, suppliers and employees. 

As our information technology systems contain certain information about individuals and businesses, our failure to maintain the security of the data we hold, whether as a result of our own error or the malfeasance or errors of others, could lead to disruptions in our online ordering system or other data systems, and could lead to unauthorized release of confidential or otherwise protected information or corruption of data. Failure to maintain security of the data we hold could also result in violations of applicable privacy, data security and other laws, potentially subjecting us to lawsuits, fines and other forms of regulatory enforcement. While we have implemented security measures, our information technology systems remain susceptible to cyber-attacks, viruses and other disruptions and security compromises. Any unauthorized or inadvertent disclosure of personally identifiable information, whether through a compromise of our network by an unauthorized party, employee theft, misuse, error, or otherwise, has the potential to damage our reputation, impair our ability to attract website visitors, or subject us to claims or litigation arising from damages suffered by consumers. This could adversely affect our operations, financial performance and condition.

We depend on cash generated from our operations to support our growth, and we may need to raise additional capital, which may not be available on terms acceptable to us, or at all.

We primarily rely on cash flow generated from our sales to fund our current operations and growth initiatives. As we expand our business, we will need significant cash from operations to purchase inventory, increase product development, expand our manufacturer and supplier relationships, pay personnel, pay for the increased costs associated with operating as a public company and further invest in sales and marketing efforts. If our business does not generate sufficient cash flow from operations to fund these activities and sufficient funds are not otherwise available from our current or future credit facility, we may need additional equity or debt financing. If such financing is not available to us on satisfactory terms, our ability to operate and expand our business or to respond to competitive pressures could be harmed. Moreover, if we raise additional capital by issuing equity securities or securities convertible into equity securities, the ownership of our existing stockholders may be diluted. The holders of new securities may also have rights, preferences or privileges which are senior to those of existing holders of our Common Stock. In addition, any indebtedness we incur may subject us to covenants that restrict our operations and will require interest and principal payments that could create additional cash demands and financial risk for us.

Events affecting the financial services industry could have an adverse impact on the Company's business operations, financial condition, and results of operations.

The closures of certain regional banks have created bank-specific and broader financial institution liquidity risk and concerns. Future adverse developments with respect to specific financial institutions or the broader financial services industry may lead to market-wide liquidity shortages, impair the ability of companies to access working capital needs, and create additional market and economic uncertainty.

Although we do not have any funds in any of the banks that have been placed into receivership to date, we cannot guarantee that the banks or other financial institutions that hold our funds will not experience similar issues. These events have resulted in market disruption and volatility and future similar events could lead to greater instability in the credit and financial markets and a deterioration in confidence in economic conditions. Our operations may be adversely affected by any such economic downturn, liquidity shortages, volatile business environments, or unpredictable market conditions. These events could also make any necessary debt or equity financing more difficult and/or costly. 

The future effect of these events on the financial services industry and broader economy are unknown and difficult to predict but could include failures of other financial institutions to which we or our customers, vendors, or other counterparties face direct or more significant exposure. Any such developments could adversely impact our results of operation and financial position, and there may be other risks we have not yet identified. 

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Our indebtedness may limit our ability to invest in the ongoing needs of our business and if we are unable to comply with the covenants in our current credit agreements, our business, sales, financial condition and results of operations could be harmed.

On November 18, 2021, we entered into a credit facility with a syndicate of lenders and Wells Fargo Bank, N.A., as administrative agent for the lenders, letter of credit issuer and swing line lender (as amended, the "Credit Agreement"). On December 31, 2023, $592.5 million in principal was outstanding under the credit facility. We are required to make quarterly payments of principal plus accrued interest. The Credit Agreement imposes various restrictions and contains customary affirmative and restrictive covenants, including, without limitation, certain reporting obligations, certain limitations on restricted payments, and limitations on liens, encumbrances and indebtedness. In addition, borrowings under the Credit Agreement are jointly and severally guaranteed by us and certain of our wholly owned material subsidiaries and our future subsidiaries that become guarantors (collectively the “Loan Parties"). The First Lien Credit Agreement is secured by a first-priority lien on substantially all of the Loan Parties’ assets, in each case subject to certain customary exceptions. If we fail to comply with the covenants or payments specified in the Credit Agreement, the lender could declare an event of default, which would give it the right to declare all borrowings outstanding, together with any accrued and unpaid interest and fees, to be immediately due and payable.

The Credit Agreement places certain conditions on us including, subject to certain conditions, reductions and exceptions, requiring us to utilize a portion of our and our subsidiaries’ cash flow from operations to make payments on our and our subsidiaries’ indebtedness, reducing the availability of cash flow to fund working capital, capital expenditures, development activity, return capital to our stockholders, and other general corporate purposes. Our and our subsidiaries’ compliance with these conditions may limit our and our subsidiaries’ ability to invest in ongoing business needs. For example, complying with these conditions:

• increases vulnerability to adverse economic or industry conditions;

• limits flexibility in planning for, or reacting to, changes in business or markets;

• increases vulnerability to higher interest rates, as borrowings under the Credit Agreement bear interest at variable rates;

• limits our ability to obtain additional financing in the future for working capital or other purposes; and

• potentially places us at a competitive disadvantage compared to our competitors that have less indebtedness.

The Credit Agreement places certain limitations on our and certain of our subsidiaries’ ability to incur additional indebtedness. However, subject to the certain exceptions and baskets in the Credit Agreement, we and our subsidiaries may incur substantial additional indebtedness under and outside of such credit agreement. The Credit Agreement also limits or prohibits, among other things, and in each case, subject to exceptions, materiality thresholds and baskets, our and certain of our subsidiaries’ ability to: (a) pay dividends on, redeem or repurchase stock, or make other distributions; (b) incur or guarantee additional indebtedness; (c) sell stock in certain of our subsidiaries; (d) create or incur liens; (e) make acquisitions or investments; (f) transfer or sell certain assets or merge or consolidate with or into other companies; (g) make certain payments or prepayments of indebtedness subordinated to our obligations under the Credit Agreement; and (h) enter into certain transactions with our affiliates.

In addition to the restrictions described above, the Credit Agreement requires us and certain of our subsidiaries to comply with certain other covenants, including a financial maintenance covenant regarding our total net leverage ratio on the last day of each fiscal quarter, with step downs to lower total net leverage ratio levels at specified times as set forth therein. Failure to comply with these covenants and certain other provisions of the Credit Agreement, or the occurrence of a change of control, could result in an event of default and an acceleration of the Loan Parties’ obligations under the Credit Agreement or other indebtedness that we and our subsidiaries may incur in the future.

In February 2023, the Company entered into an amendment to its Credit Agreement which, among other things, increased the consolidated net leverage ratio financial covenant level applicable under the Credit Agreement as of the fiscal quarter ending April 2, 2023 to initially 7.25:1.00, and provides for modified step-down levels for such covenant thereafter through the fiscal quarter ending March 31, 2024 (the "Covenant Relief Period"). Commencing with the fiscal quarter ending June 30, 2024 (or such earlier date as the Company may choose to end the Covenant Relief Period in its sole discretion), the consolidated net leverage financial covenant reverts back to 5:00:1.00. As an ongoing condition to the Covenant Relief Period, the Company also agreed to (i) a minimum liquidity test, (ii) an interest coverage test, (iii) an anti-cash hoarding test at any time revolving loans are outstanding, and (iv) additional reporting obligations. 

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If such an event of default and acceleration of the Loan Parties’ obligations occurs, subject to intercreditor agreements agreed to by the lenders, the lenders under the Credit Agreement would have the right to proceed against the collateral the Loan Parties granted to them to secure such indebtedness. If the debt under the Credit Agreement were to be accelerated, we and our subsidiaries may not have sufficient cash or be able to sell sufficient collateral to repay this debt, which would immediately and materially harm our and our subsidiaries’ business, sales, financial condition and results of operations. The threat of our debt being accelerated in connection with a change of control could make it more difficult for us to attract potential buyers or to consummate a change of control transaction that would otherwise be beneficial to our stockholders.

Our failure to maintain effective internal controls over financial reporting could harm us.

As a public company, we are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal control over financial reporting. As an emerging growth company, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until the date we are no longer an emerging growth company. At such time, our independent registered public accounting firm may issue a report that is adverse in the event that it is not satisfied with the level at which our controls are documented, designed or operating.

Any failure to maintain internal control over financial reporting, or any failure to fully remediate the existing or any future material weaknesses that may be found to exist, could inhibit our ability to accurately and on a timely basis report our cash flows, results of operations or financial condition in compliance with applicable securities laws. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our Common Stock and Warrants could decline and we could be subject to sanctions or investigations by NYSE, the SEC or other regulatory authorities. Failure to remediate any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets and negatively impact the price and trading market for our Common Stock and Warrants.

Our disclosure controls and procedures may not prevent or detect all acts of fraud.

Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to management and is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Our management expects that our disclosure controls and procedures and internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within our company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by an unauthorized override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and we cannot assure that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

We may acquire or invest in other companies to complement our organic growth, which may not be successful and may divert financial and management resources.

Historically our growth has been dependent on our acquisition strategy, and our future growth may continue to depend, in part, on our acquisition strategy and the successful integration of acquired businesses into our existing operations. We intend to continue to identify appropriate opportunities to acquire or invest in businesses or assets that we believe could complement or expand our business, enhance our capabilities, or otherwise offer growth opportunities. However, we may not be successful in identifying suitable acquisition opportunities or completing such transactions. The pursuit of potential acquisitions may divert the attention of management and cause us to incur costs in identifying, investigating, and pursuing acquisitions, whether or not they are consummated. Our ability to enter into and complete acquisitions may be restricted by, or subject to, various approvals under U.S. or other applicable law or may not otherwise be possible, may result in a possible dilutive issuance of our securities, or may require us to seek additional financing.

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In addition, following completion of an acquisition, our management and resources may be diverted from their core business activities due to the integration process, which diversion may harm the effective management of our business. We may experience difficulties integrating acquired operations, technology, and personnel into our existing business and operations. It may not be possible to achieve the expected synergies or the actual cost of delivering such benefits may exceed the anticipated cost. We cannot provide assurance that any acquisition, once integrated, will perform as planned, be accretive to earnings, or prove to be beneficial to our results of operations or cash flow. Completed acquisitions may also expose us to potential risks, including risks associated with the assumption of product liabilities, or contingent or undisclosed liabilities, acquisition-related litigation, difficulties in maintaining uniform standards, impact to our corporate culture, the diversion of resources from our existing business, and the potential loss of, or harm to, relationships with our suppliers, business relationships or employees as a result of our integration of new businesses.

We may also face liability with respect to acquired businesses for violations of environment laws occurring prior to the date of acquisition, which may not be covered by environment insurance secured to mitigate the risk or by indemnification from the sellers of the acquired businesses. We could also incur significant costs, including, but not limited to, remediation costs, natural resources damages, civil or criminal fines and sanctions, and third-party claims, as a result of past or future violations of, or liabilities, associated with environmental laws. Any of these factors may have an adverse effect on our business, results of operations and financial condition.

Our management team does not have extensive experience managing a public company.

Most members of our management team do not have extensive experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage us as a public company that is subject to significant regulatory oversight and reporting obligations under federal securities laws and the continuous scrutiny of securities analysts and investors. These obligations and constituents require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, results of operations and financial condition.

If our goodwill, other intangible assets, or fixed assets become impaired, we may be required to record a charge to earnings.

We may be required to record future impairments of goodwill, other intangible assets, or fixed assets to the extent the fair value of these assets falls below their book value. Our estimates of fair value are based on assumptions regarding future cash flows, gross margins, expenses, discount rates applied to these cash flows, and current market estimates of value. Estimates used for future sales growth rates, gross profit performance, and other assumptions used to estimate fair value could cause us to record material non-cash impairment charges, which could harm our financial condition and results of operations.

We assess the potential impairment of goodwill and indefinite-lived intangible assets on an annual basis or whenever events or changes in circumstances indicate the carrying value of these assets may have been impaired. During the third quarter of 2022, we concluded it was necessary to reevaluate goodwill and indefinite-lived intangible assets for impairment after supply chain challenges led to a downward revision of earnings estimates for 2022, which resulted in a decline in our market capitalization. Based on a quantitative assessment in the third quarter of 2022, we identified impairment of $2.4 million on certain indefinite-lived tradenames but did not identify any indicators of goodwill impairment. During the fourth quarter of 2022, we performed our annual impairment test for goodwill, and a quantitative analysis did not identify any indicators of impairment. Based on the annual impairment assessment, the estimated fair value exceeded the carrying value of the reporting unit by 15%. On December 31, 2022, we concluded it was necessary to reevaluate goodwill for impairment due to a further downward revision of earnings estimates for 2022 and a continued decline in our market capitalization. Accordingly, we performed a qualitative assessment and did not identify any indicators of impairment. During the fourth quarter of 2023, we performed our annual impairment test for goodwill, and a qualitative analysis did not identify any indicators of impairment. Goodwill was $419.1 million on December 31, 2023, and is considered at higher risk of failing future quantitative impairment tests due to the narrow difference between fair value and carrying value. 

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Global climate change and related regulations could negatively affect our business.

The effects of climate change, such as extreme weather conditions, create financial risks to our business. The demand for our products may be affected by extreme weather conditions, such as droughts, wildfires and flooding. These types of extreme weather events have and may continue to adversely impact us, our suppliers, our customers and their ability to purchase our products and our ability to timely receive appropriate raw materials to manufacture and transport our products on a timely basis. The effects of climate change could also disrupt our operations by impacting the availability and cost of materials needed for manufacturing and could increase insurance and other operating costs. We could also face indirect financial risks passed through the supply chain and disruptions that could result in increased prices for our products and the resources needed to produce them.

Furthermore, the long-term impacts of climate change, whether involving physical risks (such as extreme weather conditions, drought, or rising sea levels) or transition risks (such as regulatory or technology changes) are expected to be widespread and unpredictable. Certain impacts of physical risk may include: temperature changes that increase the heating and cooling costs at our facilities; extreme weather patterns that affect the production or sourcing of certain components; flooding and extreme storms that damage or destroy our buildings and inventory; and heat and extreme weather events that cause long-term disruption or threats to the habitability of our customers’ communities. Relative to transition risk, certain impacts may include: changes in energy and commodity prices driven by climate-related weather events; prolonged climate-related events affecting macroeconomic conditions with related effects on consumer spending and confidence; stakeholder perception of our engagement in climate-related policies; and new regulatory requirements resulting in higher compliance risk and operational costs.

Climate change is continuing to receive ever increasing attention worldwide, which could lead to additional legislative and regulatory efforts to increase transparency and standardization of reporting of greenhouse gas emissions, energy policies, and renewable energy usage. Additionally, new federal or state restrictions on emissions of carbon dioxide that may be imposed on vehicles and automobile fuels could adversely affect demand for vehicles, annual miles driven or the products we sell or lead to changes in automotive technology. Compliance with any new or more stringent laws or regulations, or stricter interpretations of existing laws, could require increased capital expenditures to improve our product portfolio to meet such new laws, regulations and standards.

Increasing scrutiny and evolving expectations with respect to our environmental, social and governance (“ESG”) practices may impose additional costs on us or expose us to new or additional risks.

In addition to the increased legislative and regulatory attention to climate change, customer, investor, and employee expectations in ESG have been rapidly evolving and increasing. While we have been committed to continuous improvements to our product portfolio to meet anticipated regulatory standard levels, if customers, regulators or investors demand we increase our greenhouse gas emission or renewable energy disclosures or our ESG initiatives, we may have to implement additional reporting standards and reporting requirements. If we fail to meet customer, investor, or employee expectations, we may be unable to attract or retain our consumer base or talent. Further, there can be no assurance that our commitments will be successful, that our products will be accepted by the market, that proposed regulation or deregulation will not have a negative competitive impact, or that economic returns will reflect our investments in new product development.

The standards by which ESG efforts and related matters are measured are developing and evolving, and we could be criticized for the scope of our initiatives and goals, or lack thereof. If we fail to comply with the evolving customer or investor or employee expectations and standards, or if we are perceived to have failed to adequately respond to such expectations and standards, we may suffer from reputational damage, which could have an adverse impact on our business or financial condition.

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Legal, Regulatory and Compliance Risks Related to Our Business

We may become involved in legal or regulatory proceedings and audits.

Our business requires compliance with many laws and regulations, including labor and employment, sales and other taxes, customs, and consumer protection laws and ordinances that regulate retailers generally and/or govern the importation, promotion, and sale of merchandise, and the operation of stores and warehouse facilities. Failure to comply with these laws and regulations could subject us to lawsuits and other proceedings, and could also lead to damage awards, fines, and penalties. We may become involved in a number of legal proceedings and audits, including government and agency investigations, and consumer, employment, tort, and other litigation. The outcome of some of these legal proceedings, audits, and other contingencies could require us to take, or refrain from taking, actions that could harm our operations or require us to pay substantial amounts of money, harming our business, sales, financial condition and results of operations. Additionally, defending against these lawsuits and proceedings may be necessary, which could result in substantial costs and diversion of management’s attention and resources, harming our business, sales, financial condition and results of operations. Any pending or future legal or regulatory proceedings and audits could harm our business, sales, financial condition and results of operations.

We may become subject to intellectual property claims or lawsuits that could cause us to incur significant costs or pay significant damages or that could prohibit us from selling our products.

Our competitors also seek to obtain patent, trademark, copyright or other protection of their proprietary rights and designs for automotive products. From time to time, third parties have claimed or may claim in the future that our products infringe upon their proprietary rights. We evaluate any such claims and, where appropriate, have obtained or sought to obtain licenses or other business arrangements. To date, there have been no significant interruptions in our business as a result of any claims of infringement. However, in the future, intellectual property claims could force us to alter our existing products or withdraw them from the market or could delay the introduction of new products.

Various patents have been issued to our competitors in the automotive parts industry and these competitors may assert that our products infringe their patent or other proprietary rights. If our products are found to infringe third-party intellectual property rights, we may be unable to obtain a license to use such technology, and we could incur substantial costs to redesign our products, withdraw them from the market, and/or to defend legal actions.

Sales of our products by unauthorized retailers or distributors could adversely affect our authorized distribution channels and harm our reputation.

Some of our products may find their way to unauthorized outlets or distribution channels. This “gray market” for our products can undermine authorized retailers and foreign wholesale distributors who promote and support our products and can injure our brands in the minds of our customers and consumers. On the other hand, stopping such commerce could result in a potential decrease in sales to those customers who are selling our products to unauthorized distributors or an increase in sales returns over historical levels. While we have taken some lawful steps to limit commerce of our products in the “gray market” in both the United States and abroad, we have not stopped such commerce.

We are subject to environmental, health, safety, and other governmental laws and regulations, which could subject us to liabilities, increase our costs or restrict our operations in the future.

Our properties and operations are subject to a number of environmental, health and safety laws and regulations in each of the jurisdictions in which we operate, including, among others, regulations of the California Air Resources Board. These laws and regulations govern, among other things, air emissions, water discharges, handling and disposal of solid and hazardous substances and wastes, soil and groundwater contamination and employee health and safety. Our failure to comply with such environmental, health and safety laws and regulations could result in substantial civil or criminal fines or penalties or enforcement actions, including regulatory or judicial orders enjoining or curtailing operations or requiring remedial or corrective measures, installation of pollution control equipment or other actions.

We may also be subject to liability for environmental investigations and cleanups, including at properties that we currently or previously owned or operated, even if such contamination was not caused by us, and we may face claims alleging harm to health or property or natural resource damages arising out of contamination or exposure to hazardous substances. We may also be subject to similar liabilities and claims in connection with locations at which hazardous substances or wastes we have generated have been stored, treated, otherwise managed, or disposed. Environmental conditions at or related to our current or former properties or operations, and/or the costs of complying with current or future environmental, health and safety requirements (which have become more stringent and complex over time) could materially adversely affect our business, sales, financial condition and results of operations.

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Compliance with new and proposed ESG disclosure requirements, including the climate change disclosure requirements of the SEC and the State of California, could require significant effort and divert management’s attention and resources, which could adversely affect our operating results. We are also subject to evolving data privacy and cybersecurity laws and regulations (including applicable standards), compliance with which may also increase our costs of doing business.

Changes in, or any failure to comply with, privacy laws, regulations, and standards may adversely affect our business.

Personal privacy and data security have become significant issues in the United States, Europe, and in many other jurisdictions in which we operate. The regulatory framework for privacy and security issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Furthermore, federal, state, or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws and regulations affecting data privacy, all of which may be subject to invalidation by relevant foreign judicial bodies.

Industry organizations also regularly adopt and advocate for new standards in this area. In the United States, these include rules and regulations promulgated under the authority of federal agencies and state attorneys general and legislatures and consumer protection agencies, including, but not limited to, the California Consumer Privacy Act. Internationally, many jurisdictions in which we operate have established their own data security and privacy legal framework with which we or our customers must comply, including, but not limited to, the European General Data Protection Regulation, which imposes certain privacy-related obligations and potential penalties and risks upon our business. In many jurisdictions, enforcement actions and consequences for noncompliance are also rising. In addition to government regulation, privacy advocates and industry groups may propose new and different self-regulatory standards that either legally or contractually apply to us. Any inability or perceived inability to adequately address privacy and security concerns, even if unfounded, or comply with applicable privacy and data security laws, regulations, and policies, could result in additional cost and liability to us, damage our reputation and adversely affect our business.

Our insurance policies may not provide adequate levels of coverage against all claims, and we may incur losses that are not covered by our insurance.

We maintain insurance of the type and in amounts that we believe are commercially reasonable and that are available to businesses in our industry. We carry various types of insurance, including general liability, auto liability, workers’ compensation, cyber, and excess umbrella, from highly rated insurance carriers. Market forces beyond our control could limit the scope of the insurance coverage that we can obtain in the future or restrict our ability to buy insurance coverage at reasonable rates. We cannot predict the level of the premiums that we may be required to pay for subsequent insurance coverage, the level of any deductible and/or self- insurance retention applicable thereto, the level of aggregate coverage available or the availability of coverage for specific risks. In the event of a substantial loss, the insurance coverage that we carry may not be sufficient to compensate us for the losses we incur or any costs we are responsible for.

Changes in tax law or regulation, effective tax rates and unanticipated tax liabilities could adversely affect our effective income tax rate and profitability.

We are subject to income taxes in the United States (federal and state) and various foreign jurisdictions. Our future effective income tax rate could be subject to volatility or adversely affected by a number of factors, including changes in the valuation of deferred tax assets and liabilities, changes in tax laws, regulations, accounting principles, or interpretations and application thereof. In particular, the U.S. government may enact significant changes to the taxation of business entities including, among others, an increase in the corporate income tax rate, the imposition of minimum taxes or surtaxes on certain types of income, significant changes to the taxation of income derived from international operations, and an addition of further limitations on the deductibility of business interest. For example, the U.S. government enacted the Inflation Reduction Act which, among other things, imposes a minimum tax on certain corporations with book income of at least $1 billion, subject to certain adjustments, and a 1% excise tax on certain stock buybacks and similar corporate actions. Any of these or similar developments or changes in federal, state, or international tax laws or tax rulings could adversely affect our effective tax rate and our operating results. 

We are also subject to the continuous examination of our income and other tax returns by the Internal Revenue Service and other tax authorities globally. It is possible that tax authorities may disagree with certain positions we have taken, and an adverse outcome of such a review or audit could have a negative effect on our financial position and operating results. There can be no assurance that the outcomes from such examinations, or changes in tax law or regulation impacting our effective tax rates, will not have an adverse effect on our business, financial condition and results of operations.

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Risks Related to Ownership of Our Securities

Certain of our stockholders, including the Holley Stockholder and the Sponsor, may have conflicts of interest with other stockholders and may limit other stockholders' ability to influence corporate matters.

On December 31, 2023, the Holley Stockholder and the Sponsor (together with its affiliates) beneficially own, in the aggregate, approximately 50% of shares of Common Stock, excluding any Warrants exercisable for Common Stock held by Sponsor or its affiliates (or 52% inclusive of shares of Common Stock underlying Warrants held by Sponsor and its affiliates). As a result of this concentration of stock ownership, these parties acting together have sufficient voting power to effectively control most matters submitted to our stockholders for approval, including director elections and proposed amendments to our certificate of incorporation and bylaws. On July 16, 2021, (the “Closing” and such date, the “Closing Date”), the Company, the Sponsor, certain affiliates of the Sponsor, the Holley Stockholder and Sentinel Capital Partners V, L.P., Sentinel Capital Partners V-A, L.P. and Sentinel Capital Investors V, L.P., controlling affiliates of the Holley Stockholder entered into the Stockholders’ Agreement, pursuant to which the Holley Stockholder and the Sponsor have the right to designate nominees for election to our board of directors subject to certain beneficial ownership requirements.

In addition, this concentration of ownership may delay or prevent a merger, consolidation or other business combination or change in control of our company and make some transactions that might otherwise give stockholders the opportunity to realize a premium over the then-prevailing market price of our securities more difficult or impossible without their support. Because we have opted out of Section 203 of the Delaware General Corporation Law (“DGCL”) regulating certain business combinations with interested stockholders, these parties may transfer their shares of Common Stock and such control of us to a third party, which would not require the approval of our board of directors or other stockholders and may limit the price that investors are willing to pay in the future for shares of our Common Stock. The interests of these parties may not always coincide with our interests as a company or the interests of other stockholders. Accordingly, these parties could cause us to enter into transactions or agreements of which other stockholders may not approve or make decisions with which other stockholders would disagree. This concentration of ownership may also adversely affect the trading prices of our securities.

Each of the Holley Stockholder and the Sponsor is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. The certificate of incorporation provides that none of the Holley Stockholder, the Sponsor, any of their affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his or her director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. Each of the Holley Stockholder and the Sponsor also may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.

Warrants are exercisable for Common Stock, which could increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

On December 31, 2023, we had an aggregate of 14,633,311 Warrants issued and outstanding, representing the right to purchase an equivalent number of shares of Common Stock. The exercise price of the Warrants is $11.50 per share. To the extent such Warrants are exercised, additional shares of Common Stock will be issued, which will result in dilution to our stockholders and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market or the fact that such Warrants may be exercised could adversely affect the market price of our Common Stock. However, there is no guarantee that the Warrants will ever be in the money prior to their expiration, and as such, the Warrants may expire worthless.

The Warrants may expire worthless, and the terms of the Warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then-outstanding Warrants approve of such amendment.

The Warrant Agreement provides that the terms of the Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but it requires the approval by the holders of at least 50% of the then-outstanding Warrants to make any change that adversely affects the interests of the registered holders of the Warrants. Accordingly, we may amend the terms of the Warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding Warrants approve of such amendment. Although our ability to amend the terms of the Warrants with the consent of at least 50% of the then outstanding Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Warrants, shorten the exercise period or decrease the number of Common Stock purchasable upon exercise of a Warrant.

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The market price and trading volume of Common Stock and Warrants may be volatile.

Stock markets, including the NYSE, have from time-to-time experienced significant price and volume fluctuations. Even if an active, liquid and orderly trading market develops and is sustained for Common Stock and Warrants, the market price of Common Stock and Warrants may be volatile and could decline significantly, whether or not any price changes are related to matters specific to us. In addition, the trading volume in Common Stock and Warrants may fluctuate and cause significant price variations to occur. If the market price of Common Stock and Warrants declines significantly, stockholders may be unable to resell shares of Common Stock and Warrants at or above the market price of Common Stock and Warrants. We cannot guarantee that the market price of Common Stock and Warrants will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following:

• the realization of any of the risk factors presented in this Annual Report;

• actual or anticipated differences in our estimates, or in the estimates of analysts, for our revenues, results of operations, level of indebtedness, liquidity or financial condition;

• additions and departures of key personnel;

• failure to comply with the requirements of the NYSE;

• failure to comply with the Sarbanes-Oxley Act or other laws or regulations;

• future issuances, sales or resales, or anticipated issuances, sales or resales, of Common Stock;

• perceptions of the investment opportunity associated with Common Stock relative to other investment alternatives;

• the performance and market valuations of other similar companies;

• future announcements concerning our business or our competitors’ businesses;

• broad disruptions in the financial markets, including sudden disruptions in the credit markets;

• speculation in the press or investment community;

• actual, potential or perceived control, accounting or reporting problems;

• changes in accounting principles, policies and guidelines; and

• general economic and political conditions, such as inflation, labor shortages, disruption of the supply chain, interest rates, fuel prices and other transportation costs, international currency fluctuations, geopolitical instability, military conflicts (including the conflict in Ukraine, the conflict in Israel and surrounding areas, and the possible expansion of such conflicts) or terrorism.

Securities class action litigation has often been instituted against companies following periods of volatility in the market price of their securities. The trading price of our common stock has experienced significant volatility. In addition, we and certain of our former executive officers have been named as defendants in a putative securities class action lawsuit. See Litigation in Note 19 “Commitments and Contingencies.”  We could face additional securities litigation class action lawsuits in the future. This type of litigation [has resulted and could continue to] result in substantial costs and divert our management’s attention and resources, which could have a material adverse effect on us.

Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the market price and trading volume of Common Stock and Warrants.

The market for Common Stock and Warrants depends in part on the research and reports that securities or industry analysts publish about us or our business. Securities research analysts may establish and publish their own periodic projections for Holley. These projections may vary widely and may not accurately predict the results we actually achieve. Our share price may decline if our actual results do not match the projections of these securities research analysts. Similarly, if one or more of the analysts who write reports on us downgrades our stock or publishes inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for Common Stock and Warrants could decrease, which might cause the market price and trading volume of our Common Stock and Warrants to decline significantly.

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Future sales of our Common Stock and Warrants in the public market could cause our stock price to fall.

On December 31, 2023, the Holley Stockholder and the Sponsor (together with its affiliates) beneficially own, in the aggregate, approximately 50% of our shares of Common Stock, excluding any warrants exercisable for Common Stock held by Sponsor or its affiliates (or 52% inclusive of shares of Common Stock underlying Warrants held by Sponsor and its affiliates). All shares held by our affiliates are eligible for resale in the public market, subject to applicable securities laws, including the Securities Act. Therefore, unless shares owned by any of our affiliates are registered under the Securities Act, these shares may only be resold into the public markets in accordance with the requirements of an exemption from registration or safe harbor, including Rule 144 and the volume limitations, manner of sale requirements and notice requirements thereof. However, pursuant to the terms the Amended and Restated Registration Rights Agreement, of which the Company entered into with the Sponsor and the Holley Stockholder at the closing of the Business Combination, the Sponsor and the Holley Stockholder have the right to demand that we register their shares under the Securities Act as well as the right to include their shares in any registration statement that we file with the SEC, subject to certain exceptions. The registration statement, which was filed pursuant to these registration rights, and any registration of other shares we may file in the future, enables those securities to be sold in the public market. Any sale by the Holley Stockholder, the Sponsor or other affiliates and stockholders, or any perception in the public markets that such a transaction may occur could cause the market price of our Common Stock and Warrants to decline materially.

We may redeem unexpired Warrants prior to their exercise at a time that is disadvantageous to the Warrant holders, thereby making the Warrants worthless.

We have the ability to redeem outstanding Warrants at any time prior to their expiration, at a price of $0.01 per Warrant, provided that the last reported sales price of Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which we send the notice of redemption to the Warrant holders. If and when the Warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares of Common Stock upon exercise of the Warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register or qualify such shares of Common Stock under the blue-sky laws of the state of residence in those states in which the Warrants were offered. Redemption of the outstanding Warrants could force stockholders (i) to exercise the Warrants and pay the exercise price therefor at a time when it may be disadvantageous to do so, (ii) to sell the Warrants at the then-current market price when stockholders might otherwise wish to hold the Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Warrants are called for redemption, is likely to be substantially less than the market value of the Warrants. None of the Private Warrants will be redeemable by us so long as they are held by the Sponsor, or its permitted transferees.

The NYSE may delist our securities from trading on its exchange, which could limit stockholders’ ability to make transactions in our securities and subject us to additional trading restrictions.

Our Common Stock and Warrants are currently listed on NYSE. We cannot assure that our securities will continue to be listed on the NYSE. In order to continue listing our securities on the NYSE, we are required to maintain certain financial, distribution and stock price levels. Generally, we are required to maintain a minimum amount of stockholders’ equity.

If the NYSE delists our securities from trading on its exchange for failure to meet the exchange's continued listing standards or otherwise, and we are not able to list our securities on another national securities exchange, our securities could be quoted on an over-the-counter market, but no assurance of this can be given. If this were to occur, we and our stockholders could face significant material adverse consequences including:

• a limited availability of market quotations for our securities;

• reduced liquidity for our securities;

• a determination that our Common Stock is a “penny stock” which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

• a limited amount of news and analyst coverage; and

• a decreased ability to issue additional securities or obtain additional financing in the future.

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The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Since our Common Stock and Warrants are listed on the NYSE, they are covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. Further, if we were no longer listed on the NYSE, our securities would not be covered securities, and we would be subject to regulation in each state in which we offer our securities.

Future issuances of debt securities and equity securities may adversely affect us, including the market price of Common Stock and may be dilutive to existing stockholders.

There is no assurance that we will not incur debt or issue equity ranking senior to Common Stock. Those securities will generally have priority upon liquidation. Such securities also may be governed by an indenture or other instrument containing covenants restricting their operating flexibility. Additionally, any convertible or exchangeable securities that the Company issues in the future may have rights, preferences and privileges more favorable than those of Common Stock. Separately, additional financing may not be available on favorable terms, or at all. Because our decision to issue debt or equity in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising efforts. As a result, future capital-raising efforts may reduce the market price of Common Stock and be dilutive to existing stockholders.

We do not intend to pay cash dividends for the foreseeable future.

We currently intend to retain our future earnings, if any, to finance the further development and expansion of our business and do not intend to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as our board of directors deems relevant.

The JOBS Act permits “emerging growth companies” like us to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies.

We qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act. As such, we take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as we continue to be an emerging growth company, including (i) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, (ii) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements and (iii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. As a result, our stockholders may not have access to certain information they deem important. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year (a) following the fifth anniversary of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of the Common Stock and Warrants that are held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as we are an emerging growth company. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. We have elected to avail ourselves of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

We cannot predict if investors will find our Common Stock and Warrants less attractive because we will rely on these exemptions. If some investors find our Common Stock and Warrants less attractive as a result, there may be a less active trading market for our Common Stock and Warrants and more stock price volatility.

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Delaware law and our certificate of incorporation and bylaws contain certain provisions, including anti- takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.

The certificate of incorporation, bylaws and the DGCL contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our Common Stock, and therefore depress the trading price of Common Stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of our board of directors or taking other corporate actions, including effecting changes in our management. Among other things, the certificate of incorporation and bylaws include provisions regarding:

• a classified board of directors with staggered, three-year terms;

• prevent stockholders from acting by written consent;

• limit the ability of stockholders to amend our certificate of incorporation;

• limit the ability of stockholders to remove directors;

• prevent stockholders from calling special meetings of stockholders;

• the ability of the board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder;

• the certificate of incorporation prohibits cumulative voting in the election of directors;

• the limitation of the liability of, and the indemnification of, our directors and officers;

• the ability of the board of directors to amend the bylaws; and

• advance notice procedures with which stockholders must comply to nominate candidates to the board of directors or to propose matters to be acted upon at a stockholders’ meeting.

These provisions, alone or together, could discourage, delay or prevent hostile takeovers and changes in control, including transactions in which the acquirer may offer a premium price for our Common Stock and Warrants, or changes in our board of directors or management. In addition, our Incentive Plan provides for accelerated vesting of awards that are assumed or substituted in connection with a change in control of the Company as a result of the change in control if a participant experiences a qualifying termination within two years following the change in control, which could discourage, delay or prevent a merger or acquisition at a premium price.

The provisions of the certificate of incorporation requiring exclusive forum in the Court of Chancery of the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.

The certificate of incorporation provides that, unless we select or consent in writing to the selection of an alternative forum, to the fullest extent permitted by the applicable law: (a) the sole and exclusive forum for any complaint asserting any internal corporate claims, to the fullest extent permitted by law, and subject to applicable jurisdictional requirements, shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to accept, jurisdiction, another state court or a federal court located within the State of Delaware); and (b) the sole and exclusive forum for any complaint asserting a cause of action arising under the Securities Act of 1933, to the fullest extent permitted by law, shall be the federal district courts of the United States of America. For purposes of the foregoing, “internal corporate claims” means claims, including claims in the right of the Company that are based upon a violation of a duty by a current or former director, officer, employee or stockholder in such capacity, or as to which the DGCL confers jurisdiction upon the Court of Chancery. Any person or entity purchasing or otherwise acquiring any interest in any shares of Common Stock will be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce the certificate of incorporation’s exclusive forum provision (an “FSC Enforcement Action”), and (ii) having service of process made upon such holder of Common Stock in any such FSC Enforcement Action by service upon such holder of Common Stock’s counsel in such action as agent for such holder of Common Stock.

These provisions may have the effect of discouraging lawsuits against our directors and officers. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in the certificate of incorporation to be inapplicable or unenforceable in such action.

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Item 1B. Unresolved Staff Comments

None

Item 1C. Cybersecurity

Holley recognizes the importance of maintaining the safety and security of our information systems and data and has risk-based processes in place for overseeing and managing material risks from cybersecurity threats. Our cybersecurity program, which is further described below, is supported by our information technology team, management and our board of directors. Additionally, our cybersecurity processes and reporting structure are incorporated into our enterprise risk management program, which addresses both the corporate information technology environment and customer-facing products. We will continue to invest in the security and resiliency of our networks and to enhance our internal controls and processes, which are designed to help protect our systems and infrastructure, and the information they contain.

Management’s Role

Holley’s information technology team, which is responsible for developing and implementing our cybersecurity program, currently operates under the oversight of our Chief Financial Officer (“CFO”). The CFO is generally responsible for managing risks from cybersecurity threats, as well as overseeing the safeguarding and fortification of our networks and systems. With a proven track record in developing and leading data science teams, the CFO's expertise in business, finance and technology enables him to guide the team in making strategic information technology investments that strike a balance between growth opportunities, risk mitigation and return on investment. The information technology team is comprised of cybersecurity professionals with broad experience and expertise, including in cybersecurity threat assessments and detection, mitigation technologies, cybersecurity training, incident response, penetration testing processes and methodologies, and risk communication and reporting. Currently, an Interim Chief Information Officer (“CIO”) is overseeing our cybersecurity program as we proceed with an executive search to appoint a permanent CIO. Going forward, the CIO will be responsible for the management and oversight of Holley’s cybersecurity program.

Board Oversight

Our board of directors, in coordination with the Audit Committee, oversees Holley’s enterprise risk management activities, including the management of risks from cybersecurity threats. Our Audit Committee directly oversees our cybersecurity program. The Audit Committee receives updates, biannually or more frequently, as needed, from management on the Company’s cyber risk management processes, including reports on risk trends related to cybersecurity. If a cybersecurity incident is identified, the information technology team, in conjunction with management, will take appropriate actions to mitigate and remediate the incident in a timely manner. Management will determine the materiality of the incident and inform the Audit Committee, as appropriate.

Technical Safeguards and Continuous Monitoring

As part of our cybersecurity program, we regularly assess and deploy technical safeguards designed to protect our information systems from cybersecurity threats. Such safeguards are regularly evaluated and improved based on vulnerability assessments, cybersecurity threat intelligence and incident response experience. We utilize data analytics to detect anomalies and search for cyber threats. Our cybersecurity processes include a continuous monitoring system which supports comprehensive cyber threat detection and response capabilities and complements the technology, processes and threat detection techniques we use to monitor, manage and mitigate cybersecurity threats. Cyber partners are a key part of Holley’s cybersecurity infrastructure. We partner with leading cybersecurity companies, leveraging third-party technology and expertise. We engage with these partners to monitor and maintain the performance and effectiveness of products and services that are deployed in our environment. 

Training and Awareness

We provide awareness training to our employees to help identify, avoid and mitigate cybersecurity threats. Our employees with network access participate annually in required training, including privacy and security training designed to enhance employee awareness of how to detect and respond to cybersecurity threats. We have also developed a program for staging incident response drills to prepare support teams in the event of a significant incident.

Third-Party Risk Management

Our information technology team is responsible for identifying and managing any cybersecurity threats that occur with our vendors and suppliers. The team communicates with our suppliers and vendors and relies on them to apprise Holley of any cybersecurity issues.

We have not identified risks from cybersecurity threats that have materially affected us, including our financial position, results of operations, cash flows, or reputation, although certain risks, if realized, are reasonably likely to materially affect us. For more information regarding the risks we face from cybersecurity threats and how those risks could affect us, please see Item 1A. “Risk Factors.”

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Item 2. Properties

Our corporate headquarters is located at 1801 Russellville Rd, Bowling Green, Kentucky 42101. We own the property and building where our headquarters is located. Our facility is approximately 200,000 square feet and includes approximately 69,000 square feet for corporate office space, 89,000 square feet for manufacturing and approximately 42,000 square feet for product shipment and delivery acceptance.

We have a number of leased locations across the United States, Canada and Italy that serve multiple functions, including distribution, engineering, manufacturing, office space, R&D, and retail sales. We have 15 facilities that perform manufacturing of our products and 12 distribution locations. We also have 17 R&D/Engineering facilities designed to develop our new product innovations.

Item 3. Legal Proceedings

See Litigation in Note 19 "Commitments and Contingencies."

Item 4. Mine Safety Disclosures

Not applicable

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

The principal market on which Holley's Common Stock and Warrants are listed for trading is the New York Stock Exchange. Holley's Common Stock and Warrants trade under the symbols “HLLY” and “HLLY WS,” respectively.

Holders of Record

As of March 11, 2024, there were approximately 14 stockholders of record of Common Stock.

Dividend Policy

Holley has never declared or paid any cash dividends on its Common Stock and does not currently anticipate paying any cash dividends in the foreseeable future. Holley may consider declaring and paying a cash dividend in the future; however, there can be no assurance that it will do so.

Issuer Repurchase of Equity Securities

None

Unregistered Sales of Equity Securities

Except as previously disclosed in a Current Report on Form 8-K, no unregistered sales of the Company’s equity securities were made during the year ended December 31, 2023.

Stock Performance Graph

The following graph shows a comparison from July 16, 2021, (the date the Company’s common stock commenced trading on the NYSE) through December 31, 2023, of the cumulative total return for the Company's common stock, the Standard & Poor's 500 Stock Index (S&P 500 Index), and the Standard & Poor’s Consumer Discretionary (Sector) Index. The graph assumes that $100 was invested in the Company’s common stock at the close of the market on July 16, 2021. In the case of the S&P 500 Index and the S&P Consumer Discretionary Index, the graph assumes that $100 was invested at the close of the market on July 16, 2021, and assumes reinvestments of dividends. The stock price performance of the following graph is not necessarily indicative of future stock price performance.

Item 6. [Reserved]

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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 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.

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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.

In 2022 and 2021, Holley completed 11 acquisitions. The most significant of these acquisitions impacting the comparability of our operating results were:

• Baer, Inc.: On December 23, 2021, we acquired Baer, Inc. doing business as Baer Brakes, a developer and supplier of brakes and brake systems. This acquisition moves us closer to our goal of providing complete vehicle solutions by adding a new product category and brake system expertise.

• Brothers Mail Order Industries, Inc.: On December 16, 2021, we acquired Brothers Mail Order Industries, Inc., doing business as Brothers Trucks, a distributor of Classic and Custom vehicle restoration parts serving the Chevrolet and GMC truck aftermarket. This acquisition increases our offering in truck and SUV appearance items.

• Advance Engine Management Inc.: On April 14, 2021, we acquired Advance Engine Management Inc., doing business as AEM Performance Electronics, a developer and supplier of electronic control and monitoring systems for performance automotive applications. This acquisition increases our penetration into the import and other sport compact cars submarket.

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,” and Note 2, “Business Combination and Acquisitions,” 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, and disruption of the supply chain, 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. Sales growth in certain products has been constrained by continuing supply chain challenges and automotive electronic component shortages. 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, and demands on our performance that increased our costs. 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. 

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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.

Acquisition and Restructuring Costs

Acquisition and restructuring costs consist of professional fees for legal, accounting, consulting, administrative, and other professional services directly attributable to potential acquisitions. In addition, operational restructuring costs are included within this classification.

Related Party Acquisition and Management Fee Costs

Related party acquisition and management fee costs consist of fees paid to our historical private equity sponsor pursuant to a management services agreement for management services and consulting services directly attributable to potential acquisitions. Upon the Closing of the Business Combination, the management services agreement with our private equity sponsor was terminated.

Interest Expense

Interest expense consists of interest due on the indebtedness under our credit facilities. On December 31, 2023, $592.5 million was outstanding under the Credit Agreement. Interest is based on the SOFR or prime rate, plus the applicable margin rate.

37

Results of Operations

Year Ended December 31, 2023 Compared With Year Ended December 31, 2022

The table below presents our results of operations for the years ended December 31, 2023 and 2022 (dollars in thousands):

	For the years ended December 31,
	2023			2022			Change ($)			Change (%)
Net sales	$	659,704		$	688,415		$	(28,711	)		(4.2	)%
Cost of goods sold		403,615			434,757			(31,142	)		(7.2	)%
Gross profit		256,089			253,658			2,431			1.0	%
Selling, general, and administrative		120,244			150,728			(30,484	)		(20.2	)%
Research and development costs		23,844			29,083			(5,239	)		(18.0	)%
Amortization of intangible assets		14,557			14,683			(126	)		(0.9	)%
Impairment of indefinite-lived intangible assets		—			2,395			(2,395	)		(100.0	)%
Acquisition and restructuring costs		2,641			4,513			(1,872	)		(41.5	)%
Other expense		765			1,514			(749	)		(49.5	)%
Operating income		94,038			50,742			43,296			85.3	%
Change in fair value of warrant liability		4,111			(57,021	)		61,132			n/a
Change in fair value of earn-out liability		2,303			(10,731	)		13,034			n/a
Gain on early extinguishment of debt		(701	)		—			(701	)		n/a
Interest expense		60,746			40,227			20,519			51.0	%
Income before income taxes		27,579			78,267			(50,688	)		(64.8	)%
Income tax expense		8,399			4,493			3,906			86.9	%
Net income		19,180			73,774			(54,594	)		(74.0	)%
Foreign currency translation adjustment		234			(990	)		1,224			n/a
Pension liability gain		—			302			(302	)		(100.0	)%
Total comprehensive income	$	19,414		$	73,086		$	(53,672	)		(73.4	)%

Net Sales

Net sales for the year ended December 31, 2023, decreased $28.7 million, or 4.2%, to $659.7 million as compared to $688.4 million for the year ended December 31, 2022. The decline in sales was driven by supply chain constraints in electronic components and a return to the sales trends experienced prior to the increased demand experienced during the COVID-19 pandemic. As a result, lower unit volume drove a decrease of approximately $42.3 million that was partially offset by improved price realization of approximately $13.6 million compared to the prior year period. Comparable year-over-year results by category include a decrease in safety products sales of $9.4 million (14.3% category decline), a decrease in accessories sales of $9.3 million (8.6% category decline), a decrease in mechanical systems sales of $7.6 million (4.6% category decline), a decrease in exhaust system sales of $6.8 million (10.2% category decline), and electronic systems sales growth of $4.4 million (1.5% category growth) 

Cost of Goods Sold

Cost of goods sold for year ended December 31, 2023, decreased $31.1 million, or 7.2%, to $403.6 million as compared to $434.8 million for the year ended December 31, 2022. The decrease in cost of goods sold during the year ended December 31, 2023, reflects the decrease in product sales during such period combined with lower freight costs.

Gross Profit and Gross Margin

Gross profit for the year ended December 31, 2023, increased $2.4 million, or 1.0%, to $256.1 million as compared to $253.7 million for the year ended December 31, 2022. Gross margin for the year ended December 31, 2023, was 38.8% as compared to a gross margin of 36.8% for the year ended December 31, 2022. The increase in gross profit and gross profit margin, during a period in which sales volume was down, was driven primarily by meaningful improvements in freight, lower warranty costs, and product mix. 

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Selling, General and Administrative

Selling, general and administrative costs for the year ended December 31, 2023, decreased $30.5 million, or 20.2%, to $120.2 million as compared to $150.7 million for the year ended December 31, 2022. When expressed as a percentage of sales, selling, general and administrative costs decreased to 18.2% of sales for the year ended December 31, 2023, compared to 21.9% of sales in 2022. The decrease selling, general and administrative costs was driven by a lower equity compensation cost and the implementation of cost-saving initiatives, which resulted in decreases in outbound shipping and handling, professional fees, personnel and marketing costs. 

Research and Development Costs

Research and development costs for the year ended December 31, 2023, decreased $5.2 million, or 18.0%, to $23.8 million as compared to $29.1 million for the year ended December 31, 2022. The decrease in research and development costs was primarily due to headcount reductions, reflecting the implementation of cost-saving initiatives.

Amortization and Impairment of Intangible Assets

Amortization of intangible assets for the year ended December 31, 2023, decreased $0.1 million, or 0.9%, to $14.6 million as compared to $14.7 million for the year ended December 31, 2022. Additionally, an impairment charge of $2.4 million was recognized on certain indefinite-lived tradenames during 2022 (see 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).

Acquisition and Restructuring Costs

Acquisition and restructuring costs for the year ended December 31, 2023, decreased $1.9 million to $2.6 million, as compared to $4.5 million for the year ended December 31, 2022, reflecting a reduction in restructuring activities associated with acquisitions.

Operating Income

As a result of factors described above, operating income for the year ended December 31, 2023, increased $43.3 million, or 85.3%, to $94.0 million as compared to $50.7 million for the year ended December 31, 2022.

Change in Fair Value of Warrant Liability

For the year ended December 31, 2023, we recognized a loss of $4.1 million due to the change in fair value of the warrant liability, which reflects an increase in Holley's stock price during 2023. This compares to a gain of $57.0 million for the year ended December 31, 2022, a period during which Holley's stock price declined. 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, 2023, we recognized a loss of $2.3 million due to the change in fair value of the earn-out liability, which reflects an increase in Holley's stock price during 2023. This compares to a gain of $10.7 million for the year ended December 31, 2022, a period during which Holley's stock price declined. The earn-out liability reflects the fair value of the unvested Earn-Out Shares resulting from the Business Combination.

Gain on Early Extinguishment of Debt

For the year ended December 31, 2023, we recognized a gain of $0.7 million on the early extinguishment of debt. The gain was recognized on the repurchase of $38.8 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, 2023, increased $20.5 million, or 51.0%, to $60.8 million as compared to $40.2 million for the year ended December 31, 2022, reflecting a higher effective interest rate on outstanding debt. Interest expense for 2023 is net of a $1.2 million fair value adjustment on the interest rate collar and $0.6 million in cash payments received on the interest rate collar.

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Income before Income Taxes

As a result of factors described above, we recognized $27.6 million of income before income taxes for the year ended December 31, 2023, as compared to net income before income taxes of $78.3 million for the year ended December 31, 2022.

Income Tax Expense

We recognized income tax expense of $8.4 million for the year ended December 31, 2023, as compared to $4.5 million for the year ended December 31, 2022. The effective tax rate was 30.5% and 5.7% for the years ended December 31, 2023 and 2022, respectively. The difference between the effective tax rate and the federal statutory rate in 2023 was primarily due to permanent differences resulting from state income taxes, foreign rate differentials, compensation limits with respect to covered employees, and the change in fair value of warrant and earn-out liabilities. The difference between the effective tax rate and the federal statutory rate in 2022 was primarily due to permanent differences resulting from the change in fair value of warrant and earn-out liabilities. 

Net Income and Total Comprehensive Income 

As a result of factors described above, we recognized net income of $19.2 million for the year ended December 31, 2023, as compared to net income of $73.8 million for the year ended December 31, 2022. Additionally, we recognized total comprehensive income of $19.4 million for the year ended December 31, 2023, as compared to total comprehensive income of $73.1 million for the year ended December 31, 2022. Comprehensive income (loss) includes the effect of foreign currency translation and pension liability adjustments.

Year Ended December 31, 2022 Compared With Year Ended December 31, 2021

The table below presents our results of operations for the years ended December 31, 2022 and 2021 (dollars in thousands):

	For the years ended December 31,
	2022			2021			Change ($)			Change (%)
Net sales	$	688,415		$	692,847		$	(4,432	)		(0.6	%)
Cost of goods sold		434,757			406,040			28,717			7.1	%
Gross profit		253,658			286,807			(33,149	)		(11.6	%)
Selling, general, and administrative		150,728			116,793			33,935			29.1	%
Research and development costs		29,083			28,280			803			2.8	%
Amortization of intangible assets		14,683			13,999			684			4.9	%
Impairment of indefinite-lived intangible assets		2,395			—			2,395			n/a
Acquisition and restructuring costs		4,513			23,668			(19,155	)		(80.9	%)
Related party acquisition and management fee costs		—			25,789			(25,789	)		(100.0	%)
Other operating expense		1,514			755			759			100.5	%
Operating income		50,742			77,523			(26,781	)		(34.5	%)
Change in fair value of warrant liability		(57,021	)		32,580			(89,601	)		n/a
Change in fair value of earn-out liability		(10,731	)		8,875			(19,606	)		n/a
Loss on early extinguishment of debt		—			13,650			(13,650	)		(100.0	%)
Interest expense		40,227			39,128			1,099			2.8	%
Income (loss) before income taxes		78,267			(16,710	)		94,977			n/a
Income tax expense		4,493			10,429			(5,936	)		(56.9	%)
Net income (loss)		73,774			(27,139	)		100,913			n/a
Foreign currency translation adjustment		(990	)		30			(1,020	)		n/a
Pension liability gain		302			388			(86	)		(22.2	%)
Total comprehensive income (loss)	$	73,086		$	(26,721	)	$	99,807			n/a

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Net Sales

Net sales for the year ended December 31, 2022, decreased $4.4 million, or 0.6%, to $688.4 million as compared to $692.9 million for the year ended December 31, 2021. Non-comparable sales associated with acquisitions contributed $31.3 million to net sales in 2022, or year-over-year growth of 4.5%. The remaining comparable sales decreased by $35.7 million, or 5.2%. The decline in comparable sales was primarily driven by supply chain constraints that prevented us from building and shipping to orders received from customers and stabilizing demand due to a reduction in disposable income of our consumers. As a result, lower unit volume drove a decrease of approximately $88.5 million that was partially offset by improved price realization of approximately $52.8 million compared to 2021. Comparable year-over-year results by category include a decrease in electronic system sales of $28.1 million (9.1% category decline), a decrease in exhaust system sales of $11.4 million (14.6% category decline), a decrease in mechanical system sales of $4.6 million (3.0% category decline), a decrease in safety product sales of $3.2 million (4.9% category decline), and accessories sales growth of $11.6 million (13.6% category growth).

Cost of Goods Sold

Cost of goods sold for year ended December 31, 2022, increased $28.7 million, or 7.1%, to $434.8 million as compared to $406.0 million for the year ended December 31, 2021. The increase in cost of goods sold during the year ended December 31, 2022, in which sales declined reflects compression in gross profit margin due to manufacturing inefficiencies driven by supply chain constraints, higher product rationalization charges, higher warranty costs, and inflationary pressures on certain other costs. 

Gross Profit and Gross Margin

Gross profit for the year ended December 31, 2022, decreased $33.2 million, or 11.6%, to $253.7 million as compared to $286.8 million for the year ended December 31, 2021. Gross margin for the year ended December 31, 2022, of 36.8% decreased from gross margin of 41.4% for the year ended December 31, 2021. The decrease in gross profit and gross profit margin was driven primarily by inflationary factors, higher expenses associated with product rationalization and warranty costs, and a shift in the mix of products sold towards products with lower margins due in part to limitations caused by supply chain challenges. In general, gross margin and margins on individual products will remain under pressure due to various factors, including potential increases in manufacturing costs and the shift of our sales mix towards products with lower gross margins. Future gross margins could also be affected by our ability to manage product quality and warranty costs effectively and to stimulate demand for certain of our products.

Selling, General and Administrative

Selling, general and administrative costs for the year ended December 31, 2022, increased $33.9 million, or 29.1%, to $150.7 million as compared to $116.8 million for the year ended December 31, 2021. When expressed as a percentage of sales, selling, general and administrative costs increased to 21.9% of sales for the year ended December 31, 2022, compared to 16.9% of sales in 2021. The increase in costs was driven by a $19.4 million increase in compensation expense related to equity awards, which included an $11.4 million cumulative adjustment related to the early vesting of profit interest units granted by the Holley Stockholder prior to the Business Combination. Outbound shipping and handling costs increased $7.6 million, reflecting inflationary pressures on domestic shipping companies, and recent acquisitions contributed $3.7 million to the increase in selling, general and administrative costs.

Research and Development Costs

Research and development costs for the year ended December 31, 2022, increased $0.8 million, or 2.8%, to $29.1 million as compared to $28.3 million for the year ended December 31, 2021. The increase in research and development costs reflects our pursuit of product innovation and new products.

Amortization and Impairment of Intangible Assets

Amortization of intangible assets for the year ended December 31, 2022, increased $0.7 million, or 4.9%, to $14.7 million as compared to $14.0 million for the year ended December 31, 2021, due to recent acquisitions. Additionally, an impairment charge of $2.4 million was recognized on certain indefinite-lived tradenames during 2022 (see 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).

Acquisition and Restructuring Costs

Acquisition and restructuring costs for the year ended December 31, 2022, decreased $19.2 million to $4.5 million, as compared to $23.7 million for the year ended December 31, 2021. The year ended December 31, 2021, included an adjustment of $17.2 million for contingent consideration payable for the acquisition of Simpson Performance Products (“Simpson”).

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Related Party Acquisition and Management Fees

Upon the Closing of the Business Combination, the management services agreement with our private equity sponsor was terminated. Related party acquisition and management fee costs for the year ended December 31, 2021, were $25.8 million, of which $23.3 million represents a fee paid upon the Closing of the Business Combination.

Operating Income

As a result of factors described above, operating income for the year ended December 31, 2022, decreased $26.8 million, or 34.5%, to $50.7 million as compared to $77.5 million for the year ended December 31, 2021.

Change in Fair Value of Warrant Liability

For the year ended December 31, 2022, we recognized a gain of $57.0 million from the change in fair value of the warrant liability as compared to a loss of $32.6 million for the year ended December 31, 2021. 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, 2022, we recognized a gain of $10.7 million from the change in fair value of the earn-out liability as compared to a loss of $8.9 million for the year ended December 31, 2021. The earn-out liability reflects the fair value of the unvested Earn-Out Shares resulting from the Business Combination.

Loss on Early Extinguishment of Debt

For the year ended December 31, 2021, we recognized a $13.6 million loss on the early extinguishment of debt. The extinguishment loss includes a write off of $12.2 million in unamortized debt issuance costs associated with our previous first lien and second lien notes due to the refinancing of our previous credit facility (refer to Note 7, “Debt” for further discussion). Additionally, we wrote off $1.4 million of unamortized debt issuance costs when $100 million of the net proceeds from the Business Combination were used to reduce the outstanding principal balance of our second lien note.

Interest Expense

Interest expense for the year ended December 31, 2022, increased $1.1 million, or 2.8%, to $40.2 million as compared to $39.1 million for the year ended December 31, 2021, due to a higher effective interest rate.

Income (Loss) before Income Taxes

As a result of factors described above, we recognized net income of $78.3 million before income taxes for the year ended December 31, 2022, as compared to a net loss before income taxes of $(16.7) million for the year ended December 31, 2021.

Income Tax Expense

We recognized income tax expense of $4.5 million for the year ended December 31, 2022, as compared to $10.4 million for the year ended December 31, 2021. The effective tax rate for the year ended December 31, 2022, was 5.7%. The difference between the effective tax rate and the federal statutory rate in 2022 was primarily due to permanent differences resulting from the change in fair value of the warrant and earn-out liabilities. We recognized income tax expense on a net loss for the year ended December 31, 2021, due to permanent differences resulting from the Business Combination, the adjustment to the Simpson earn-out liability during the period, and the change in fair value of the 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 $73.8 million for the year ended December 31, 2022, as compared to a net loss of $(27.1) million for the year ended December 31, 2021. Additionally, we recognized total comprehensive income of $73.1 million for the year ended December 31, 2022, as compared to total comprehensive loss of $(26.7) million for the year ended December 31, 2021. Comprehensive income (loss) includes the effect of foreign currency translation and pension liability adjustments.

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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. 

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, acquisition and 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; non-cash charges due to our product rationalization initiative aimed at eliminating unprofitable or slow-moving stock keeping units; impairment of indefinite-lived intangible assets; 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, 2023, includes certain costs incurred for advisory services related to identifying performance initiatives, and for the year ended December 31, 2022, includes a non-cash adjustment related to the adoption of ASC Topic 842, “Leases,” and legal fees and costs related to a settlement, and for the year ended December 31, 2021 includes amortization of the fair market value increase in inventory due to acquisitions; and other expenses or gains, which for the year ended December 31, 2022, includes a $1.0 million loss on the sale of a business (see Note 2, "Business Combination, Acquisitions, and Divestiture," in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information related to the divestiture) and for all periods includes net gains or losses from disposal of fixed assets, franchise taxes, and gains or losses from foreign currency transactions. 

EBITDA and Adjusted EBITDA are not prepared in accordance with 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 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 GAAP.

The following unaudited table presents the reconciliation of net income (loss), the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA for the years ended December 31, 2023, 2022 and 2021 (dollars in thousands):

	For the years ended December 31,
	2023			2022			2021
Net income (loss)	$	19,180		$	73,774		$	(27,139	)
Adjustments:
Depreciation		10,308			10,107			11,527
Amortization of intangible assets		14,557			14,683			13,999
Interest expense, net		60,746			40,227			39,128
Income tax expense (benefit)		8,399			4,493			10,429
EBITDA		113,190			143,284			47,944
Acquisition and restructuring costs		2,641			4,513			23,668
Change in fair value of warrant liability		4,111			(57,021	)		32,580
Change in fair value of earn-out liability		2,303			(10,731	)		8,875
Equity-based compensation expense		7,291			24,395			4,963
Product rationalization		(800	)		4,519			—
Impairment of indefinite-lived intangible assets		—			2,395			—
(Gain) loss on early extinguishment of debt		(701	)		—			13,650
Related party acquisition and management fee costs		—			—			25,789
Notable items		1,285			1,838			11,270
Other expense		765			1,514			755
Adjusted EBITDA	$	130,085		$	114,706		$	169,494

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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.

On December 31, 2023, we had cash of $41.1 million and availability of $123.3 million under our revolving credit facility. We have a senior secured revolving credit facility with $125 million in borrowing capacity. On December 31, 2023, we had $1.7 million in letters of credit outstanding under the revolving credit facility. In February 2023, we entered into an amendment to our Credit Agreement which, among other things, contains a minimum liquidity financial covenant of $45 million, which includes unrestricted cash and any available borrowing capacity under the revolving credit facility. The amendment also increases the consolidated net leverage ratio financial covenant level applicable under the Credit Agreement as of the fiscal quarter ending April 2, 2023 to initially 7.25:1.00 and provides for modified step-down levels for such covenant thereafter through the fiscal quarter ending March 31, 2024 (the “Covenant Relief Period”). Commencing with the fiscal quarter ending June 30, 2024 (or such earlier date as the Company may choose to end the Covenant Relief Period in its sole discretion), the consolidated net leverage financial covenant reverts back to 5.00:1.00. 

We are obligated under various operating leases for facilities, equipment, and automobiles with estimated lease payments of approximately $7.2 million, including short-term leases, due in fiscal year 2024. See Note 16, "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, 2023 of $5.9 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 in the range of $8 million to $12 million in fiscal year 2024.

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, 2023, based on the then current weighted average interest rate of 9.2%, expected interest payments associated with outstanding debt totaled approximately $54.6 million for fiscal year 2024.

As discussed under “Business Environment” above, although the future impact of supply chain disruptions 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,
	2023			2022			2021
Cash flows provided by operating activities	$	88,092		$	12,312		$	21,583
Cash flows used in investing activities		(4,453	)		(25,037	)		(134,089	)
Cash flows (used in) provided by financing activities		(69,008	)		2,850			77,157
Effect of foreign currency rate fluctuations on cash		300			(300	)		—
Net (decrease) increase in cash and cash equivalents	$	14,931		$	(10,175	)	$	(35,349	)

44

Operating Activities. Cash provided by operating activities for the year ended December 31, 2023, was $88.1 million compared to cash provided by operating activities of $12.3 million for the year ended December 31, 2022. Cash provided by inventory and prepaids and other current assets increased by $96.6 million and $1.4 million, respectively. Offsetting these increases were decreases in cash provided by accrued interest, accounts receivable, and accounts payable of $8.2 million, $6.1 million, and $0.9 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.

Cash provided by operating activities for the year ended December 31, 2022, was $12.3 million compared to cash provided by operating activities of $21.6 million for the year ended December 31, 2021. Cash provided by prepaids and other current assets, accrued interest and accounts receivable increased by $14.6 million, $5.9 million, and $3.3 million, respectively. Offsetting these increases were decreases in cash provided by inventory, accrued liabilities and accounts payable of $13.3 million, $13.0 million, and $9.5 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. Cash used in investing activities for the year ended December 31, 2023, was $4.5 million, primarily relating to capital expenditures of $5.9 million. For the year ended December 31, 2022, cash used in investing activities was $25.0 million, primarily relating to acquisitions of $14.3 million and capital expenditures of $13.6 million. For the year ended December 31, 2021, cash used in investing activities was $134.1 million, primarily relating to acquisitions of $119.2 million and capital expenditures of $15.2 million.

Financing Activities. Cash used in financing activities for the year ended December 31, 2023, was $69.0 million, which primarily reflected principal payments on long-term debt. Cash provided by financing activities for the year ended December 31, 2022, was $2.9 million, which primarily reflected net borrowings on long-term debt. Cash provided by financing activities for the year ended December 31, 2021, was $77.2 million, which included $630.0 million in proceeds from long-term debt, $132.3 million in cash received due to the recapitalization, and $25.0 million in net borrowings under the revolving credit agreement, largely offset by $687.5 million in principal payments on long-term debt, $13.4 million in deferred financing fees, and $9.2 million in payment of contingent consideration on acquisitions.

Working Capital. On December 31, 2023, working capital was $203.6 million compared to $223.7 million on December 31, 2022. For the year ended December 31, 2023, inventories decreased by $41.3 million. Offsetting this decrease in working capital was an increase in cash of $14.9 million.

Holley’s working capital on December 31, 2022, increased $23.8 million from $199.9 million on December 31, 2021. For the year ended December 31, 2022, inventories increased by $48.5 million. Offsetting this increase in working capital were a decrease in cash of $10.2 million, an increase in accrued liabilities of $8.5 million, and a decrease in accounts receivable of $4.3 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 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. 

45

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 multiperiod 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 2, "Business Combination, Acquisitions, and Divestiture" and 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.

Goodwill and Intangible Assets

Goodwill represents the excess of purchase price over the fair value of the net tangible and identifiable intangible assets of businesses acquired. Goodwill amounts are not amortized, but rather tested for impairment at least annually or more often if circumstances indicate that the carrying value may not be recoverable. During the third quarter of 2022, we concluded it was necessary to reevaluate goodwill and indefinite-lived intangible assets for impairment after supply chain challenges led to a downward revision of earnings estimates for 2022, which resulted in a decline in our market capitalization. Based on a quantitative assessment in the third quarter of 2022, we did not identify any indicators of goodwill impairment. During the fourth quarter of 2022, we performed our annual impairment test for goodwill, and a quantitative analysis did not identify any indicators of impairment. Based on the annual impairment assessment, the estimated fair value exceeded the carrying value of the reporting unit by 15%. On December 31, 2022, we concluded it was necessary to reevaluate goodwill for impairment due to a further downward revision of earnings estimates for 2022 and a continued decline in our market capitalization. Accordingly, we performed a qualitative assessment and did not identify any indicators of impairment. During the fourth quarter of 2023, we performed our annual impairment test for goodwill, and a qualitative assessment did not identify any indicators of impairment. Goodwill was $419.1 million on December 31, 2023, and is considered at higher risk of failing future quantitative impairment tests due to the narrow difference between fair value and carrying value. No goodwill impairment charges were incurred during 2023 and 2022.

Intangible assets include trade names, customer relationships and developed technology obtained through business acquisitions. Acquired finite-lived intangible 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 third quarter of 2022, a quantitative assessment of indefinite life intangible assets identified certain tradenames for which the carrying amounts might not be recoverable. As a result of this evaluation, a pre-tax impairment of $2.4 million was recognized on certain indefinite-lived tradenames. During the fourth quarter of 2023, we performed our annual impairment test of indefinite-lived intangible assets, and a qualitative assessment did not identify any indicators of impairment. No impairment was recognized on intangible assets in 2023.

46

The fair value of the indefinite-lived tradenames was estimated using the relief from royalty method, a form of the income approach. Significant judgement is required in estimating the fair value of a reporting unit and in performing impairment tests. The most significant assumptions utilized in the determination of the estimated fair values of the indefinite-lived tradenames were the sales projections and long-term earnings growth rates, the royalty rate and the discount rate. The long-term earnings growth rate represents the expected rate at which the brands are expected to grow beyond the shorter-term business planning period. The royalty rate is based on observed market royalty rates for various industrial, consumer and commercial trademarks. The discount rate is based on our weighted average cost of capital adjusted for risk.

Determining the fair value of the reporting unit requires significant judgment, including judgements about the appropriate terminal growth rates, weighted average costs of capital and the amounts and timing of projected future cash flows. Fair value determinations are sensitive to changes in underlying assumptions, estimates, and market factors. Projected future cash flows are based on our most recent forecasts and strategic plans as well as certain growth rate assumptions. Potential changes in our costs and operating structure, the implementation of synergies, and overall performance in the automotive aftermarket industry, could negatively impact our near-term cash-flow projections and could trigger a potential impairment of our goodwill. In addition, failure to execute our strategic plans as well as increases in weighted average costs of capital could negatively impact the fair value of the reporting unit and increase the risk of future impairment charges.

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.

47

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk. Holley is exposed to market risk in the normal course of business due to the Company’s ongoing investing and financing activities. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. Holley has established policies and procedures governing the Company’s management of market risks and the use of financial instruments to manage exposure to such risks. When appropriate, the Company uses derivative financial instruments to mitigate some of the effects of increases in interest rates. On December 31, 2023 the Company had $592.5 million of floating-rate debt outstanding under the Credit Agreement with a weighted average borrowing rate of 9.2%. A hypothetical 100 basis point increase in interest rates would result in an approximately $0.9 million increase in annual interest expense, while a hypothetical 100 basis point decrease in interest rates would result in an approximately $4.1 million decrease to Holley’s annual interest expense.

Credit and other Risks. Holley is exposed to credit risk associated with cash and cash equivalents and trade receivables. On December 31, 2023, the majority of the Company’s cash and cash equivalents consisted of cash balances in non-interest-bearing checking accounts which exceed the insurance coverage provided on such deposits. Substantially all trade receivable balances of the business are unsecured. The credit risk with respect to trade receivables is concentrated by the number of significant customers that the Company has in its customer base and a prolonged economic downturn could increase exposure to credit risk on the Company’s trade receivables. To manage exposure to such risks, Holley performs ongoing credit evaluations of the Company’s customers and maintains an allowance for potential credit losses.

Exchange Rate Sensitivity. On December 31, 2023, the Company was exposed to changes in foreign currency exchange rates. While historically this exposure to changes in foreign currency exchange rates has not had a material effect on the Company’s financial condition or results of operations, foreign currency fluctuations could have an adverse effect on business and results of operations in the future. Historically, Holley’s primary exposure has been related to transactions denominated in the Euros and Canadian dollars. The majority of the Company’s sales, both domestically and internationally, are denominated in U.S. Dollars. Historically, the majority of the Company’s expenses have also been in U.S. Dollars, and it has been somewhat insulated from currency fluctuations. However, Holley may be exposed to greater exchange rate sensitivity in the future. Currently, the Company does not hedge foreign currency exposure; however, the Company may consider strategies to mitigate foreign currency exposure in the future if deemed necessary.

Item 8. Financial Statements and Supplementary Data

The consolidated financial statements and accompanying notes listed in Part IV, Item 15(a)(1) of this Annual Report on Form 10-K are included immediately following Part IV hereof and incorporated by reference herein.

48

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our President and Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our management under the supervision and with the participation of the Company’s President and Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act, on December 31, 2023. Based on their evaluation the President and Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective on December 31, 2023.

(b) Management’s Annual Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements in accordance with U.S. GAAP and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of its assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of its financial statements in accordance with U.S. GAAP, and that its receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on its financial statements.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management's projections of any evaluation of the effectiveness of internal control over financial reporting as to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management, under the oversight of the President and Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting on December 31, 2023 and in making this assessment used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission Internal Control-Integrated Framework (2013). Based on this assessment, the Company’s management, under the oversight of the President and Chief Executive Officer and Chief Financial Officer, determined that the Company’s internal control over financial reporting was effective on December 31, 2023.

(c) Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d- 15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable

49

Part III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by Item 10 will appear in the Company’s Proxy Statement for its 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

Item 11. Executive Compensation

The information required by Item 11 will appear in the Company’s Proxy Statement for its 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 will appear in the Company’s Proxy Statement for its 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 will appear in the Company’s Proxy Statement for its 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

The information required by Item 14 will appear in the Company’s Proxy Statement for its 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

50

Part IV

Item 15. Exhibits, Financial Statement Schedules

The following documents are filed as part of this Annual Report on Form 10-K:

(1) Financial Statements:

The financial statements are filed as part of this Annual Report on Form 10-K under “Item 8. Financial Statements and Supplementary Data.”

(2) Financial Statement Schedules:

Schedule II-Valuation and Qualifying Accounts is included below. The rest of the schedules required by this item have been omitted as they are either not required, not applicable or the information required is presented in the financial statements and notes thereto under "Item 8. Financial Statements and Supplementary Data" of this report.

Holley Inc. and Subsidiaries

Schedule II - Valuation and Qualifying Accounts

Years Ended December 31, 2023, 2022, and 2021

			Charged				Charged
	Balance at		(Credited)		Reserves		Against		Balance at
	Beginning of		to Costs and		from		Allowances		End of
	Period		Expenses		Acquisitions		(1) (2)		Period
Accounts receivable reserve:
Year ended December 31, 2021:
Bad debt reserve	$	813	$	809	$	—	$	666	$	956
Cash discount reserve		426		6,173		—		6,169		430
Year ended December 31, 2022:
Bad debt reserve		956		878		—		672		1,162
Cash discount reserve		430		5,941		—		5,983		388
Year ended December 31, 2023:
Bad debt reserve		1,162		1,016		—		1,122		1,056
Cash discount reserve		388		5,991		—		5,858		521
Inventory valuation reserve:
Year ended December 31, 2021:
Expired and obsolete reserve		22,052		3,806		1,226		804		26,280
Year ended December 31, 2022:
Expired and obsolete reserve		26,280		13,410		—		1,156		38,534
Year ended December 31, 2023:
Expired and obsolete reserve		38,534		1,802		—		6,362		33,974
(1) Write-off of uncollectible accounts, net of recoveries.
(2) Write-off of obsolete inventory, net of inventory adjustments.

(3) Exhibits:

See Exhibit Index immediately following the signature page of this Annual Report on Form 10-K.

Item 16. Form 10-K Summary

None

51

HOLLEY INC.

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248)	53
Consolidated Balance Sheets	54
Consolidated Statements of Comprehensive Income (Loss)	55
Consolidated Statements of Changes in Stockholders’ Equity	56
Consolidated Statements of Cash Flows	57
Notes to Consolidated Financial Statements	58

52

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Holley Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Holley Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedules included under Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2020

Cincinnati, Ohio

March 14, 2024

53

HOLLEY INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	December 31,
	2023			2022
ASSETS
Cash and cash equivalents	$	41,081		$	26,150
Accounts receivable, less allowance for credit losses of $1,577 and $1,550, respectively		48,360			47,083
Inventory		192,260			233,573
Prepaids and other current assets		15,665			18,157
Total current assets		297,366			324,963
Property, plant, and equipment, net		47,206			52,181
Goodwill		419,056			418,121
Other intangibles assets, net		410,465			424,855
Right-of-use assets		29,250			29,522
Total assets	$	1,203,343		$	1,249,642
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	43,692		$	44,948
Accrued interest		455			5,994
Accrued liabilities		42,129			43,317
Current portion of long-term debt		7,461			7,000
Total current liabilities		93,737			101,259
Long-term debt, net of current portion		576,710			643,563
Warrant liability		8,383			4,272
Earn-out liability		3,479			1,176
Deferred taxes		53,542			58,390
Other noncurrent liabilities		26,341			24,992
Total liabilities		762,192			833,652
Commitments and contingencies (Refer to Note 19 - Commitments and Contingencies)
Stockholders' equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, none issued and outstanding on December 31, 2023 and December 31, 2022		—			—
Common stock, $0.0001 par value, 550,000,000 shares authorized, 117,707,280 and 117,147,997 shares issued and outstanding on December 31, 2023 and December 31, 2022, respectively		12			12
Additional paid-in capital		373,869			368,122
Accumulated other comprehensive loss		(710	)		(944	)
Retained earnings		67,980			48,800
Total stockholders' equity		441,151			415,990
Total liabilities and stockholders' equity	$	1,203,343		$	1,249,642

See accompanying notes to consolidated financial statements.

54

HOLLEY INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

	For the years ended December 31,
	2023			2022			2021
Net sales	$	659,704		$	688,415		$	692,847
Cost of goods sold		403,615			434,757			406,040
Gross profit		256,089			253,658			286,807
Selling, general, and administrative		120,244			150,728			116,793
Research and development costs		23,844			29,083			28,280
Amortization of intangible assets		14,557			14,683			13,999
Impairment of indefinite-lived intangible assets		—			2,395			—
Acquisition and restructuring costs		2,641			4,513			23,668
Related party acquisition and management fee costs		—			—			25,789
Other operating expense		765			1,514			755
Total operating expense		162,051			202,916			209,284
Operating income		94,038			50,742			77,523
Change in fair value of warrant liability		4,111			(57,021	)		32,580
Change in fair value of earn-out liability		2,303			(10,731	)		8,875
Loss (gain) on early extinguishment of debt		(701	)		—			13,650
Interest expense, net		60,746			40,227			39,128
Total non-operating expense (income)		66,459			(27,525	)		94,233
Income (loss) before income taxes		27,579			78,267			(16,710	)
Income tax expense		8,399			4,493			10,429
Net income (loss)	$	19,180		$	73,774		$	(27,139	)
Comprehensive income (loss):
Foreign currency translation adjustment		234			(990	)		30
Pension liability gain		—			302			388
Total other comprehensive income (loss)		234			(688	)		418
Total comprehensive income (loss)	$	19,414		$	73,086		$	(26,721	)
Common Share Data:
Weighted average common shares outstanding - basic		117,378,854			116,762,928			89,959,993
Weighted average common shares outstanding - diluted		118,510,800			117,248,296			89,959,993
Basic net income (loss) per share	$	0.16		$	0.63		$	(0.30	)
Diluted net income (loss) per share	$	0.16		$	0.14		$	(0.30	)

See accompanying notes to consolidated financial statements.

55

HOLLEY INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(in thousands, except share data)

	Common Stock							Accumulated			Retained
					Additional			Other			Earnings
					Paid-In			Comprehensive			(Accumulated
	Shares		Amount		Capital			Gain (Loss)			Deficit)			Total
Balance on December 31, 2020		67,673,884	$	7	$	238,883		$	(674	)	$	2,165		$	240,381
Net loss		—		—		—			—			(27,139	)		(27,139	)
Equity compensation		—		—		4,963			—			—			4,963
Foreign currency translation		—		—		—			30			—			30
Pension liability adjustment		—		—		—			388			—			388
Recapitalization transaction, net		48,133,453		5		85,859			—			—			85,864
Balance on December 31, 2021		115,807,337		12		329,705			(256	)		(24,974	)		304,487
Net income		—		—		—			—			73,774			73,774
Equity compensation		—		—		24,395			—			—			24,395
Foreign currency translation		—		—		—			(990	)		—			(990	)
Pension liability adjustment		—		—		—			302			—			302
Issuance of vested Earn-Out Shares		1,093,750		—		14,689			—			—			14,689
Warrants exercised		33,333		—		383			—			—			383
Tax withholding related to vesting of restricted stock units		—		—		(1,050	)		—			—			(1,050	)
Issuance of shares for restricted stock units		213,577		—		—			—			—			—
Balance on December 31, 2022		117,147,997		12		368,122			(944	)		48,800			415,990
Net income		—		—		—			—			19,180			19,180
Equity compensation		—		—		7,291			—			—			7,291
Foreign currency translation		—		—		—			234			—			234
Tax withholding related to vesting of restricted stock units		—		—		(1,544	)		—			—			(1,544	)
Issuance of shares for restricted stock units		559,283		—		—			—			—			—
Balance on December 31, 2023		117,707,280	$	12	$	373,869		$	(710	)	$	67,980		$	441,151

See accompanying notes to consolidated financial statements.

56

HOLLEY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	For the years ended December 31,
	2023			2022			2021
OPERATING ACTIVITIES:
Net income (loss)	$	19,180		$	73,774		$	(27,139	)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation		10,308			10,107			11,527
Amortization of intangible assets		14,557			14,683			13,999
Impairment of indefinite-lived intangible assets		—			2,395			—
Amortization of deferred loan costs		1,780			1,707			3,182
Amortization of right of use assets		5,480			5,666			—
Gain on termination of leases		—			(279	)		—
Fair value adjustments to warrant liability		4,111			(57,021	)		32,580
Fair value adjustments to earn-out liability		2,303			(10,731	)		8,875
Fair value adjustments to interest rate collar		1,164			—			—
Equity compensation		7,291			24,395			4,963
Change in deferred taxes		(4,848	)		(11,655	)		(66	)
Loss on sale of business		—			1,037			—
Loss (gain) on early extinguishment of long-term debt		(701	)		—			13,650
Loss (gain) on disposal of property, plant and equipment		(192	)		253			(82	)
Provision for inventory reserves		1,802			13,410			4,228
Provision for credit losses		1,016			878			147
Change in operating assets and liabilities:
Accounts receivable		(2,280	)		3,777			464
Inventories		38,199			(58,406	)		(45,073	)
Prepaids and other current assets		2,555			1,142			(13,408	)
Accounts payable		(1,626	)		(740	)		8,727
Accrued interest		(5,539	)		2,635			(3,229	)
Accrued and other liabilities		(6,468	)		(4,715	)		8,238
Net cash provided by operating activities		88,092			12,312			21,583
INVESTING ACTIVITIES:
Capital expenditures		(5,934	)		(13,590	)		(15,233	)
Proceeds from the disposal of fixed assets		1,481			888			364
Proceeds from sale of business		—			1,966			—
Cash paid for acquisitions, net		—			(14,301	)		(119,220	)
Net cash used in investing activities		(4,453	)		(25,037	)		(134,089	)
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt		—			37,000			655,000
Principal payments on long-term debt		(66,038	)		(33,483	)		(687,529	)
Deferred financing fees		(1,427	)		—			(13,413	)
Payment of acquisition contingent consideration		—			—			(9,200	)
Proceeds from Business Combination and PIPE financing, net of issuance costs paid		—			—			132,299
Payments from stock-based award activities		(1,543	)		(1,050	)		—
Proceeds from issuance of common stock in connection with the exercise of Warrants		—			383			—
Net cash (used in) provided by financing activities		(69,008	)		2,850			77,157
Effect of foreign currency rate fluctuations on cash		300			(300	)		—
Net change in cash and cash equivalents		14,931			(10,175	)		(35,349	)
Cash and cash equivalents:
Beginning of period		26,150			36,325			71,674
End of period	$	41,081		$	26,150		$	36,325
Supplemental disclosures of cash flow information:
Cash paid for interest	$	64,693		$	36,868		$	38,067
Cash paid for income taxes		16,041			6,834			10,648
Noncash investing and financing activities:
Vested Earn-Out Shares issued to Empower Sponsor Holdings LLC	$	—		$	14,689		$	—
Assumption of warrant liability		—			—			28,713
Assumption of earn-out liability		—			—			17,722

See accompanying notes to consolidated financial statements.

57

HOLLEY INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data)

1. Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies

Holley Inc., a Delaware corporation headquartered in Bowling Green, Kentucky conducts operations through its wholly owned subsidiaries. These operating subsidiaries are comprised of Holley Performance Products Inc., Hot Rod Brands, Inc., Simpson Safety Solutions, Inc., B&M Racing and Performance Products, Inc., and Speedshop.com, Inc. When used in these notes, the terms the “Company” or “Holley” mean Holley, Inc. and all entities included in its consolidated financial statements.

The Company consummated a Business Combination pursuant to the Merger Agreement, by and among Empower, Merger Sub I, Merger Sub II, and Holley Intermediate on the Closing Date. The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP in which 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. On the Closing Date, Empower changed its name to Holley Inc. and its trading symbol on the NYSE from “EMPW” to “HLLY.”

The Company designs, manufactures and distributes performance automotive products to customers primarily in the United States, Canada and Europe. The Company is a leading manufacturer of a diversified line of performance automotive products, including carburetors, fuel pumps, fuel injection systems, nitrous oxide injection systems, superchargers, exhaust headers, mufflers, distributors, ignition components, engine tuners and automotive performance plumbing products. The Company is also a leading manufacturer of exhaust products as well as shifters, converters, transmission kits, transmissions, tuners and automotive software. The Company’s products are designed to enhance street, off-road, recreational and competitive vehicle performance through increased horsepower, torque and drivability. The Company has locations in the United States, Canada, Italy and China.

Emerging Growth Company Status

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company is an emerging growth company, and, as such, has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards.

Risks and Uncertainties

The Company's business and results of operations, financial condition, and liquidity are impacted by broad economic conditions including inflation, labor shortages, and disruption of the supply chain, 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). The Company's operations have been adversely impacted by inflationary pressures primarily related to transportation, labor and component costs. Sales growth in certain products has been constrained by supply chain challenges and automotive electronic component shortages. In response to the global supply chain volatility and inflationary impacts, the Company has attempted to minimize potential adverse impacts on its business with cost savings initiatives, price increases to customers, and by closely monitoring inventory levels of certain products and working closely with its 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 to lower-margin products, and demands on our performance that increase our costs. Should the ongoing macroeconomic conditions not improve, or worsen, or if the Company's attempt to mitigate the impact on its supply chain, operations and costs is not successful, the Company’s business, results of operations and financial condition may be adversely affected.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation.

Reclassifications

Certain previously reported amounts in the accrued liabilities footnote have been reclassified between line items to conform to the current period presentation.

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Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. These estimates require the use of judgment as future events, and the effect of these events, cannot be predicted with certainty. The estimates will change as new events occur, as more experience is acquired and as more information is obtained. The Company evaluates and updates assumptions and estimates on an ongoing basis and may consult outside experts to assist as considered necessary.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company's cash and cash equivalents include cash and deposits, including an overnight sweep account where funds are transferred to an interest-bearing deposit account that is insured by the Federal Deposit Insurance Corporation ("FDIC"). The FDIC insures financial institution deposits up to $250. The Company maintains deposits exceeding $250 in certain accounts at financial institutions in the United States. On  December 31, 2023 and 2022, the Company had cash in foreign bank accounts of $4,975 and $5,878, respectively. Cash and cash equivalent in foreign bank accounts are primarily held in Italy. Italian deposits are insured up to €100 per depositor, per bank. The Company maintains deposits exceeding €100 in certain accounts at financial institutions in Italy. The Company has not incurred any losses in these accounts.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable represent amounts due from customers in the ordinary course of business. The receivables are stated at the amount management expects to collect. The Company is subject to risk of loss from uncollectible receivables in excess of its allowance. The Company maintains an allowance for credit losses for estimated losses from customers’ inability to make required payments. In order to estimate the appropriate level of this allowance, the Company analyzes historical bad debts, customer concentrations, current customer creditworthiness, current economic trends and changes in customer payment patterns. Accounts are written off when management determines the account is uncollectable. Interest is not charged on past due accounts.

Inventory Valuation

The Company's 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.

Segments

The Company's operations are managed and reported to its Chief Executive Officer (“CEO”), the Company’s chief operating decision maker, on a consolidated basis. The CEO assesses performance and allocates resources based on the consolidated results of operations. Under this organizational and reporting structure, the Company has one reportable segment.

Goodwill

Goodwill represents the excess of purchase price over the fair value of the net assets of businesses acquired. On an annual basis or whenever events or changes in circumstances indicate the carrying value of goodwill may have been impaired, the Company may perform a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill. If the Company determines that the fair value of the reporting unit is less than its carrying amount or elects not to perform a qualitative assessment, it will perform a quantitative analysis; otherwise, no further evaluation is necessary. For the quantitative impairment assessment, the Company compares the fair value of the reporting unit to its carrying value, including goodwill. The Company determines the fair value of the reporting unit based on a weighting of income and market approaches. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company will recognize a loss equal to the excess, limited to the total amount of goodwill allocated to that reporting unit. Impairments, if any, are charged directly to earnings. 

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Intangible Assets Other Than Goodwill

Tradenames acquired in certain business combinations were determined to have indefinite useful lives and are not amortized, but instead are tested for impairment on an annual basis and when facts and circumstances indicate that the carrying values of the assets may be impaired. If such review indicates an asset’s carrying value may not be recoverable, an impairment loss is recognized for the excess of the carrying value over the fair value of the asset.

As part of separate business acquisitions, the Company’s customer relationships, technology and certain tradenames were identified as definite-lived intangible assets. The customer relationship intangible assets are being amortized over a ten to twenty-five year life based on the attrition rate of customers with a weighted-average amortization period of 23.6 years. The technology intangible assets are being amortized over a five to fourteen year life based on the lifecycle of previous technology with a weighted-average amortization period of 12.1 years. The tradenames are being amortized over a fifteen to twenty year life based on the estimated life of the tradename with a weighted-average amortization period of 19.2 years. The weighted-average amortization period for all amortizable intangibles on a combined basis is 22.5 years.

Property, Plant and Equipment

Property, plant and equipment acquired in various acquisitions have been recorded at fair value. All other property, plant and equipment is recorded at cost. Depreciation and amortization are provided for using the straight-line method over the estimated useful lives of the assets. Estimated useful lives for new property, plant and equipment additions are seven to twenty-five years for buildings, three to ten years for machinery and equipment, and the shorter of the estimated lease term or useful life for leasehold improvements. Maintenance, repairs, and betterments which do not enhance the value of or increase the life of the assets are expensed as incurred.

Leases

Operating lease right of use ("ROU") assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. The Company's leases may include options to extend or terminate the lease. These options to extend are included in the lease term when it is reasonably certain that the Company will exercise that option. Some leases have variable payments, however, because they are not based on an index or rate, they are not included in the ROU assets and liabilities. Variable payments for real estate leases primarily relate to common area maintenance, insurance, taxes and utilities. Since the Company's leases generally do not provide an implicit rate, the Company applies a portfolio approach using an estimated incremental borrowing rate based on the lease term and other information available at the commencement date in determining the present value of lease payments. The rate applied is based on the currency of the lease. Leases having a lease term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the term of the lease. In addition, the Company has applied the practical expedient to account for the lease and non-lease components as a single lease component for all of the Company's leases. 

Debt Issuance Costs

Debt issuance costs include fees and costs incurred to obtain financing. Debt issuance costs related to the Company's term loans are presented in the consolidated balance sheet as a direct deduction from the carrying amount of the term loans. These fees and costs are being amortized using the effective interest method over the term of the related loans and are included in interest expense in the Company's consolidated statements of comprehensive income (loss). If the debt is retired before its scheduled maturity date, any remaining unamortized debt issuance costs are written off in the period the debt is retired as a non-operating expense in the statement of operations as loss on the early extinguishment of debt. For the years ended 2023, 2022 and 2021, the amortization of debt issuance costs included in interest expense was $1,780, $1,707, and $3,182, respectively.

Self-Insurance

The Company is self-insured for employee medical and prescription drug benefits up to certain stop loss coverage amounts. The Company accrues an estimate for unpaid claims, as well as incurred but not reported claims, based upon the Company’s claim experience and expectations of future claim activity. The resulting liability and expense are reflected as a component of accrued expenses, cost of sales and selling, general and administrative expenses in the accompanying consolidated balance sheets and consolidated statements of comprehensive income (loss), respectively.

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Revenue Recognition

The Company recognizes revenue with customers when control of the promised goods transfers to the customer. This generally occurs when the product is shipped to the customer. Revenue is recorded at the amount of consideration the Company expects to be entitled to in exchange for the delivered goods, which includes an estimate of variable consideration, expected returns, or refunds when applicable. The Company estimates variable consideration, such as sales incentives, by using the most likely amount approach, which considers the single most likely amount from a range of possible consideration amounts. Estimates of variable consideration result in an adjustment to the transaction price such that it is probable that a significant reversal of cumulative revenue would not occur in the future. Sales incentives and allowances are recognized as a reduction to revenue at the time of the related sale. Revenue is recorded net of sales tax. Shipping and handling fees billed to customers are included in net sales, while costs of shipping and handling to customers are included in selling, general and administrative costs. 

For more information about the Company’s revenue from contracts with customers, see Note 11, “Revenue”.

Customer Sales Incentives

Sales incentives provided take the form of either sales discounts or rebates and are treated as a reduction of net sales. The Company also maintains a cooperative advertising program with its customers and provides sales incentives to the extent of the estimated value of advertising provided by the customer on behalf of the Company. The costs incurred under the cooperative advertising program are included as a reduction of net sales.

Product Warranty 

The Company generally warrants its products against certain manufacturing and other defects. These product warranties are provided for specific periods of time depending on the nature of the product. The accrued product warranty costs are based primarily on historical experience of actual warranty claims and are recorded at the time of the sale. These obligations are recorded within accrued liabilities in the consolidated balance sheets (see also Note 19, “Commitments and Contingencies” for additional information on warranty reserves). Significant judgments and estimates must be made and used in connection with establishing warranty allowances in any accounting period. Revision of these estimates is made, when necessary, based upon changes in these factors.

Sales Returns

Estimated sales returns and allowances are recorded as a charge against gross sales in the period in which the related sales are recognized, net of returns to stock. The Company’s customers are permitted to return new, undamaged products within customer-specific limits (which are generally limited to a specified percentage of their annual purchases) in the event that they have overstocked their inventories. The Company estimates sales returns based primarily upon actual historical returns, planned product discontinuances, and promotional sales. Returned products, which are recorded as inventories, are valued at the lower of cost or net realizable value. The physical condition and marketability of the returned products are the major factors considered in estimating realizable value. 

Cost of Goods Sold 

Cost of goods sold primarily consists of materials and labor expense in the manufacturing of the Company’s products sold to its customers. Cost of goods sold also includes provisions for excess and obsolete inventory, warranty costs, certain allocated costs for facilities, depreciation and other manufacturing overhead. 

Selling, General and Administrative Expenses 

Selling, general and administrative expenses include personnel costs for employees in selling, general and administrative functions (including equity-based compensation); costs to operate shop locations, corporate offices and back-office support centers; costs to transport products from facilities to our customers; and other selling, general and administrative expenses, such as professional fees, supplies, and advertising expenses.

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Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company recognizes income tax positions only if those positions are “more likely than not” of being sustained upon examination by taxing authorities. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company recognizes interest on liabilities for uncertain tax positions in interest expense and would recognize penalties, if any, in operating expenses in its consolidated income statements. The Company has no amounts accrued for such interest or penalties on  December 31, 2023 and 2022. The Company files income tax returns in the U.S. federal jurisdiction and various foreign and state jurisdictions.

On  December 31, 2023, the Company had approximately $329 of unrecognized tax benefits. There were no unrecognized tax benefits on  December 31, 2022. The statute of limitations remains open for U.S. federal income tax examinations for the years ended December 31, 2020, through December 31, 2022. U.S. state jurisdictions have statues of limitations generally ranging from three to eight years. The Company does not expect the total amount of unrecognized tax benefits to significantly change in the next 12 months.

Impairment or Disposal of Long-Lived Assets

The Company accounts for long-lived assets, including intangible assets subject to amortization, in accordance with the provisions that require long-lived assets, such as property and equipment, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the sum of undiscounted net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Advertising

Advertising production costs are expensed the first time the advertising takes place. Total advertising expenses were $5,987, $7,159, and $6,299 for the years ended December 31, 2023, 2022, and 2021, respectively. Advertising costs are classified as a component of selling, general and administrative costs in the accompanying consolidated statements of comprehensive income (loss).

Research and Development Costs

Research, development, pre-production and start-up costs related to both present and future products are expensed as incurred. Such costs amount to $23,844, $29,083, and $28,280 for the years ended December 31, 2023, 2022, and 2021, respectively.

Other Comprehensive Income (Loss)

Comprehensive income (loss) encompasses all changes in stockholder’s equity and includes net income, change in the foreign currency translation adjustment and minimum pension liability gains. The Company’s accumulated other comprehensive loss shown on the consolidated balance sheets on  December 31, 2023 and 2022 consists of foreign currency translation adjustments of $710 and $944, respectively.

Foreign Currencies

The functional currency of the Company’s Italian subsidiary is the Euro. Assets and liabilities of foreign operations are translated using period end exchange rates. Revenue and expenses are translated using average exchange rates during each period reported. Translation gains (losses) are reported in accumulated other comprehensive loss as a component of shareholders equity and were $234, ($990), and $30 for the years ended December 31, 2023, 2022 and 2021, respectively. The Company recognizes foreign currency transaction gains (losses) on certain assets and liabilities. These transaction (gains) losses are reported in other expense in the consolidated statements of comprehensive income (loss) and were $278, ($97), and $44 for the years ended December 31, 2023, 2022 and 2021, respectively.

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Earnings per Share

Earnings per share is computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. The dilutive effect of these potential common shares is reflected in diluted earnings per share by application of the treasury stock method.

Warrants

The Company accounts for warrants to purchase its common stock as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Accounting Standards Codification ("ASC") Topic 480, Distinguishing Liabilities from Equity, and ASC Topic 815, Derivatives and Hedging. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC Topic 480, meet the definition of a liability pursuant to ASC Topic 480, and whether the warrants meet all of the requirements for equity classification under ASC Topic 815, including whether the warrants are indexed to the Company’s own shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

Equity-Based Compensation

The Company accounts for equity-based awards granted to employees and nonemployees under the fair value method prescribed by ASC Subtopic 718-10, Stock Compensation. Equity-based compensation cost is measured based on the estimated grant date fair value of the award and is recognized as expense over the requisite service period (generally the vesting period). The fair value of stock options is estimated using the Black Scholes option-pricing model. Restricted stock units are valued at the stock price on the grant date. The fair value of profit interest units granted by the Holley Stockholder is estimated based on the Company’s estimated equity value for each unit class at the time of granting using the Black-Scholes option-pricing model, discounted to reflect market considerations for illiquidity.

Performance share units that vest based on the achievement of company-designated performance targets are valued at the stock price on the grant date. Compensation expense in respect of such performance share units is recognized each period based on the expected level of achievement and, to the extent that the expected levels of achievement change, compensation cost is adjusted in the period of change with the remaining unrecognized cost recognized over the remaining requisite service period. For performance share units that vest based on the achievement of predetermined market conditions, the Company estimates the grant date fair value using a Monte Carlo simulation model. The fair value associated with each tranche of the award is recognized, straight-line, over the associated requisite service period for that tranche, subject to acceleration if the market condition is met prior to the end of the derived service period. 

Unless the awards contain a market condition, previously recognized expense related to forfeited awards is reversed in the period in which the forfeiture occurs. For awards containing a market condition, previously recognized stock-based compensation expense is not reversed when the awards are forfeited as long as the service is provided for the duration of the required service period.

Fair Value Measurements

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimizes the use of unobservable inputs to the extent possible. The inputs used to measure fair value are prioritized based on a three-level hierarchy, which are defined as follows:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

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Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, Derivatives and Hedging. For derivative financial instruments that are accounted for as assets or liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified on the balance sheet as current or non-current based on whether or not net cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. 

The Company uses derivative instruments to manage its exposure to changes in interest rates on borrowings under its debt facility. These derivative instruments are primarily valued on the basis of quotes obtained from banks, brokers, and/or dealers. The valuation of the derivative instruments considers future expected interest rates on the notional principal balance remaining, which is comparable to what a prospective acquirer would pay on the measurement date. Valuation pricing models consider inputs such as forward rates, anticipated interest rate volatility relating to the reference rate, as well as time value, counterparty risk and other factors underlying derivative instruments. 

Concentration of Credit Risk 

Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash and accounts receivable. The Company controls its exposure to credit risk associated with these instruments by (i) placing cash and cash equivalents with several major financial institutions and (ii) maintaining strict policies over credit extension that include credit evaluations, credit limits and monitoring procedures. For more information on the Company’s net sales to its three largest customers, see Note 17, “Major Reseller Customers”.

Recent Accounting Pronouncements

Accounting Standards Recently Adopted

In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU requires entities to apply the definition of a performance obligation under ASC Topic 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers that are acquired in a business combination. Prior to the adoption of ASU 2021-08, an acquirer generally recognized assets acquired, and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU No. 2021-08 results in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. The Company adopted ASU 2021-08 on January 1, 2023. Adoption of ASU 2021-08 did not impact the Company's consolidated financial statements.

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Accounting Standards Not Yet Adopted

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to SEC's Disclosure Update and Simplification Initiative. This ASU amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company will monitor the removal of various requirements from the current regulations in order to determine when to adopt the related amendments, but it does not anticipate that the adoption of the new guidance will have a material impact on the Company’s consolidated financial statements and related disclosures. The Company will continue to evaluate the impact of this guidance on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard requires interim and annual disclosure of significant segment expenses that are regularly provided to the chief operating decision-maker ("CODM") and included within the reported measure of a segment’s profit or loss, requires interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually, requires disclosure of the position and title of the CODM, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, and contains other disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires additional disclosures of various income tax components that affect the rate reconciliation based on the applicable taxing jurisdictions, as well as the qualitative and quantitative aspects of those components. The standard also requires information pertaining to taxes paid to be disaggregated for federal, state and foreign taxes, and contains other disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2024 and interim periods within fiscal years beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its consolidated financial statements and related disclosures.

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2. BUSINESS COMBINATION, ACQUISITIONS, AND DIVESTITURE   BUSINESS COMBINATION

On July 16, 2021, Holley consummated the Business Combination pursuant to the terms of the Merger Agreement, whereby (i) Merger Sub I, a direct wholly owned subsidiary of Empower, merged with and into Holley Intermediate, with Holley Intermediate surviving such merger as a wholly owned subsidiary of Holley (“Merger I”) and (ii) Merger Sub II, a direct wholly owned subsidiary of Empower, merged with and into Holley Intermediate, with Merger Sub II surviving such merger as a wholly owned subsidiary of Holley (“Merger II”).

Pursuant to the Merger Agreement, at the Closing, all outstanding shares of Holley Intermediate common stock as of immediately prior to the effective time of Merger I were cancelled and the Holley Stockholder, the sole stockholder of Holley Intermediate, received $264,718 in cash and 67,673,884 shares of common stock (at a deemed value of $10.00 per share). The Company’s common stock is listed on the NYSE under the symbol “HLLY.”

In connection with the Business Combination, a number of subscribers purchased from the Company an aggregate of 24,000,000 shares of Common Stock (the “PIPE”), for a purchase price of $10.00 per share, or $240,000 in the aggregate. Per the Merger Agreement, $100,000 of the PIPE proceeds were used to partially pay off Holley’s debt.

Pursuant to the Amended and Restated Forward Purchase Agreement (“A&R FPA”), at the Closing, 5,000,000 shares of the Company’s Common Stock and 1,666,667 Warrants were issued to certain investors for an aggregate purchase price of $50,000. Pursuant to the A&R FPA, each Warrant entitles the holder to purchase one share of the Company’s Common Stock at a price of $11.50 per share (the ”Public Warrants”), subject to certain conditions.

The Company also assumed 8,333,310 Public Warrants and 4,666,667 private placement warrants (the “Private Warrants”, and together with the Public Warrants, the “Warrants”) upon the Business Combination, all of which were issued in connection with Empower’s initial public offering. Each Warrant represents the right to purchase one share of the Company’s common stock at a price of $11.50 per share, subject to certain conditions. The Warrants are exercisable commencing on October 9, 2021 (the one-year anniversary of Empower’s initial public offering) and expire on July 16, 2026 (five years after the Closing Date). The Public Warrants are listed on the NYSE under the symbol “HLLY WS.”

Additionally, Empower Sponsor Holdings LLC (the "Sponsor") received 2,187,500 shares of the Company’s common stock, which vest in two equal tranches upon achieving certain market share price milestones as outlined in the Merger Agreement during the earn-out period (“the “Earn-Out Shares”). The first tranche of Earn-Out Shares vested during the first quarter of 2022. The remaining tranche of Earn-Out Shares will be forfeited if the applicable conditions are not satisfied before July 16, 2028 (seven years after the Closing Date). 

The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP. This determination was primarily based on the Holley Stockholder having a relative majority of the voting power of the Company, the operations of Holley prior to the acquisition comprising the only ongoing operations of the Company, and senior management of Holley comprising the majority of the senior management of the Company. Under this method of accounting, Empower was treated as the acquired company for financial reporting. Accordingly, the Business Combination was accounted for as the equivalent of Holley issuing stock for the net assets of Empower, accompanied by a recapitalization. The net assets of Empower are stated at historical cost, with no goodwill or other intangible assets recorded. Reported amounts from operations included herein prior to the Business Combination are those of Holley Intermediate. The shares and corresponding capital amounts and earnings per share, prior to the Business Combination, have been retroactively restated based on shares received by the Holley Stockholder.

The following table reconciles the elements of the Business Combination to the consolidated statements of cash flows for the year ended December 31, 2021:

	Recapitalization
Cash - Empower's trust and cash (net of redemptions of $99,353 and transaction costs of $44,314)	$	107,017
Cash - Forward Purchase Agreement		50,000
Cash - PIPE Financing		240,000
Net cash provided by Business Combination and PIPE Financing		397,017
Less: cash consideration paid to Holley Stockholder		(264,718	)
Net contributions from Business Combination and PIPE Financing	$	132,299

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ACQUISITIONS

During the three years ended December 31, 2023, the Company completed 11 acquisitions. These acquisitions are expected to enhance the Company's portfolio of products and services in the automotive aftermarket and automotive safety solutions market.

The Company accounts for acquisitions using the acquisition method, and accordingly, the purchase price has been allocated based upon the fair value of the assets acquired and liabilities assumed. The valuation of the assets acquired and liabilities assumed is subject to revision. If additional information becomes available, the Company may further revise the purchase price allocation as soon as practical, but no later than one year from the acquisition date; however, material changes are not expected. Goodwill generated by the acquisitions is primarily attributable to the strong market position of the entities acquired.

Purchase price consideration for all acquisitions was paid primarily in cash. All acquisitions were for 100 percent of the acquired business and are reported in the Consolidated Statements of Cash Flows, net of acquired cash and cash equivalents. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs, are typically expensed in the periods in which the costs are incurred and are recorded in acquisition and restructuring costs. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date.

In 2022, the Company acquired substantially all the assets of John's Ind., Inc., Southern Kentucky Classics, and Vesta Motorsports USA, Inc., doing business as RaceQuip. These acquisitions were immaterial business combinations. Cash paid for the three acquisitions, net of cash acquired, was $14,863, and was funded with borrowings from the Company's credit facility and cash on hand. The acquisitions resulted in both amortizable and nonamortizable intangibles and goodwill totaling $10,553. The goodwill and intangibles generated as a result of these acquisitions are deductible for income tax purposes. Pro forma results of operations and the results of operations since the acquisition dates for these immaterial acquisitions have not been separately disclosed because the effects were not significant compared to the consolidated financial statements, individually or in the aggregate. 

The determination of the final purchase price allocation to specific assets acquired and liabilities assumed was adjusted to reflect the final fair value estimate of acquired assets and liabilities, as noted below. The allocation of the purchase price to the assets acquired and liabilities assumed was based on estimates of the fair value of the net assets as follows:

	2022			Measurement Period			2022
	(as initially reported)			Adjustments			(as adjusted)
Accounts receivable	$	959		$	(397	)	$	562
Inventory		3,481			146			3,627
Property, plant and equipment		275			—			275
Other assets		1,132			(1,108	)		24
Tradenames		1,689			—			1,689
Customer relationships		1,512			—			1,512
Goodwill		5,858			1,494			7,352
Accounts payable		(25	)		(133	)		(158	)
Accrued liabilities		(18	)		(2	)		(20	)
	$	14,863		$	—		$	14,863

The fair value of the acquired customer relationship intangible asset was estimated using the excess earnings approach. The customer relationship intangible asset is being amortized based on the attrition rate of customers which was determined to be 20 years. The fair value of the acquired tradenames intangible asset was estimated using the relief from royalty method, a form of the income approach. The tradenames were determined to have an indefinite life.

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In 2021, the Company acquired substantially all the assets of Finspeed, LLC, Classic Instruments LLC, ADS Precision Machining, Inc., doing business as Arizona Desert Shocks, Rocket Performance Machine, Inc., doing business as Rocket Racing Wheels, and Speartech Fuel Injections Systems, Inc. These five acquisitions were individually immaterial business combinations that are material in the aggregate. Cash paid for the five immaterial acquisitions, net of cash acquired, was $19,909, and was funded with borrowings from the Company's credit facility and cash on hand. The acquisitions resulted in both amortizable and non-amortizable intangibles and goodwill totaling $13,247. The goodwill and intangibles generated as a result of these acquisitions are deductible for income tax purposes. Pro forma results of operations and the results of operations since the acquisition dates for these immaterial acquisitions have not been separately disclosed because the effects were not significant compared to the consolidated financial statements, individually or in the aggregate. 

The determination of the final purchase price allocation to specific assets acquired and liabilities assumed was adjusted to reflect the final fair value estimate of acquired assets and liabilities, as noted below. The allocation of the purchase price to the assets acquired and liabilities assumed was based on estimates of the fair value of the net assets as follows:

	2021			Measurement Period			2021
	(as initially reported)			Adjustments			(as adjusted)
Cash	$	122		$	—		$	122
Accounts receivable		618			—			618
Inventory		3,975			—			3,975
Property, plant and equipment		2,274			—			2,274
Other assets		23			—			23
Tradenames		2,608			—			2,608
Customer relationships		2,450			—			2,450
Goodwill		11,017			(2,828	)		8,189
Accounts payable		(343	)		—			(343	)
Accrued liabilities		(129	)		122			(7	)
	$	22,615		$	(2,706	)	$	19,909

The fair value of the acquired customer relationship intangible assets was estimated using the excess earnings approach. The customer relationship intangible assets are being amortized based on the attrition rate of customers which have an estimated weighted average life of 18 years. The fair value of the acquired tradenames intangible asset was estimated using the relief from royalty method, a form of the income approach. The tradenames were determined to have an indefinite life.

The remaining three acquisitions completed during the year ended December 31, 2021 are described below.

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Baer, Inc.

On December 23, 2021, the Company acquired substantially all the assets and liabilities of Baer, Inc., doing business as Baer Brakes ("Baer"). Consideration for the assets acquired was cash payments of $22,170. The acquisition resulted in both amortizable and non-amortizable intangibles and goodwill totaling $18,989. The goodwill and intangibles generated as a result of this acquisition are deductible for income tax purposes. The purchase price was funded with borrowings from the Company's credit facility and cash on hand.

The determination of the final purchase price allocation to specific assets acquired and liabilities assumed was adjusted to reflect the final fair value estimate of acquired assets and liabilities, as noted below. The allocation of the purchase price to the assets acquired and liabilities assumed was based on estimates of the fair value of the net assets as follows:

	December 23, 2021			Measurement Period			December 23, 2021
	(as initially reported)			Adjustments			(as adjusted)
Accounts receivable	$	627		$	—		$	627
Inventory		1,813			—			1,813
Property, plant and equipment		695			—			695
Other assets		76			—			76
Tradenames		4,630			—			4,630
Customer relationships		6,075			—			6,075
Goodwill		8,363			(79	)		8,284
Accounts payable		(81	)		79			(2	)
Accrued liabilities		(28	)		—			(28	)
	$	22,170		$	—		$	22,170

The fair value of the acquired customer relationship intangible asset was estimated using the excess earnings approach. The customer relationship intangible asset is being amortized based on the attrition rate of customers which was determined to be 20 years. The fair value of the acquired tradenames intangible asset was estimated using the relief from royalty method, a form of the income approach. The tradenames were determined to have an indefinite life.

The contractual value of the accounts receivable acquired was $800.

The Company incurred transaction costs in the amount of $222, which are reflected in operating expenses for the year ended December 31, 2021.

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Brothers Mail Order Industries, Inc.

On December 16, 2021, the Company acquired substantially all the assets and liabilities of Brothers Mail Order Industries, Inc., doing business as Brothers Trucks ("Brothers"). Consideration for the assets acquired was cash payments of $26,135. The acquisition resulted in non-amortizable intangibles and goodwill totaling $24,835. The goodwill and intangibles generated as a result of this acquisition are deductible for income tax purposes. The purchase price was funded with borrowings from the Company's credit facility and cash on hand.

The determination of the final purchase price allocation to specific assets acquired and liabilities assumed was adjusted to reflect the final fair value estimate of acquired assets and liabilities, as noted below. The allocation of the purchase price to the assets acquired and liabilities assumed was based on estimates of the fair value of the net assets as follows:

	December 16, 2021			Measurement Period		December 16, 2021
	(as initially reported)			Adjustments		(as adjusted)
Accounts receivable	$	22		$	—	$	22
Inventory		1,682			—		1,682
Property, plant and equipment		20			—		20
Other assets		13			—		13
Tradenames		4,975			—		4,975
Goodwill		19,561			299		19,860
Accounts payable		(34	)		—		(34	)
Accrued liabilities		(403	)		—		(403	)
	$	25,836		$	299	$	26,135

The fair value of the acquired tradenames intangible asset was estimated using the relief from royalty method, a form of the income approach. The tradenames were determined to have an indefinite life.

The contractual value of the accounts receivable acquired was $22.

The Company incurred transaction costs in the amount of $191, which are reflected in operating expenses for the year ended December 31, 2021.

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Advance Engine Management Inc.

On April 14, 2021, the Company acquired substantially all the assets and liabilities of Advance Engine Management Inc. doing business as AEM Performance Electronics (“AEM”). Consideration for the assets acquired was cash payments of $51,243. The acquisition resulted in both amortizable and non-amortizable intangibles and goodwill, totaling $44,486. The goodwill and intangibles generated as a result of this acquisition are deductible for income tax purposes. The purchase price was funded from cash on hand.

The determination of the final purchase price allocation to specific assets acquired and liabilities assumed was adjusted to reflect the final fair value estimate of acquired assets and liabilities, as noted below. The allocation of the purchase price to the assets acquired and liabilities assumed was based on estimates of the fair value of the net assets as follows:

	April 14, 2021			Measurement Period			April 14, 2021
	(as initially reported)			Adjustments			(as adjusted)
Accounts receivable	$	3,454		$	(61	)	$	3,393
Inventory		3,892			—			3,892
Property, plant and equipment		1,342			—			1,342
Other assets		493			(91	)		402
Tradenames		10,760			—			10,760
Customer relationships		14,640			—			14,640
Patents		1,970			—			1,970
Technology intangibles		110			—			110
Goodwill		17,426			(420	)		17,006
Accounts payable		(2,032	)		110			(1,922	)
Accrued liabilities		(489	)		139			(350	)
	$	51,566		$	(323	)	$	51,243

The fair value of the acquired customer relationship intangible asset was estimated using the excess earnings approach. The customer relationship intangible asset is being amortized based on the attrition rate of customers which was determined to be 20 years. The fair value of the acquired tradenames and patents intangible assets were estimated using the relief from royalty method, a form of the income approach. The tradenames were determined to have an indefinite life. The patents are being amortized over 13 years based on the weighted average remaining life of the patent portfolio.

The contractual value of the accounts receivable acquired was $3,454.

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The Company’s results for the year ended December 31, 2021, include $16,593 of net sales and $2,664 of net income from AEM since the date of acquisition. The Company incurred transaction costs in the amount of $2,264, which are reflected in operating expenses for the year ended December 31, 2021.

The following table provides the unaudited consolidated pro forma results for the periods presented as if Baer, Brothers, and AEM had been acquired as of January 1, 2021.

	For the year ended December 31,
	2021
Pro forma net sales	$	727,369
Pro forma net income		(16,248	)

The pro forma results include the effects of the amortization of purchased intangible assets and acquired inventory step-up. The pro forma results are based upon unaudited financial information of the acquired entity and are presented for informational purposes only and are not necessarily indicative of the results of future operations or the results that would have occurred had the acquisitions taken place in the periods noted.

DIVESTITURE

In the fourth quarter of 2022, the Company made the decision to sell Finspeed in connection with a strategic review of its product portfolio. Finspeed generated approximately $426 in net sales in 2022. The Company received $1,966 cash consideration and recorded a pre-tax loss of $1,037 on the sale of the business, which included a $268 write-down of intangible assets, and was reported as other operating expense in the Consolidated Statements of Comprehensive Income (Loss).  

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3. INVENTORY

Inventories of the Company consisted of the following:

	December 31,
	2023		2022
Raw materials	$	63,552	$	78,586
Work-in-process		22,619		23,906
Finished goods		106,089		131,081
	$	192,260	$	233,573

4. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment of the Company consisted of the following:

	December 31,
	2023		2022
Land	$	3,326	$	3,426
Buildings and improvements		11,404		11,051
Machinery and equipment		73,332		66,140
Construction in process		6,224		9,563
Total property, plant and equipment		94,286		90,180
Less: accumulated depreciation		47,080		37,999
Property, plant and equipment, net	$	47,206	$	52,181

The Company’s long-lived assets by geographic locations are as follows:

	December 31,
	2023		2022
United States	$	44,931	$	50,434
International		2,275		1,747
Total property, plant and equipment, net	$	47,206	$	52,181

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5. GOODWILL AND OTHER INTANGIBLE ASSETS

The following presents changes to goodwill for the periods indicated:

Balance on December 31, 2021	$	411,383
John's acquisition		240
SKC acquisition		1,270
RaceQuip acquisition		4,348
Measurement period adjustments		880
Balance on December 31, 2022		418,121
Measurement period adjustments		935
Balance on December 31, 2023	$	419,056

Goodwill represents the premium paid over the fair value of the net tangible and identifiable intangible assets acquired in the Company's business combinations. The measurement period for the valuation of assets acquired and liabilities assumed ends as soon as information on the facts and circumstances that existed as of the acquisition date becomes available, not to exceed 12 months. Adjustments in purchase price allocations may require a change in the amounts allocated to goodwill during the periods in which the adjustments are determined. In the fourth quarter of 2023, the Company performed a qualitative assessment and did not identify any indicators of impairment. In the third quarter and fourth quarters of 2022, the Company performed quantitative and qualitative assessments and did not identify any indicators of impairment. No goodwill impairment charges were incurred during 2023 and 2022.

Intangible assets consisted of the following:

	December 31, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
Finite-lived intangible assets:
Customer relationships	$	269,950	$	(55,732	)	$	214,218
Tradenames		13,775		(5,569	)		8,206
Technology		26,676		(13,800	)		12,876
Total finite-lived intangible assets	$	310,401	$	(75,101	)	$	235,300
Indefinite-lived intangible assets:
Tradenames	$	175,165		—		$	175,165

	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
Finite-lived intangible assets:
Customer relationships	$	269,950	$	(44,178	)	$	225,772
Tradenames		13,775		(4,843	)		8,932
Technology		26,676		(11,523	)		15,153
Total finite-lived intangible assets	$	310,401	$	(60,544	)	$	249,857
Indefinite-lived intangible assets:
Tradenames	$	174,998		—		$	174,998

The following outlines the estimated future amortization expense related to intangible assets held on  December 31, 2023:

2024	$	13,744
2025		13,714
2026		13,608
2027		13,601
2028		13,601
Thereafter		167,032
Total	$	235,300

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In the third quarter of 2022, management concluded it was necessary to reevaluate indefinite-lived intangible assets for impairment after supply chain challenges led to a downward revision of earnings estimates for 2022, which resulted in a decline in the Company's market capitalization. As a result of this evaluation, a pre-tax impairment of $2,395 was recognized on certain indefinite-lived tradenames. In the fourth quarter of 2022, the Company performed a qualitative assessment of indefinite-lived intangible assets and did not identify any indicators of impairment. The Company has not subsequently identified any circumstances to indicate that it was necessary to reevaluate indefinite-lived intangible assets for impairment. No impairment was recognized on intangible assets in 2023.

The fair value of the indefinite-lived tradenames was estimated using the relief from royalty method, a form of the income approach. Significant judgement is required in estimating the fair value of intangible assets and in performing impairment tests. The most significant assumptions utilized in the determination of the estimated fair values of the indefinite-lived tradenames were the sales projections and long-term earnings growth rates, the royalty rate and the discount rate. The long-term earnings growth rate represents the expected rate at which the brands are expected to grow beyond the shorter-term business planning period. The royalty rate is based on observed market royalty rates for various industrial, consumer and commercial trademarks. The discount rate is based on the Company's weighted average cost of capital adjusted for risk. Due to the inherent uncertainty in forecasting future sales, actual results in the future may vary significantly from the forecasts.

Potential changes in our costs and operating structure, the implementation of synergies, and overall performance in the automotive aftermarket industry, could negatively impact our near-term cash-flow projections and could trigger a potential impairment of the Company's goodwill and / or indefinite-lived intangible assets. In addition, failure to execute the Company's strategic plans as well as increases in weighted average costs of capital could negatively impact the fair value of the reporting unit and increase the risk of future impairment charges.

6. ACCRUED LIABILIITES

Accrued liabilities of the Company consisted of the following:

	December 31,
	2023		2022
Accrued freight	$	5,654	$	6,861
Accrued employee compensation and benefits		11,696		7,635
Accrued returns, allowances and warranties		11,267		8,798
Accrued taxes		1,475		6,697
Current portion of operating lease liabilities		4,948		5,112
Accrued other		7,089		8,214
Total accrued liabilities	$	42,129	$	43,317

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7. DEBT

Debt of the Company consisted of the following:

	December 31,
	2023			2022
First lien term loan due November 17, 2028	$	592,505		$	649,350
Revolver		—			10,000
Other		1,974			2,770
Less unamortized debt issuance costs		(10,308	)		(11,557	)
		584,171			650,563
Less current portion of long-term debt		(7,461	)		(7,000	)
	$	576,710		$	643,563

On November 18, 2021, the Company entered into a credit facility with a syndicate of lenders and Wells Fargo Bank, N.A., as administrative agent for the lenders, letter of credit issuer and swing line lender (the "Credit Agreement"). The financing consists of a seven-year $600,000 first lien term loan, a five-year $125,000 revolving credit facility, and a $100,000 delayed draw term loan. The proceeds of delayed draw loans made after closing were available to the Company to finance acquisitions. Upon the expiration of the delayed draw term loan in May 2022, the Company had drawn $57,000, which is included in the amount outstanding under the first lien term loan due November 17, 2028. 

The revolving credit facility includes a letter of credit facility in the amount of $10,000, pursuant to which letters of credit may be issued as long as revolving loans may be advanced and subject to availability under the revolving credit facility. The Company had $1,728 in outstanding letters of credit on  December 31, 2023.

In 2021, proceeds from the credit facility were used to repay in full the Company’s obligations under its existing first lien and second lien notes and to pay $13,413 in deferred financing fees related to the refinancing. As a result of the prepayments of the Company’s existing first lien and second lien notes, losses of $13,650 were recognized in 2021 on the early extinguishment of debt due to the write-off of unamortized debt issuance costs.

The first lien term loan is to be repaid in quarterly payments of $1,643 through September 30, 2028, with the balance due upon maturity on November 17, 2028. The Company is required to make annual payments on the term loan in an amount equal to 50% of annual excess cash flow greater than $5,000, as defined in the Credit Agreement. This percentage requirement may decrease or be eliminated if certain leverage ratios are achieved. Based on the Company's results for 2023, no excess cash flow payment is expected to be required in 2024. Any such payments offset future mandatory quarterly payments. The Credit Agreement permits voluntary prepayments at any time, in whole or in part. The Company paid down an aggregate of $56,845 in principal on its outstanding first lien term loan during the year ended December 31, 2023 by repurchasing $38,845 at a discount to par, making a voluntary repayment of $11,000, and making required quarterly payments totaling $7,000. A gain of $701 was recognized on the debt repurchased at a discount to par, net of the write-off of unamortized debt issuance costs. 

On December 31, 2023, amounts outstanding under the credit facility accrue interest at a rate equal to either the SOFR or base rate, at the Company's election, plus a specified margin. In the case of revolving credit loans and letter of credit fees, the specified margin is based on the Company's Total Leverage Ratio, as defined in the Credit Agreement. Commitment fees payable under the revolving credit facility are based on the Company's Total Leverage Ratio. On  December 31, 2023, the weighted average interest rate on the Company's borrowings under the credit facility was 9.2%.

Obligations under the Credit Agreement are secured by substantially all of the Company’s assets, including a secured interest in the Company's corporate headquarters, with a carrying value of $2,999. The Credit Agreement includes representations and warranties, and affirmative and negative covenants customary for financings of this type, including, but not limited to, limitations on restricted payments, additional borrowings, additional investments, and asset sales. The Credit Agreement also requires that Holley maintain, on the last day of each quarter, a Total Leverage Ratio not to exceed a maximum amount. On  December 31, 2023, the Company was in compliance with all financial covenants.

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In February 2023, the Company entered into an amendment to its Credit Agreement which, among other things, increases the Total Leverage Ratio applicable under the Credit Agreement as of the fiscal quarter ending April 2, 2023 to initially 7.25:1.00, and provides for modified step-down levels for such covenant thereafter through the fiscal quarter ending March 31, 2024 (the “Covenant Relief Period”). As of December 31, 2023, the required Total Leverage Ratio was 5.75:1.00. As an ongoing condition to the Covenant Relief Period, the Company also agreed to (i) a minimum liquidity test, (ii) an interest coverage test, (iii) an anti-cash hoarding test at any time revolving loans are outstanding, and (iv) additional reporting obligations. Under the amended Credit Agreement, the revolving credit facility contains a minimum liquidity financial covenant of $45,000, which includes unrestricted cash and any available borrowing capacity under the revolving credit facility. In April 2023, the Company entered into a second amendment to the Credit Agreement in which the interest rate on any outstanding borrowings under the Credit Agreement was changed from LIBOR to SOFR. In May 2023, the Company entered into a third amendment to the Credit Agreement in which certain defined terms were clarified. The Company incurred $1,427 of deferred financing fees related to these amendments. On December 31, 2023, the Company was in compliance with all financial covenants. 

Some of the lenders that are parties to the Credit Agreement, and their respective affiliates, have various relationships with the Company in the ordinary course of business involving the provision of financial services, including cash management, commercial banking, investment banking or other services.

Future maturities of long-term debt and amortization of debt issuance costs on  December 31, 2023, are as follows:

		Debt		Debt Issuance Costs
2024	$	7,461	$	1,770
2025		7,656		1,921
2026		6,571		2,087
2027		6,572		2,271
2028		566,219		2,259
	$	594,479	$	10,308

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8. COMMON STOCK WARRANTS AND EARN-OUT LIABILITY

Upon the Closing, there were 14,666,644 Warrants, consisting of 9,999,977 Public Warrants and 4,666,667 Private Warrants, outstanding to purchase shares of the Company's common stock that were issued by Empower prior to the Business Combination. Each Warrant entitles the registered holder to purchase one share of Common Stock at a price of $11.50 per share, subject to adjustments, commencing on October 9, 2021 (the one-year anniversary of Empower’s initial public offering), provided that the Company has an effective registration statement under the Securities Act covering the shares of Common Stock issuable upon exercise of the Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities laws of the state of residence of the holder. The Warrants may be exercised only for a whole number of shares of Common Stock. The Warrants expire on July 16, 2026, the date that is five years after the Closing date, or earlier upon redemption or liquidation. Additionally, the Private Warrants will be non-redeemable and are exercisable on a cashless basis so long as they are held by the Sponsor or any of its permitted transferees. If the Private Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

The Company may redeem the Public Warrants at a price of $0.01 per warrant upon 30 days' notice if the closing price of the Company’s common stock equals or exceeds $18.00 per share, subject to adjustments, on the trading day prior to the date on which notice of redemption is given, provided there is an effective registration statement and current prospectus in effect with respect to the ordinary shares underlying such Warrants throughout the 30-day redemption period. If the foregoing conditions are satisfied and the Company issues a notice of redemption of the Warrants, the Warrant holder is entitled to exercise his, her or its Warrant prior to the scheduled redemption date. Any such exercise requires the Warrant holder to pay the exercise price for each Warrant being exercised. Further, the Company may redeem the Public Warrants at a price of $0.10 per warrant upon 30 days' notice if the closing price of Common Stock equals or exceeds $10.00 per share, subject to adjustments, on the trading day prior to the date on which notice of redemption is given. Beginning on the date the notice of redemption is given until the Warrants are redeemed or exercised, holders may elect to exercise their Warrants on a cashless basis and receive that number of shares of Common Stock as determined by reference to a table in the warrant agreement.

During any period when the Company has failed to maintain an effective registration statement, warrant holders may exercise Warrants on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption, but the Company will use its commercially reasonable best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

The Warrants are accounted for as a liability in accordance with ASC Subtopic 815-40, Derivatives and Hedging - Contracts in Entity's Own Equity, and are presented as a warrant liability on the balance sheet. The warrant liability was measured at fair value at inception and on a recurring basis, with changes in fair value recognized as non-operating expense. On  December 31, 2023 and 2022, a warrant liability with a fair value of $8,383 and $4,272, respectively, was reflected as a long-term liability in the consolidated balance sheet. As of both  December 31, 2023 and 2022, there were 14,633,311 Warrants outstanding. For the year ended December 31, 2023, an increase of $4,111 in the fair value of the warrant liability as compared to a decrease of $57,021 in the fair value of the warrant liability for the year ended  December 31, 2022, was reflected as change in fair value of warrant liability in the consolidated statements of comprehensive income.

Additionally, the Sponsor received 2,187,500 shares of Common Stock upon the Closing, which vest in two equal tranches upon achievement of certain market share price milestones during the earn-out period, as outlined in the Merger Agreement (the “Earn-Out Shares”). The first tranche of Earn-Out Shares vested during the first quarter of 2022. Upon vesting, the first tranche of 1,093,750 Earn-Out Shares were issued and a liability of $14,689, representing the fair value of the shares on the date of vesting, was reclassified from liabilities to equity. The remaining tranche of Earn-Out Shares will be forfeited if the applicable conditions are not satisfied before July 16, 2028 (seven years after the Closing Date). The unvested Earn-Out Shares are presented as an earn-out liability on the balance sheet and are remeasured at fair value with changes in fair value recognized as non-operating expense. On  December 31, 2023 and 2022, an earn-out liability with a fair value of $3,479 and $1,176, respectively, was reflected as a long-term liability in the consolidated balance sheet. For the year ended December 31, 2023, an increase of $2,303 in the fair value of the earn-out liability as compared to a decrease of $10,731 in the fair value of the earn-out liability for the year ended  December 31, 2022, was reflected as change in fair value of earn-out liability in the consolidated statements of comprehensive income. 

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9.  DERIVATIVE INSTRUMENTS 

The Company from time to time enters into derivative financial instruments, such as interest rate collar agreements (each, a “Collar”), to manage its exposure to fluctuations in interest rates on the Company’s variable rate debt. On January 4, 2023, the Company entered into a Collar with Wells Fargo Bank, N.A. ("Wells Fargo") with a notional amount of $500,000 that expires on February 18, 2026. The Collar has a floor of 2.811% and a cap of 5% (based on three-month SOFR). The structure of this Collar is such that the Company receives an incremental amount if the Collar index exceeds the cap rate. Conversely, the Company pays an incremental amount to Wells Fargo if the Collar index falls below the floor rate. No payments are required if the Collar index falls between the cap and floor rates. 

On  December 31, 2023, the Company recognized a derivative liability of $1,164 for the Collar in other noncurrent liabilities on the consolidated balance sheet. For the year ended December 31, 2023, the Company recorded a net change in the fair value of the Collar as an increase to interest expense of $1,164. Cash receipts for the Collar totaled $620 for the year ended December 31, 2023. 

The fair value of the Collar is determined using observable market-based inputs and the impact of credit risk on the derivative’s fair value (the creditworthiness of the Company’s counterparty for assets and the creditworthiness of the Company for liabilities) (a Level 2 measurement, as described in Note 10, "Fair Value Measurements").

10. FAIR VALUE MEASUREMENTS

The Company’s financial liabilities subject to fair value measurement on a recurring basis and the level of inputs used for such measurements were as follows: 

	Fair Value Measured on December 31, 2023
	Level 1		Level 2		Level 3		Total
Warrant liability (Public)	$	5,480	$	—	$	—	$	5,480
Warrant liability (Private)		—		—		2,903		2,903
Earn-out liability		—		—		3,479		3,479
Interest rate collar liability		—		1,164		—		1,164
Total fair value liabilities	$	5,480	$	1,164	$	6,382	$	13,026

	Fair Value Measured on December 31, 2022
	Level 1		Level 2		Level 3		Total
Warrant liability (Public)	$	2,691	$	—	$	—	$	2,691
Warrant liability (Private)		—		—		1,581		1,581
Earn-out liability		—		—		1,176		1,176
Total fair value liabilities	$	2,691	$	—	$	2,757	$	5,448

On  December 31, 2023 and 2022, the Company's liabilities for its Private and Public Warrants, earn-out liability, and Collar are measured at fair value on a recurring basis (see Note 8, “Common Stock Warrants and Earn-Out Liability,” and Note 9, "Derivative Instruments,” for more details). The fair values of the Private Warrants and earn-out liability are determined based on significant inputs not observable in the market (Level 3). These assumptions are believed to be reasonable at the time, but such assumptions are subject to inherent uncertainty. The valuation of the Level 3 liabilities uses assumptions and estimates the Company believes would be made by a market participant in making the same valuation. The Company assesses these assumptions and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained. The Company uses a Monte Carlo simulation model to estimate the fair value of its Private Warrants and earn-out liability. The fair value of the Collar, which is included in other noncurrent liabilities on the consolidated balance sheet, is determined based on models that reflect the contractual terms of the derivative, yield curves, and the credit quality of the counterparties. Inputs are generally observable and do not contain a high level of subjectivity (Level 2). The fair value of the Public Warrants is determined using publicly traded prices (Level 1). Changes in the fair value of the derivative liabilities related to Warrants and the earn-out liability are recognized as non-operating expense in the consolidated statements of comprehensive income (loss). Changes in the fair value of the Collar are recognized as an adjustment to interest expense in the consolidated statements of comprehensive income (loss). Changes in the fair value of the Warrants, the earn-out liability, and the Collar, along with cash flows associated with the Collar, are presented in operating activities on the consolidated statements of cash flows.

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The fair value of Private Warrants was estimated on  December 31, 2023 and 2022 using the Monte Carlo simulation model with the following assumptions:

	2023			2022
Valuation date price	$	4.87		$	2.12
Strike price	$	11.50		$	11.50
Remaining life (in years)		2.54			3.54
Expected dividend	$	—		$	—
Risk-free interest rate		4.01	%		4.06	%
Price threshold	$	18.00		$	18.00

The fair value of the earn-out liability was estimated on  December 31, 2023 and 2022 using the Monte Carlo simulation model with the following assumptions:

	2023			2022
Valuation date price	$	4.87		$	2.12
Expected term (in years)		4.54			5.54
Expected volatility		67.20	%		70.33	%
Risk-free interest rate		3.79	%		3.88	%
Price hurdle	$	15.00		$	15.00

On  December 31, 2023 and 2022, the Company had accounts receivable, accounts payable and accrued expenses for which the carrying value approximates fair value due to the short-term nature of these instruments. The carrying value of the Company’s long-term debt approximates fair value as the rates used approximate the market rates currently available to the Company. Fair value measurements used in the impairment reviews of goodwill and intangible assets are Level 3 measurements.

The reconciliation of changes in Level 3 during the years ended December 31, 2023 and 2022 is as follows:

	Private Warrants			Earn-Out Liability			Total
Balance on December 31, 2021	$	21,793		$	26,596		$	48,389
Liabilities reclassed to equity		—			(14,689	)		(14,689	)
Gains included in earnings		(20,212	)		(10,731	)		(30,943	)
Balance on December 31, 2022	$	1,581		$	1,176		$	2,757
Losses included in earnings		1,322			2,303			3,625
Balance on December 31, 2023	$	2,903		$	3,479		$	6,382

11. REVENUE

The principal activity from which the Company generates its revenue is the manufacturing and distribution of after-market automotive parts for its customers, comprised of resellers and end users. The Company recognizes revenue at a point in time, rather than over time, as the performance obligation is satisfied when customer obtains control of the product upon title transfer and not as the product is manufactured or developed. The amount of revenue recognized is based on the purchase order price and adjusted for revenue allocated to variable consideration (i.e., estimated rebates, co-op advertising, etc.).

The Company collects sales tax and other taxes concurrent with revenue-producing activities which are excluded from revenue. Shipping and handling costs incurred after control of the product is transferred to our customers are treated as fulfillment costs and not a separate performance obligation.

The Company allows customers to return products when certain Company-established criteria are met. These sales returns are recorded as a charge against gross sales in the period in which the related sales are recognized, net of returns to stock. Returned products, which are recorded as inventories, are valued at the lower of cost or net realizable value. The physical condition and marketability of the returned products are the major factors considered in estimating realizable value. The Company also estimates expected sales returns and records the necessary adjustment as a charge against gross sales.

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The Company’s payment terms with customers are customary and vary by customer and geography but typically range from 30 to 365 days. The Company elected the practical expedient to disregard the possible existence of a significant financing component related to payment on contracts, as the Company expects that customers will pay for the products within one year. The Company has evaluated the terms of its arrangements and determined that they do not contain significant financing components. Additionally, as all contracts with customers have an expected duration of one year or less, the Company has elected the practical expedient to exclude disclosure of information regarding the aggregate amount and future timing of performance obligations that are unsatisfied or partially satisfied as of the end of the reporting period. The Company provides limited warranties on most of its products against certain manufacturing and other defects. Provisions for estimated expenses related to product warranty are made at the time products are sold. Refer to Note 19, “Commitments and Contingencies” for more information.

The following table summarizes total revenue by product category. The Company's product category definitions have been revised by management in 2022. The prior-year period has been revised to conform with the current presentation. There is no change to total sales.

	For the years ended December 31,
	2023		2022		2021
Electronic systems	$	287,215	$	282,865	$	309,233
Mechanical systems		157,427		165,007		154,878
Exhaust		59,938		66,767		78,179
Accessories		98,899		108,150		85,280
Safety		56,225		65,626		65,277
Net sales	$	659,704	$	688,415	$	692,847

The following table summarizes total revenue based on geographic location from which the product is shipped:

	For the years ended December 31,
	2023		2022		2021
United States	$	644,652	$	669,187	$	674,491
Italy		15,052		19,228		18,356
Net sales	$	659,704	$	688,415	$	692,847

12. INCOME TAXES

Income tax expense of the Company consisted of the following:

	For the years ended December 31,
	2023			2022			2021
Current income tax expense:
Federal	$	10,909		$	12,356		$	7,422
State		927			1,253			323
Foreign		1,715			2,450			2,602
Total current income tax expense		13,551			16,059			10,347
Deferred income tax expense (benefit):
Federal		(5,986	)		(8,679	)		823
State		811			(2,591	)		(552	)
Foreign		23			(296	)		(189	)
Total deferred income tax expense (benefit)		(5,152	)		(11,566	)		82
Total income tax expense	$	8,399		$	4,493		$	10,429

The Company’s income before income taxes was subject to taxes in the following jurisdictions:

	For the years ended December 31,
	2023		2022		2021
United States	$	23,971	$	72,276	$	(24,772	)
Foreign		3,608		5,991		8,062
Income (loss) before income taxes	$	27,579	$	78,267	$	(16,710	)

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Reported income tax expense for the years ended December 31, 2023, 2022 and 2021 differs from the “expected” tax expense (benefit), computed by applying the U.S. Federal statutory income tax rate of 21% to income before income taxes as follows:

	For the years ended December 31,
	2023			2022			2021
Expected tax expense (benefit) at U.S. Federal statutory rates	$	5,792		$	16,479		$	(3,510	)
State income tax expense (benefit)		1,373			(1,057	)		(180	)
Permanent tax differences		375			4,275			825
Foreign-derived intangible income deduction		(397	)		(298	)		—
Global intangible low-taxed income		—			—			375
Section 162(m) limitation		709			—			—
Foreign rate differential		782			560			719
Tax credit		(1,506	)		(1,393	)		(1,620	)
Earn-outs		484			(2,254	)		5,470
Change in fair value of Warrants		863			(11,974	)		6,842
Transaction costs		—			—			1,465
Other differences, net		(76	)		155			43
Total income tax expense	$	8,399		$	4,493		$	10,429

The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and deferred tax liabilities consisted of the following:

	December 31,
	2023			2022
Deferred tax assets:
Reserves on assets	$	10,283		$	12,305
Liabilities not yet deductible		781			3,371
Interest expense limitation		16,040			9,624
Right-of-use liability		6,791			6,899
Section 174 expenses		10,049			6,197
Net operating losses		2,446			1,493
Other		1,113			526
Total gross deferred tax assets		47,503			40,415
Valuation allowance		(5	)		—
Total gross deferred tax assets, net of valuation allowance		47,498			40,415
Deferred tax liabilities:
Tradename		33,801			33,770
Intangible assets		41,715			41,126
Goodwill		12,310			10,037
Property, plant and equipment		6,634			7,110
Right-of-use asset		6,585			6,762
Total gross deferred tax liabilities		101,045			98,805
Net deferred tax liabilities	$	53,542		$	58,390

Based on the Company’s projected pretax earnings, reversal of deferred tax liabilities and other relevant factors, management believes that it is more likely than not that the Company’s deferred tax assets on  December 31, 2023 and 2022 will be realized, with the exception of certain state net operating loss carryforwards.

On  December 31, 2023, the Company's federal and state net operating loss carryforwards for income tax purposes were immaterial. A majority of the U.S. net operating loss carryforwards have no expiration date. The remaining state net operating loss carryforwards expire at various dates through 2035. The entire amount of federal net operating loss carryforward of $381 and a significant portion of state net operating loss carryforward of $2,064 relate to acquisitions, and, as a result, are limited in the amount that can be recognized in any one year.

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Changes in the valuation allowance for deferred tax assets were as follows:

	December 31,
	2023
Valuation allowance, January 1	$	—
Additions charged to expense accounts		5
Valuation allowance, December 31	$	5

The valuation allowance on December 31, 2023, includes allowances primarily related to unrealized state net operating losses and credit carryforwards of $5.

Uncertain Tax Positions

Under the accounting rules for income taxes, the Company is not permitted to recognize the tax benefit attributable to a tax position unless such position is more likely than not to be sustained upon examination by taxing authorities, including resolution of any related appeals and litigation processes, based solely on the technical merits of the position. The Company had uncertain tax positions of $329 for the year ended December 31, 2023. The Company did not have any uncertain tax positions for the year ended December 31, 2022.

The Company recognizes interest on liabilities for uncertain tax positions in interest expense and would recognize penalties, if any, in operating expenses in its consolidated statements of comprehensive income (loss). In 2023 and 2022, the Company has not recognized any amount of interest and penalties for uncertain tax positions in its consolidated statements of comprehensive income (loss).

Changes in unrecognized tax benefits were as follows:

	December 31,
	2023
Gross unrecognized tax benefits, January 1	$	—
Changes in balance related to tax position taken during prior periods		329
Gross unrecognized tax benefits, December 31	$	329

As of  December 31, 2023, $9 of this total represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. Interest, penalties, and accrued interest related to unrecognized tax benefits are insignificant for the periods presented.

The Company regularly engages in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions in which it conducts business. Although the timing of the resolutions and/or closures of audits is highly uncertain, it is reasonably possible, that certain U.S. federal and non-U.S. tax audits may be concluded within the next 12 months, which could increase or decrease the balance of our gross unrecognized tax benefits. The Company estimates that unrecognized tax benefits as of December 31, 2023, could decrease by as much as $9 in the next 12 months.

The Company files federal, state, and non-U.S. tax returns in various foreign jurisdictions. For state and non-U.S. tax returns, the Company is generally no longer subject to tax examinations for years prior to 2014. For federal tax returns, the Company is no longer subject to tax examinations for years prior to 2019. The federal tax returns for 2020 through 2022 remain open for examinations. State income tax returns remain open for examination in various states for tax years 2014 through 2022.

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13. EARNINGS PER SHARE

The following table sets forth the calculation of basic and diluted earnings per share:

	For the years ended December 31,
	2023		2022			2021
Numerator:
Net income (loss)	$	19,180	$	73,774		$	(27,139	)
Less: fair value adjustment for Warrants		—		(57,021	)		—
Net income (loss) - diluted	$	19,180	$	16,753		$	(27,139	)
Denominator:
Weighted average common shares outstanding - basic		117,378,854		116,762,928			89,959,993
Dilutive effect of potential common shares from RSUs		952,161		101,290			—
Dilutive effect of potential common shares from PSUs		179,785		—			—
Dilutive effect of potential common shares from Warrants		—		384,078			—
Weighted average common shares outstanding - diluted		118,510,800		117,248,296			89,959,993
Earnings (loss) per share:
Basic	$	0.16	$	0.63		$	(0.30	)
Diluted	$	0.16	$	0.14		$	(0.30	)

The following outstanding shares of common stock equivalents were excluded from the calculation of diluted earnings per share due to the anti-dilutive effect such shares would have on net loss per common share.

	For the years ended December 31,
	2023		2022		2021
Anti-dilutive shares excluded from calculation of diluted EPS:
Warrants		14,633,311		—		14,666,644
Stock options		886,046		1,709,690		1,386,974
Restricted stock units		146,475		540,344		656,485
Performance stock units		1,822,994		—		—
Unvested Earn-Out Shares		1,093,750		1,093,750		2,187,500
Total anti-dilutive shares		18,582,576		3,343,784		18,897,603

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14. BENEFIT PLANS

On January 28, 2022, the Company approved the termination of its defined benefit pension plan (the "Plan"), effective March 31, 2022. The final distribution of Plan assets pursuant to the termination was not made until the plan termination satisfied all regulatory requirements in the fourth quarter of 2022. Plan participants received their accrued benefits from plan assets by electing either lump sum distributions or annuity contracts with a qualifying third-party annuity provider. The resulting settlement effect of the Plan termination was determined based on prevailing market conditions, the lump sum offer participation rate of eligible participants, the actual lump sum distributions, and annuity purchase rates at the date of distribution. As a result, the Plan recognized a final settlement loss of $154. Prior to termination, the Projected Unit Credit Actuarial Cost Method was used to determine the normal cost of the Plan and estimated pension benefit obligation. The fair value of Plan assets on  December 31, 2022, was zero. 

The following table shows the changes in the benefit obligation and plan assets and the plan’s funded status.

	December 31,
	2022
Change in Projected Benefit Obligation:
Benefit obligation, January 1	$	6,104
Service cost		113
Interest cost		138
Plan curtailments		(5,185	)
Benefits paid		(299	)
Expenses paid		(149	)
Actuarial (gain) loss		(722	)
Benefit obligation, December 31	$	—
Change in Plan Assets:
Fair value of plan assets, January 1	$	5,242
Actual return on plan assets		(374	)
Employer contributions		765
Plan settlements		(5,185	)
Benefits paid from plan assets		(299	)
Expenses paid		(149	)
Fair value of plan net assets, December 31	$	—
Funded status at end of period	$	—

There was no remaining accumulated benefit obligation for the Plan on  December 31, 2022. The Company made contributions of $765 and $471 in 2022 and 2021, respectively. There were no participant contributions in 2022 or 2021.

The pre-tax amounts recognized in other comprehensive income were as follows:

	For the years ended December 31,
	2022			2021
Actuarial gain arising during measurement period	$	(129	)	$	(513	)
Amortization of actuarial loss		(154	)		(25	)
Total recognized in other comprehensive (income) loss	$	(283	)	$	(538	)

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The following summarizes the components of net periodic benefit cost for the defined benefit pension plan:

	For the years ended December 31,
	2022			2021
Components of expense:
Service cost	$	113		$	143
Interest cost		138			152
Expected return on plan assets		(218	)		(240	)
Settlement loss recognized		154			—
Amortization of net loss		—			25
Net periodic benefit cost	$	187		$	80

Weighted-average assumptions used to determine net cost:

	December 31,
	2022
Discount rate		2.78	%
Expected return on plan assets		5.20	%

401(k) Plan

The Company has a 401(k) savings plan for salaried and non-salaried employees. Participation in the plan is optional. The Company matches employee contributions up to 3.5% each pay period. The Company's matching contributions for the years ended December 31, 2023, 2022, and 2021, include additional discretionary matching contributions of 1.2%, 0%, and 1% based on the Company's performance targets for 2023, 2022 and 2021, respectively. The Company made matching contributions of $3,154, $2,990, and $2,579 for the years ended December 31, 2023, 2022, and 2021, respectively. 

15. EQUITY-BASED COMPENSATION PLANS

In 2021, the Company adopted the 2021 Omnibus Incentive Plan (the “2021 Plan”), under which awards, including stock options, time-based restricted stock units ("RSUs"), and performance-based restricted stock units ("PSUs") may be granted to employees and non-employee directors. The 2021 Plan authorized 8,850,000 shares of Common Stock to be available for award grants. On  December 31, 2023, 4,679,306 shares of Common Stock remained available for future issuance under the 2021 Plan. On June 6, 2023, the Company granted 1,000,000 time-based RSUs and 1,520,000 PSUs to its new President and Chief Executive Officer. These awards were granted outside of the 2021 Plan as employment inducement awards and did not require shareholder approval under the rules of the NYSE or otherwise. 

Restricted Stock Awards

RSUs and PSU are collectively referred to as “Restricted Stock Awards”. The Compensation Committee has awarded RSUs to select employees and non-employee directors and has awarded PSUs to select employees. The RSUs vest ratably over one to four years of continued employment. The grant date fair value of a time-based award or a performance-based award without a market condition is equal to the market price of Common Stock on the grant date and is recognized over the requisite service period. The grant date fair value of a performance-based award with a market condition is determined using a Monte Carlo simulation and is recognized over the requisite service period. On  December 31, 2023, there was $9,071 of unrecognized compensation cost related to unvested Restricted Stock Awards that is expected to be recognized over a remaining weighted average period of 2.3 years.

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The weighted-average grant-date fair value of Restricted Stock Awards granted during the years ended December 31, 2023, 2022, and 2021, was $2.60, $5.87 and $12.06, respectively. The fair value of Restricted Stock Awards vested and converted to shares of Common Stock was $4,231 for the year ended December 31, 2023.

	Unvested Restricted Stock Awards
				Weighted Average
	Number of RSAs			Grant Date Fair Value
Balance on December 31, 2022		1,108,330		$	9.43
Granted (1)		4,954,177			2.60
Vested		(823,337	)		4.96
Forfeited		(334,369	)		8.19
Balance on December 31, 2023		4,904,801		$	2.86

(1) Includes 1.0 million PSUs subject to the Company achieving certain Adjusted EBITDA and sales performance targets during each of fiscal years 2023, 2024, and 2025. The criteria are based on a range of these performance targets in which participants may earn between 0% to 150% of the base number of awards granted. The weighted average grant date fair value of these PSUs was $1.98. The Company assesses the attainment of target payout rates each reporting period. Equity-based compensation expense is recognized for awards deemed probable of vesting.

Performance-based Restricted Stock Units

The PSUs granted under the 2021 Plan represent shares of Common Stock that are potentially issuable in the future based on a combination of performance and service requirements. On March 8, 2023, the Company granted 949,412 PSUs to key employees with a grant date fair value of $1.98 and on May 8, 2023, granted an additional 8,050 PSUs with a grant data fair value of $2.43. The PSUs granted to employees were based on salary and include annual net sales and adjusted EBITDA growth targets with threshold and stretch goals. The awards vest ratably over three years, subject to the employee’s continuous employment through the vesting date and the level of performance achieved. The number of PSUs granted reflects the target number able to be earned under a given award. Non-vested PSU compensation expense is based on the most recent performance assumption available and is adjusted as assumptions change. The fair value of a PSU at the grant date is equal to the market price of Common Stock on the grant date. The cost estimates for PSU grants represent initial target awards until the Company can reasonably forecast the financial performance of each PSU award grant. The actual number of shares of Common Stock to be issued at the end of each performance period will range from 0% to 150% of the initial target awards.

On June 6, 2023, the Company granted 1,520,000 PSUs to its new President and Chief Executive Officer as an employment inducement award. These shares are potentially issuable in the future based on a combination of achievement of certain stock price metrics and service requirements through the expiration date of December 31, 2030. Share-based compensation expense will not be adjusted solely because the market condition is not satisfied, and the award is therefore not earned, provided the requisite service is rendered. The fair value of this award was determined as of the date of the grant using a Monte Carlo valuation model with the following assumptions:

	For the year ended
	December 31, 2023
Expected volatility		60.5	%
Expected dividend		—
Risk-free interest rate		3.67	%

The Company's estimates of fair value may be impacted by certain variables including, but not limited to, stock price volatility, the risk-free interest rate, expected dividend yields, and the Company's performance. Expected volatility is based on a size and leverage-adjusted peer volatility estimate since the Company has limited historical volatility. The expected dividend yield is assumed to be zero since the Company has never paid dividends and does not have current plans to pay any dividends. The risk-free interest rate is based on a term-matched zero-coupon risk-free interest rate derived from the Treasury Constant Maturities yield curve on the valuation date.

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Stock Options

Stock option grants have an exercise price at least equal to the market value of the underlying Common Stock on the date of grant, have ten-year terms, and vest ratably over three years of continued employment. In general, vested options expire if not exercised within 90 days of termination of service. Compensation expense for stock options is recorded based on straight-line amortization of the grant date fair value over the requisite service period. On  December 31, 2023, there was $893 of unrecognized compensation cost related to unvested stock options that is expected to be recognized over a remaining weighted-average period of 0.9 years.

The following table presents a summary of stock option activity for the year ended December 31, 2023:

						Weighted Average
				Weighted		Remaining		Aggregate
	Number of			Average		Contractual		Intrinsic Value
	Stock Options			Exercise Price		Term (years)		(in millions)
Options outstanding on December 31, 2022		1,709,690		$	10.97
Forfeited		(628,770	)		11.12
Expired		(194,874	)		10.50
Options outstanding on December 31, 2023		886,046		$	10.97		7.33	$	—
Options exercisable on, December 31, 2023		512,370		$	10.79		6.94	$	—

The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2022 and 2021, was $4.65 and $3.88, respectively. The fair value of each stock option granted in 2022 and 2021 was estimated on the grant date using a Black-Scholes option pricing model with the following assumptions:

	For the years ended December 31,
	2022			2021
Weighted-average expected term	6.0 years			6.0 years
Expected volatility		36.0% - 40.0	%		40.3	%
Expected dividend		—			—
Risk-free interest rate		1.98% - 3.06	%		0.94	%

The expected term has been estimated using a simplified method, which calculates the expected term as the mid-point between the vesting date and the contractual life of the awards since the Company does not have an extended history of actual exercises. The expected dividend yield is assumed to be zero since the Company has never paid dividends and does not have current plans to pay any dividends. The risk-free interest rate is based on yields of U.S. Treasury securities with maturities similar to the expected term of the options. Expected volatility is based on an evenly weighted blend of implied volatility and historical volatility of publicly traded peer companies since the Company has limited historical volatility.

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Profit Interest Units

The Holley Stockholder authorized an incentive pool of 41,400,000 units of Holley Stockholder that its management had the right to grant to certain employees of the Company. The units, which are designated as Profit Interest Units (“PIU's”), are a special type of limited liability company equity unit that allows the recipient to potentially participate in a future increase in the value of the Company. The PIUs were issued for no consideration and generally provided for vesting over a requisite service period, subject to the recipient remaining an employee of the Company through each vesting date. Compensation expense related to PIUs is recorded based on the grant-date fair value over the requisite service period. For the years ended December 31, 2022 and 2021, 36,506,814 and 1,693,804 PIUs vested with total grant-date fair values of $20,276 and $535, respectively.

In October 2022, the Holley Stockholder amended the vesting criteria to allow for immediate vesting of all outstanding and unvested PIUs. The changes to these awards were deemed to be modification events under ASC Subtopic 718-10, Stock Compensation. Accordingly, during the year ended December 31, 2022, the Company recognized a cumulative adjustment of $11,351, including incremental fair value resulting from the modification, as applicable to each award grant, presented in selling, general and administrative expenses. At that time all PIUs were fully vested with no remaining unrecognized compensation cost, and there are no remaining PIUs authorized for issuance.

Prior to October 2022, the Holley Stockholder's had granted 24,074,944 PIUs that contained certain performance vesting criteria related to the attainment of specified levels of return for certain other investors in the Holley Stockholder and the occurrence of certain events. Compensation expense for these performance-based awards was not recognized prior to the early vesting date, as meeting the necessary performance conditions for vesting was not considered probable. The early vesting of these awards was classified as a Type III: Improbable to Probable modification event under ASC Subtopic 718-10, and the fair value of the modified awards was estimated on the modification date using a Black-Scholes option pricing model. The fair value of PIUs was estimated on the grant date with the following assumptions:

	For the years ended December 31,
	2022			2021
Weighted-average expected term		3.0 years			2.0 years
Expected volatility		65.0	%		55.0	%
Expected dividend		—			—
Risk-free interest rate		4.3	%		0.3	%

Determining the fair value of PIUs is affected by estimates involving inherent uncertainties, as well as assumptions regarding a number of other complex and subjective variables. These variables include the fair value of the equity unit classes, value adjustments for a reduction in marketability, expected unit price volatility over the expected term of the units, unit redemption and cancellation behaviors, risk-free interest rates and expected dividends.

The expected term has been estimated based on the contractual terms, vesting schedules and expectations of future unit holder behavior. The expected dividend yield is assumed to be zero since the Company has never paid dividends and does not have current plans to pay any dividends. The risk-free interest rate is based on yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group. As the Holley Stockholder is a private company and does not have a trading history for its equity units, the expected price volatility for the equity units is estimated by taking the average historical price volatility for industry peers. Industry peers, which the Company has designated, consist of several public companies in the industry similar in size, stage of life cycle and financial leverage.

The components of share-based compensation expense, included within selling, general and administrative costs in the consolidated statements of comprehensive income, is as follows:

	For the years ended December 31,
	2023		2022		2021
Restricted stock units	$	4,371	$	4,304	$	1,070
Performance stock units		2,343		—		—
Stock options		577		2,349		824
Profit interest units		—		17,742		3,069

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16. LEASE COMMITMENTS

The Company leases retail stores, manufacturing, distribution, engineering, and research and development facilities, office space, equipment, and automobiles under operating lease agreements. Leases have remaining lease terms of one to 14 years, inclusive of renewal options that the Company is reasonably certain to exercise. Taxes, insurance and maintenance expenses relating to all leases are obligations of the Company.

The following table summarizes operating lease assets and obligations and provides information associated with the measurement of operating lease obligations:

	December 31,
	2023			2022
Assets:
Operating right of use assets	$	29,250		$	29,522
Liabilities:
Current operating lease liabilities - Accrued liabilities	$	4,948		$	5,112
Long-term operating lease liabilities - Other noncurrent liabilities		25,177			24,992
Total lease liabilities	$	30,125		$	30,104
Lease term and discount rate
Weighted average remaining lease term (in years)		7.2			7.9
Weighted average discount rate		6.21	%		5.77	%

The following summarizes the components of operating lease expense and provides supplemental cash flow information for operating leases:

	For the years ended December 31,
	2023		2022
Components of lease expense:
Operating lease expense	$	6,629	$	7,294
Short-term lease expense		1,953		2,402
Variable lease expense		314		763
Total lease expense	$	8,896	$	10,459
Supplemental cash flow information related to leases:
Cash paid for amounts included in measurement of operating lease liabilities	$	7,024	$	7,311
Right-of-use assets obtained in exchange for new operating lease liabilities		6,531		13,942
Decapitalization of right-of-use assets upon lease termination or modification		1,320		12,658

The short-term lease expense for the period does not reasonably reflect the Company's short-term lease commitments. The Company's short-term lease commitments as of December 31, 2023, were approximately $540.

The following table summarizes the maturities of the Company's operating lease liabilities on  December 31, 2023:

2024	$	6,651
2025		5,202
2026		4,715
2027		4,695
2028		4,442
Thereafter		11,918
Total lease payments		37,623
Less imputed interest		(7,498	)
Present value of lease liabilities	$	30,125

For the year ended December 31, 2021, total rent expense under operating leases approximated $8,412. 

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17. MAJOR RESELLER CUSTOMERS

The Company's reseller customers include many large and well-known automotive parts retailers and distributors. The following table summarizes resellers that individually account for more than 5% of the Company’s net sales in any of the periods presented:

	For the years ended December 31,
	2023			2022			2021
Customer A		21.4	%		19.2	%		19.3	%

The following reseller customers accounted for 10% or more of the Company’s account receivable balance in any of the periods presented:

	December 31,
	2023			2022
Customer A		16.4	%		11.3	%

18. ACQUISITION, RESTRUCTURING AND MANAGEMENT FEE COSTS

The following table summarizes total acquisition, restructuring and management fee costs:

	For the years ended December 31,
	2023		2022		2021
Acquisitions (1)	$	—	$	1,887	$	5,074
Restructuring (2)		2,641		2,626		1,421
Management fees (3)		—		—		25,789
Earn out adjustment (4)		—		—		17,173
Total acquisition and restructuring costs	$	2,641	$	4,513	$	49,457

(1) Includes professional fees for legal, accounting, consulting, administrative, and other professional services directly attributable to acquisitions.

(2)	Includes costs incurred as part of the restructuring of operations including professional and consulting services and executive severance. 2023 includes executive severance cost of $591, of which $407 was paid during the year and $184 remained accrued as of December 31, 2023.
(3)	Includes acquisition costs and management fees paid to Sentinel Capital Partners, including a fee of $23,275 paid in 2021 upon the Closing of the Business Combination.
(4)	A fair value adjustment to the contingent consideration payable from the Simpson acquisition.

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19. COMMITMENTS AND CONTINGENCIES

Litigation 

The Company is a party to various lawsuits and claims in the normal course of business, as well as the putative securities class action described below. While the lawsuits and claims against the Company cannot be predicted with certainty, management believes that the ultimate resolution of such matters will not have a material effect on the consolidated financial position or liquidity of the Company; however, in light of the inherent uncertainties involved in such lawsuits and claims, some of which may be beyond the Company’s control, an adverse outcome in one or more of these matters could be material to the Company’s results of operations or cash flows for any particular reporting period.

A putative securities class action was filed on November 6, 2023, against the Company, Tom Tomlinson (the Company’s former Director, President, and Chief Executive Officer), and Dominic Bardos (the Company’s former Chief Financial Officer) in the United States District Court for the Western District of Kentucky (the “Complaint”) and is captioned City of Fort Lauderdale General Employees’ Retirement System v. Holley, Inc., f/k/a Empower LTD., Tom Tomlinson, and Dominic Bardos, Civil Action No. 1:23-cv-148-S.

On February 26, 2024, the court appointed City of Fort Lauderdale General Employees’ Retirement System to serve as lead plaintiff to prosecute claims on behalf of a proposed class of stockholders who purchased or otherwise acquired Holley securities between July 21, 2021 and February 6, 2023.  Lead plaintiff alleges that statements made regarding the Company’s business, operations, and prospects violated Sections 10(b), Section 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 and seeks class certification, damages, interest, attorneys’ fees, and other relief.

Due to the early stage of this proceeding, we cannot reasonably estimate the potential range of loss, if any. The Company disputes the allegations and intends to vigorously defend against them.

Product Warranties 

The Company generally warrants its products against certain manufacturing and other defects. These product warranties are provided for specific periods of time depending on the nature of the product. The accrued product warranty costs are based primarily on historical experience of actual warranty claims and are recorded at the time of the sale.

The following table provides the changes in the Company's accrual for product warranties, which is classified as a component of accrued liabilities in the consolidated balance sheets.

	For the years ended December 31,
	2023			2022			2021
Beginning balance	$	3,584		$	3,994		$	3,989
Accrued for current year warranty claims		11,362			12,261			10,185
Settlement of warranty claims		(11,621	)		(12,671	)		(10,180	)
Ending balance	$	3,325		$	3,584		$	3,994

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Exhibit Index

Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated as of March 11, 2021, by and among Empower Ltd., Empower Merger Sub I Inc., Empower Merger Sub II LLC and Holley Intermediate Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the SEC on March 12, 2021).

3.1 Certificate of Incorporation of the Company, dated July 16, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed with the SEC on July 21, 2021).

3.2 Amended and Restated Bylaws of the Company, dated August 8, 2023 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed with the SEC on August 9, 2023).

4.1 Description of Securities.

4.3 Warrant Agreement, dated October 6, 2020, by and between Empower Ltd. and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on October 13, 2020).

4.4 Specimen Common Stock Certificate of Holley Inc. (incorporated by reference to Exhibit 4.5 to Amendment No. 1 to the Company’s Registration Statement on Form S-4/A (File No. 333-255133), filed with the SEC on May 25, 2021).

4.5	Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to Amendment No. 1 to the Company’s Registration Statement on Form S-1/A (File No. 333-248899), filed with the SEC on September 25, 2020).
10.1	Amended and Restated Registration Rights Agreement, dated as of July 16, 2021, by and among Empower Sponsor Holdings LLC, Holley Parent Holdings LLC and Holley Inc. (incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K, filed with the SEC on July 21, 2021).

10.2 Stockholders’ Agreement, dated as of July 16, 2021, by and among Holley Inc., Empower Sponsor Holdings LLC, MidOcean Partners V, L.P., MidOcean Partners V Executive, L.P., Holley Parent Holdings, LLC, Sentinel Capital Partners V, L.P., Sentinel Capital Partners V-A, L.P., and Sentinel Capital Investors V, L.P. (incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K, filed with the SEC on July 21, 2021).

10.3 Holley 2021 Stock Incentive Plan (incorporated by reference to Exhibit 10.12 of Amendment No. 1 to the Company’s Registration Statement on Form S-4/A, filed with the SEC on May 25, 2021).

10.4 #New Executive Agreement, effective July 16, 2021, by and among Holley Intermediate Holdings Inc. and Thomas W. Tomlinson (as assigned to Holley Inc.) (incorporated by reference to Exhibit 10.9 of the Company’s Current Report on Form 8-K, filed with the SEC on July 21, 2021).

10.5 #Employment Agreement, dated as of December 12, 2022, by and between Holley Inc. and Jesse Weaver (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on December 12, 2022).

10.6	#Severance Agreement and General Release, dated March 28, 2023, by and between Holley Intermediate Holdings LLC and Thomas W. Tomlinson (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2023).
10.7	#Employment Agreement, dated as of March 30, 2022, by and between Holley Inc. and Carly Kennedy (incorporated by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 15, 2023).
10.8	#Offer Letter, dated as of November 8, 2022, by and between Holley Performance Products, Inc. and Brian Appelgate (incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 15, 2023).
10.9	#Form of Indemnification Agreement of Holley Inc. (incorporated by reference to Exhibit 10.14 of the Company’s Current Report on Form 8-K, filed with the SEC on July 21, 2021).

10.10 #Form of Option Grant Notice and Agreement (incorporated by reference to Exhibit 10.22 of the Company’s Current Report on Form 8-K, filed with the SEC on July 21, 2021).

10.11 #Form of Restricted Stock Unit Grant Notice and Agreement (incorporated by reference to Exhibit 10.23 of the Company’s Current Report on Form 8-K, filed with the SEC on July 21, 2021).

10.12 Non-Disclosure Agreement, dated as of August 10, 2021, between the Company, Sentinel Capital Partners, L.L.C., Owen Basham and James Coady (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on August 12, 2021).

93

10.13 Non-Disclosure Agreement, dated as of August 10, 2021, between the Company, MidOcean US Advisor, LP, Matthew Rubel and Graham Clempson (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed with the SEC on August 12, 2021).

10.14 Credit Agreement dated as of November 18, 2021, by and among Holley Inc. as Borrower, Wells Fargo Bank, N.A. as administrative agent, and other lender parties thereto (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on November 19, 2021).

10.15	Amendment No. 1 to Credit Agreement, dated as of March 3, 2023, by and among the Company. and certain of its subsidiaries as the Borrower, Wells Fargo Bank, National Association, as Administrative Agent, and other lender parties thereto (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on March 9, 2023).
10.16	Amendment No. 2 to Credit Agreement, dated as of April 20, 2023, by and among the Company and certain of it s subsidiaries, as the Borrower, Wells Fargo Bank, National Association, as Administrative Agent, and other lender parties thereto (incorporated by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2023)
10.17	Amended and Restated Forward Purchase Agreement, dated as of March 11, 2021, by and between Empower Ltd. and Empower Funding LLC. as assigned to MidOcean Partners V, L.P. and MidOcean Partners V, L.P. (incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-4 (File No. 333-255133), filed with the SEC on April 8, 2021.

10.18 Form of Subscription Agreement, by and between Empower and the Subscriber party thereto (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the SEC on March 12, 2021).

10.19 Sponsor Agreement, dated as of March 11, 2021, by and among Empower Ltd., Empower Sponsor Holdings LLC, and Holley Parent Holdings, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on March 12, 2021).

10.20 #Indemnity Agreement, dated October 9, 2020, between Empower and Matthew Rubel (incorporated by reference to Exhibit 10.7 of Empower’s Form 10-K, filed with the SEC on March 8, 2021).

10.21	#Form of Performance Stock Unit Grant Notice and Agreement (incorporated by reference to Exhibit 10.23 to the Company's Annual Report on Form 10-K, filed with the SEC on March 15, 2023).
10.22	#Inducement Award Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 99.1 of the Company's Registration Statement on Form S-8 (File No. 333-272436) filed with the SEC on June 6, 2023).
10.23	#Inducement Award Performance-Based Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 99.2 of the Company's Registration Statement on Form S-8 (File No. 333-272436) filed with the SEC on June 6, 2023).
10.24	#Letter Agreement, dated February 20,2023, by and between the Company and Michelle Gloeckler (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2023).

21.1 Subsidiaries of Holley Inc.

23.1 Consent of Grant Thornton LLP.

24.1 Power of attorney (included in the signature page hereof).

31.1 Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act

31.2 Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act

32.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
97.1	#Policy Relating to Recovery of Erroneously Awarded Compensation.
101.INS	Inline XBRL Instance Document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

#   Indicates management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Holley Inc.

/s/ Matthew Stevenson

Matthew Stevenson

President and Chief Executive Officer

(Principal Executive Officer)

March 14, 2024

/s/ Jesse Weaver

Jesse Weaver

Chief Financial Officer

(Principal Financial and Accounting Officer)

March 14, 2024

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Pursuant to the requirements of the Securities and Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

	Signature	Title	Date
/S/	Matthew Stevenson
	Matthew Stevenson	Director, President and Chief Executive Officer (principal executive officer)	March 14, 2024
/S/	Jesse Weaver
	Jesse Weaver	Chief Financial Officer (principal financial and accounting officer)	March 14, 2024
/S/	Michelle Gloeckler
	Michelle Gloeckler	Director	March 14, 2024
/S/	James Coady
	James Coady	Director	March 14, 2024
/S/	Owen Basham
	Owen Basham	Director	March 14, 2024
/S/	Anita Sehgal
	Anita Sehgal	Director	March 14, 2024
/S/	Graham Clempson
	Graham Clempson	Director	March 14, 2024
/S/	Matthew Rubel
	Matthew Rubel	Director and Executive Chairman	March 14, 2024
/S/	Ginger Jones
	Ginger Jones	Director	March 14, 2024

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EX-4.1

Exhibit 4.1

HOLLEY INC.

DESCRIPTION OF SECURITIES

The following sets forth a summary of certain terms of the securities of Holley Inc. (the “Company”, “we” or “our”), including certain provisions of the Delaware General Corporation Law (the “DGCL”) and of the Company’s certificate of incorporation and the bylaws. This summary is not intended to be a complete summary of the rights and preferences of such securities and is qualified entirely by reference to the certificate of incorporation, bylaws and the Warrant Agreement, dated October 6, 2020, between Continental Stock Transfer & Trust Company, as Warrant agent, and Empower Ltd. (the “Warrant Agreement”). You should refer to our certificate of incorporation, bylaws and the Warrant Agreement, which are incorporated by reference as exhibits to our Annual Report on Form 10-K, for a complete description of the rights and preferences of our securities. The summary below is also qualified by reference to the provisions of the DGCL, as applicable.

Authorized and Outstanding Stock

The certificate of incorporation authorizes the issuance of 555,000,000 shares of capital stock, consisting of (i) 550,000,000 shares of common stock, par value $0.0001 per share (“Common Stock”) and (ii) 5,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”).

Common Stock

Except as otherwise required by law or as otherwise provided in any certificate of designation for any series of preferred stock, under the certificate of incorporation, the holders of Common Stock possess all voting power for the election of our directors and all other matters requiring stockholder action and are entitled to one vote per share on matters to be voted on by stockholders and are not entitled to cumulative voting in the election of directors. Subject to certain limited exceptions, the holders of Common Stock shall at all times vote together as one class on all matters submitted to a vote of the holders of Common Stock under the certificate of incorporation. Subject to preferences that may be applicable to any outstanding series of preferred stock, the holders of our Common Stock will receive ratably any dividends declared by our board of directors out of funds legally available for the payment of dividends. In the event of our liquidation, dissolution or winding-up, the holders of our Common Stock will be entitled to share ratably in all assets remaining after payment of or provision for any liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding.

Preferred Stock

The certificate of incorporation provides that shares of preferred stock may be issued from time to time in one or more series. The board of directors is authorized to fix the voting rights, if any, designations, powers, preferences and relative, participating, optional, special and other rights, if any, and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The Company’s board of directors is able, without stockholder approval, to issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the Common Stock and could have anti-takeover effects. The ability of the Company’s board of directors to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of existing management.

Dividends

Under the certificate of incorporation, holders of Common Stock are entitled to receive ratable dividends, if any, as may be declared from time-to-time by our board of directors out of legally available assets or funds, subject to preferences that may be applicable to any outstanding series of preferred stock.

Preemptive or Other Rights

The certificate of incorporation does not provide for any preemptive or other similar rights.

Election of Directors

Under the terms of the certificate of incorporation, the board of directors is divided into three classes designated as Class I, Class II and Class III. Class I directors will initially serve for a term expiring at the 2022 annual meeting of stockholders. Class II and Class III directors will initially serve for a term expiring at the 2023 and 2024 annual meeting of stockholders, respectively. At each succeeding annual meeting of stockholders, directors will be elected for a full term of three years to succeed the directors of the class whose terms expire at such annual meeting of the stockholders. There will be no limit on the number of terms a director may serve on the board of directors of the Company.

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Under the certificate of incorporation, directors are elected by a plurality voting standard, whereby each of our stockholders may not give more than one vote per share towards any one director nominee. There are no cumulative voting rights.

Annual Stockholder Meetings

The bylaws provide that annual stockholder meetings will be held at a date, time and place, if any, as exclusively selected by the board of directors. To the extent permitted under applicable law, the Company may conduct meetings by remote communications.

Dissenters’ Rights of Appraisal and Payment

Under the DGCL, with certain exceptions, the Company’s stockholders have appraisal rights in connection with a merger or consolidation of the Company. Pursuant to the DGCL, stockholders who properly request and perfect appraisal rights in connection with such merger or consolidation will have the right to receive payment of the fair value of their shares as determined by the Delaware Court of Chancery.

Stockholders’ Derivative Actions

Under the DGCL, any of the Company’s stockholders may bring an action in the Company’s name to procure a judgment in the Company’s favor, also known as a derivative action, provided that the stockholder bringing the action is a holder of the Company’s shares at the time of the transaction to which the action relates or such stockholder’s stock thereafter devolved by operation of law.

Limitations on Liability and Indemnification of Officers and Directors

The certificate of incorporation and bylaws provide for the indemnification of current and former officers and directors of the Company to the fullest extent permitted by Delaware law. The DGCL permits a corporation to limit or eliminate a director’s personal liability to the corporation or the holders of its capital stock for breach of fiduciary duty. This limitation is generally unavailable for acts or omissions by a director which (i) were not in good faith, (ii) were the result of intentional misconduct or a knowing violation of law, (iii) the director derived an improper personal benefit from (such as a financial profit or other advantage to which the director was not legally entitled) or (iv) breached the director’s duty of loyalty. The DGCL also prohibits limitations on director liability under Section 174 of the DGCL, which relates to certain unlawful dividend declarations and stock repurchases. We have entered into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification provided for in our certificate of incorporation. We have purchased a policy of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors. In connection with the consummation of that certain business combination (the “Closing”) contemplated by that certain Agreement and Plan of Merger dated March 11, 2021 (the “Merger Agreement”), by and among Empower Ltd., (“Empower” and predecessor to the Company), Empower Merger Sub I Inc., Empower Merger Sub II LLC, and Holley Intermediate Holdings, Inc., we purchased a tail policy with respect to liability coverage for the benefit of our officers and directors prior to the Closing on the same or substantially similar terms of our existing policy. Pursuant to the Merger Agreement, we are required to maintain such tail policy for a period of no less than six years following the Closing.

These provisions may discourage current stockholders and future stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders and stockholders. Furthermore, a stockholder’s or stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions.

We believe that these provisions, the directors’ and officers’ liability insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.

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Exclusive Forum

The certificate of incorporation provides that, unless the Company selects or consents in writing to the selection of an alternative forum, to the fullest extent permitted by the applicable law: (a) the sole and exclusive forum for any complaint asserting any internal corporate claims, to the fullest extent permitted by law, and subject to applicable jurisdictional requirements, shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to accept, jurisdiction, another state court or a federal court located within the State of Delaware); and (b) the sole and exclusive forum for any complaint asserting a cause of action arising under the Securities Act of 1933, to the fullest extent permitted by law, shall be the federal district courts of the United States of America. For purposes of the foregoing, “internal corporate claims” means claims, including claims in the right of the Company that are based upon a violation of a duty by a current or former director, officer, employee or stockholder in such capacity, or as to which the DGCL confers jurisdiction upon the Court of Chancery. Any person or entity purchasing or otherwise acquiring any interest in any shares of Common Stock will be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce the exclusive forum provision of the certificate of incorporation, and (ii) having service of process made upon such holder of Common Stock in any such action by service upon such holder of Common Stock’s counsel in such action as agent for such holder of Common Stock. 

Certain Anti-Takeover Provisions of Delaware Law; Certificate of Incorporation and Bylaws

The certificate of incorporation, bylaws and DGCL contain provisions, as summarized in the following paragraphs that are intended to enhance the likelihood of continuity and stability in the composition of our board of directors. These provisions are intended to avoid costly takeover battles, reduce the Company’s vulnerability to a hostile change of control and enhance the ability of the Company’s board of directors to maximize stockholder value in connection with any unsolicited offer to acquire the Company. However, these provisions may have an anti-takeover effect and may delay, deter or prevent a merger or acquisition of the Company by means of a tender offer, a proxy contest or other takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the prevailing market price for the shares of Common Stock held by stockholders.

Advanced Notice Requirements for Stockholder Meetings, Nominations and Proposals

The bylaws provide that special meetings of the stockholders may be called only by or at the direction of the chairman of our board of directors, the chief executive officer, the secretary, or the board of directors pursuant to a resolution adopted by a majority of the board. Our bylaws prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. These provisions may have the effect of deferring, delaying or discouraging hostile takeovers or changes in control or management of the Company.

The bylaws establish an advance notice procedure for stockholders who wish to present a proposal before an annual meeting of stockholders, including the nomination of a director candidate. The bylaws provide that the only business that may be conducted at an annual meeting of stockholders is business that is (i) specified in the notice of such meeting (or any supplement or amendment thereto) given by or at the direction of the board of directors, (ii) otherwise properly brought before such meeting by or at the direction of the board of directors, or (iii) otherwise properly brought before such meeting by a stockholder who (A) is (1) a stockholder of record and (2) with respect to any beneficial owner, if different, on whose behalf such business is proposed, only if such beneficial owner is the beneficial owner of shares of Common Stock, in any case, both at the time of giving the notice and at the time of the meeting, (B) is entitled to vote at the meeting, and (C) has complied with (1) the provisions set forth in the bylaws and (2) all requirements of the Exchange Act and other applicable legal requirements in connection with such business. To be timely for the Company’s annual meeting of stockholders, the Company’s secretary must receive the written notice at the Company’s principal executive offices not earlier than the 120th day and not later than the 90th day before the one-year anniversary of the preceding year’s annual meeting. In the event that no annual meeting was held in the previous year or the date of the annual meeting is advanced by more than thirty (30) days or delayed (other than as a result of adjournment) by more than thirty (30) days from the first anniversary of the previous year’s annual meeting, notice by a stockholder to be timely must be received not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the date on which public announcement of the date of such meeting is first made. Nominations and proposals also must satisfy other procedural and information requirements set forth in the bylaws. The Chairperson of the board of directors of the Company or the board of directors of the Company may refuse to acknowledge the introduction of any stockholder proposal not made in compliance with the foregoing procedures. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to influence or obtain control of the Company.

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No Cumulative Voting

The DGCL provides that a stockholder’s right to vote cumulatively in the election of directors does not exist unless the certificate of incorporation specifically provides otherwise. Our certificate of incorporation does not provide for cumulative voting.

Classified Board of Directors

Our certificate of incorporation provides that our board of directors is divided into three classes of directors, with the classes to be as nearly equal in number as possible, designated Class I, Class II and Class III. Class I, II and III directors shall initially serve until our 2022, 2023 and 2024 annual meetings of stockholders, respectively. Commencing with the 2024 annual meeting of stockholders, directors of each class the term of which shall then expire shall be elected to hold office for a three-year term. The classification of directors has the effect of making it more difficult for stockholders to change the composition of our board of directors.

Removal of Directors; Vacancies

Our certificate of incorporation provides that directors may be removed only for cause and only upon the affirmative vote of holders of a majority of the voting power of all the then outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class. In addition, our certificate of incorporation provides that any newly created directorships and any vacancies on our board of directors will be filled only by the affirmative vote of the majority of remaining directors. Therefore, stockholders are not able to elect new directors to fill any resulting vacancies that may be created as a result of such a special meeting.

Supermajority Vote Requirement to Amend the Bylaws and Certificate of Incorporation

The affirmative vote of at least (i) 66 2/3% of the voting power of all the then-outstanding shares of capital stock entitled to vote generally in the election of directors, voting as a single class, is required for stockholders to adopt, amend or repeal Article VI of the bylaws, (ii) 66.7% of the voting power of all the then-outstanding shares of capital stock entitled to vote generally in the election of directors is required for stockholders, voting as a single class, to adopt, amend or repeal Section 4.2 and Articles V, VII, VIII, X, XI and XII of the certificate of incorporation and (iii) 80% of the voting power of all the then-outstanding shares of capital stock entitled to vote generally in the election of directors is required for stockholders, voting as a single class, to adopt, amend or repeal Article IX of the certificate of incorporation.

Stockholder Action by Written Consent

The DGCL permits any action required to be taken at any annual or special meeting of the stockholders to be taken without a meeting, without prior notice and without a vote if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of stock entitled to vote thereon were present and voted, unless the certificate of incorporation provides otherwise. Our certificate of incorporation precludes stockholder action by written consent.

Authorized but Unissued Shares

Our authorized but unissued shares of Common Stock and preferred stock are available for future issuance without stockholder approval. The DGCL does not require stockholder approval for any issuance of authorized shares. However, the rules of the New York Stock Exchange require stockholder approval of certain issuances equal to or exceeding 20% of the then-outstanding voting power or the then-outstanding number of shares of Common Stock. No assurances can be given that our shares will remain so listed. We may use additional shares for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. As discussed above, our board of directors has the ability to issue preferred stock with voting rights or other preferences, without stockholder approval. The existence of authorized but unissued shares of Common Stock and preferred stock could render more difficult or discourage an attempt to obtain control of the Company by means of a proxy contest, tender offer, merger or otherwise.

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Warrants

As of January 25, 2022, there were 14,666,644 warrants outstanding, consisting of 9,999,977 public warrants, each representing the right to purchase one share of Common Stock at a price of $11.50 per share, subject to certain conditions set forth in the Warrant Agreement (the “Public Warrants”) and 4,666,667 private placement warrants, each representing the right to purchase one share of Common Stock at a price of $11.50 per share, subject to certain conditions set forth in the Warrant Agreement (the “Private Warrants”, together with the Public Warrants, the “Warrants”).

Public Warrants

Each whole Warrant entitles the registered holder to purchase one share of Common Stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on October 9, 2021 (the one year anniversary of Empower’s initial public offering), except as discussed below. Pursuant to the Warrant Agreement, a Warrant holder may exercise its Warrants only for a whole number of shares of Common Stock. This means only a whole Warrant may be exercised at a given time by a Warrant holder. The Warrants will expire on July 16, 2026, the date that is five years after the Closing Date, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

We will not be obligated to deliver any shares of Common Stock pursuant to the exercise of a Warrant and will have no obligation to settle such Warrant exercise unless a registration statement under the Securities Act with respect to the shares of Common Stock underlying the Warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration, or a valid exemption from registration is available. As of the date hereof, all of the (i) outstanding Public Warrants and the underlying shares of Common Stock to such Public Warrants and (ii) outstanding Private Warrants and the underlying shares of Common Stock to such Private Warrants have been registered for resale pursuant to a registration statement, and such registration statements have been declared effective by the SEC. It is the Company’s expectation that it will continue to maintain the effectiveness of such registration statements. No Warrant will be exercisable and we will not be obligated to issue a share of Common Stock upon exercise of a Warrant unless the share of Common Stock issuable upon such Warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the Warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a Warrant, the holder of such Warrant will not be entitled to exercise such Warrant and such Warrant may have no value and expire worthless. In no event will we be required to net cash settle any Warrant.

We have agreed that as soon as practicable, but in no event later than twenty business days after the Closing, we will use our commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Common Stock issuable upon exercise of the Warrants, and we will use our commercially reasonable efforts to cause the same to become effective within 60 business days after the Closing, and to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of Common Stock until the Warrants expire or are redeemed, as specified in the Warrant Agreement. As of the date hereof, all of the (i) outstanding Public Warrants and the underlying shares of Common Stock to such Public Warrants and (ii) outstanding Private Warrants and the underlying shares of Common Stock to such Private Warrants have been registered for resale pursuant to a registration statement, and such registration statements have been declared effective by the SEC. It is the Company’s expectation that it will continue to maintain the effectiveness of such registration statements. However, if our shares of Common Stock are at the time of any exercise of a Warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of Public Warrants who exercise their Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, but we will use our commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If a registration statement covering the shares of Common Stock issuable upon exercise of the Warrants is not effective by the 60th business day after the Closing, Warrant holders may, until such time as there is an effective registration statement and during any period when we will have failed to maintain an effective registration statement, exercise Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption, but we will use our commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In such event, each holder would pay the exercise price by surrendering the Warrants for that number of shares of Common Stock equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Warrants, multiplied by the excess of the fair market value less the exercise price of the Warrants by (y) the fair market value and (B) 0.361 per Warrant. The “fair market value” as used in this paragraph shall mean the volume weighted average price of the shares of Common Stock for the 10 trading days ending on the trading day prior to the date on which the notice of exercise is received by the Warrant agent.

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Redemption of Warrants when the price per share of Common Stock equals or exceeds $18.00. 

We may redeem the outstanding Warrants (except as described herein with respect to the Private Warrants) in whole and not in part, at a price of $0.01 per Warrant, upon a minimum of 30 day’s prior written notice of redemption to each Warrant holder, if, and only if, the closing price of the Common Stock equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Warrant as described under the heading “— Anti-dilution Adjustments”) on the trading day prior to the date on which we send the notice of redemption to the Warrant holders.

We will not redeem the Warrants as described above unless a registration statement under the Securities Act covering the issuance of the shares of Common Stock issuable upon exercise of the Warrants is then effective and a current prospectus relating to those shares of Common Stock is available throughout the 30-day redemption period. If and when the Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.

We have established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the Warrant exercise price. If the foregoing conditions are satisfied and we issue a notice of redemption of the Warrants, each Warrant holder will be entitled to exercise his, her or its Warrant prior to the scheduled redemption date. Any such exercise would not be done on a “cashless” basis and would require the exercising Warrant holder to pay the exercise price for each Warrant being exercised. However, the price of the shares of Common Stock may fall below the $18.00 redemption trigger price (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Warrant as described under the heading “— Anti-dilution Adjustments”) as well as the $11.50 per share of Common Stock exercise price after the redemption notice is issued.

Redemption of Warrants when the price per share of Common Stock equals or exceeds $10.00.

We may redeem the outstanding Warrants (except as described herein with respect to the Private Warrants) in whole and not in part, at a price of $0.10 per Warrant, upon a minimum of 30 days’ prior written notice of redemption if, and only if, the closing price of our shares of Common Stock equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Warrant as described under the heading “— Anti-dilution Adjustments”) on the trading day prior to the date on which we send the notice of redemption to the Warrant holders.

Beginning on the date the notice of redemption is given until the Warrants are redeemed or exercised, holders may elect to exercise their Warrants on a cashless basis. The numbers in the table below represent the number of shares of Common Stock that a Warrant holder will receive upon such cashless exercise in connection with a redemption by us pursuant to this redemption feature, based on the “fair market value” of our shares of Common Stock on the corresponding redemption date (assuming holders elect to exercise their Warrants and such Warrants are not redeemed for $0.10 per Warrant), determined for these purposes based on volume weighted average price of our shares of Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Warrants, and the number of months that the corresponding redemption date precedes the expiration date of the Warrants, each as set forth in the table below. We will provide our Warrant holders with the redemption fair market value no later than one business day after the 10-trading day period described above ends.

The share prices set forth in the column headings of the table below will be adjusted as of any date on which the number of shares issuable upon exercise of a Warrant or the exercise price of a Warrant is adjusted as set forth under the heading “ — Anti-dilution Adjustments” below. If the number of shares issuable upon exercise of a Warrant is adjusted, the adjusted share prices in the column headings will equal the share prices immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the number of shares deliverable upon exercise of a Warrant prior to such adjustment and the denominator of which is the number of shares deliverable upon exercise of a Warrant immediately so adjusted. In such an event, the number of shares in the table below shall be adjusted by multiplying such share amounts by a fraction, the numerator of which is the number of shares deliverable upon exercise of a Warrant immediately prior to such adjustment and the denominator of which is the number of shares deliverable upon exercise of a Warrant as so adjusted. If the exercise price of a Warrant is adjusted pursuant to the second paragraph under the heading “ — Anti-dilution Adjustments” below, the adjusted share prices in the column headings will equal the share prices immediately prior to the adjustment less the decrease in the exercise price of a Warrant pursuant to such exercise price adjustment.

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Redemption Date (period to expiration of Warrants)	Fair Market Value of share of Common Stock
	<10.00	11.00	12.00	13.00	14.00	15.00	16.00	17.00	>18.00
60 months	0.261	0.281	0.297	0.311	0.324	0.337	0.348	0.358	0.361
57 months	0.257	0.277	0.294	0.310	0.324	0.337	0.348	0.358	0.361
54 months	0.252	0.272	0.291	0.307	0.322	0.335	0.347	0.357	0.361
51 months	0.246	0.268	0.287	0.304	0.320	0.333	0.346	0.357	0.361
48 months	0.241	0.263	0.283	0.301	0.317	0.332	0.344	0.356	0.361
45 months	0.235	0.258	0.279	0.298	0.315	0.330	0.343	0.356	0.361
42 months	0.228	0.252	0.274	0.294	0.312	0.328	0.342	0.355	0.361
39 months	0.221	0.246	0.269	0.290	0.309	0.325	0.340	0.354	0.361
36 months	0.213	0.239	0.263	0.285	0.305	0.323	0.339	0.353	0.361
33 months	0.205	0.232	0.257	0.280	0.301	0.320	0.337	0.352	0.361
30 months	0.196	0.224	0.250	0.274	0.297	0.316	0.335	0.351	0.361
27 months	0.185	0.214	0.242	0.268	0.291	0.313	0.332	0.350	0.361
24 months	0.173	0.204	0.233	0.260	0.285	0.308	0.329	0.348	0.361
21 months	0.161	0.193	0.223	0.252	0.279	0.304	0.326	0.347	0.361
18 months	0.146	0.179	0.211	0.242	0.271	0.298	0.322	0.345	0.361
15 months	0.130	0.164	0.197	0.230	0.262	0.291	0.317	0.342	0.361
12 months	0.111	0.146	0.181	0.216	0.250	0.282	0.312	0.339	0.361
9 months	0.090	0.125	0.162	0.199	0.237	0.272	0.305	0.336	0.361
6 months	0.065	0.099	0.137	0.178	0.219	0.259	0.296	0.331	0.361
3 months	0.034	0.065	0.104	0.150	0.197	0.243	0.286	0.326	0.361
0 months	—	—	0.042	0.115	0.179	0.233	0.281	0.323	0.361

For example, if the volume weighted average price of our shares of Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of the Warrants is $11.00 per share, and at such time there are 57 months until the expiration of the Warrants, holders may choose to, in connection with this redemption feature, exercise their Warrants for 0.277 shares of Common Stock for each whole Warrant. However, the exact fair market value and redemption date may not be set forth in the table above, in which case, if the fair market value is between two values in the table or the redemption date is between two redemption dates in the table, the number of shares of Common Stock to be issued for each Warrant exercised will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower fair market values and the earlier and later redemption dates, as applicable, based on a 365 or 366-day year, as applicable. For example, if the volume weighted average price of our shares of Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of the Warrants is $13.50 per share, and at such time there are 38 months until the expiration of the Warrants, holders may choose to, in connection with this redemption feature, exercise their Warrants for 0.298 shares of Common Stock for each whole Warrant. In no event will the Warrants be exercisable on a cashless basis in connection with this redemption feature for more than 0.361 shares of Common Stock per Warrant (subject to adjustment). Finally, as reflected in the table above, if the Warrants are out of the money, they cannot be exercised on a cashless basis in connection with a redemption by us pursuant to this redemption feature, since they will not be exercisable for any shares of Common Stock.

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This redemption feature differs from the typical Warrant redemption features used by many other blank check companies, which typically only provide for a redemption of Warrants for cash (other than the Private Warrants) when the trading price for the shares of Common Stock exceeds $18.00 per share for a specified period of time. This redemption feature is structured to allow for all of the outstanding Warrants to be redeemed when the shares of Common Stock are trading at or above $10.00 per share, which may be at a time when the trading price of our shares of Common Stock is below the exercise price of the Warrants. This redemption feature was established to provide us with the flexibility to redeem the Warrants without the Warrants having to reach the $18.00 per share threshold discussed above. Holders choosing to exercise their Warrants in connection with a redemption pursuant to this feature will, in effect, receive a number of shares for their Warrants based on an option pricing model with a fixed volatility input as of the date of the initial public offering prospectus. This redemption right provides us with an additional mechanism by which to redeem all of the outstanding Warrants, and therefore have certainty as to our capital structure as the Warrants would no longer be outstanding and would have been exercised or redeemed. We will be required to pay the applicable redemption price to Warrant holders if we choose to exercise this redemption right and it will allow us to quickly proceed with a redemption of the Warrants if we determine it is in our best interest to do so. As such, we would redeem the Warrants in this manner when we believe it is in our best interest to update our capital structure to remove the Warrants and pay the redemption price to the Warrant holders.

As stated above, we can redeem the Warrants when the shares of Common Stock are trading at a price starting at $10.00, which is below the exercise price of $11.50, because it will provide certainty with respect to our capital structure and cash position while providing Warrant holders with the opportunity to exercise their Warrants on a cashless basis for the applicable number of shares. If we choose to redeem the Warrants when the shares of Common Stock are trading at a price below the exercise price of the Warrants, this could result in the Warrant holders receiving fewer shares of Common Stock than they would have received if they had chosen to wait to exercise their Warrants for shares of Common Stock if and when such shares of Common Stock were trading at a price higher than the exercise price of $11.50.

No fractional shares of Common Stock will be issued upon exercise. If, upon exercise, a holder would be entitled to receive a fractional interest in a share, we will round down to the nearest whole number of the number of shares of Common Stock to be issued to the holder. If, at the time of redemption, the Warrants are exercisable for a security other than the shares of Common Stock pursuant to the Warrant Agreement, the Warrants may be exercised for such security. At such time as the Warrants become exercisable for a security other than the shares of Common Stock, the Company (or surviving company) will use its commercially reasonable efforts to register under the Securities Act the security issuable upon the exercise of the Warrants.

Maximum Percentage Procedures. 

A holder of a Warrant may notify us in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such Warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the Warrant agent’s actual knowledge, would beneficially own in excess of 9.8% (or such other amount as a holder may specify) of the shares of Common Stock issued and outstanding immediately after giving effect to such exercise.

Anti-dilution Adjustments. 

If the number of outstanding shares of Common Stock is increased by a capitalization or share dividend payable in shares of Common Stock, or by a split-up of ordinary shares or other similar event, then, on the effective date of such capitalization or share dividend, split-up or similar event, the number of shares of Common Stock issuable on exercise of each Warrant will be increased in proportion to such increase in the outstanding Common Stock. A rights offering made to all or substantially all holders of Common Stock entitling holders to purchase shares of Common Stock at a price less than the “historical fair market value” (as defined below) will be deemed a share dividend of a number of shares of Common Stock equal to the product of (i) the number of shares of Common Stock actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for shares of Common Stock) and (ii) one minus the quotient of (x) the price per share of Common Stock paid in such rights offering and (y) the historical fair market value. If the rights offering is for securities convertible into or exercisable for shares of Common Stock, in determining the price payable for shares of Common Stock, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion. For these purposes, “historical fair market value” means the volume weighted average price of a share of Common Stock as reported during the 10 trading day period ending on the trading day prior to the first date on which the shares of Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.

8

In addition, if we, at any time while the Warrants are outstanding, pay a dividend or make a distribution in cash, securities or other assets to all or substantially all of the holders of the shares of Common Stock on account of such shares of Common Stock (or other securities into which the Warrants are convertible), other than (a) as described above, (b) any cash dividends or cash distributions which, when combined on a per share basis with all other cash dividends and cash distributions paid on the shares of Common Stock during the 365-day  period ending on the date of declaration of such dividend or distribution does not exceed $0.50 (as adjusted to appropriately reflect any other adjustments and excluding cash dividends or cash distributions that resulted in an adjustment to the exercise price or to the number of shares of Common Stock issuable on exercise of each Warrant) but only with respect to the amount of the aggregate cash dividends or cash distributions equal to or less than $0.50 per share or (c) to satisfy the redemption rights of the holders of Common Stock in connection with a stockholder vote to amend our certificate of incorporation or bylaws with respect to any other provision relating to the rights of holders of Common Stock, then the Warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each share of Common Stock in respect of such event.

If the number of outstanding shares of Common Stock is decreased by a consolidation, combination, reverse share sub-division or reclassification of shares of Common Stock or other similar event, then, on the effective date of such consolidation, combination, reverse share sub-division, reclassification or similar event, the number of shares of Common Stock issuable on exercise of each Warrant will be decreased in proportion to such decrease in outstanding shares of Common Stock. Whenever the number of shares of Common Stock purchasable upon the exercise of the Warrants is adjusted, as described above, the Warrant exercise price will be adjusted by multiplying the Warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of shares of Common Stock purchasable upon the exercise of the Warrants immediately prior to such adjustment and (y) the denominator of which will be the number of shares of Common Stock so purchasable immediately thereafter.

In case of any reclassification or reorganization of the outstanding shares of Common Stock (other than those described above or that solely affects the par value of such shares of Common Stock), or in the case of any merger or consolidation of us with or into another corporation (other than a consolidation or merger in which we are the continuing corporation and that does not result in any reclassification or reorganization of our outstanding shares of Common Stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of us as an entirety or substantially as an entirety in connection with which the Company is dissolved, the holders of the Warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the Warrants and in lieu of the shares of Common Stock issuable upon exercise thereof, the kind and amount of shares of Common Stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the Warrants would have received if such holder had exercised their Warrants immediately prior to such event. However, if such holders were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon such consolidation or merger, then the kind and amount of securities, cash or other assets for which each Warrant will become exercisable will be deemed to be the weighted average of the kind and amount received per share by such holders in such consolidation or merger that affirmatively make such election, and if a tender, exchange or redemption offer has been made to and accepted by such holders under circumstances in which, upon completion of such tender or exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) of which such maker is a part, and together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under the Exchange Act) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act) more than 50% of the issued and outstanding shares of Common Stock, the holder of a Warrant will be entitled to receive the highest amount of cash, securities or other property to which such holder would actually have been entitled as a stockholder if such Warrant holder had exercised the Warrant prior to the expiration of such tender or exchange offer, accepted such offer and all of the shares of Common Stock held by such holder had been purchased pursuant to such tender or exchange offer, subject to adjustment (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in the Warrant Agreement. If less than 70% of the consideration receivable by the holders of shares of Common Stock in such a transaction is payable in the form of shares of Common Stock in the successor entity that is listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the registered holder of the Warrant properly exercises the Warrant within thirty days following public disclosure of such transaction, the Warrant exercise price will be reduced as specified in the Warrant Agreement based on the Black-Scholes value (as defined in the Warrant Agreement) of the Warrant. The purpose of such exercise price reduction is to provide additional value to holders of the Warrants when an extraordinary transaction occurs during the exercise period of the Warrants pursuant to which the holders of the Warrants otherwise do not receive the full potential value of the Warrants.

9

The Warrants are issued in registered form under the Warrant Agreement whereby the terms of the Warrants may be amended without the consent of any holder for the purpose of (i) curing any ambiguity or correcting any mistake, or defective provision (ii) amending the provisions relating to cash dividends on ordinary shares as contemplated by and in accordance with the Warrant Agreement or (iii) adding or changing any provisions with respect to matters or questions arising under the Warrant Agreement as the parties to the Warrant Agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the registered holders of the Warrants, provided that the approval by the holders of at least 50% of the then-outstanding Public Warrants is required to make any change that adversely affects the interests of the registered holders. The Warrant holders do not have the rights or privileges of holders of shares of Common Stock and any voting rights until they exercise their Warrants and receive shares of Common Stock.

Private Placement Warrants

Except as described below, the Private Warrants have terms and provisions that are identical to those of the Public Warrants. The Private Warrants (including the shares of Common Stock issuable upon exercise of the Private Warrants) were not transferable, assignable or salable until August 15, 2021, the date that was 30 days after the Closing Date (except pursuant to limited exceptions to our officers and directors and other persons or entities affiliated with the initial purchasers of the Private Warrants), and they will not be redeemable by us so long as they are held by Empower Sponsor Holdings LLC (the “Sponsor”) or its permitted transferees. Our Sponsor, or its permitted transferees, has the option to exercise the Private Warrants on a cashless basis. If the Private Warrants are held by holders other than our Sponsor or its permitted transferees, the Private Warrants will be redeemable by us in all redemption scenarios and exercisable by the holders on the same basis as the Public Warrants. Any amendment to the terms of the Private Warrants or any provision of the Warrant Agreement with respect to the Private Warrants will require a vote of holders of at least 50% of the number of the then outstanding Private Warrants.

If a holder of the Private Warrants elects to exercise a Private Warrant on a cashless basis, the holder would pay the exercise price by surrendering his, her or its Warrants for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Warrants, multiplied by the excess of the “Sponsor fair market value” (defined below) over the exercise price of the Warrants by (y) the Sponsor fair market value. For these purposes, the “Sponsor fair market value” shall mean the average reported closing price of the shares of Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of Warrant exercise is sent to the Warrant agent. The reason these Warrants permit a cashless exercise so long as they are held by our Sponsor and its permitted transferees is because it was not known at time of issuance whether they would be affiliated with us following the Business Combination, which would significantly limit their ability to sell our securities in the open market. We have policies in place that restrict insiders from selling our securities except during specific periods of time. Even during such periods of time when insiders will be permitted to sell our securities, an insider cannot trade in our securities if he or she is in possession of material non-public information. Accordingly, unlike public investors who could exercise their Warrants and sell the shares of Common Stock received upon such exercise freely in the open market in order to recoup the cost of such exercise, the insiders are significantly restricted from selling such securities.

10

EX-21.1

Exhibit 21.1

Subsidiaries of the Registrant

Holley Intermediate Holdings LLC

Holley Purchaser, Inc.

Holley High Performance Holdings, Inc.

High Performance Industries, Inc.

Holley Performance Products Inc.

Hot Rod Brands, Inc.

Speedshop.com, Inc.

Simpson Safety Solutions, Inc.

B&M Racing & Performance Products, Inc.

Holley Performance Products (Canada), Inc.

Simpson Performance Products, Inc.

Team Simpson Partners, Inc.

Simpson Partners, Inc.

Stilo S.r.L

Aero Wings, Inc.

Accel Performance Group, LLC

MSD, LLC

MSDP Trading Shanghai Company Ltd.

Powerteq, LLC

APR, LLC

APR Germany GP, LLC

APR Germany LLC & Co. KG

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated March 14, 2024, with respect to the consolidated financial statements included in the Annual Report of Holley Inc. on Form 10-K for the year ended December 31, 2023. We consent to the incorporation by reference of said report in the Registration Statements of Holley Inc. on Form S-1 (File No. 333-258075), Forms S-8 (File No. 333-259744), Form S-3 (File No. 333-266779), Form S-8 (333-272436), and Form S-3 (File No. 333-276324).

.

/s/ Grant Thornton LLP

Cincinnati, Ohio

March 14, 2024

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Matthew Stevenson, certify that:

1. I have reviewed this annual report on Form 10-K of Holley Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Matthew Stevenson

Matthew Stevenson

Director, President and Chief Executive Officer

March 14, 2024

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Jesse Weaver, certify that:

1. I have reviewed this annual report on Form 10-K of Holley Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Jesse Weaver

Jesse Weaver

Chief Financial Officer

March 14, 2024

EX-32.1

Exhibit 32.1

CERTIFICATIONS PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Annual Report on Form 10-K of Holley Inc. (the “Company”) for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “Report”), Matthew Stevenson, Director, President and Chief Executive Officer of the Company, does hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to his knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Matthew Stevenson

Matthew Stevenson

Director, President and Chief Executive Officer

March 14, 2024

A signed original of this statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATIONS PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Annual Report on Form 10-K of Holley Inc. (the “Company”) for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “Report”), Jesse Weaver, Chief Financial Officer of the Company, does hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to his knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jesse Weaver

Jesse Weaver

Chief Financial Officer

March 14, 2024

A signed original of this statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

EX-97.1

Exhibit 97.1

HOLLEY INC.

CLAWBACK POLICY

Effective December 1, 2023

If Holley Inc., a Delaware corporation (together with its subsidiaries, the “Company”), is required to prepare an Accounting Restatement (as defined below), then the Company will recover reasonably promptly the amount of Erroneously Awarded Compensation (as defined below) Received (as defined below) by any current or former Executive Officer (as defined below) during the Recovery Period (as defined below).

The Company will not be required to enforce this policy if the Compensation Committee (the “Committee”) of the Board of Directors of the Company (the “Board”) determines that (i) recovery would be impracticable, as determined by the Committee, and (ii) one of the conditions of (A), (B), or (C) are satisfied:

(A) The direct expense paid to a third party to assist in enforcing this policy would exceed the amount to be recovered; provided, before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based expense of enforcement, document such reasonable attempt(s) to recover, and provide that documentation to the New York Stock Exchange (the “NYSE”).

(B) Recovery would violate home country law where that law was adopted prior to November 28, 2022; provided, that before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on violation of home country law, the Company must obtain an opinion of home country counsel, acceptable to the NYSE, that recovery would result in such a violation, and must provide such opinion to the NYSE.

(C) Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to the Company’s employees, to fail to meet the requirements of the Internal Revenue Code of 1986, as amended.

The Company is prohibited from indemnifying any current or former Executive Officer against the loss of any Erroneously Awarded Compensation or paying or reimbursing such Executive Officers for insurance premiums to recover losses incurred under this policy.

This policy is intended to comply with Section 303A.14 of the NYSE Listed Company Manual (the “Manual”), as required by Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10D-1 promulgated thereunder. The Committee shall have express discretionary authority to interpret and administer this policy and to make all determinations with respect to this policy in its sole discretion which shall be final and binding on all parties.

Definitions: For purposes of this policy:

● “Accounting Restatement” means an accounting restatement triggered by the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.

● “Executive Officer” means the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president of the issuer in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the issuers. Executive officers of the Company parent(s) or subsidiaries are deemed executive officers of the Company if they perform such policy making functions. Identification of an Executive Officer for purposes of this policy and Section 303A.14 of the Manual would include at a minimum executive officers identified pursuant to 17 CFR 229.401(b).

● “Erroneously Awarded Compensation” means the amount of Incentive-Based Compensation Received by an Executive Officer that exceeds the amount of Incentive-Based Compensation that otherwise would have been Received had it been determined based on the restated amounts, which amount must be computed without regard to any taxes paid.

● “Financial Reporting Measure” are measures that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measures that are derived wholly or in part from such measures. Stock price and total shareholder return are also Financial Reporting Measures. A Financial Reporting Measure need not be presented within the financial statements or included in a filing with the U.S. Securities and Exchange Commission.

● “Incentive-Based Compensation” means any compensation that is granted, earned or vested based wholly or in part upon the attainment of any Financial Reporting Measure.

● “Received” with respect to Incentive-Based Compensation means the fiscal period during which the Financial Reporting Measure specified in the Incentive-Based Compensation award is attained, even if the payment or grant of the Incentive-Based Compensation occurs after the end of that period.

● “Recovery Period” means the three (3) completed fiscal years immediately preceding the date that the Company is required to prepare an Accounting Restatement, which date is the earlier to occur of (a) the date the Board, a committee of the Board, or the officer or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement or (b) the date a court, regulator or other legally authorized body directs the Company to prepare an Accounting Restatement. In addition to these last three (3) completed fiscal years, the Recovery Period also applies to any transition period (that results from a change in the Company’s fiscal year) within or immediately following those three (3) completed fiscal years. However, a transition period between the last day of the Company’s previous fiscal year end and the first day of its new fiscal year that comprises a period of nine (9) to twelve (12) months would be deemed a completed fiscal year.

XML

Document And Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2023	Mar. 01, 2024	Jul. 02, 2023
Document Information [Line Items]
Entity Central Index Key	0001822928
Entity Registrant Name	Holley Inc.
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2023
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2023
Document Transition Report	false
Entity File Number	001-39599
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	87-1727560
Entity Address, Address Line One	1801 Russellville Road
Entity Address, City or Town	Bowling Green
Entity Address, State or Province	KY
Entity Address, Postal Zip Code	42101
City Area Code	270
Local Phone Number	782-2900
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
ICFR Auditor Attestation Flag	false
Document Financial Statement Error Correction [Flag]	false
Entity Shell Company	false
Entity Public Float			$ 215,000,000
Entity Common Stock, Shares Outstanding		118,801,030
Auditor Firm ID	248
Auditor Name	GRANT THORNTON LLP
Auditor Location	Cincinnati, Ohio
Warrant [Member]
Document Information [Line Items]
Title of 12(b) Security	Warrants to Purchase Common Stock
Trading Symbol	HLLY WS
Security Exchange Name	NYSE
Common Stock [Member]
Document Information [Line Items]
Title of 12(b) Security	Common Stock, par value $0.0001
Trading Symbol	HLLY
Security Exchange Name	NYSE

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
ASSETS
Cash and cash equivalents	$ 41,081	$ 26,150
Accounts receivable, less allowance for credit losses of $1,577 and $1,550, respectively	48,360	47,083
Inventory	192,260	233,573
Prepaids and other current assets	15,665	18,157
Total current assets	297,366	324,963
Property, plant, and equipment, net	47,206	52,181
Goodwill	419,056	418,121
Other intangibles assets, net	410,465	424,855
Right-of-use assets	29,250	29,522
Total assets	1,203,343	1,249,642
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	43,692	44,948
Accrued interest	455	5,994
Accrued liabilities	42,129	43,317
Current portion of long-term debt	7,461	7,000
Total current liabilities	93,737	101,259
Long-term debt, net of current portion	576,710	643,563
Warrant liability	8,383	4,272
Earn-out liability	3,479	1,176
Deferred taxes	53,542	58,390
Other noncurrent liabilities	26,341	24,992
Total liabilities	762,192	833,652
Commitments and contingencies (Refer to Note 19 - Commitments and Contingencies)
Stockholders' equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, none issued and outstanding on December 31, 2023 and December 31, 2022	0	0
Common stock, $0.0001 par value, 550,000,000 shares authorized, 117,707,280 and 117,147,997 shares issued and outstanding on December 31, 2023 and December 31, 2022, respectively	12	12
Additional paid-in capital	373,869	368,122
Accumulated other comprehensive loss	(710)	(944)
Retained earnings	67,980	48,800
Total stockholders' equity	441,151	415,990
Total liabilities and stockholders' equity	$ 1,203,343	$ 1,249,642

XML

Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Accounts Receivable, Allowance for Credit Loss, Current	$ 1,577	$ 1,550
Preferred Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.0001	$ 0.0001
Preferred Stock, Shares Authorized (in shares)	5,000,000	5,000,000
Preferred Stock, Shares Issued (in shares)	0	0
Preferred Stock, Shares Outstanding (in shares)	0	0
Common Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.0001	$ 0.0001
Common Stock, Shares Authorized (in shares)	550,000,000	550,000,000
Common Stock, Shares, Issued (in shares)	117,707,280	117,147,997
Common Stock, Shares, Outstanding (in shares)	117,707,280	117,147,997

XML

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Net sales	$ 659,704	$ 688,415	$ 692,847
Cost of goods sold	403,615	434,757	406,040
Gross profit	256,089	253,658	286,807
Selling, general, and administrative	120,244	150,728	116,793
Research and development costs	23,844	29,083	28,280
Amortization of intangible assets	14,557	14,683	13,999
Impairment of indefinite-lived intangible assets	0	2,395	0
Acquisition and restructuring costs	2,641	4,513	23,668
Related party acquisition and management fee costs	0	0	25,789
Other operating expense	765	1,514	755
Total operating expense	162,051	202,916	209,284
Operating income	94,038	50,742	77,523
Fair value adjustments to warrant liability	4,111	(57,021)	32,580
Fair value adjustments to earn-out liability	2,303	(10,731)	8,875
Loss (gain) on early extinguishment of long-term debt	(701)	0	13,650
Interest expense, net	(60,746)	(40,227)	(39,128)
Total non-operating expense (income)	66,459	(27,525)	94,233
Income (loss) before income taxes	27,579	78,267	(16,710)
Income tax expense	8,399	4,493	10,429
Net income (loss)	19,180	73,774	(27,139)
Comprehensive income (loss):
Foreign currency translation adjustment	234	(990)	30
Pension liability gain	0	302	388
Total other comprehensive income (loss)	234	(688)	418
Total comprehensive income (loss)	$ 19,414	$ 73,086	$ (26,721)
Common Share Data:
Weighted average common shares outstanding - basic (in shares)	117,378,854	116,762,928	89,959,993
Weighted average common shares outstanding - diluted (in shares)	118,510,800	117,248,296	89,959,993
Basic net income (loss) per share (in dollars per share)	$ 0.16	$ 0.63	$ (0.3)
Diluted net income (loss) per share (in dollars per share)	$ 0.16	$ 0.14	$ (0.3)

XML

Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2020	67,673,884
Balance at Dec. 31, 2020	$ 7	$ 238,883	$ (674)	$ 2,165	$ 240,381
Net income (loss)	0	0	0	(27,139)	(27,139)
Equity compensation	0	4,963	0	0	4,963
Foreign currency translation adjustment	0	0	30	0	30
Pension liability adjustment	$ 0	0	388	0	388
Recapitalization transaction, net (in shares)	48,133,453
Recapitalization transaction, net	$ 5	85,859	0	0	85,864
Balance (in shares) at Dec. 31, 2021	115,807,337
Balance at Dec. 31, 2021	$ 12	329,705	(256)	(24,974)	304,487
Net income (loss)	0	0	0	73,774	73,774
Equity compensation	0	24,395	0	0	24,395
Foreign currency translation adjustment	0	0	(990)	0	(990)
Pension liability adjustment	$ 0	0	302	0	302
Issuance of vested Earn-Out Shares (in shares)	1,093,750
Issuance of vested Earn-Out Shares	$ 0	14,689	0	0	14,689
Warrants exercised (in shares)	33,333
Warrants exercised	$ 0	383	0	0	383
Tax withholding related to vesting of restricted stock units	$ 0	(1,050)	0	0	(1,050)
Issuance of shares for restricted stock units (in shares)	213,577
Issuance of shares for restricted stock units	$ 0	0	0	0	0
Balance (in shares) at Dec. 31, 2022	117,147,997
Balance at Dec. 31, 2022	$ 12	368,122	(944)	48,800	415,990
Net income (loss)	0	0	0	19,180	19,180
Equity compensation	0	7,291	0	0	7,291
Foreign currency translation adjustment	0	0	234	0	234
Tax withholding related to vesting of restricted stock units	$ 0	(1,544)	0	0	(1,544)
Issuance of shares for restricted stock units (in shares)	559,283
Issuance of shares for restricted stock units	$ 0	0	0	0	0
Balance (in shares) at Dec. 31, 2023	117,707,280
Balance at Dec. 31, 2023	$ 12	$ 373,869	$ (710)	$ 67,980	$ 441,151

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
OPERATING ACTIVITIES:
Net income (loss)	$ 19,180	$ 73,774	$ (27,139)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation	10,308	10,107	11,527
Amortization of intangible assets	14,557	14,683	13,999
Impairment of indefinite-lived intangible assets	0	2,395	0
Amortization of deferred loan costs	1,780	1,707	3,182
Amortization of right of use assets	5,480	5,666	0
Gain on termination of leases	0	(279)	0
Fair value adjustments to warrant liability	4,111	(57,021)	32,580
Fair value adjustments to earn-out liability	2,303	(10,731)	8,875
Fair value adjustments to interest rate collar	1,164	0	0
Equity compensation	7,291	24,395	4,963
Change in deferred taxes	(4,848)	(11,655)	(66)
Loss on sale of business	0	1,037	0
Loss (gain) on early extinguishment of long-term debt	(701)	0	13,650
Loss (gain) on disposal of property, plant and equipment	(192)	253	(82)
Provision for inventory reserves	1,802	13,410	4,228
Provision for credit losses	1,016	878	147
Accounts receivable	(2,280)	3,777	464
Inventories	38,199	(58,406)	(45,073)
Prepaids and other current assets	2,555	1,142	(13,408)
Accounts payable	(1,626)	(740)	8,727
Accrued interest	(5,539)	2,635	(3,229)
Accrued and other liabilities	(6,468)	(4,715)	8,238
Net cash provided by operating activities	88,092	12,312	21,583
INVESTING ACTIVITIES:
Capital expenditures	(5,934)	(13,590)	(15,233)
Proceeds from the disposal of fixed assets	1,481	888	364
Proceeds from sale of business	0	1,966	0
Cash paid for acquisitions, net	0	(14,301)	(119,220)
Net cash used in investing activities	(4,453)	(25,037)	(134,089)
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt	0	37,000	655,000
Deferred financing fees	(1,427)	0	(13,413)
Payment of acquisition contingent consideration	0	0	(9,200)
Proceeds from Business Combination and PIPE financing, net of issuance costs paid	0	0	132,299
Payments from stock-based award activities	(1,543)	(1,050)	0
Proceeds from issuance of common stock in connection with the exercise of Warrants	0	383	0
Net cash (used in) provided by financing activities	(69,008)	2,850	77,157
Effect of foreign currency rate fluctuations on cash	300	(300)	0
Net change in cash and cash equivalents	14,931	(10,175)	(35,349)
Beginning of period	26,150	36,325	71,674
End of period	41,081	26,150	36,325
Supplemental disclosures of cash flow information:
Cash paid for interest	64,693	36,868	38,067
Cash paid for income taxes	16,041	6,834	10,648
Assumption of warrant liability	0	0	28,713
Assumption of earn-out liability	0	0	17,722
Empower Sponsor Holdings LLC [Member]
Supplemental disclosures of cash flow information:
Vested Earn-Out Shares issued to Empower Sponsor Holdings LLC	0	14,689	0
Principal Payment [Member]
FINANCING ACTIVITIES:
Principal payments on long-term debt	$ (66,038)	$ (33,483)	$ (687,529)

XML

Insider Trading Arrangements

12 Months Ended

Dec. 31, 2023

Insider Trading Arr Line Items

Material Terms of Trading Arrangement [Text Block]

Item 9B. Other Information

None

Rule 10b5-1 Arrangement Adopted [Flag]

false

Non-Rule 10b5-1 Arrangement Adopted [Flag]

false

Rule 10b5-1 Arrangement Terminated [Flag]

false

Non-Rule 10b5-1 Arrangement Terminated [Flag]

false

XML

Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

SEC Schedule, 12-09, Schedule of Valuation and Qualifying Accounts Disclosure [Text Block]

Holley Inc. and Subsidiaries

Schedule II - Valuation and Qualifying Accounts

Years Ended December 31, 2023, 2022, and 2021

			Charged				Charged
	Balance at		(Credited)		Reserves		Against		Balance at
	Beginning of		to Costs and		from		Allowances		End of
	Period		Expenses		Acquisitions		(1) (2)		Period
Accounts receivable reserve:
Year ended December 31, 2021:
Bad debt reserve	$	813	$	809	$	—	$	666	$	956
Cash discount reserve		426		6,173		—		6,169		430
Year ended December 31, 2022:
Bad debt reserve		956		878		—		672		1,162
Cash discount reserve		430		5,941		—		5,983		388
Year ended December 31, 2023:
Bad debt reserve		1,162		1,016		—		1,122		1,056
Cash discount reserve		388		5,991		—		5,858		521
Inventory valuation reserve:
Year ended December 31, 2021:
Expired and obsolete reserve		22,052		3,806		1,226		804		26,280
Year ended December 31, 2022:
Expired and obsolete reserve		26,280		13,410		—		1,156		38,534
Year ended December 31, 2023:
Expired and obsolete reserve		38,534		1,802		—		6,362		33,974
(1) Write-off of uncollectible accounts, net of recoveries.
(2) Write-off of obsolete inventory, net of inventory adjustments.

XML

Note 1 - Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies

Holley Inc., a Delaware corporation headquartered in Bowling Green, Kentucky conducts operations through its wholly owned subsidiaries. These operating subsidiaries are comprised of Holley Performance Products Inc., Hot Rod Brands, Inc., Simpson Safety Solutions, Inc., B&M Racing and Performance Products, Inc., and Speedshop.com, Inc. When used in these notes, the terms the “Company” or “Holley” mean Holley, Inc. and all entities included in its consolidated financial statements.

The Company consummated a Business Combination pursuant to the Merger Agreement, by and among Empower, Merger Sub I, Merger Sub II, and Holley Intermediate on the Closing Date. The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP in which 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. On the Closing Date, Empower changed its name to Holley Inc. and its trading symbol on the NYSE from “EMPW” to “HLLY.”

The Company designs, manufactures and distributes performance automotive products to customers primarily in the United States, Canada and Europe. The Company is a leading manufacturer of a diversified line of performance automotive products, including carburetors, fuel pumps, fuel injection systems, nitrous oxide injection systems, superchargers, exhaust headers, mufflers, distributors, ignition components, engine tuners and automotive performance plumbing products. The Company is also a leading manufacturer of exhaust products as well as shifters, converters, transmission kits, transmissions, tuners and automotive software. The Company’s products are designed to enhance street, off-road, recreational and competitive vehicle performance through increased horsepower, torque and drivability. The Company has locations in the United States, Canada, Italy and China.

Emerging Growth Company Status

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company is an emerging growth company, and, as such, has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards.

Risks and Uncertainties

The Company's business and results of operations, financial condition, and liquidity are impacted by broad economic conditions including inflation, labor shortages, and disruption of the supply chain, 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). The Company's operations have been adversely impacted by inflationary pressures primarily related to transportation, labor and component costs. Sales growth in certain products has been constrained by supply chain challenges and automotive electronic component shortages. In response to the global supply chain volatility and inflationary impacts, the Company has attempted to minimize potential adverse impacts on its business with cost savings initiatives, price increases to customers, and by closely monitoring inventory levels of certain products and working closely with its 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 to lower-margin products, and demands on our performance that increase our costs. Should the ongoing macroeconomic conditions not improve, or worsen, or if the Company's attempt to mitigate the impact on its supply chain, operations and costs is not successful, the Company’s business, results of operations and financial condition may be adversely affected.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation.

Reclassifications

Certain previously reported amounts in the accrued liabilities footnote have been reclassified between line items to conform to the current period presentation.

Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. These estimates require the use of judgment as future events, and the effect of these events, cannot be predicted with certainty. The estimates will change as new events occur, as more experience is acquired and as more information is obtained. The Company evaluates and updates assumptions and estimates on an ongoing basis and may consult outside experts to assist as considered necessary.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company's cash and cash equivalents include cash and deposits, including an overnight sweep account where funds are transferred to an interest-bearing deposit account that is insured by the Federal Deposit Insurance Corporation ("FDIC"). The FDIC insures financial institution deposits up to $250. The Company maintains deposits exceeding $250 in certain accounts at financial institutions in the United States. On  December 31, 2023 and 2022, the Company had cash in foreign bank accounts of $4,975 and $5,878, respectively. Cash and cash equivalent in foreign bank accounts are primarily held in Italy. Italian deposits are insured up to €100 per depositor, per bank. The Company maintains deposits exceeding €100 in certain accounts at financial institutions in Italy. The Company has not incurred any losses in these accounts.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable represent amounts due from customers in the ordinary course of business. The receivables are stated at the amount management expects to collect. The Company is subject to risk of loss from uncollectible receivables in excess of its allowance. The Company maintains an allowance for credit losses for estimated losses from customers’ inability to make required payments. In order to estimate the appropriate level of this allowance, the Company analyzes historical bad debts, customer concentrations, current customer creditworthiness, current economic trends and changes in customer payment patterns. Accounts are written off when management determines the account is uncollectable. Interest is not charged on past due accounts.

Inventory Valuation

The Company's 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.

Segments

The Company's operations are managed and reported to its Chief Executive Officer (“CEO”), the Company’s chief operating decision maker, on a consolidated basis. The CEO assesses performance and allocates resources based on the consolidated results of operations. Under this organizational and reporting structure, the Company has one reportable segment.

Goodwill

Goodwill represents the excess of purchase price over the fair value of the net assets of businesses acquired. On an annual basis or whenever events or changes in circumstances indicate the carrying value of goodwill may have been impaired, the Company may perform a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill. If the Company determines that the fair value of the reporting unit is less than its carrying amount or elects not to perform a qualitative assessment, it will perform a quantitative analysis; otherwise, no further evaluation is necessary. For the quantitative impairment assessment, the Company compares the fair value of the reporting unit to its carrying value, including goodwill. The Company determines the fair value of the reporting unit based on a weighting of income and market approaches. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company will recognize a loss equal to the excess, limited to the total amount of goodwill allocated to that reporting unit. Impairments, if any, are charged directly to earnings. 

Intangible Assets Other Than Goodwill

Tradenames acquired in certain business combinations were determined to have indefinite useful lives and are not amortized, but instead are tested for impairment on an annual basis and when facts and circumstances indicate that the carrying values of the assets may be impaired. If such review indicates an asset’s carrying value may not be recoverable, an impairment loss is recognized for the excess of the carrying value over the fair value of the asset.

As part of separate business acquisitions, the Company’s customer relationships, technology and certain tradenames were identified as definite-lived intangible assets. The customer relationship intangible assets are being amortized over a ten to twenty-five year life based on the attrition rate of customers with a weighted-average amortization period of 23.6 years. The technology intangible assets are being amortized over a five to fourteen year life based on the lifecycle of previous technology with a weighted-average amortization period of 12.1 years. The tradenames are being amortized over a fifteen to twenty year life based on the estimated life of the tradename with a weighted-average amortization period of 19.2 years. The weighted-average amortization period for all amortizable intangibles on a combined basis is 22.5 years.

Property, Plant and Equipment

Property, plant and equipment acquired in various acquisitions have been recorded at fair value. All other property, plant and equipment is recorded at cost. Depreciation and amortization are provided for using the straight-line method over the estimated useful lives of the assets. Estimated useful lives for new property, plant and equipment additions are seven to twenty-five years for buildings, three to ten years for machinery and equipment, and the shorter of the estimated lease term or useful life for leasehold improvements. Maintenance, repairs, and betterments which do not enhance the value of or increase the life of the assets are expensed as incurred.

Leases

Operating lease right of use ("ROU") assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. The Company's leases may include options to extend or terminate the lease. These options to extend are included in the lease term when it is reasonably certain that the Company will exercise that option. Some leases have variable payments, however, because they are not based on an index or rate, they are not included in the ROU assets and liabilities. Variable payments for real estate leases primarily relate to common area maintenance, insurance, taxes and utilities. Since the Company's leases generally do not provide an implicit rate, the Company applies a portfolio approach using an estimated incremental borrowing rate based on the lease term and other information available at the commencement date in determining the present value of lease payments. The rate applied is based on the currency of the lease. Leases having a lease term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the term of the lease. In addition, the Company has applied the practical expedient to account for the lease and non-lease components as a single lease component for all of the Company's leases. 

Debt Issuance Costs

Debt issuance costs include fees and costs incurred to obtain financing. Debt issuance costs related to the Company's term loans are presented in the consolidated balance sheet as a direct deduction from the carrying amount of the term loans. These fees and costs are being amortized using the effective interest method over the term of the related loans and are included in interest expense in the Company's consolidated statements of comprehensive income (loss). If the debt is retired before its scheduled maturity date, any remaining unamortized debt issuance costs are written off in the period the debt is retired as a non-operating expense in the statement of operations as loss on the early extinguishment of debt. For the years ended 2023, 2022 and 2021, the amortization of debt issuance costs included in interest expense was $1,780, $1,707, and $3,182, respectively.

Self-Insurance

The Company is self-insured for employee medical and prescription drug benefits up to certain stop loss coverage amounts. The Company accrues an estimate for unpaid claims, as well as incurred but not reported claims, based upon the Company’s claim experience and expectations of future claim activity. The resulting liability and expense are reflected as a component of accrued expenses, cost of sales and selling, general and administrative expenses in the accompanying consolidated balance sheets and consolidated statements of comprehensive income (loss), respectively.

Revenue Recognition

The Company recognizes revenue with customers when control of the promised goods transfers to the customer. This generally occurs when the product is shipped to the customer. Revenue is recorded at the amount of consideration the Company expects to be entitled to in exchange for the delivered goods, which includes an estimate of variable consideration, expected returns, or refunds when applicable. The Company estimates variable consideration, such as sales incentives, by using the most likely amount approach, which considers the single most likely amount from a range of possible consideration amounts. Estimates of variable consideration result in an adjustment to the transaction price such that it is probable that a significant reversal of cumulative revenue would not occur in the future. Sales incentives and allowances are recognized as a reduction to revenue at the time of the related sale. Revenue is recorded net of sales tax. Shipping and handling fees billed to customers are included in net sales, while costs of shipping and handling to customers are included in selling, general and administrative costs. 

For more information about the Company’s revenue from contracts with customers, see Note 11, “Revenue”.

Customer Sales Incentives

Sales incentives provided take the form of either sales discounts or rebates and are treated as a reduction of net sales. The Company also maintains a cooperative advertising program with its customers and provides sales incentives to the extent of the estimated value of advertising provided by the customer on behalf of the Company. The costs incurred under the cooperative advertising program are included as a reduction of net sales.

Product Warranty 

The Company generally warrants its products against certain manufacturing and other defects. These product warranties are provided for specific periods of time depending on the nature of the product. The accrued product warranty costs are based primarily on historical experience of actual warranty claims and are recorded at the time of the sale. These obligations are recorded within accrued liabilities in the consolidated balance sheets (see also Note 19, “Commitments and Contingencies” for additional information on warranty reserves). Significant judgments and estimates must be made and used in connection with establishing warranty allowances in any accounting period. Revision of these estimates is made, when necessary, based upon changes in these factors.

Sales Returns

Estimated sales returns and allowances are recorded as a charge against gross sales in the period in which the related sales are recognized, net of returns to stock. The Company’s customers are permitted to return new, undamaged products within customer-specific limits (which are generally limited to a specified percentage of their annual purchases) in the event that they have overstocked their inventories. The Company estimates sales returns based primarily upon actual historical returns, planned product discontinuances, and promotional sales. Returned products, which are recorded as inventories, are valued at the lower of cost or net realizable value. The physical condition and marketability of the returned products are the major factors considered in estimating realizable value. 

Cost of Goods Sold 

Cost of goods sold primarily consists of materials and labor expense in the manufacturing of the Company’s products sold to its customers. Cost of goods sold also includes provisions for excess and obsolete inventory, warranty costs, certain allocated costs for facilities, depreciation and other manufacturing overhead. 

Selling, General and Administrative Expenses 

Selling, general and administrative expenses include personnel costs for employees in selling, general and administrative functions (including equity-based compensation); costs to operate shop locations, corporate offices and back-office support centers; costs to transport products from facilities to our customers; and other selling, general and administrative expenses, such as professional fees, supplies, and advertising expenses.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company recognizes income tax positions only if those positions are “more likely than not” of being sustained upon examination by taxing authorities. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company recognizes interest on liabilities for uncertain tax positions in interest expense and would recognize penalties, if any, in operating expenses in its consolidated income statements. The Company has no amounts accrued for such interest or penalties on  December 31, 2023 and 2022. The Company files income tax returns in the U.S. federal jurisdiction and various foreign and state jurisdictions.

On  December 31, 2023, the Company had approximately $329 of unrecognized tax benefits. There were no unrecognized tax benefits on  December 31, 2022. The statute of limitations remains open for U.S. federal income tax examinations for the years ended December 31, 2020, through December 31, 2022. U.S. state jurisdictions have statues of limitations generally ranging from three to eight years. The Company does not expect the total amount of unrecognized tax benefits to significantly change in the next 12 months.

Impairment or Disposal of Long-Lived Assets

The Company accounts for long-lived assets, including intangible assets subject to amortization, in accordance with the provisions that require long-lived assets, such as property and equipment, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the sum of undiscounted net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Advertising

Advertising production costs are expensed the first time the advertising takes place. Total advertising expenses were $5,987, $7,159, and $6,299 for the years ended December 31, 2023, 2022, and 2021, respectively. Advertising costs are classified as a component of selling, general and administrative costs in the accompanying consolidated statements of comprehensive income (loss).

Research and Development Costs

Research, development, pre-production and start-up costs related to both present and future products are expensed as incurred. Such costs amount to $23,844, $29,083, and $28,280 for the years ended December 31, 2023, 2022, and 2021, respectively.

Other Comprehensive Income (Loss)

Comprehensive income (loss) encompasses all changes in stockholder’s equity and includes net income, change in the foreign currency translation adjustment and minimum pension liability gains. The Company’s accumulated other comprehensive loss shown on the consolidated balance sheets on  December 31, 2023 and 2022 consists of foreign currency translation adjustments of $710 and $944, respectively.

Foreign Currencies

The functional currency of the Company’s Italian subsidiary is the Euro. Assets and liabilities of foreign operations are translated using period end exchange rates. Revenue and expenses are translated using average exchange rates during each period reported. Translation gains (losses) are reported in accumulated other comprehensive loss as a component of shareholders equity and were $234, ($990), and $30 for the years ended December 31, 2023, 2022 and 2021, respectively. The Company recognizes foreign currency transaction gains (losses) on certain assets and liabilities. These transaction (gains) losses are reported in other expense in the consolidated statements of comprehensive income (loss) and were $278, ($97), and $44 for the years ended December 31, 2023, 2022 and 2021, respectively.

Earnings per Share

Earnings per share is computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. The dilutive effect of these potential common shares is reflected in diluted earnings per share by application of the treasury stock method.

Warrants

The Company accounts for warrants to purchase its common stock as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Accounting Standards Codification ("ASC") Topic 480, Distinguishing Liabilities from Equity, and ASC Topic 815, Derivatives and Hedging. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC Topic 480, meet the definition of a liability pursuant to ASC Topic 480, and whether the warrants meet all of the requirements for equity classification under ASC Topic 815, including whether the warrants are indexed to the Company’s own shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

Equity-Based Compensation

The Company accounts for equity-based awards granted to employees and nonemployees under the fair value method prescribed by ASC Subtopic 718-10, Stock Compensation. Equity-based compensation cost is measured based on the estimated grant date fair value of the award and is recognized as expense over the requisite service period (generally the vesting period). The fair value of stock options is estimated using the Black Scholes option-pricing model. Restricted stock units are valued at the stock price on the grant date. The fair value of profit interest units granted by the Holley Stockholder is estimated based on the Company’s estimated equity value for each unit class at the time of granting using the Black-Scholes option-pricing model, discounted to reflect market considerations for illiquidity.

Performance share units that vest based on the achievement of company-designated performance targets are valued at the stock price on the grant date. Compensation expense in respect of such performance share units is recognized each period based on the expected level of achievement and, to the extent that the expected levels of achievement change, compensation cost is adjusted in the period of change with the remaining unrecognized cost recognized over the remaining requisite service period. For performance share units that vest based on the achievement of predetermined market conditions, the Company estimates the grant date fair value using a Monte Carlo simulation model. The fair value associated with each tranche of the award is recognized, straight-line, over the associated requisite service period for that tranche, subject to acceleration if the market condition is met prior to the end of the derived service period. 

Unless the awards contain a market condition, previously recognized expense related to forfeited awards is reversed in the period in which the forfeiture occurs. For awards containing a market condition, previously recognized stock-based compensation expense is not reversed when the awards are forfeited as long as the service is provided for the duration of the required service period.

Fair Value Measurements

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimizes the use of unobservable inputs to the extent possible. The inputs used to measure fair value are prioritized based on a three-level hierarchy, which are defined as follows:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, Derivatives and Hedging. For derivative financial instruments that are accounted for as assets or liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified on the balance sheet as current or non-current based on whether or not net cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. 

The Company uses derivative instruments to manage its exposure to changes in interest rates on borrowings under its debt facility. These derivative instruments are primarily valued on the basis of quotes obtained from banks, brokers, and/or dealers. The valuation of the derivative instruments considers future expected interest rates on the notional principal balance remaining, which is comparable to what a prospective acquirer would pay on the measurement date. Valuation pricing models consider inputs such as forward rates, anticipated interest rate volatility relating to the reference rate, as well as time value, counterparty risk and other factors underlying derivative instruments. 

Concentration of Credit Risk 

Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash and accounts receivable. The Company controls its exposure to credit risk associated with these instruments by (i) placing cash and cash equivalents with several major financial institutions and (ii) maintaining strict policies over credit extension that include credit evaluations, credit limits and monitoring procedures. For more information on the Company’s net sales to its three largest customers, see Note 17, “Major Reseller Customers”.

Recent Accounting Pronouncements

Accounting Standards Recently Adopted

In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU requires entities to apply the definition of a performance obligation under ASC Topic 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers that are acquired in a business combination. Prior to the adoption of ASU 2021-08, an acquirer generally recognized assets acquired, and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU No. 2021-08 results in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. The Company adopted ASU 2021-08 on January 1, 2023. Adoption of ASU 2021-08 did not impact the Company's consolidated financial statements.

Accounting Standards Not Yet Adopted

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to SEC's Disclosure Update and Simplification Initiative. This ASU amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company will monitor the removal of various requirements from the current regulations in order to determine when to adopt the related amendments, but it does not anticipate that the adoption of the new guidance will have a material impact on the Company’s consolidated financial statements and related disclosures. The Company will continue to evaluate the impact of this guidance on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard requires interim and annual disclosure of significant segment expenses that are regularly provided to the chief operating decision-maker ("CODM") and included within the reported measure of a segment’s profit or loss, requires interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually, requires disclosure of the position and title of the CODM, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, and contains other disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires additional disclosures of various income tax components that affect the rate reconciliation based on the applicable taxing jurisdictions, as well as the qualitative and quantitative aspects of those components. The standard also requires information pertaining to taxes paid to be disaggregated for federal, state and foreign taxes, and contains other disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2024 and interim periods within fiscal years beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its consolidated financial statements and related disclosures.

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Note 2 - Business Combination, Acquisitions and Divestiture

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Business Combination Disclosure [Text Block]

2. BUSINESS COMBINATION, ACQUISITIONS, AND DIVESTITURE   BUSINESS COMBINATION

On July 16, 2021, Holley consummated the Business Combination pursuant to the terms of the Merger Agreement, whereby (i) Merger Sub I, a direct wholly owned subsidiary of Empower, merged with and into Holley Intermediate, with Holley Intermediate surviving such merger as a wholly owned subsidiary of Holley (“Merger I”) and (ii) Merger Sub II, a direct wholly owned subsidiary of Empower, merged with and into Holley Intermediate, with Merger Sub II surviving such merger as a wholly owned subsidiary of Holley (“Merger II”).

Pursuant to the Merger Agreement, at the Closing, all outstanding shares of Holley Intermediate common stock as of immediately prior to the effective time of Merger I were cancelled and the Holley Stockholder, the sole stockholder of Holley Intermediate, received $264,718 in cash and 67,673,884 shares of common stock (at a deemed value of $10.00 per share). The Company’s common stock is listed on the NYSE under the symbol “HLLY.”

In connection with the Business Combination, a number of subscribers purchased from the Company an aggregate of 24,000,000 shares of Common Stock (the “PIPE”), for a purchase price of $10.00 per share, or $240,000 in the aggregate. Per the Merger Agreement, $100,000 of the PIPE proceeds were used to partially pay off Holley’s debt.

Pursuant to the Amended and Restated Forward Purchase Agreement (“A&R FPA”), at the Closing, 5,000,000 shares of the Company’s Common Stock and 1,666,667 Warrants were issued to certain investors for an aggregate purchase price of $50,000. Pursuant to the A&R FPA, each Warrant entitles the holder to purchase one share of the Company’s Common Stock at a price of $11.50 per share (the ”Public Warrants”), subject to certain conditions.

The Company also assumed 8,333,310 Public Warrants and 4,666,667 private placement warrants (the “Private Warrants”, and together with the Public Warrants, the “Warrants”) upon the Business Combination, all of which were issued in connection with Empower’s initial public offering. Each Warrant represents the right to purchase one share of the Company’s common stock at a price of $11.50 per share, subject to certain conditions. The Warrants are exercisable commencing on October 9, 2021 (the one-year anniversary of Empower’s initial public offering) and expire on July 16, 2026 (five years after the Closing Date). The Public Warrants are listed on the NYSE under the symbol “HLLY WS.”

Additionally, Empower Sponsor Holdings LLC (the "Sponsor") received 2,187,500 shares of the Company’s common stock, which vest in two equal tranches upon achieving certain market share price milestones as outlined in the Merger Agreement during the earn-out period (“the “Earn-Out Shares”). The first tranche of Earn-Out Shares vested during the first quarter of 2022. The remaining tranche of Earn-Out Shares will be forfeited if the applicable conditions are not satisfied before July 16, 2028 (seven years after the Closing Date). 

The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP. This determination was primarily based on the Holley Stockholder having a relative majority of the voting power of the Company, the operations of Holley prior to the acquisition comprising the only ongoing operations of the Company, and senior management of Holley comprising the majority of the senior management of the Company. Under this method of accounting, Empower was treated as the acquired company for financial reporting. Accordingly, the Business Combination was accounted for as the equivalent of Holley issuing stock for the net assets of Empower, accompanied by a recapitalization. The net assets of Empower are stated at historical cost, with no goodwill or other intangible assets recorded. Reported amounts from operations included herein prior to the Business Combination are those of Holley Intermediate. The shares and corresponding capital amounts and earnings per share, prior to the Business Combination, have been retroactively restated based on shares received by the Holley Stockholder.

The following table reconciles the elements of the Business Combination to the consolidated statements of cash flows for the year ended December 31, 2021:

	Recapitalization
Cash - Empower's trust and cash (net of redemptions of $99,353 and transaction costs of $44,314)	$	107,017
Cash - Forward Purchase Agreement		50,000
Cash - PIPE Financing		240,000
Net cash provided by Business Combination and PIPE Financing		397,017
Less: cash consideration paid to Holley Stockholder		(264,718	)
Net contributions from Business Combination and PIPE Financing	$	132,299

ACQUISITIONS

During the three years ended December 31, 2023, the Company completed 11 acquisitions. These acquisitions are expected to enhance the Company's portfolio of products and services in the automotive aftermarket and automotive safety solutions market.

The Company accounts for acquisitions using the acquisition method, and accordingly, the purchase price has been allocated based upon the fair value of the assets acquired and liabilities assumed. The valuation of the assets acquired and liabilities assumed is subject to revision. If additional information becomes available, the Company may further revise the purchase price allocation as soon as practical, but no later than one year from the acquisition date; however, material changes are not expected. Goodwill generated by the acquisitions is primarily attributable to the strong market position of the entities acquired.

Purchase price consideration for all acquisitions was paid primarily in cash. All acquisitions were for 100 percent of the acquired business and are reported in the Consolidated Statements of Cash Flows, net of acquired cash and cash equivalents. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs, are typically expensed in the periods in which the costs are incurred and are recorded in acquisition and restructuring costs. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date.

In 2022, the Company acquired substantially all the assets of John's Ind., Inc., Southern Kentucky Classics, and Vesta Motorsports USA, Inc., doing business as RaceQuip. These acquisitions were immaterial business combinations. Cash paid for the three acquisitions, net of cash acquired, was $14,863, and was funded with borrowings from the Company's credit facility and cash on hand. The acquisitions resulted in both amortizable and nonamortizable intangibles and goodwill totaling $10,553. The goodwill and intangibles generated as a result of these acquisitions are deductible for income tax purposes. Pro forma results of operations and the results of operations since the acquisition dates for these immaterial acquisitions have not been separately disclosed because the effects were not significant compared to the consolidated financial statements, individually or in the aggregate. 

The determination of the final purchase price allocation to specific assets acquired and liabilities assumed was adjusted to reflect the final fair value estimate of acquired assets and liabilities, as noted below. The allocation of the purchase price to the assets acquired and liabilities assumed was based on estimates of the fair value of the net assets as follows:

	2022			Measurement Period			2022
	(as initially reported)			Adjustments			(as adjusted)
Accounts receivable	$	959		$	(397	)	$	562
Inventory		3,481			146			3,627
Property, plant and equipment		275			—			275
Other assets		1,132			(1,108	)		24
Tradenames		1,689			—			1,689
Customer relationships		1,512			—			1,512
Goodwill		5,858			1,494			7,352
Accounts payable		(25	)		(133	)		(158	)
Accrued liabilities		(18	)		(2	)		(20	)
	$	14,863		$	—		$	14,863

The fair value of the acquired customer relationship intangible asset was estimated using the excess earnings approach. The customer relationship intangible asset is being amortized based on the attrition rate of customers which was determined to be 20 years. The fair value of the acquired tradenames intangible asset was estimated using the relief from royalty method, a form of the income approach. The tradenames were determined to have an indefinite life.

In 2021, the Company acquired substantially all the assets of Finspeed, LLC, Classic Instruments LLC, ADS Precision Machining, Inc., doing business as Arizona Desert Shocks, Rocket Performance Machine, Inc., doing business as Rocket Racing Wheels, and Speartech Fuel Injections Systems, Inc. These five acquisitions were individually immaterial business combinations that are material in the aggregate. Cash paid for the five immaterial acquisitions, net of cash acquired, was $19,909, and was funded with borrowings from the Company's credit facility and cash on hand. The acquisitions resulted in both amortizable and non-amortizable intangibles and goodwill totaling $13,247. The goodwill and intangibles generated as a result of these acquisitions are deductible for income tax purposes. Pro forma results of operations and the results of operations since the acquisition dates for these immaterial acquisitions have not been separately disclosed because the effects were not significant compared to the consolidated financial statements, individually or in the aggregate. 

The determination of the final purchase price allocation to specific assets acquired and liabilities assumed was adjusted to reflect the final fair value estimate of acquired assets and liabilities, as noted below. The allocation of the purchase price to the assets acquired and liabilities assumed was based on estimates of the fair value of the net assets as follows:

	2021			Measurement Period			2021
	(as initially reported)			Adjustments			(as adjusted)
Cash	$	122		$	—		$	122
Accounts receivable		618			—			618
Inventory		3,975			—			3,975
Property, plant and equipment		2,274			—			2,274
Other assets		23			—			23
Tradenames		2,608			—			2,608
Customer relationships		2,450			—			2,450
Goodwill		11,017			(2,828	)		8,189
Accounts payable		(343	)		—			(343	)
Accrued liabilities		(129	)		122			(7	)
	$	22,615		$	(2,706	)	$	19,909

The fair value of the acquired customer relationship intangible assets was estimated using the excess earnings approach. The customer relationship intangible assets are being amortized based on the attrition rate of customers which have an estimated weighted average life of 18 years. The fair value of the acquired tradenames intangible asset was estimated using the relief from royalty method, a form of the income approach. The tradenames were determined to have an indefinite life.

The remaining three acquisitions completed during the year ended December 31, 2021 are described below.

Baer, Inc.

On December 23, 2021, the Company acquired substantially all the assets and liabilities of Baer, Inc., doing business as Baer Brakes ("Baer"). Consideration for the assets acquired was cash payments of $22,170. The acquisition resulted in both amortizable and non-amortizable intangibles and goodwill totaling $18,989. The goodwill and intangibles generated as a result of this acquisition are deductible for income tax purposes. The purchase price was funded with borrowings from the Company's credit facility and cash on hand.

The determination of the final purchase price allocation to specific assets acquired and liabilities assumed was adjusted to reflect the final fair value estimate of acquired assets and liabilities, as noted below. The allocation of the purchase price to the assets acquired and liabilities assumed was based on estimates of the fair value of the net assets as follows:

	December 23, 2021			Measurement Period			December 23, 2021
	(as initially reported)			Adjustments			(as adjusted)
Accounts receivable	$	627		$	—		$	627
Inventory		1,813			—			1,813
Property, plant and equipment		695			—			695
Other assets		76			—			76
Tradenames		4,630			—			4,630
Customer relationships		6,075			—			6,075
Goodwill		8,363			(79	)		8,284
Accounts payable		(81	)		79			(2	)
Accrued liabilities		(28	)		—			(28	)
	$	22,170		$	—		$	22,170

The fair value of the acquired customer relationship intangible asset was estimated using the excess earnings approach. The customer relationship intangible asset is being amortized based on the attrition rate of customers which was determined to be 20 years. The fair value of the acquired tradenames intangible asset was estimated using the relief from royalty method, a form of the income approach. The tradenames were determined to have an indefinite life.

The contractual value of the accounts receivable acquired was $800.

The Company incurred transaction costs in the amount of $222, which are reflected in operating expenses for the year ended December 31, 2021.

Brothers Mail Order Industries, Inc.

On December 16, 2021, the Company acquired substantially all the assets and liabilities of Brothers Mail Order Industries, Inc., doing business as Brothers Trucks ("Brothers"). Consideration for the assets acquired was cash payments of $26,135. The acquisition resulted in non-amortizable intangibles and goodwill totaling $24,835. The goodwill and intangibles generated as a result of this acquisition are deductible for income tax purposes. The purchase price was funded with borrowings from the Company's credit facility and cash on hand.

The determination of the final purchase price allocation to specific assets acquired and liabilities assumed was adjusted to reflect the final fair value estimate of acquired assets and liabilities, as noted below. The allocation of the purchase price to the assets acquired and liabilities assumed was based on estimates of the fair value of the net assets as follows:

	December 16, 2021			Measurement Period		December 16, 2021
	(as initially reported)			Adjustments		(as adjusted)
Accounts receivable	$	22		$	—	$	22
Inventory		1,682			—		1,682
Property, plant and equipment		20			—		20
Other assets		13			—		13
Tradenames		4,975			—		4,975
Goodwill		19,561			299		19,860
Accounts payable		(34	)		—		(34	)
Accrued liabilities		(403	)		—		(403	)
	$	25,836		$	299	$	26,135

The fair value of the acquired tradenames intangible asset was estimated using the relief from royalty method, a form of the income approach. The tradenames were determined to have an indefinite life.

The contractual value of the accounts receivable acquired was $22.

The Company incurred transaction costs in the amount of $191, which are reflected in operating expenses for the year ended December 31, 2021.

Advance Engine Management Inc.

On April 14, 2021, the Company acquired substantially all the assets and liabilities of Advance Engine Management Inc. doing business as AEM Performance Electronics (“AEM”). Consideration for the assets acquired was cash payments of $51,243. The acquisition resulted in both amortizable and non-amortizable intangibles and goodwill, totaling $44,486. The goodwill and intangibles generated as a result of this acquisition are deductible for income tax purposes. The purchase price was funded from cash on hand.

The determination of the final purchase price allocation to specific assets acquired and liabilities assumed was adjusted to reflect the final fair value estimate of acquired assets and liabilities, as noted below. The allocation of the purchase price to the assets acquired and liabilities assumed was based on estimates of the fair value of the net assets as follows:

	April 14, 2021			Measurement Period			April 14, 2021
	(as initially reported)			Adjustments			(as adjusted)
Accounts receivable	$	3,454		$	(61	)	$	3,393
Inventory		3,892			—			3,892
Property, plant and equipment		1,342			—			1,342
Other assets		493			(91	)		402
Tradenames		10,760			—			10,760
Customer relationships		14,640			—			14,640
Patents		1,970			—			1,970
Technology intangibles		110			—			110
Goodwill		17,426			(420	)		17,006
Accounts payable		(2,032	)		110			(1,922	)
Accrued liabilities		(489	)		139			(350	)
	$	51,566		$	(323	)	$	51,243

The fair value of the acquired customer relationship intangible asset was estimated using the excess earnings approach. The customer relationship intangible asset is being amortized based on the attrition rate of customers which was determined to be 20 years. The fair value of the acquired tradenames and patents intangible assets were estimated using the relief from royalty method, a form of the income approach. The tradenames were determined to have an indefinite life. The patents are being amortized over 13 years based on the weighted average remaining life of the patent portfolio.

The contractual value of the accounts receivable acquired was $3,454.

The Company’s results for the year ended December 31, 2021, include $16,593 of net sales and $2,664 of net income from AEM since the date of acquisition. The Company incurred transaction costs in the amount of $2,264, which are reflected in operating expenses for the year ended December 31, 2021.

The following table provides the unaudited consolidated pro forma results for the periods presented as if Baer, Brothers, and AEM had been acquired as of January 1, 2021.

	For the year ended December 31,
	2021
Pro forma net sales	$	727,369
Pro forma net income		(16,248	)

The pro forma results include the effects of the amortization of purchased intangible assets and acquired inventory step-up. The pro forma results are based upon unaudited financial information of the acquired entity and are presented for informational purposes only and are not necessarily indicative of the results of future operations or the results that would have occurred had the acquisitions taken place in the periods noted.

DIVESTITURE

In the fourth quarter of 2022, the Company made the decision to sell Finspeed in connection with a strategic review of its product portfolio. Finspeed generated approximately $426 in net sales in 2022. The Company received $1,966 cash consideration and recorded a pre-tax loss of $1,037 on the sale of the business, which included a $268 write-down of intangible assets, and was reported as other operating expense in the Consolidated Statements of Comprehensive Income (Loss).  

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Note 3 - Inventory

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Inventory Disclosure [Text Block]

3. INVENTORY

Inventories of the Company consisted of the following:

	December 31,
	2023		2022
Raw materials	$	63,552	$	78,586
Work-in-process		22,619		23,906
Finished goods		106,089		131,081
	$	192,260	$	233,573

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Note 4 - Property, Plant and Equipment, Net

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

4. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment of the Company consisted of the following:

	December 31,
	2023		2022
Land	$	3,326	$	3,426
Buildings and improvements		11,404		11,051
Machinery and equipment		73,332		66,140
Construction in process		6,224		9,563
Total property, plant and equipment		94,286		90,180
Less: accumulated depreciation		47,080		37,999
Property, plant and equipment, net	$	47,206	$	52,181

The Company’s long-lived assets by geographic locations are as follows:

	December 31,
	2023		2022
United States	$	44,931	$	50,434
International		2,275		1,747
Total property, plant and equipment, net	$	47,206	$	52,181

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Note 5 - Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

5. GOODWILL AND OTHER INTANGIBLE ASSETS

The following presents changes to goodwill for the periods indicated:

Balance on December 31, 2021	$	411,383
John's acquisition		240
SKC acquisition		1,270
RaceQuip acquisition		4,348
Measurement period adjustments		880
Balance on December 31, 2022		418,121
Measurement period adjustments		935
Balance on December 31, 2023	$	419,056

Goodwill represents the premium paid over the fair value of the net tangible and identifiable intangible assets acquired in the Company's business combinations. The measurement period for the valuation of assets acquired and liabilities assumed ends as soon as information on the facts and circumstances that existed as of the acquisition date becomes available, not to exceed 12 months. Adjustments in purchase price allocations may require a change in the amounts allocated to goodwill during the periods in which the adjustments are determined. In the fourth quarter of 2023, the Company performed a qualitative assessment and did not identify any indicators of impairment. In the third quarter and fourth quarters of 2022, the Company performed quantitative and qualitative assessments and did not identify any indicators of impairment. No goodwill impairment charges were incurred during 2023 and 2022.

Intangible assets consisted of the following:

	December 31, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
Finite-lived intangible assets:
Customer relationships	$	269,950	$	(55,732	)	$	214,218
Tradenames		13,775		(5,569	)		8,206
Technology		26,676		(13,800	)		12,876
Total finite-lived intangible assets	$	310,401	$	(75,101	)	$	235,300
Indefinite-lived intangible assets:
Tradenames	$	175,165		—		$	175,165

	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
Finite-lived intangible assets:
Customer relationships	$	269,950	$	(44,178	)	$	225,772
Tradenames		13,775		(4,843	)		8,932
Technology		26,676		(11,523	)		15,153
Total finite-lived intangible assets	$	310,401	$	(60,544	)	$	249,857
Indefinite-lived intangible assets:
Tradenames	$	174,998		—		$	174,998

The following outlines the estimated future amortization expense related to intangible assets held on  December 31, 2023:

2024	$	13,744
2025		13,714
2026		13,608
2027		13,601
2028		13,601
Thereafter		167,032
Total	$	235,300

In the third quarter of 2022, management concluded it was necessary to reevaluate indefinite-lived intangible assets for impairment after supply chain challenges led to a downward revision of earnings estimates for 2022, which resulted in a decline in the Company's market capitalization. As a result of this evaluation, a pre-tax impairment of $2,395 was recognized on certain indefinite-lived tradenames. In the fourth quarter of 2022, the Company performed a qualitative assessment of indefinite-lived intangible assets and did not identify any indicators of impairment. The Company has not subsequently identified any circumstances to indicate that it was necessary to reevaluate indefinite-lived intangible assets for impairment. No impairment was recognized on intangible assets in 2023.

The fair value of the indefinite-lived tradenames was estimated using the relief from royalty method, a form of the income approach. Significant judgement is required in estimating the fair value of intangible assets and in performing impairment tests. The most significant assumptions utilized in the determination of the estimated fair values of the indefinite-lived tradenames were the sales projections and long-term earnings growth rates, the royalty rate and the discount rate. The long-term earnings growth rate represents the expected rate at which the brands are expected to grow beyond the shorter-term business planning period. The royalty rate is based on observed market royalty rates for various industrial, consumer and commercial trademarks. The discount rate is based on the Company's weighted average cost of capital adjusted for risk. Due to the inherent uncertainty in forecasting future sales, actual results in the future may vary significantly from the forecasts.

Potential changes in our costs and operating structure, the implementation of synergies, and overall performance in the automotive aftermarket industry, could negatively impact our near-term cash-flow projections and could trigger a potential impairment of the Company's goodwill and / or indefinite-lived intangible assets. In addition, failure to execute the Company's strategic plans as well as increases in weighted average costs of capital could negatively impact the fair value of the reporting unit and increase the risk of future impairment charges.

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Note 6 - Accrued Liabilities

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Accrued Liabilities Disclosure [Text Block]

6. ACCRUED LIABILIITES

Accrued liabilities of the Company consisted of the following:

	December 31,
	2023		2022
Accrued freight	$	5,654	$	6,861
Accrued employee compensation and benefits		11,696		7,635
Accrued returns, allowances and warranties		11,267		8,798
Accrued taxes		1,475		6,697
Current portion of operating lease liabilities		4,948		5,112
Accrued other		7,089		8,214
Total accrued liabilities	$	42,129	$	43,317

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Note 7 - Debt

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Debt Disclosure [Text Block]

7. DEBT

Debt of the Company consisted of the following:

	December 31,
	2023			2022
First lien term loan due November 17, 2028	$	592,505		$	649,350
Revolver		—			10,000
Other		1,974			2,770
Less unamortized debt issuance costs		(10,308	)		(11,557	)
		584,171			650,563
Less current portion of long-term debt		(7,461	)		(7,000	)
	$	576,710		$	643,563

On November 18, 2021, the Company entered into a credit facility with a syndicate of lenders and Wells Fargo Bank, N.A., as administrative agent for the lenders, letter of credit issuer and swing line lender (the "Credit Agreement"). The financing consists of a seven-year $600,000 first lien term loan, a five-year $125,000 revolving credit facility, and a $100,000 delayed draw term loan. The proceeds of delayed draw loans made after closing were available to the Company to finance acquisitions. Upon the expiration of the delayed draw term loan in May 2022, the Company had drawn $57,000, which is included in the amount outstanding under the first lien term loan due November 17, 2028. 

The revolving credit facility includes a letter of credit facility in the amount of $10,000, pursuant to which letters of credit may be issued as long as revolving loans may be advanced and subject to availability under the revolving credit facility. The Company had $1,728 in outstanding letters of credit on  December 31, 2023.

In 2021, proceeds from the credit facility were used to repay in full the Company’s obligations under its existing first lien and second lien notes and to pay $13,413 in deferred financing fees related to the refinancing. As a result of the prepayments of the Company’s existing first lien and second lien notes, losses of $13,650 were recognized in 2021 on the early extinguishment of debt due to the write-off of unamortized debt issuance costs.

The first lien term loan is to be repaid in quarterly payments of $1,643 through September 30, 2028, with the balance due upon maturity on November 17, 2028. The Company is required to make annual payments on the term loan in an amount equal to 50% of annual excess cash flow greater than $5,000, as defined in the Credit Agreement. This percentage requirement may decrease or be eliminated if certain leverage ratios are achieved. Based on the Company's results for 2023, no excess cash flow payment is expected to be required in 2024. Any such payments offset future mandatory quarterly payments. The Credit Agreement permits voluntary prepayments at any time, in whole or in part. The Company paid down an aggregate of $56,845 in principal on its outstanding first lien term loan during the year ended December 31, 2023 by repurchasing $38,845 at a discount to par, making a voluntary repayment of $11,000, and making required quarterly payments totaling $7,000. A gain of $701 was recognized on the debt repurchased at a discount to par, net of the write-off of unamortized debt issuance costs. 

On December 31, 2023, amounts outstanding under the credit facility accrue interest at a rate equal to either the SOFR or base rate, at the Company's election, plus a specified margin. In the case of revolving credit loans and letter of credit fees, the specified margin is based on the Company's Total Leverage Ratio, as defined in the Credit Agreement. Commitment fees payable under the revolving credit facility are based on the Company's Total Leverage Ratio. On  December 31, 2023, the weighted average interest rate on the Company's borrowings under the credit facility was 9.2%.

Obligations under the Credit Agreement are secured by substantially all of the Company’s assets, including a secured interest in the Company's corporate headquarters, with a carrying value of $2,999. The Credit Agreement includes representations and warranties, and affirmative and negative covenants customary for financings of this type, including, but not limited to, limitations on restricted payments, additional borrowings, additional investments, and asset sales. The Credit Agreement also requires that Holley maintain, on the last day of each quarter, a Total Leverage Ratio not to exceed a maximum amount. On  December 31, 2023, the Company was in compliance with all financial covenants.

In February 2023, the Company entered into an amendment to its Credit Agreement which, among other things, increases the Total Leverage Ratio applicable under the Credit Agreement as of the fiscal quarter ending April 2, 2023 to initially 7.25:1.00, and provides for modified step-down levels for such covenant thereafter through the fiscal quarter ending March 31, 2024 (the “Covenant Relief Period”). As of December 31, 2023, the required Total Leverage Ratio was 5.75:1.00. As an ongoing condition to the Covenant Relief Period, the Company also agreed to (i) a minimum liquidity test, (ii) an interest coverage test, (iii) an anti-cash hoarding test at any time revolving loans are outstanding, and (iv) additional reporting obligations. Under the amended Credit Agreement, the revolving credit facility contains a minimum liquidity financial covenant of $45,000, which includes unrestricted cash and any available borrowing capacity under the revolving credit facility. In April 2023, the Company entered into a second amendment to the Credit Agreement in which the interest rate on any outstanding borrowings under the Credit Agreement was changed from LIBOR to SOFR. In May 2023, the Company entered into a third amendment to the Credit Agreement in which certain defined terms were clarified. The Company incurred $1,427 of deferred financing fees related to these amendments. On December 31, 2023, the Company was in compliance with all financial covenants. 

Some of the lenders that are parties to the Credit Agreement, and their respective affiliates, have various relationships with the Company in the ordinary course of business involving the provision of financial services, including cash management, commercial banking, investment banking or other services.

Future maturities of long-term debt and amortization of debt issuance costs on  December 31, 2023, are as follows:

		Debt		Debt Issuance Costs
2024	$	7,461	$	1,770
2025		7,656		1,921
2026		6,571		2,087
2027		6,572		2,271
2028		566,219		2,259
	$	594,479	$	10,308

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Note 8 - Common Stock Warrants and Earn-out Liability

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Warrant Liability [Text Block]

8. COMMON STOCK WARRANTS AND EARN-OUT LIABILITY

Upon the Closing, there were 14,666,644 Warrants, consisting of 9,999,977 Public Warrants and 4,666,667 Private Warrants, outstanding to purchase shares of the Company's common stock that were issued by Empower prior to the Business Combination. Each Warrant entitles the registered holder to purchase one share of Common Stock at a price of $11.50 per share, subject to adjustments, commencing on October 9, 2021 (the one-year anniversary of Empower’s initial public offering), provided that the Company has an effective registration statement under the Securities Act covering the shares of Common Stock issuable upon exercise of the Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities laws of the state of residence of the holder. The Warrants may be exercised only for a whole number of shares of Common Stock. The Warrants expire on July 16, 2026, the date that is five years after the Closing date, or earlier upon redemption or liquidation. Additionally, the Private Warrants will be non-redeemable and are exercisable on a cashless basis so long as they are held by the Sponsor or any of its permitted transferees. If the Private Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

The Company may redeem the Public Warrants at a price of $0.01 per warrant upon 30 days' notice if the closing price of the Company’s common stock equals or exceeds $18.00 per share, subject to adjustments, on the trading day prior to the date on which notice of redemption is given, provided there is an effective registration statement and current prospectus in effect with respect to the ordinary shares underlying such Warrants throughout the 30-day redemption period. If the foregoing conditions are satisfied and the Company issues a notice of redemption of the Warrants, the Warrant holder is entitled to exercise his, her or its Warrant prior to the scheduled redemption date. Any such exercise requires the Warrant holder to pay the exercise price for each Warrant being exercised. Further, the Company may redeem the Public Warrants at a price of $0.10 per warrant upon 30 days' notice if the closing price of Common Stock equals or exceeds $10.00 per share, subject to adjustments, on the trading day prior to the date on which notice of redemption is given. Beginning on the date the notice of redemption is given until the Warrants are redeemed or exercised, holders may elect to exercise their Warrants on a cashless basis and receive that number of shares of Common Stock as determined by reference to a table in the warrant agreement.

During any period when the Company has failed to maintain an effective registration statement, warrant holders may exercise Warrants on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption, but the Company will use its commercially reasonable best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

The Warrants are accounted for as a liability in accordance with ASC Subtopic 815-40, Derivatives and Hedging - Contracts in Entity's Own Equity, and are presented as a warrant liability on the balance sheet. The warrant liability was measured at fair value at inception and on a recurring basis, with changes in fair value recognized as non-operating expense. On  December 31, 2023 and 2022, a warrant liability with a fair value of $8,383 and $4,272, respectively, was reflected as a long-term liability in the consolidated balance sheet. As of both  December 31, 2023 and 2022, there were 14,633,311 Warrants outstanding. For the year ended December 31, 2023, an increase of $4,111 in the fair value of the warrant liability as compared to a decrease of $57,021 in the fair value of the warrant liability for the year ended  December 31, 2022, was reflected as change in fair value of warrant liability in the consolidated statements of comprehensive income.

Additionally, the Sponsor received 2,187,500 shares of Common Stock upon the Closing, which vest in two equal tranches upon achievement of certain market share price milestones during the earn-out period, as outlined in the Merger Agreement (the “Earn-Out Shares”). The first tranche of Earn-Out Shares vested during the first quarter of 2022. Upon vesting, the first tranche of 1,093,750 Earn-Out Shares were issued and a liability of $14,689, representing the fair value of the shares on the date of vesting, was reclassified from liabilities to equity. The remaining tranche of Earn-Out Shares will be forfeited if the applicable conditions are not satisfied before July 16, 2028 (seven years after the Closing Date). The unvested Earn-Out Shares are presented as an earn-out liability on the balance sheet and are remeasured at fair value with changes in fair value recognized as non-operating expense. On  December 31, 2023 and 2022, an earn-out liability with a fair value of $3,479 and $1,176, respectively, was reflected as a long-term liability in the consolidated balance sheet. For the year ended December 31, 2023, an increase of $2,303 in the fair value of the earn-out liability as compared to a decrease of $10,731 in the fair value of the earn-out liability for the year ended  December 31, 2022, was reflected as change in fair value of earn-out liability in the consolidated statements of comprehensive income. 

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Note 9 - Derivative Instruments

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

9.  DERIVATIVE INSTRUMENTS 

The Company from time to time enters into derivative financial instruments, such as interest rate collar agreements (each, a “Collar”), to manage its exposure to fluctuations in interest rates on the Company’s variable rate debt. On January 4, 2023, the Company entered into a Collar with Wells Fargo Bank, N.A. ("Wells Fargo") with a notional amount of $500,000 that expires on February 18, 2026. The Collar has a floor of 2.811% and a cap of 5% (based on three-month SOFR). The structure of this Collar is such that the Company receives an incremental amount if the Collar index exceeds the cap rate. Conversely, the Company pays an incremental amount to Wells Fargo if the Collar index falls below the floor rate. No payments are required if the Collar index falls between the cap and floor rates. 

On  December 31, 2023, the Company recognized a derivative liability of $1,164 for the Collar in other noncurrent liabilities on the consolidated balance sheet. For the year ended December 31, 2023, the Company recorded a net change in the fair value of the Collar as an increase to interest expense of $1,164. Cash receipts for the Collar totaled $620 for the year ended December 31, 2023. 

The fair value of the Collar is determined using observable market-based inputs and the impact of credit risk on the derivative’s fair value (the creditworthiness of the Company’s counterparty for assets and the creditworthiness of the Company for liabilities) (a Level 2 measurement, as described in Note 10, "Fair Value Measurements").

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Note 10 - Fair Value Measurements

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Fair Value Disclosures [Text Block]

10. FAIR VALUE MEASUREMENTS

The Company’s financial liabilities subject to fair value measurement on a recurring basis and the level of inputs used for such measurements were as follows: 

	Fair Value Measured on December 31, 2023
	Level 1		Level 2		Level 3		Total
Warrant liability (Public)	$	5,480	$	—	$	—	$	5,480
Warrant liability (Private)		—		—		2,903		2,903
Earn-out liability		—		—		3,479		3,479
Interest rate collar liability		—		1,164		—		1,164
Total fair value liabilities	$	5,480	$	1,164	$	6,382	$	13,026

	Fair Value Measured on December 31, 2022
	Level 1		Level 2		Level 3		Total
Warrant liability (Public)	$	2,691	$	—	$	—	$	2,691
Warrant liability (Private)		—		—		1,581		1,581
Earn-out liability		—		—		1,176		1,176
Total fair value liabilities	$	2,691	$	—	$	2,757	$	5,448

On  December 31, 2023 and 2022, the Company's liabilities for its Private and Public Warrants, earn-out liability, and Collar are measured at fair value on a recurring basis (see Note 8, “Common Stock Warrants and Earn-Out Liability,” and Note 9, "Derivative Instruments,” for more details). The fair values of the Private Warrants and earn-out liability are determined based on significant inputs not observable in the market (Level 3). These assumptions are believed to be reasonable at the time, but such assumptions are subject to inherent uncertainty. The valuation of the Level 3 liabilities uses assumptions and estimates the Company believes would be made by a market participant in making the same valuation. The Company assesses these assumptions and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained. The Company uses a Monte Carlo simulation model to estimate the fair value of its Private Warrants and earn-out liability. The fair value of the Collar, which is included in other noncurrent liabilities on the consolidated balance sheet, is determined based on models that reflect the contractual terms of the derivative, yield curves, and the credit quality of the counterparties. Inputs are generally observable and do not contain a high level of subjectivity (Level 2). The fair value of the Public Warrants is determined using publicly traded prices (Level 1). Changes in the fair value of the derivative liabilities related to Warrants and the earn-out liability are recognized as non-operating expense in the consolidated statements of comprehensive income (loss). Changes in the fair value of the Collar are recognized as an adjustment to interest expense in the consolidated statements of comprehensive income (loss). Changes in the fair value of the Warrants, the earn-out liability, and the Collar, along with cash flows associated with the Collar, are presented in operating activities on the consolidated statements of cash flows.

The fair value of Private Warrants was estimated on  December 31, 2023 and 2022 using the Monte Carlo simulation model with the following assumptions:

	2023			2022
Valuation date price	$	4.87		$	2.12
Strike price	$	11.50		$	11.50
Remaining life (in years)		2.54			3.54
Expected dividend	$	—		$	—
Risk-free interest rate		4.01	%		4.06	%
Price threshold	$	18.00		$	18.00

The fair value of the earn-out liability was estimated on  December 31, 2023 and 2022 using the Monte Carlo simulation model with the following assumptions:

	2023			2022
Valuation date price	$	4.87		$	2.12
Expected term (in years)		4.54			5.54
Expected volatility		67.20	%		70.33	%
Risk-free interest rate		3.79	%		3.88	%
Price hurdle	$	15.00		$	15.00

On  December 31, 2023 and 2022, the Company had accounts receivable, accounts payable and accrued expenses for which the carrying value approximates fair value due to the short-term nature of these instruments. The carrying value of the Company’s long-term debt approximates fair value as the rates used approximate the market rates currently available to the Company. Fair value measurements used in the impairment reviews of goodwill and intangible assets are Level 3 measurements.

The reconciliation of changes in Level 3 during the years ended December 31, 2023 and 2022 is as follows:

	Private Warrants			Earn-Out Liability			Total
Balance on December 31, 2021	$	21,793		$	26,596		$	48,389
Liabilities reclassed to equity		—			(14,689	)		(14,689	)
Gains included in earnings		(20,212	)		(10,731	)		(30,943	)
Balance on December 31, 2022	$	1,581		$	1,176		$	2,757
Losses included in earnings		1,322			2,303			3,625
Balance on December 31, 2023	$	2,903		$	3,479		$	6,382

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Note 11 - Revenue

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

11. REVENUE

The principal activity from which the Company generates its revenue is the manufacturing and distribution of after-market automotive parts for its customers, comprised of resellers and end users. The Company recognizes revenue at a point in time, rather than over time, as the performance obligation is satisfied when customer obtains control of the product upon title transfer and not as the product is manufactured or developed. The amount of revenue recognized is based on the purchase order price and adjusted for revenue allocated to variable consideration (i.e., estimated rebates, co-op advertising, etc.).

The Company collects sales tax and other taxes concurrent with revenue-producing activities which are excluded from revenue. Shipping and handling costs incurred after control of the product is transferred to our customers are treated as fulfillment costs and not a separate performance obligation.

The Company allows customers to return products when certain Company-established criteria are met. These sales returns are recorded as a charge against gross sales in the period in which the related sales are recognized, net of returns to stock. Returned products, which are recorded as inventories, are valued at the lower of cost or net realizable value. The physical condition and marketability of the returned products are the major factors considered in estimating realizable value. The Company also estimates expected sales returns and records the necessary adjustment as a charge against gross sales.

The Company’s payment terms with customers are customary and vary by customer and geography but typically range from 30 to 365 days. The Company elected the practical expedient to disregard the possible existence of a significant financing component related to payment on contracts, as the Company expects that customers will pay for the products within one year. The Company has evaluated the terms of its arrangements and determined that they do not contain significant financing components. Additionally, as all contracts with customers have an expected duration of one year or less, the Company has elected the practical expedient to exclude disclosure of information regarding the aggregate amount and future timing of performance obligations that are unsatisfied or partially satisfied as of the end of the reporting period. The Company provides limited warranties on most of its products against certain manufacturing and other defects. Provisions for estimated expenses related to product warranty are made at the time products are sold. Refer to Note 19, “Commitments and Contingencies” for more information.

The following table summarizes total revenue by product category. The Company's product category definitions have been revised by management in 2022. The prior-year period has been revised to conform with the current presentation. There is no change to total sales.

	For the years ended December 31,
	2023		2022		2021
Electronic systems	$	287,215	$	282,865	$	309,233
Mechanical systems		157,427		165,007		154,878
Exhaust		59,938		66,767		78,179
Accessories		98,899		108,150		85,280
Safety		56,225		65,626		65,277
Net sales	$	659,704	$	688,415	$	692,847

The following table summarizes total revenue based on geographic location from which the product is shipped:

	For the years ended December 31,
	2023		2022		2021
United States	$	644,652	$	669,187	$	674,491
Italy		15,052		19,228		18,356
Net sales	$	659,704	$	688,415	$	692,847

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Note 12 - Income Taxes

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

12. INCOME TAXES

Income tax expense of the Company consisted of the following:

	For the years ended December 31,
	2023			2022			2021
Current income tax expense:
Federal	$	10,909		$	12,356		$	7,422
State		927			1,253			323
Foreign		1,715			2,450			2,602
Total current income tax expense		13,551			16,059			10,347
Deferred income tax expense (benefit):
Federal		(5,986	)		(8,679	)		823
State		811			(2,591	)		(552	)
Foreign		23			(296	)		(189	)
Total deferred income tax expense (benefit)		(5,152	)		(11,566	)		82
Total income tax expense	$	8,399		$	4,493		$	10,429

The Company’s income before income taxes was subject to taxes in the following jurisdictions:

	For the years ended December 31,
	2023		2022		2021
United States	$	23,971	$	72,276	$	(24,772	)
Foreign		3,608		5,991		8,062
Income (loss) before income taxes	$	27,579	$	78,267	$	(16,710	)

Reported income tax expense for the years ended December 31, 2023, 2022 and 2021 differs from the “expected” tax expense (benefit), computed by applying the U.S. Federal statutory income tax rate of 21% to income before income taxes as follows:

	For the years ended December 31,
	2023			2022			2021
Expected tax expense (benefit) at U.S. Federal statutory rates	$	5,792		$	16,479		$	(3,510	)
State income tax expense (benefit)		1,373			(1,057	)		(180	)
Permanent tax differences		375			4,275			825
Foreign-derived intangible income deduction		(397	)		(298	)		—
Global intangible low-taxed income		—			—			375
Section 162(m) limitation		709			—			—
Foreign rate differential		782			560			719
Tax credit		(1,506	)		(1,393	)		(1,620	)
Earn-outs		484			(2,254	)		5,470
Change in fair value of Warrants		863			(11,974	)		6,842
Transaction costs		—			—			1,465
Other differences, net		(76	)		155			43
Total income tax expense	$	8,399		$	4,493		$	10,429

The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and deferred tax liabilities consisted of the following:

	December 31,
	2023			2022
Deferred tax assets:
Reserves on assets	$	10,283		$	12,305
Liabilities not yet deductible		781			3,371
Interest expense limitation		16,040			9,624
Right-of-use liability		6,791			6,899
Section 174 expenses		10,049			6,197
Net operating losses		2,446			1,493
Other		1,113			526
Total gross deferred tax assets		47,503			40,415
Valuation allowance		(5	)		—
Total gross deferred tax assets, net of valuation allowance		47,498			40,415
Deferred tax liabilities:
Tradename		33,801			33,770
Intangible assets		41,715			41,126
Goodwill		12,310			10,037
Property, plant and equipment		6,634			7,110
Right-of-use asset		6,585			6,762
Total gross deferred tax liabilities		101,045			98,805
Net deferred tax liabilities	$	53,542		$	58,390

Based on the Company’s projected pretax earnings, reversal of deferred tax liabilities and other relevant factors, management believes that it is more likely than not that the Company’s deferred tax assets on  December 31, 2023 and 2022 will be realized, with the exception of certain state net operating loss carryforwards.

On  December 31, 2023, the Company's federal and state net operating loss carryforwards for income tax purposes were immaterial. A majority of the U.S. net operating loss carryforwards have no expiration date. The remaining state net operating loss carryforwards expire at various dates through 2035. The entire amount of federal net operating loss carryforward of $381 and a significant portion of state net operating loss carryforward of $2,064 relate to acquisitions, and, as a result, are limited in the amount that can be recognized in any one year.

Changes in the valuation allowance for deferred tax assets were as follows:

	December 31,
	2023
Valuation allowance, January 1	$	—
Additions charged to expense accounts		5
Valuation allowance, December 31	$	5

The valuation allowance on December 31, 2023, includes allowances primarily related to unrealized state net operating losses and credit carryforwards of $5.

Uncertain Tax Positions

Under the accounting rules for income taxes, the Company is not permitted to recognize the tax benefit attributable to a tax position unless such position is more likely than not to be sustained upon examination by taxing authorities, including resolution of any related appeals and litigation processes, based solely on the technical merits of the position. The Company had uncertain tax positions of $329 for the year ended December 31, 2023. The Company did not have any uncertain tax positions for the year ended December 31, 2022.

The Company recognizes interest on liabilities for uncertain tax positions in interest expense and would recognize penalties, if any, in operating expenses in its consolidated statements of comprehensive income (loss). In 2023 and 2022, the Company has not recognized any amount of interest and penalties for uncertain tax positions in its consolidated statements of comprehensive income (loss).

Changes in unrecognized tax benefits were as follows:

	December 31,
	2023
Gross unrecognized tax benefits, January 1	$	—
Changes in balance related to tax position taken during prior periods		329
Gross unrecognized tax benefits, December 31	$	329

As of  December 31, 2023, $9 of this total represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. Interest, penalties, and accrued interest related to unrecognized tax benefits are insignificant for the periods presented.

The Company regularly engages in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions in which it conducts business. Although the timing of the resolutions and/or closures of audits is highly uncertain, it is reasonably possible, that certain U.S. federal and non-U.S. tax audits may be concluded within the next 12 months, which could increase or decrease the balance of our gross unrecognized tax benefits. The Company estimates that unrecognized tax benefits as of December 31, 2023, could decrease by as much as $9 in the next 12 months.

The Company files federal, state, and non-U.S. tax returns in various foreign jurisdictions. For state and non-U.S. tax returns, the Company is generally no longer subject to tax examinations for years prior to 2014. For federal tax returns, the Company is no longer subject to tax examinations for years prior to 2019. The federal tax returns for 2020 through 2022 remain open for examinations. State income tax returns remain open for examination in various states for tax years 2014 through 2022.

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Note 13 - Earnings Per Share

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Earnings Per Share [Text Block]

13. EARNINGS PER SHARE

The following table sets forth the calculation of basic and diluted earnings per share:

	For the years ended December 31,
	2023		2022			2021
Numerator:
Net income (loss)	$	19,180	$	73,774		$	(27,139	)
Less: fair value adjustment for Warrants		—		(57,021	)		—
Net income (loss) - diluted	$	19,180	$	16,753		$	(27,139	)
Denominator:
Weighted average common shares outstanding - basic		117,378,854		116,762,928			89,959,993
Dilutive effect of potential common shares from RSUs		952,161		101,290			—
Dilutive effect of potential common shares from PSUs		179,785		—			—
Dilutive effect of potential common shares from Warrants		—		384,078			—
Weighted average common shares outstanding - diluted		118,510,800		117,248,296			89,959,993
Earnings (loss) per share:
Basic	$	0.16	$	0.63		$	(0.30	)
Diluted	$	0.16	$	0.14		$	(0.30	)

The following outstanding shares of common stock equivalents were excluded from the calculation of diluted earnings per share due to the anti-dilutive effect such shares would have on net loss per common share.

	For the years ended December 31,
	2023		2022		2021
Anti-dilutive shares excluded from calculation of diluted EPS:
Warrants		14,633,311		—		14,666,644
Stock options		886,046		1,709,690		1,386,974
Restricted stock units		146,475		540,344		656,485
Performance stock units		1,822,994		—		—
Unvested Earn-Out Shares		1,093,750		1,093,750		2,187,500
Total anti-dilutive shares		18,582,576		3,343,784		18,897,603

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Note 14 - Benefit Plans

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Defined Benefit Plan [Text Block]

14. BENEFIT PLANS

On January 28, 2022, the Company approved the termination of its defined benefit pension plan (the "Plan"), effective March 31, 2022. The final distribution of Plan assets pursuant to the termination was not made until the plan termination satisfied all regulatory requirements in the fourth quarter of 2022. Plan participants received their accrued benefits from plan assets by electing either lump sum distributions or annuity contracts with a qualifying third-party annuity provider. The resulting settlement effect of the Plan termination was determined based on prevailing market conditions, the lump sum offer participation rate of eligible participants, the actual lump sum distributions, and annuity purchase rates at the date of distribution. As a result, the Plan recognized a final settlement loss of $154. Prior to termination, the Projected Unit Credit Actuarial Cost Method was used to determine the normal cost of the Plan and estimated pension benefit obligation. The fair value of Plan assets on  December 31, 2022, was zero. 

The following table shows the changes in the benefit obligation and plan assets and the plan’s funded status.

	December 31,
	2022
Change in Projected Benefit Obligation:
Benefit obligation, January 1	$	6,104
Service cost		113
Interest cost		138
Plan curtailments		(5,185	)
Benefits paid		(299	)
Expenses paid		(149	)
Actuarial (gain) loss		(722	)
Benefit obligation, December 31	$	—
Change in Plan Assets:
Fair value of plan assets, January 1	$	5,242
Actual return on plan assets		(374	)
Employer contributions		765
Plan settlements		(5,185	)
Benefits paid from plan assets		(299	)
Expenses paid		(149	)
Fair value of plan net assets, December 31	$	—
Funded status at end of period	$	—

There was no remaining accumulated benefit obligation for the Plan on  December 31, 2022. The Company made contributions of $765 and $471 in 2022 and 2021, respectively. There were no participant contributions in 2022 or 2021.

The pre-tax amounts recognized in other comprehensive income were as follows:

	For the years ended December 31,
	2022			2021
Actuarial gain arising during measurement period	$	(129	)	$	(513	)
Amortization of actuarial loss		(154	)		(25	)
Total recognized in other comprehensive (income) loss	$	(283	)	$	(538	)

The following summarizes the components of net periodic benefit cost for the defined benefit pension plan:

	For the years ended December 31,
	2022			2021
Components of expense:
Service cost	$	113		$	143
Interest cost		138			152
Expected return on plan assets		(218	)		(240	)
Settlement loss recognized		154			—
Amortization of net loss		—			25
Net periodic benefit cost	$	187		$	80

Weighted-average assumptions used to determine net cost:

	December 31,
	2022
Discount rate		2.78	%
Expected return on plan assets		5.20	%

401(k) Plan

The Company has a 401(k) savings plan for salaried and non-salaried employees. Participation in the plan is optional. The Company matches employee contributions up to 3.5% each pay period. The Company's matching contributions for the years ended December 31, 2023, 2022, and 2021, include additional discretionary matching contributions of 1.2%, 0%, and 1% based on the Company's performance targets for 2023, 2022 and 2021, respectively. The Company made matching contributions of $3,154, $2,990, and $2,579 for the years ended December 31, 2023, 2022, and 2021, respectively. 

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Note 15 - Equity-based Compensation Plans

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Shareholders' Equity and Share-Based Payments [Text Block]

15. EQUITY-BASED COMPENSATION PLANS

In 2021, the Company adopted the 2021 Omnibus Incentive Plan (the “2021 Plan”), under which awards, including stock options, time-based restricted stock units ("RSUs"), and performance-based restricted stock units ("PSUs") may be granted to employees and non-employee directors. The 2021 Plan authorized 8,850,000 shares of Common Stock to be available for award grants. On  December 31, 2023, 4,679,306 shares of Common Stock remained available for future issuance under the 2021 Plan. On June 6, 2023, the Company granted 1,000,000 time-based RSUs and 1,520,000 PSUs to its new President and Chief Executive Officer. These awards were granted outside of the 2021 Plan as employment inducement awards and did not require shareholder approval under the rules of the NYSE or otherwise. 

Restricted Stock Awards

RSUs and PSU are collectively referred to as “Restricted Stock Awards”. The Compensation Committee has awarded RSUs to select employees and non-employee directors and has awarded PSUs to select employees. The RSUs vest ratably over one to four years of continued employment. The grant date fair value of a time-based award or a performance-based award without a market condition is equal to the market price of Common Stock on the grant date and is recognized over the requisite service period. The grant date fair value of a performance-based award with a market condition is determined using a Monte Carlo simulation and is recognized over the requisite service period. On  December 31, 2023, there was $9,071 of unrecognized compensation cost related to unvested Restricted Stock Awards that is expected to be recognized over a remaining weighted average period of 2.3 years.

The weighted-average grant-date fair value of Restricted Stock Awards granted during the years ended December 31, 2023, 2022, and 2021, was $2.60, $5.87 and $12.06, respectively. The fair value of Restricted Stock Awards vested and converted to shares of Common Stock was $4,231 for the year ended December 31, 2023.

	Unvested Restricted Stock Awards
				Weighted Average
	Number of RSAs			Grant Date Fair Value
Balance on December 31, 2022		1,108,330		$	9.43
Granted (1)		4,954,177			2.60
Vested		(823,337	)		4.96
Forfeited		(334,369	)		8.19
Balance on December 31, 2023		4,904,801		$	2.86

(1) Includes 1.0 million PSUs subject to the Company achieving certain Adjusted EBITDA and sales performance targets during each of fiscal years 2023, 2024, and 2025. The criteria are based on a range of these performance targets in which participants may earn between 0% to 150% of the base number of awards granted. The weighted average grant date fair value of these PSUs was $1.98. The Company assesses the attainment of target payout rates each reporting period. Equity-based compensation expense is recognized for awards deemed probable of vesting.

Performance-based Restricted Stock Units

The PSUs granted under the 2021 Plan represent shares of Common Stock that are potentially issuable in the future based on a combination of performance and service requirements. On March 8, 2023, the Company granted 949,412 PSUs to key employees with a grant date fair value of $1.98 and on May 8, 2023, granted an additional 8,050 PSUs with a grant data fair value of $2.43. The PSUs granted to employees were based on salary and include annual net sales and adjusted EBITDA growth targets with threshold and stretch goals. The awards vest ratably over three years, subject to the employee’s continuous employment through the vesting date and the level of performance achieved. The number of PSUs granted reflects the target number able to be earned under a given award. Non-vested PSU compensation expense is based on the most recent performance assumption available and is adjusted as assumptions change. The fair value of a PSU at the grant date is equal to the market price of Common Stock on the grant date. The cost estimates for PSU grants represent initial target awards until the Company can reasonably forecast the financial performance of each PSU award grant. The actual number of shares of Common Stock to be issued at the end of each performance period will range from 0% to 150% of the initial target awards.

On June 6, 2023, the Company granted 1,520,000 PSUs to its new President and Chief Executive Officer as an employment inducement award. These shares are potentially issuable in the future based on a combination of achievement of certain stock price metrics and service requirements through the expiration date of December 31, 2030. Share-based compensation expense will not be adjusted solely because the market condition is not satisfied, and the award is therefore not earned, provided the requisite service is rendered. The fair value of this award was determined as of the date of the grant using a Monte Carlo valuation model with the following assumptions:

	For the year ended
	December 31, 2023
Expected volatility		60.5	%
Expected dividend		—
Risk-free interest rate		3.67	%

The Company's estimates of fair value may be impacted by certain variables including, but not limited to, stock price volatility, the risk-free interest rate, expected dividend yields, and the Company's performance. Expected volatility is based on a size and leverage-adjusted peer volatility estimate since the Company has limited historical volatility. The expected dividend yield is assumed to be zero since the Company has never paid dividends and does not have current plans to pay any dividends. The risk-free interest rate is based on a term-matched zero-coupon risk-free interest rate derived from the Treasury Constant Maturities yield curve on the valuation date.

Stock Options

Stock option grants have an exercise price at least equal to the market value of the underlying Common Stock on the date of grant, have ten-year terms, and vest ratably over three years of continued employment. In general, vested options expire if not exercised within 90 days of termination of service. Compensation expense for stock options is recorded based on straight-line amortization of the grant date fair value over the requisite service period. On  December 31, 2023, there was $893 of unrecognized compensation cost related to unvested stock options that is expected to be recognized over a remaining weighted-average period of 0.9 years.

The following table presents a summary of stock option activity for the year ended December 31, 2023:

						Weighted Average
				Weighted		Remaining		Aggregate
	Number of			Average		Contractual		Intrinsic Value
	Stock Options			Exercise Price		Term (years)		(in millions)
Options outstanding on December 31, 2022		1,709,690		$	10.97
Forfeited		(628,770	)		11.12
Expired		(194,874	)		10.50
Options outstanding on December 31, 2023		886,046		$	10.97		7.33	$	—
Options exercisable on, December 31, 2023		512,370		$	10.79		6.94	$	—

The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2022 and 2021, was $4.65 and $3.88, respectively. The fair value of each stock option granted in 2022 and 2021 was estimated on the grant date using a Black-Scholes option pricing model with the following assumptions:

	For the years ended December 31,
	2022			2021
Weighted-average expected term	6.0 years			6.0 years
Expected volatility		36.0% - 40.0	%		40.3	%
Expected dividend		—			—
Risk-free interest rate		1.98% - 3.06	%		0.94	%

The expected term has been estimated using a simplified method, which calculates the expected term as the mid-point between the vesting date and the contractual life of the awards since the Company does not have an extended history of actual exercises. The expected dividend yield is assumed to be zero since the Company has never paid dividends and does not have current plans to pay any dividends. The risk-free interest rate is based on yields of U.S. Treasury securities with maturities similar to the expected term of the options. Expected volatility is based on an evenly weighted blend of implied volatility and historical volatility of publicly traded peer companies since the Company has limited historical volatility.

Profit Interest Units

The Holley Stockholder authorized an incentive pool of 41,400,000 units of Holley Stockholder that its management had the right to grant to certain employees of the Company. The units, which are designated as Profit Interest Units (“PIU's”), are a special type of limited liability company equity unit that allows the recipient to potentially participate in a future increase in the value of the Company. The PIUs were issued for no consideration and generally provided for vesting over a requisite service period, subject to the recipient remaining an employee of the Company through each vesting date. Compensation expense related to PIUs is recorded based on the grant-date fair value over the requisite service period. For the years ended December 31, 2022 and 2021, 36,506,814 and 1,693,804 PIUs vested with total grant-date fair values of $20,276 and $535, respectively.

In October 2022, the Holley Stockholder amended the vesting criteria to allow for immediate vesting of all outstanding and unvested PIUs. The changes to these awards were deemed to be modification events under ASC Subtopic 718-10, Stock Compensation. Accordingly, during the year ended December 31, 2022, the Company recognized a cumulative adjustment of $11,351, including incremental fair value resulting from the modification, as applicable to each award grant, presented in selling, general and administrative expenses. At that time all PIUs were fully vested with no remaining unrecognized compensation cost, and there are no remaining PIUs authorized for issuance.

Prior to October 2022, the Holley Stockholder's had granted 24,074,944 PIUs that contained certain performance vesting criteria related to the attainment of specified levels of return for certain other investors in the Holley Stockholder and the occurrence of certain events. Compensation expense for these performance-based awards was not recognized prior to the early vesting date, as meeting the necessary performance conditions for vesting was not considered probable. The early vesting of these awards was classified as a Type III: Improbable to Probable modification event under ASC Subtopic 718-10, and the fair value of the modified awards was estimated on the modification date using a Black-Scholes option pricing model. The fair value of PIUs was estimated on the grant date with the following assumptions:

	For the years ended December 31,
	2022			2021
Weighted-average expected term		3.0 years			2.0 years
Expected volatility		65.0	%		55.0	%
Expected dividend		—			—
Risk-free interest rate		4.3	%		0.3	%

Determining the fair value of PIUs is affected by estimates involving inherent uncertainties, as well as assumptions regarding a number of other complex and subjective variables. These variables include the fair value of the equity unit classes, value adjustments for a reduction in marketability, expected unit price volatility over the expected term of the units, unit redemption and cancellation behaviors, risk-free interest rates and expected dividends.

The expected term has been estimated based on the contractual terms, vesting schedules and expectations of future unit holder behavior. The expected dividend yield is assumed to be zero since the Company has never paid dividends and does not have current plans to pay any dividends. The risk-free interest rate is based on yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group. As the Holley Stockholder is a private company and does not have a trading history for its equity units, the expected price volatility for the equity units is estimated by taking the average historical price volatility for industry peers. Industry peers, which the Company has designated, consist of several public companies in the industry similar in size, stage of life cycle and financial leverage.

The components of share-based compensation expense, included within selling, general and administrative costs in the consolidated statements of comprehensive income, is as follows:

	For the years ended December 31,
	2023		2022		2021
Restricted stock units	$	4,371	$	4,304	$	1,070
Performance stock units		2,343		—		—
Stock options		577		2,349		824
Profit interest units		—		17,742		3,069

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Note 16 - Lease Commitments

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

16. LEASE COMMITMENTS

The Company leases retail stores, manufacturing, distribution, engineering, and research and development facilities, office space, equipment, and automobiles under operating lease agreements. Leases have remaining lease terms of one to 14 years, inclusive of renewal options that the Company is reasonably certain to exercise. Taxes, insurance and maintenance expenses relating to all leases are obligations of the Company.

The following table summarizes operating lease assets and obligations and provides information associated with the measurement of operating lease obligations:

	December 31,
	2023			2022
Assets:
Operating right of use assets	$	29,250		$	29,522
Liabilities:
Current operating lease liabilities - Accrued liabilities	$	4,948		$	5,112
Long-term operating lease liabilities - Other noncurrent liabilities		25,177			24,992
Total lease liabilities	$	30,125		$	30,104
Lease term and discount rate
Weighted average remaining lease term (in years)		7.2			7.9
Weighted average discount rate		6.21	%		5.77	%

The following summarizes the components of operating lease expense and provides supplemental cash flow information for operating leases:

	For the years ended December 31,
	2023		2022
Components of lease expense:
Operating lease expense	$	6,629	$	7,294
Short-term lease expense		1,953		2,402
Variable lease expense		314		763
Total lease expense	$	8,896	$	10,459
Supplemental cash flow information related to leases:
Cash paid for amounts included in measurement of operating lease liabilities	$	7,024	$	7,311
Right-of-use assets obtained in exchange for new operating lease liabilities		6,531		13,942
Decapitalization of right-of-use assets upon lease termination or modification		1,320		12,658

The short-term lease expense for the period does not reasonably reflect the Company's short-term lease commitments. The Company's short-term lease commitments as of December 31, 2023, were approximately $540.

The following table summarizes the maturities of the Company's operating lease liabilities on  December 31, 2023:

2024	$	6,651
2025		5,202
2026		4,715
2027		4,695
2028		4,442
Thereafter		11,918
Total lease payments		37,623
Less imputed interest		(7,498	)
Present value of lease liabilities	$	30,125

For the year ended December 31, 2021, total rent expense under operating leases approximated $8,412. 

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Note 17 - Major Reseller Customers

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

17. MAJOR RESELLER CUSTOMERS

The Company's reseller customers include many large and well-known automotive parts retailers and distributors. The following table summarizes resellers that individually account for more than 5% of the Company’s net sales in any of the periods presented:

	For the years ended December 31,
	2023			2022			2021
Customer A		21.4	%		19.2	%		19.3	%

The following reseller customers accounted for 10% or more of the Company’s account receivable balance in any of the periods presented:

	December 31,
	2023			2022
Customer A		16.4	%		11.3	%

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Note 18 - Acquisition, Restructuring and Management Fee Costs

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Restructuring, Impairment, and Other Activities Disclosure [Text Block]

18. ACQUISITION, RESTRUCTURING AND MANAGEMENT FEE COSTS

The following table summarizes total acquisition, restructuring and management fee costs:

	For the years ended December 31,
	2023		2022		2021
Acquisitions (1)	$	—	$	1,887	$	5,074
Restructuring (2)		2,641		2,626		1,421
Management fees (3)		—		—		25,789
Earn out adjustment (4)		—		—		17,173
Total acquisition and restructuring costs	$	2,641	$	4,513	$	49,457

(1) Includes professional fees for legal, accounting, consulting, administrative, and other professional services directly attributable to acquisitions.

(2)	Includes costs incurred as part of the restructuring of operations including professional and consulting services and executive severance. 2023 includes executive severance cost of $591, of which $407 was paid during the year and $184 remained accrued as of December 31, 2023.
(3)	Includes acquisition costs and management fees paid to Sentinel Capital Partners, including a fee of $23,275 paid in 2021 upon the Closing of the Business Combination.
(4)	A fair value adjustment to the contingent consideration payable from the Simpson acquisition.

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Note 19 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

19. COMMITMENTS AND CONTINGENCIES

Litigation 

The Company is a party to various lawsuits and claims in the normal course of business, as well as the putative securities class action described below. While the lawsuits and claims against the Company cannot be predicted with certainty, management believes that the ultimate resolution of such matters will not have a material effect on the consolidated financial position or liquidity of the Company; however, in light of the inherent uncertainties involved in such lawsuits and claims, some of which may be beyond the Company’s control, an adverse outcome in one or more of these matters could be material to the Company’s results of operations or cash flows for any particular reporting period.

A putative securities class action was filed on November 6, 2023, against the Company, Tom Tomlinson (the Company’s former Director, President, and Chief Executive Officer), and Dominic Bardos (the Company’s former Chief Financial Officer) in the United States District Court for the Western District of Kentucky (the “Complaint”) and is captioned City of Fort Lauderdale General Employees’ Retirement System v. Holley, Inc., f/k/a Empower LTD., Tom Tomlinson, and Dominic Bardos, Civil Action No. 1:23-cv-148-S.

On February 26, 2024, the court appointed City of Fort Lauderdale General Employees’ Retirement System to serve as lead plaintiff to prosecute claims on behalf of a proposed class of stockholders who purchased or otherwise acquired Holley securities between July 21, 2021 and February 6, 2023.  Lead plaintiff alleges that statements made regarding the Company’s business, operations, and prospects violated Sections 10(b), Section 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 and seeks class certification, damages, interest, attorneys’ fees, and other relief.

Due to the early stage of this proceeding, we cannot reasonably estimate the potential range of loss, if any. The Company disputes the allegations and intends to vigorously defend against them.

Product Warranties 

The Company generally warrants its products against certain manufacturing and other defects. These product warranties are provided for specific periods of time depending on the nature of the product. The accrued product warranty costs are based primarily on historical experience of actual warranty claims and are recorded at the time of the sale.

The following table provides the changes in the Company's accrual for product warranties, which is classified as a component of accrued liabilities in the consolidated balance sheets.

	For the years ended December 31,
	2023			2022			2021
Beginning balance	$	3,584		$	3,994		$	3,989
Accrued for current year warranty claims		11,362			12,261			10,185
Settlement of warranty claims		(11,621	)		(12,671	)		(10,180	)
Ending balance	$	3,325		$	3,584		$	3,994

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Emerging Growth Company [Policy Text Block]

Emerging Growth Company Status

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company is an emerging growth company, and, as such, has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards.

Risks And Uncertainties [Policy Text Block]

Risks and Uncertainties

The Company's business and results of operations, financial condition, and liquidity are impacted by broad economic conditions including inflation, labor shortages, and disruption of the supply chain, 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). The Company's operations have been adversely impacted by inflationary pressures primarily related to transportation, labor and component costs. Sales growth in certain products has been constrained by supply chain challenges and automotive electronic component shortages. In response to the global supply chain volatility and inflationary impacts, the Company has attempted to minimize potential adverse impacts on its business with cost savings initiatives, price increases to customers, and by closely monitoring inventory levels of certain products and working closely with its 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 to lower-margin products, and demands on our performance that increase our costs. Should the ongoing macroeconomic conditions not improve, or worsen, or if the Company's attempt to mitigate the impact on its supply chain, operations and costs is not successful, the Company’s business, results of operations and financial condition may be adversely affected.

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation.

Reclassification, Comparability Adjustment [Policy Text Block]

Reclassifications

Certain previously reported amounts in the accrued liabilities footnote have been reclassified between line items to conform to the current period presentation.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. These estimates require the use of judgment as future events, and the effect of these events, cannot be predicted with certainty. The estimates will change as new events occur, as more experience is acquired and as more information is obtained. The Company evaluates and updates assumptions and estimates on an ongoing basis and may consult outside experts to assist as considered necessary.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company's cash and cash equivalents include cash and deposits, including an overnight sweep account where funds are transferred to an interest-bearing deposit account that is insured by the Federal Deposit Insurance Corporation ("FDIC"). The FDIC insures financial institution deposits up to $250. The Company maintains deposits exceeding $250 in certain accounts at financial institutions in the United States. On  December 31, 2023 and 2022, the Company had cash in foreign bank accounts of $4,975 and $5,878, respectively. Cash and cash equivalent in foreign bank accounts are primarily held in Italy. Italian deposits are insured up to €100 per depositor, per bank. The Company maintains deposits exceeding €100 in certain accounts at financial institutions in Italy. The Company has not incurred any losses in these accounts.

Accounts Receivable [Policy Text Block]

Accounts Receivable and Allowance for Credit Losses

Accounts receivable represent amounts due from customers in the ordinary course of business. The receivables are stated at the amount management expects to collect. The Company is subject to risk of loss from uncollectible receivables in excess of its allowance. The Company maintains an allowance for credit losses for estimated losses from customers’ inability to make required payments. In order to estimate the appropriate level of this allowance, the Company analyzes historical bad debts, customer concentrations, current customer creditworthiness, current economic trends and changes in customer payment patterns. Accounts are written off when management determines the account is uncollectable. Interest is not charged on past due accounts.

Inventory, Policy [Policy Text Block]

Inventory Valuation

The Company's 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.

Segment Reporting, Policy [Policy Text Block]

Segments

The Company's operations are managed and reported to its Chief Executive Officer (“CEO”), the Company’s chief operating decision maker, on a consolidated basis. The CEO assesses performance and allocates resources based on the consolidated results of operations. Under this organizational and reporting structure, the Company has one reportable segment.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

Goodwill represents the excess of purchase price over the fair value of the net assets of businesses acquired. On an annual basis or whenever events or changes in circumstances indicate the carrying value of goodwill may have been impaired, the Company may perform a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill. If the Company determines that the fair value of the reporting unit is less than its carrying amount or elects not to perform a qualitative assessment, it will perform a quantitative analysis; otherwise, no further evaluation is necessary. For the quantitative impairment assessment, the Company compares the fair value of the reporting unit to its carrying value, including goodwill. The Company determines the fair value of the reporting unit based on a weighting of income and market approaches. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company will recognize a loss equal to the excess, limited to the total amount of goodwill allocated to that reporting unit. Impairments, if any, are charged directly to earnings. 

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Intangible Assets Other Than Goodwill

Tradenames acquired in certain business combinations were determined to have indefinite useful lives and are not amortized, but instead are tested for impairment on an annual basis and when facts and circumstances indicate that the carrying values of the assets may be impaired. If such review indicates an asset’s carrying value may not be recoverable, an impairment loss is recognized for the excess of the carrying value over the fair value of the asset.

As part of separate business acquisitions, the Company’s customer relationships, technology and certain tradenames were identified as definite-lived intangible assets. The customer relationship intangible assets are being amortized over a ten to twenty-five year life based on the attrition rate of customers with a weighted-average amortization period of 23.6 years. The technology intangible assets are being amortized over a five to fourteen year life based on the lifecycle of previous technology with a weighted-average amortization period of 12.1 years. The tradenames are being amortized over a fifteen to twenty year life based on the estimated life of the tradename with a weighted-average amortization period of 19.2 years. The weighted-average amortization period for all amortizable intangibles on a combined basis is 22.5 years.

Property, Plant and Equipment, Policy [Policy Text Block]

Property, Plant and Equipment

Property, plant and equipment acquired in various acquisitions have been recorded at fair value. All other property, plant and equipment is recorded at cost. Depreciation and amortization are provided for using the straight-line method over the estimated useful lives of the assets. Estimated useful lives for new property, plant and equipment additions are seven to twenty-five years for buildings, three to ten years for machinery and equipment, and the shorter of the estimated lease term or useful life for leasehold improvements. Maintenance, repairs, and betterments which do not enhance the value of or increase the life of the assets are expensed as incurred.

Lessee, Leases [Policy Text Block]

Leases

Operating lease right of use ("ROU") assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. The Company's leases may include options to extend or terminate the lease. These options to extend are included in the lease term when it is reasonably certain that the Company will exercise that option. Some leases have variable payments, however, because they are not based on an index or rate, they are not included in the ROU assets and liabilities. Variable payments for real estate leases primarily relate to common area maintenance, insurance, taxes and utilities. Since the Company's leases generally do not provide an implicit rate, the Company applies a portfolio approach using an estimated incremental borrowing rate based on the lease term and other information available at the commencement date in determining the present value of lease payments. The rate applied is based on the currency of the lease. Leases having a lease term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the term of the lease. In addition, the Company has applied the practical expedient to account for the lease and non-lease components as a single lease component for all of the Company's leases. 

Debt, Policy [Policy Text Block]

Debt Issuance Costs

Debt issuance costs include fees and costs incurred to obtain financing. Debt issuance costs related to the Company's term loans are presented in the consolidated balance sheet as a direct deduction from the carrying amount of the term loans. These fees and costs are being amortized using the effective interest method over the term of the related loans and are included in interest expense in the Company's consolidated statements of comprehensive income (loss). If the debt is retired before its scheduled maturity date, any remaining unamortized debt issuance costs are written off in the period the debt is retired as a non-operating expense in the statement of operations as loss on the early extinguishment of debt. For the years ended 2023, 2022 and 2021, the amortization of debt issuance costs included in interest expense was $1,780, $1,707, and $3,182, respectively.

Self Insurance Reserve [Policy Text Block]

Self-Insurance

The Company is self-insured for employee medical and prescription drug benefits up to certain stop loss coverage amounts. The Company accrues an estimate for unpaid claims, as well as incurred but not reported claims, based upon the Company’s claim experience and expectations of future claim activity. The resulting liability and expense are reflected as a component of accrued expenses, cost of sales and selling, general and administrative expenses in the accompanying consolidated balance sheets and consolidated statements of comprehensive income (loss), respectively.

Revenue [Policy Text Block]

Revenue Recognition

The Company recognizes revenue with customers when control of the promised goods transfers to the customer. This generally occurs when the product is shipped to the customer. Revenue is recorded at the amount of consideration the Company expects to be entitled to in exchange for the delivered goods, which includes an estimate of variable consideration, expected returns, or refunds when applicable. The Company estimates variable consideration, such as sales incentives, by using the most likely amount approach, which considers the single most likely amount from a range of possible consideration amounts. Estimates of variable consideration result in an adjustment to the transaction price such that it is probable that a significant reversal of cumulative revenue would not occur in the future. Sales incentives and allowances are recognized as a reduction to revenue at the time of the related sale. Revenue is recorded net of sales tax. Shipping and handling fees billed to customers are included in net sales, while costs of shipping and handling to customers are included in selling, general and administrative costs. 

For more information about the Company’s revenue from contracts with customers, see Note 11, “Revenue”.

Customer Sales Incentives

Sales incentives provided take the form of either sales discounts or rebates and are treated as a reduction of net sales. The Company also maintains a cooperative advertising program with its customers and provides sales incentives to the extent of the estimated value of advertising provided by the customer on behalf of the Company. The costs incurred under the cooperative advertising program are included as a reduction of net sales.

Product Warranty 

The Company generally warrants its products against certain manufacturing and other defects. These product warranties are provided for specific periods of time depending on the nature of the product. The accrued product warranty costs are based primarily on historical experience of actual warranty claims and are recorded at the time of the sale. These obligations are recorded within accrued liabilities in the consolidated balance sheets (see also Note 19, “Commitments and Contingencies” for additional information on warranty reserves). Significant judgments and estimates must be made and used in connection with establishing warranty allowances in any accounting period. Revision of these estimates is made, when necessary, based upon changes in these factors.

Sales Returns

Estimated sales returns and allowances are recorded as a charge against gross sales in the period in which the related sales are recognized, net of returns to stock. The Company’s customers are permitted to return new, undamaged products within customer-specific limits (which are generally limited to a specified percentage of their annual purchases) in the event that they have overstocked their inventories. The Company estimates sales returns based primarily upon actual historical returns, planned product discontinuances, and promotional sales. Returned products, which are recorded as inventories, are valued at the lower of cost or net realizable value. The physical condition and marketability of the returned products are the major factors considered in estimating realizable value. 

Cost of Goods and Service [Policy Text Block]

Cost of Goods Sold 

Cost of goods sold primarily consists of materials and labor expense in the manufacturing of the Company’s products sold to its customers. Cost of goods sold also includes provisions for excess and obsolete inventory, warranty costs, certain allocated costs for facilities, depreciation and other manufacturing overhead. 

Selling, General and Administrative Expenses, Policy [Policy Text Block]

Selling, General and Administrative Expenses 

Selling, general and administrative expenses include personnel costs for employees in selling, general and administrative functions (including equity-based compensation); costs to operate shop locations, corporate offices and back-office support centers; costs to transport products from facilities to our customers; and other selling, general and administrative expenses, such as professional fees, supplies, and advertising expenses.

Income Tax, Policy [Policy Text Block]

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company recognizes income tax positions only if those positions are “more likely than not” of being sustained upon examination by taxing authorities. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company recognizes interest on liabilities for uncertain tax positions in interest expense and would recognize penalties, if any, in operating expenses in its consolidated income statements. The Company has no amounts accrued for such interest or penalties on  December 31, 2023 and 2022. The Company files income tax returns in the U.S. federal jurisdiction and various foreign and state jurisdictions.

On  December 31, 2023, the Company had approximately $329 of unrecognized tax benefits. There were no unrecognized tax benefits on  December 31, 2022. The statute of limitations remains open for U.S. federal income tax examinations for the years ended December 31, 2020, through December 31, 2022. U.S. state jurisdictions have statues of limitations generally ranging from three to eight years. The Company does not expect the total amount of unrecognized tax benefits to significantly change in the next 12 months.

Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block]

Impairment or Disposal of Long-Lived Assets

The Company accounts for long-lived assets, including intangible assets subject to amortization, in accordance with the provisions that require long-lived assets, such as property and equipment, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the sum of undiscounted net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Advertising Cost [Policy Text Block]

Advertising

Advertising production costs are expensed the first time the advertising takes place. Total advertising expenses were $5,987, $7,159, and $6,299 for the years ended December 31, 2023, 2022, and 2021, respectively. Advertising costs are classified as a component of selling, general and administrative costs in the accompanying consolidated statements of comprehensive income (loss).

Research and Development Expense, Policy [Policy Text Block]

Research and Development Costs

Research, development, pre-production and start-up costs related to both present and future products are expensed as incurred. Such costs amount to $23,844, $29,083, and $28,280 for the years ended December 31, 2023, 2022, and 2021, respectively.

Comprehensive Income, Policy [Policy Text Block]

Other Comprehensive Income (Loss)

Comprehensive income (loss) encompasses all changes in stockholder’s equity and includes net income, change in the foreign currency translation adjustment and minimum pension liability gains. The Company’s accumulated other comprehensive loss shown on the consolidated balance sheets on  December 31, 2023 and 2022 consists of foreign currency translation adjustments of $710 and $944, respectively.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currencies

The functional currency of the Company’s Italian subsidiary is the Euro. Assets and liabilities of foreign operations are translated using period end exchange rates. Revenue and expenses are translated using average exchange rates during each period reported. Translation gains (losses) are reported in accumulated other comprehensive loss as a component of shareholders equity and were $234, ($990), and $30 for the years ended December 31, 2023, 2022 and 2021, respectively. The Company recognizes foreign currency transaction gains (losses) on certain assets and liabilities. These transaction (gains) losses are reported in other expense in the consolidated statements of comprehensive income (loss) and were $278, ($97), and $44 for the years ended December 31, 2023, 2022 and 2021, respectively.

Earnings Per Share, Policy [Policy Text Block]

Earnings per Share

Earnings per share is computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. The dilutive effect of these potential common shares is reflected in diluted earnings per share by application of the treasury stock method.

Warrant and Forward Purchase Agreement Liabilities [Policy Text Block]

Warrants

The Company accounts for warrants to purchase its common stock as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Accounting Standards Codification ("ASC") Topic 480, Distinguishing Liabilities from Equity, and ASC Topic 815, Derivatives and Hedging. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC Topic 480, meet the definition of a liability pursuant to ASC Topic 480, and whether the warrants meet all of the requirements for equity classification under ASC Topic 815, including whether the warrants are indexed to the Company’s own shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

Share-Based Payment Arrangement [Policy Text Block]

Equity-Based Compensation

The Company accounts for equity-based awards granted to employees and nonemployees under the fair value method prescribed by ASC Subtopic 718-10, Stock Compensation. Equity-based compensation cost is measured based on the estimated grant date fair value of the award and is recognized as expense over the requisite service period (generally the vesting period). The fair value of stock options is estimated using the Black Scholes option-pricing model. Restricted stock units are valued at the stock price on the grant date. The fair value of profit interest units granted by the Holley Stockholder is estimated based on the Company’s estimated equity value for each unit class at the time of granting using the Black-Scholes option-pricing model, discounted to reflect market considerations for illiquidity.

Performance share units that vest based on the achievement of company-designated performance targets are valued at the stock price on the grant date. Compensation expense in respect of such performance share units is recognized each period based on the expected level of achievement and, to the extent that the expected levels of achievement change, compensation cost is adjusted in the period of change with the remaining unrecognized cost recognized over the remaining requisite service period. For performance share units that vest based on the achievement of predetermined market conditions, the Company estimates the grant date fair value using a Monte Carlo simulation model. The fair value associated with each tranche of the award is recognized, straight-line, over the associated requisite service period for that tranche, subject to acceleration if the market condition is met prior to the end of the derived service period. 

Unless the awards contain a market condition, previously recognized expense related to forfeited awards is reversed in the period in which the forfeiture occurs. For awards containing a market condition, previously recognized stock-based compensation expense is not reversed when the awards are forfeited as long as the service is provided for the duration of the required service period.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimizes the use of unobservable inputs to the extent possible. The inputs used to measure fair value are prioritized based on a three-level hierarchy, which are defined as follows:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Derivatives, Reporting of Derivative Activity [Policy Text Block]

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, Derivatives and Hedging. For derivative financial instruments that are accounted for as assets or liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified on the balance sheet as current or non-current based on whether or not net cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. 

The Company uses derivative instruments to manage its exposure to changes in interest rates on borrowings under its debt facility. These derivative instruments are primarily valued on the basis of quotes obtained from banks, brokers, and/or dealers. The valuation of the derivative instruments considers future expected interest rates on the notional principal balance remaining, which is comparable to what a prospective acquirer would pay on the measurement date. Valuation pricing models consider inputs such as forward rates, anticipated interest rate volatility relating to the reference rate, as well as time value, counterparty risk and other factors underlying derivative instruments. 

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk 

Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash and accounts receivable. The Company controls its exposure to credit risk associated with these instruments by (i) placing cash and cash equivalents with several major financial institutions and (ii) maintaining strict policies over credit extension that include credit evaluations, credit limits and monitoring procedures. For more information on the Company’s net sales to its three largest customers, see Note 17, “Major Reseller Customers”.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

Accounting Standards Recently Adopted

In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU requires entities to apply the definition of a performance obligation under ASC Topic 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers that are acquired in a business combination. Prior to the adoption of ASU 2021-08, an acquirer generally recognized assets acquired, and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU No. 2021-08 results in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. The Company adopted ASU 2021-08 on January 1, 2023. Adoption of ASU 2021-08 did not impact the Company's consolidated financial statements.

Accounting Standards Not Yet Adopted

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to SEC's Disclosure Update and Simplification Initiative. This ASU amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company will monitor the removal of various requirements from the current regulations in order to determine when to adopt the related amendments, but it does not anticipate that the adoption of the new guidance will have a material impact on the Company’s consolidated financial statements and related disclosures. The Company will continue to evaluate the impact of this guidance on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard requires interim and annual disclosure of significant segment expenses that are regularly provided to the chief operating decision-maker ("CODM") and included within the reported measure of a segment’s profit or loss, requires interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually, requires disclosure of the position and title of the CODM, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, and contains other disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires additional disclosures of various income tax components that affect the rate reconciliation based on the applicable taxing jurisdictions, as well as the qualitative and quantitative aspects of those components. The standard also requires information pertaining to taxes paid to be disaggregated for federal, state and foreign taxes, and contains other disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2024 and interim periods within fiscal years beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its consolidated financial statements and related disclosures.

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Schedule II - Valuation and Qualifying Accounts (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Summary of Valuation Allowance [Table Text Block]

			Charged				Charged
	Balance at		(Credited)		Reserves		Against		Balance at
	Beginning of		to Costs and		from		Allowances		End of
	Period		Expenses		Acquisitions		(1) (2)		Period
Accounts receivable reserve:
Year ended December 31, 2021:
Bad debt reserve	$	813	$	809	$	—	$	666	$	956
Cash discount reserve		426		6,173		—		6,169		430
Year ended December 31, 2022:
Bad debt reserve		956		878		—		672		1,162
Cash discount reserve		430		5,941		—		5,983		388
Year ended December 31, 2023:
Bad debt reserve		1,162		1,016		—		1,122		1,056
Cash discount reserve		388		5,991		—		5,858		521
Inventory valuation reserve:
Year ended December 31, 2021:
Expired and obsolete reserve		22,052		3,806		1,226		804		26,280
Year ended December 31, 2022:
Expired and obsolete reserve		26,280		13,410		—		1,156		38,534
Year ended December 31, 2023:
Expired and obsolete reserve		38,534		1,802		—		6,362		33,974
(1) Write-off of uncollectible accounts, net of recoveries.
(2) Write-off of obsolete inventory, net of inventory adjustments.

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Note 2 - Business Combination, Acquisitions and Divestiture (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Schedule of Elements of Business Combination to Cash Flows [Table Text Block]

	Recapitalization
Cash - Empower's trust and cash (net of redemptions of $99,353 and transaction costs of $44,314)	$	107,017
Cash - Forward Purchase Agreement		50,000
Cash - PIPE Financing		240,000
Net cash provided by Business Combination and PIPE Financing		397,017
Less: cash consideration paid to Holley Stockholder		(264,718	)
Net contributions from Business Combination and PIPE Financing	$	132,299

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

	2022			Measurement Period			2022
	(as initially reported)			Adjustments			(as adjusted)
Accounts receivable	$	959		$	(397	)	$	562
Inventory		3,481			146			3,627
Property, plant and equipment		275			—			275
Other assets		1,132			(1,108	)		24
Tradenames		1,689			—			1,689
Customer relationships		1,512			—			1,512
Goodwill		5,858			1,494			7,352
Accounts payable		(25	)		(133	)		(158	)
Accrued liabilities		(18	)		(2	)		(20	)
	$	14,863		$	—		$	14,863

	2021			Measurement Period			2021
	(as initially reported)			Adjustments			(as adjusted)
Cash	$	122		$	—		$	122
Accounts receivable		618			—			618
Inventory		3,975			—			3,975
Property, plant and equipment		2,274			—			2,274
Other assets		23			—			23
Tradenames		2,608			—			2,608
Customer relationships		2,450			—			2,450
Goodwill		11,017			(2,828	)		8,189
Accounts payable		(343	)		—			(343	)
Accrued liabilities		(129	)		122			(7	)
	$	22,615		$	(2,706	)	$	19,909

	December 23, 2021			Measurement Period			December 23, 2021
	(as initially reported)			Adjustments			(as adjusted)
Accounts receivable	$	627		$	—		$	627
Inventory		1,813			—			1,813
Property, plant and equipment		695			—			695
Other assets		76			—			76
Tradenames		4,630			—			4,630
Customer relationships		6,075			—			6,075
Goodwill		8,363			(79	)		8,284
Accounts payable		(81	)		79			(2	)
Accrued liabilities		(28	)		—			(28	)
	$	22,170		$	—		$	22,170

	December 16, 2021			Measurement Period		December 16, 2021
	(as initially reported)			Adjustments		(as adjusted)
Accounts receivable	$	22		$	—	$	22
Inventory		1,682			—		1,682
Property, plant and equipment		20			—		20
Other assets		13			—		13
Tradenames		4,975			—		4,975
Goodwill		19,561			299		19,860
Accounts payable		(34	)		—		(34	)
Accrued liabilities		(403	)		—		(403	)
	$	25,836		$	299	$	26,135

	April 14, 2021			Measurement Period			April 14, 2021
	(as initially reported)			Adjustments			(as adjusted)
Accounts receivable	$	3,454		$	(61	)	$	3,393
Inventory		3,892			—			3,892
Property, plant and equipment		1,342			—			1,342
Other assets		493			(91	)		402
Tradenames		10,760			—			10,760
Customer relationships		14,640			—			14,640
Patents		1,970			—			1,970
Technology intangibles		110			—			110
Goodwill		17,426			(420	)		17,006
Accounts payable		(2,032	)		110			(1,922	)
Accrued liabilities		(489	)		139			(350	)
	$	51,566		$	(323	)	$	51,243

Business Acquisition, Pro Forma Information [Table Text Block]

	For the year ended December 31,
	2021
Pro forma net sales	$	727,369
Pro forma net income		(16,248	)

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Note 3 - Inventory (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	December 31,
	2023		2022
Raw materials	$	63,552	$	78,586
Work-in-process		22,619		23,906
Finished goods		106,089		131,081
	$	192,260	$	233,573

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Note 4 - Property, Plant and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Property, Plant and Equipment [Table Text Block]

	December 31,
	2023		2022
Land	$	3,326	$	3,426
Buildings and improvements		11,404		11,051
Machinery and equipment		73,332		66,140
Construction in process		6,224		9,563
Total property, plant and equipment		94,286		90,180
Less: accumulated depreciation		47,080		37,999
Property, plant and equipment, net	$	47,206	$	52,181

Long-Lived Assets by Geographic Areas [Table Text Block]

	December 31,
	2023		2022
United States	$	44,931	$	50,434
International		2,275		1,747
Total property, plant and equipment, net	$	47,206	$	52,181

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Note 5 - Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Schedule of Goodwill [Table Text Block]

Balance on December 31, 2021	$	411,383
John's acquisition		240
SKC acquisition		1,270
RaceQuip acquisition		4,348
Measurement period adjustments		880
Balance on December 31, 2022		418,121
Measurement period adjustments		935
Balance on December 31, 2023	$	419,056

Schedule of Intangible Assets [Table Text Block]

	December 31, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
Finite-lived intangible assets:
Customer relationships	$	269,950	$	(55,732	)	$	214,218
Tradenames		13,775		(5,569	)		8,206
Technology		26,676		(13,800	)		12,876
Total finite-lived intangible assets	$	310,401	$	(75,101	)	$	235,300
Indefinite-lived intangible assets:
Tradenames	$	175,165		—		$	175,165

	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
Finite-lived intangible assets:
Customer relationships	$	269,950	$	(44,178	)	$	225,772
Tradenames		13,775		(4,843	)		8,932
Technology		26,676		(11,523	)		15,153
Total finite-lived intangible assets	$	310,401	$	(60,544	)	$	249,857
Indefinite-lived intangible assets:
Tradenames	$	174,998		—		$	174,998

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

2024	$	13,744
2025		13,714
2026		13,608
2027		13,601
2028		13,601
Thereafter		167,032
Total	$	235,300

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Note 6 - Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Schedule of Accrued Liabilities [Table Text Block]

	December 31,
	2023		2022
Accrued freight	$	5,654	$	6,861
Accrued employee compensation and benefits		11,696		7,635
Accrued returns, allowances and warranties		11,267		8,798
Accrued taxes		1,475		6,697
Current portion of operating lease liabilities		4,948		5,112
Accrued other		7,089		8,214
Total accrued liabilities	$	42,129	$	43,317

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Note 7 - Debt (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Schedule of Debt [Table Text Block]

	December 31,
	2023			2022
First lien term loan due November 17, 2028	$	592,505		$	649,350
Revolver		—			10,000
Other		1,974			2,770
Less unamortized debt issuance costs		(10,308	)		(11,557	)
		584,171			650,563
Less current portion of long-term debt		(7,461	)		(7,000	)
	$	576,710		$	643,563

Schedule of Maturities of Long-Term Debt [Table Text Block]

		Debt		Debt Issuance Costs
2024	$	7,461	$	1,770
2025		7,656		1,921
2026		6,571		2,087
2027		6,572		2,271
2028		566,219		2,259
	$	594,479	$	10,308

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Note 10 - Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	Fair Value Measured on December 31, 2023
	Level 1		Level 2		Level 3		Total
Warrant liability (Public)	$	5,480	$	—	$	—	$	5,480
Warrant liability (Private)		—		—		2,903		2,903
Earn-out liability		—		—		3,479		3,479
Interest rate collar liability		—		1,164		—		1,164
Total fair value liabilities	$	5,480	$	1,164	$	6,382	$	13,026

	Fair Value Measured on December 31, 2022
	Level 1		Level 2		Level 3		Total
Warrant liability (Public)	$	2,691	$	—	$	—	$	2,691
Warrant liability (Private)		—		—		1,581		1,581
Earn-out liability		—		—		1,176		1,176
Total fair value liabilities	$	2,691	$	—	$	2,757	$	5,448

Fair Value Measurement Inputs and Valuation Techniques [Table Text Block]

	2023			2022
Valuation date price	$	4.87		$	2.12
Strike price	$	11.50		$	11.50
Remaining life (in years)		2.54			3.54
Expected dividend	$	—		$	—
Risk-free interest rate		4.01	%		4.06	%
Price threshold	$	18.00		$	18.00

	2023			2022
Valuation date price	$	4.87		$	2.12
Expected term (in years)		4.54			5.54
Expected volatility		67.20	%		70.33	%
Risk-free interest rate		3.79	%		3.88	%
Price hurdle	$	15.00		$	15.00

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Private Warrants			Earn-Out Liability			Total
Balance on December 31, 2021	$	21,793		$	26,596		$	48,389
Liabilities reclassed to equity		—			(14,689	)		(14,689	)
Gains included in earnings		(20,212	)		(10,731	)		(30,943	)
Balance on December 31, 2022	$	1,581		$	1,176		$	2,757
Losses included in earnings		1,322			2,303			3,625
Balance on December 31, 2023	$	2,903		$	3,479		$	6,382

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Note 11 - Revenue (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Revenue from External Customers by Products and Services [Table Text Block]

	For the years ended December 31,
	2023		2022		2021
Electronic systems	$	287,215	$	282,865	$	309,233
Mechanical systems		157,427		165,007		154,878
Exhaust		59,938		66,767		78,179
Accessories		98,899		108,150		85,280
Safety		56,225		65,626		65,277
Net sales	$	659,704	$	688,415	$	692,847

Revenue from External Customers by Geographic Areas [Table Text Block]

	For the years ended December 31,
	2023		2022		2021
United States	$	644,652	$	669,187	$	674,491
Italy		15,052		19,228		18,356
Net sales	$	659,704	$	688,415	$	692,847

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Note 12 - Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	For the years ended December 31,
	2023			2022			2021
Current income tax expense:
Federal	$	10,909		$	12,356		$	7,422
State		927			1,253			323
Foreign		1,715			2,450			2,602
Total current income tax expense		13,551			16,059			10,347
Deferred income tax expense (benefit):
Federal		(5,986	)		(8,679	)		823
State		811			(2,591	)		(552	)
Foreign		23			(296	)		(189	)
Total deferred income tax expense (benefit)		(5,152	)		(11,566	)		82
Total income tax expense	$	8,399		$	4,493		$	10,429

Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block]

	For the years ended December 31,
	2023		2022		2021
United States	$	23,971	$	72,276	$	(24,772	)
Foreign		3,608		5,991		8,062
Income (loss) before income taxes	$	27,579	$	78,267	$	(16,710	)

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	For the years ended December 31,
	2023			2022			2021
Expected tax expense (benefit) at U.S. Federal statutory rates	$	5,792		$	16,479		$	(3,510	)
State income tax expense (benefit)		1,373			(1,057	)		(180	)
Permanent tax differences		375			4,275			825
Foreign-derived intangible income deduction		(397	)		(298	)		—
Global intangible low-taxed income		—			—			375
Section 162(m) limitation		709			—			—
Foreign rate differential		782			560			719
Tax credit		(1,506	)		(1,393	)		(1,620	)
Earn-outs		484			(2,254	)		5,470
Change in fair value of Warrants		863			(11,974	)		6,842
Transaction costs		—			—			1,465
Other differences, net		(76	)		155			43
Total income tax expense	$	8,399		$	4,493		$	10,429

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	December 31,
	2023			2022
Deferred tax assets:
Reserves on assets	$	10,283		$	12,305
Liabilities not yet deductible		781			3,371
Interest expense limitation		16,040			9,624
Right-of-use liability		6,791			6,899
Section 174 expenses		10,049			6,197
Net operating losses		2,446			1,493
Other		1,113			526
Total gross deferred tax assets		47,503			40,415
Valuation allowance		(5	)		—
Total gross deferred tax assets, net of valuation allowance		47,498			40,415
Deferred tax liabilities:
Tradename		33,801			33,770
Intangible assets		41,715			41,126
Goodwill		12,310			10,037
Property, plant and equipment		6,634			7,110
Right-of-use asset		6,585			6,762
Total gross deferred tax liabilities		101,045			98,805
Net deferred tax liabilities	$	53,542		$	58,390

Deferred Tax Assets, Change in Valuation Allowance [Table Text Block]

	December 31,
	2023
Valuation allowance, January 1	$	—
Additions charged to expense accounts		5
Valuation allowance, December 31	$	5

Schedule of Unrecognized Tax Benefits Roll Forward [Table Text Block]

	December 31,
	2023
Gross unrecognized tax benefits, January 1	$	—
Changes in balance related to tax position taken during prior periods		329
Gross unrecognized tax benefits, December 31	$	329

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Note 13 - Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the years ended December 31,
	2023		2022			2021
Numerator:
Net income (loss)	$	19,180	$	73,774		$	(27,139	)
Less: fair value adjustment for Warrants		—		(57,021	)		—
Net income (loss) - diluted	$	19,180	$	16,753		$	(27,139	)
Denominator:
Weighted average common shares outstanding - basic		117,378,854		116,762,928			89,959,993
Dilutive effect of potential common shares from RSUs		952,161		101,290			—
Dilutive effect of potential common shares from PSUs		179,785		—			—
Dilutive effect of potential common shares from Warrants		—		384,078			—
Weighted average common shares outstanding - diluted		118,510,800		117,248,296			89,959,993
Earnings (loss) per share:
Basic	$	0.16	$	0.63		$	(0.30	)
Diluted	$	0.16	$	0.14		$	(0.30	)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	For the years ended December 31,
	2023		2022		2021
Anti-dilutive shares excluded from calculation of diluted EPS:
Warrants		14,633,311		—		14,666,644
Stock options		886,046		1,709,690		1,386,974
Restricted stock units		146,475		540,344		656,485
Performance stock units		1,822,994		—		—
Unvested Earn-Out Shares		1,093,750		1,093,750		2,187,500
Total anti-dilutive shares		18,582,576		3,343,784		18,897,603

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Note 14 - Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Changes in Projected Benefit Obligations, Fair Value of Plan Assets, and Funded Status of Plan [Table Text Block]

	December 31,
	2022
Change in Projected Benefit Obligation:
Benefit obligation, January 1	$	6,104
Service cost		113
Interest cost		138
Plan curtailments		(5,185	)
Benefits paid		(299	)
Expenses paid		(149	)
Actuarial (gain) loss		(722	)
Benefit obligation, December 31	$	—
Change in Plan Assets:
Fair value of plan assets, January 1	$	5,242
Actual return on plan assets		(374	)
Employer contributions		765
Plan settlements		(5,185	)
Benefits paid from plan assets		(299	)
Expenses paid		(149	)
Fair value of plan net assets, December 31	$	—
Funded status at end of period	$	—

Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Table Text Block]

	For the years ended December 31,
	2022			2021
Actuarial gain arising during measurement period	$	(129	)	$	(513	)
Amortization of actuarial loss		(154	)		(25	)
Total recognized in other comprehensive (income) loss	$	(283	)	$	(538	)

Schedule of Net Benefit Costs [Table Text Block]

	For the years ended December 31,
	2022			2021
Components of expense:
Service cost	$	113		$	143
Interest cost		138			152
Expected return on plan assets		(218	)		(240	)
Settlement loss recognized		154			—
Amortization of net loss		—			25
Net periodic benefit cost	$	187		$	80

Defined Benefit Plan, Assumptions [Table Text Block]

	December 31,
	2022
Discount rate		2.78	%
Expected return on plan assets		5.20	%

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Note 15 - Equity-based Compensation Plans (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]

	Unvested Restricted Stock Awards
				Weighted Average
	Number of RSAs			Grant Date Fair Value
Balance on December 31, 2022		1,108,330		$	9.43
Granted (1)		4,954,177			2.60
Vested		(823,337	)		4.96
Forfeited		(334,369	)		8.19
Balance on December 31, 2023		4,904,801		$	2.86

Schedule of Share-Based Payment Award, Equity Instruments Other Than Options, Valuation Assumptions [Table Text Block]

	For the year ended
	December 31, 2023
Expected volatility		60.5	%
Expected dividend		—
Risk-free interest rate		3.67	%

Share-Based Payment Arrangement, Option, Activity [Table Text Block]

						Weighted Average
				Weighted		Remaining		Aggregate
	Number of			Average		Contractual		Intrinsic Value
	Stock Options			Exercise Price		Term (years)		(in millions)
Options outstanding on December 31, 2022		1,709,690		$	10.97
Forfeited		(628,770	)		11.12
Expired		(194,874	)		10.50
Options outstanding on December 31, 2023		886,046		$	10.97		7.33	$	—
Options exercisable on, December 31, 2023		512,370		$	10.79		6.94	$	—

Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	For the years ended December 31,
	2022			2021
Weighted-average expected term	6.0 years			6.0 years
Expected volatility		36.0% - 40.0	%		40.3	%
Expected dividend		—			—
Risk-free interest rate		1.98% - 3.06	%		0.94	%

Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]

	For the years ended December 31,
	2023		2022		2021
Restricted stock units	$	4,371	$	4,304	$	1,070
Performance stock units		2,343		—		—
Stock options		577		2,349		824
Profit interest units		—		17,742		3,069

Profit Interest Units [Member]

Notes Tables

Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	For the years ended December 31,
	2022			2021
Weighted-average expected term		3.0 years			2.0 years
Expected volatility		65.0	%		55.0	%
Expected dividend		—			—
Risk-free interest rate		4.3	%		0.3	%

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Note 16 - Lease Commitments (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Schedule of Operating Lease Assets and Obligations [Table Text Block]

	December 31,
	2023			2022
Assets:
Operating right of use assets	$	29,250		$	29,522
Liabilities:
Current operating lease liabilities - Accrued liabilities	$	4,948		$	5,112
Long-term operating lease liabilities - Other noncurrent liabilities		25,177			24,992
Total lease liabilities	$	30,125		$	30,104
Lease term and discount rate
Weighted average remaining lease term (in years)		7.2			7.9
Weighted average discount rate		6.21	%		5.77	%

Lease, Cost [Table Text Block]

	For the years ended December 31,
	2023		2022
Components of lease expense:
Operating lease expense	$	6,629	$	7,294
Short-term lease expense		1,953		2,402
Variable lease expense		314		763
Total lease expense	$	8,896	$	10,459
Supplemental cash flow information related to leases:
Cash paid for amounts included in measurement of operating lease liabilities	$	7,024	$	7,311
Right-of-use assets obtained in exchange for new operating lease liabilities		6,531		13,942
Decapitalization of right-of-use assets upon lease termination or modification		1,320		12,658

Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block]

2024	$	6,651
2025		5,202
2026		4,715
2027		4,695
2028		4,442
Thereafter		11,918
Total lease payments		37,623
Less imputed interest		(7,498	)
Present value of lease liabilities	$	30,125

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Note 17 - Major Reseller Customers (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	For the years ended December 31,
	2023			2022			2021
Customer A		21.4	%		19.2	%		19.3	%

	December 31,
	2023			2022
Customer A		16.4	%		11.3	%

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Note 18 - Acquisition, Restructuring and Management Fee Costs (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Schedule of Acquisition, Restructuring and Management Fee Costs [Table Text Block]

	For the years ended December 31,
	2023		2022		2021
Acquisitions (1)	$	—	$	1,887	$	5,074
Restructuring (2)		2,641		2,626		1,421
Management fees (3)		—		—		25,789
Earn out adjustment (4)		—		—		17,173
Total acquisition and restructuring costs	$	2,641	$	4,513	$	49,457

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Note 19 - Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Schedule of Product Warranty Liability [Table Text Block]

	For the years ended December 31,
	2023			2022			2021
Beginning balance	$	3,584		$	3,994		$	3,989
Accrued for current year warranty claims		11,362			12,261			10,185
Settlement of warranty claims		(11,621	)		(12,671	)		(10,180	)
Ending balance	$	3,325		$	3,584		$	3,994

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Schedule II - Valuation and Qualifying Accounts - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
SEC Schedule, 12-09, Allowance, Credit Loss [Member]
Balance		$ 1,162	$ 956	$ 813
Charged (credited) to costs and expenses		1,016	878	809
Reserves from acquisitions		0	0	0
Charged against allowances	[1],[2]	1,122	672	666
Balance		1,056	1,162	956
SEC Schedule, 12-09, Allowance, Cash Discount Reserve [Member]
Balance		388	430	426
Charged (credited) to costs and expenses		5,991	5,941	6,173
Reserves from acquisitions		0	0	0
Charged against allowances	[1],[2]	5,858	5,983	6,169
Balance		521	388	430
SEC Schedule, 12-09, Reserve, Inventory [Member]
Balance		38,534	26,280	22,052
Charged (credited) to costs and expenses		1,802	13,410	3,806
Reserves from acquisitions		0	0	1,226
Charged against allowances	[1],[2]	6,362	1,156	804
Balance		$ 33,974	$ 38,534	$ 26,280

[1] Write-off of obsolete inventory, net of inventory adjustments.

[2] Write-off of uncollectible accounts, net of recoveries.

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Note 1 - Description of the Business, Basis of Presentation, and Summary of Significant Accounting Policies (Details Textual) $ in Thousands	12 Months Ended
	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
FDIC Deposits Maturities (Year)	3 years
Cash, FDIC Insured Amount	$ 250
Cash and Cash Equivalents, at Carrying Value	$ 41,081	$ 26,150
Number of Reportable Segments	1
Amortization of Debt Issuance Costs	$ 1,780	1,707	$ 3,182
Unrecognized Tax Benefits	329	0
Advertising Expense	5,987	7,159	6,299
Research, Development, Pre Production and Start Up Costs	23,844	29,083	28,280
Accumulated Other Comprehensive (Income) Loss, Defined Benefit Plan, after Tax	710	944
Other Expense [Member]
Gain (Loss), Foreign Currency Transaction, before Tax	278	(97)	44
Shareholders Equity [Member]
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax	$ 234	(990)	$ 30
Minimum [Member] | Building and Building Improvements [Member]
Property, Plant and Equipment, Useful Life (Year)	7 years
Minimum [Member] | Machinery and Equipment [Member]
Property, Plant and Equipment, Useful Life (Year)	3 years
Maximum [Member] | Building and Building Improvements [Member]
Property, Plant and Equipment, Useful Life (Year)	25 years
Maximum [Member] | Machinery and Equipment [Member]
Property, Plant and Equipment, Useful Life (Year)	10 years
Weighted Average [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	22 years 6 months
Customer Relationships [Member] | Minimum [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	10 years
Customer Relationships [Member] | Maximum [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	25 years
Customer Relationships [Member] | Weighted Average [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	23 years 7 months 6 days
Technology-Based Intangible Assets [Member] | Minimum [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	5 years
Technology-Based Intangible Assets [Member] | Maximum [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	14 years
Technology-Based Intangible Assets [Member] | Weighted Average [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	12 years 1 month 6 days
Trade Names [Member] | Minimum [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	15 years
Trade Names [Member] | Maximum [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	20 years
Trade Names [Member] | Weighted Average [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	19 years 2 months 12 days
Non-US [Member]
Cash and Cash Equivalents, at Carrying Value	$ 4,975	$ 5,878

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Note 2 - Business Combination, Acquisitions and Divestiture (Details Textual) - USD ($) $ / shares in Units, $ in Thousands					3 Months Ended		12 Months Ended
	Dec. 23, 2021	Dec. 16, 2021	Jul. 16, 2021	Apr. 14, 2021	Dec. 31, 2022	Mar. 31, 2022	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Payments to Acquire Businesses, Gross									$ 264,718
Common Stock, Shares, Issued (in shares)					117,147,997		117,707,280	117,147,997
Proceeds from Divestiture of Businesses							$ 0	$ 1,966	0
Finspeed Llc [Member] | Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member]
Proceeds from Divestiture of Businesses					$ 1,966
Impairment of Intangible Assets (Excluding Goodwill), Total					268
Finspeed Llc [Member] | Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | Other Operating Income (Expense) [Member]
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal					(1,037)
Finspeed Llc [Member]
Revenue from Contract with Customer, Including Assessed Tax								426
IPO [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)			1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)			$ 11.5
Warrants and Rights Outstanding, Term (Year)			5 years
IPO [Member] | Public Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)			8,333,310
IPO [Member] | Private Placement Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)			4,666,667
Merger Agreement [Member] | Pipe Investors [Member]
Repayments of Long-Term Debt, Total			$ 100,000
Subscription Agreement [Member] | Pipe Investors [Member]
Common Stock, Shares, Issued (in shares)			24,000,000
Shares Issued, Price Per Share (in dollars per share)			$ 10
Common Stock, Value, Subscriptions			$ 240,000
Amended And Restated Forward Purchase Agreement [Member]
Stock Issued During Period, Shares, New Issues (in shares)			5,000,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)			1,666,667
Proceeds from Issuance of Common Stock			$ 50,000
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)			1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)			$ 11.5
Empower Sponsor Holdings LLC [Member] | Tranche One [Member]
Outstanding Term of the Earn-out Share (Year)						7 years
Empower Sponsor Holdings LLC [Member] | Merger Agreement [Member]
Business Combination Contingent Consideration Shares Issuable, Shares (in shares)			2,187,500
Empower Sponsor Holdings LLC [Member] | Merger Agreement [Member] | Holley Parent Holdings Llc [Member]
Payments to Acquire Businesses, Gross			$ 264,718
Common Stock, Shares, Issued (in shares)			67,673,884
Shares Issued, Price Per Share (in dollars per share)			$ 10
John's, Southern Kentucky Classics, and Vesta Motorsports [Member]
Payments to Acquire Businesses, Gross								14,863
Business Combination Intangible Assets Including Goodwill Acquired					$ 10,553			$ 10,553
John's, Southern Kentucky Classics, and Vesta Motorsports [Member] | Customer Relationships [Member]
Finite-Lived Intangible Asset, Useful Life (Year)					20 years			20 years
Finspeed, Classic Instruments, ADS, Rocket and Speartech [Member]
Payments to Acquire Businesses, Gross									19,909
Business Combination Intangible Assets Including Goodwill Acquired									$ 13,247
Finspeed Llc [Member] | Customer Relationships [Member]
Finite-Lived Intangible Asset, Useful Life (Year)									18 years
Baer Inc [Member]
Payments to Acquire Businesses, Gross	$ 22,170
Business Combination Intangible Assets Including Goodwill Acquired	18,989
Accounts Receivable, Purchase	$ 800
Business Combination, Separately Recognized Transactions, Additional Disclosures, Acquisition Cost Expensed									$ 222
Baer Inc [Member] | Customer Relationships [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	20 years
Brothers Mail Order Industries Inc [Member]
Payments to Acquire Businesses, Gross		$ 26,135
Business Combination Intangible Assets Including Goodwill Acquired		24,835
Accounts Receivable, Purchase		$ 22
Business Combination, Separately Recognized Transactions, Additional Disclosures, Acquisition Cost Expensed									191
Advance Engine Management Inc [Member]
Payments to Acquire Businesses, Gross				$ 51,243
Business Combination Intangible Assets Including Goodwill Acquired				44,486
Accounts Receivable, Purchase				$ 3,454
Business Combination, Separately Recognized Transactions, Additional Disclosures, Acquisition Cost Expensed									2,264
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual									16,593
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual									$ 2,664
Advance Engine Management Inc [Member] | Customer Relationships [Member]
Finite-Lived Intangible Asset, Useful Life (Year)				20 years
Advance Engine Management Inc [Member] | Patents [Member]
Finite-Lived Intangible Asset, Useful Life (Year)				13 years

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Note 2 - Business Combination, Acquisitions, and Divestiture - Summary of Reconciles Elements of Business Combination to Cash Flows (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($)
Cash - Empower's trust and cash (net of redemptions of $99,353 and transaction costs of $44,314)	$ 107,017
Cash - Forward Purchase Agreement	50,000
Cash - PIPE Financing	240,000
Net cash provided by Business Combination and PIPE Financing	397,017
Less: cash consideration paid to Holley Stockholder	(264,718)
Net contributions from Business Combination and PIPE Financing	$ 132,299

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Note 2 - Business Combination, Acquisitions, and Divestiture - Summary of Reconciles Elements of Business Combination to Cash Flows (Details) (Parentheticals) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($)
Empowers trust and cash redemptions	$ 99,353
Transaction costs	$ 44,314

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Note 2 - Business Combination, Acquisitions, and Divestiture - Allocation of the Purchase Price to the Estimated Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021	Dec. 23, 2021	Dec. 16, 2021	Apr. 14, 2021
Goodwill	$ 419,056	$ 418,121	$ 411,383
John's, Southern Kentucky Classics, and Vesta Motorsports [Member]
Accounts receivable		562
Inventory		3,627
Property, plant and equipment		275
Other assets		24
Goodwill		7,352
Accounts payable		(158)
Accrued liabilities		(20)
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net		14,863
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net		14,863
John's, Southern Kentucky Classics, and Vesta Motorsports [Member] | Trade Names [Member]
Intangible assets		1,689
John's, Southern Kentucky Classics, and Vesta Motorsports [Member] | Customer Relationships [Member]
Intangible assets		1,512
John's, Southern Kentucky Classics, and Vesta Motorsports [Member] | Previously Reported [Member]
Accounts receivable		959
Inventory		3,481
Property, plant and equipment		275
Other assets		1,132
Goodwill		5,858
Accounts payable		(25)
Accrued liabilities		(18)
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net		14,863
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net		14,863
John's, Southern Kentucky Classics, and Vesta Motorsports [Member] | Previously Reported [Member] | Trade Names [Member]
Intangible assets		1,689
John's, Southern Kentucky Classics, and Vesta Motorsports [Member] | Previously Reported [Member] | Customer Relationships [Member]
Intangible assets		1,512
John's, Southern Kentucky Classics, and Vesta Motorsports [Member] | Revision of Prior Period, Adjustment [Member]
Accounts receivable		(397)
Inventory		146
Other assets		(1,108)
Goodwill		1,494
Accounts payable		(133)
Accrued liabilities		$ (2)
Finspeed, Classic Instruments, ADS, Rocket and Speartech [Member]
Accounts receivable			618
Inventory			3,975
Property, plant and equipment			2,274
Other assets			23
Goodwill			8,189
Accounts payable			(343)
Accrued liabilities			(7)
Cash			122
Finspeed, Classic Instruments, ADS, Rocket and Speartech [Member] | Trade Names [Member]
Intangible assets			2,608
Finspeed, Classic Instruments, ADS, Rocket and Speartech [Member] | Customer Relationships [Member]
Intangible assets			2,450
Finspeed, Classic Instruments, ADS, Rocket and Speartech [Member] | Previously Reported [Member]
Accounts receivable			618
Inventory			3,975
Property, plant and equipment			2,274
Other assets			23
Goodwill			11,017
Accounts payable			(343)
Accrued liabilities			(129)
Cash			122
Finspeed, Classic Instruments, ADS, Rocket and Speartech [Member] | Previously Reported [Member] | Trade Names [Member]
Intangible assets			2,608
Finspeed, Classic Instruments, ADS, Rocket and Speartech [Member] | Previously Reported [Member] | Customer Relationships [Member]
Intangible assets			2,450
Finspeed, Classic Instruments, ADS, Rocket and Speartech [Member] | Revision of Prior Period, Adjustment [Member]
Goodwill			(2,828)
Accrued liabilities			122
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net			(2,706)
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net			(2,706)
Baer Inc [Member]
Accounts receivable				$ 627
Inventory				1,813
Property, plant and equipment				695
Other assets				76
Goodwill				8,284
Accounts payable				(2)
Accrued liabilities				(28)
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net				22,170
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net				22,170
Baer Inc [Member] | Trade Names [Member]
Intangible assets				4,630
Baer Inc [Member] | Customer Relationships [Member]
Intangible assets				6,075
Baer Inc [Member] | Previously Reported [Member]
Accounts receivable				627
Inventory				1,813
Property, plant and equipment				695
Other assets				76
Goodwill				8,363
Accounts payable				(81)
Accrued liabilities				(28)
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net				22,170
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net				22,170
Baer Inc [Member] | Previously Reported [Member] | Trade Names [Member]
Intangible assets				4,630
Baer Inc [Member] | Previously Reported [Member] | Customer Relationships [Member]
Intangible assets				6,075
Baer Inc [Member] | Revision of Prior Period, Adjustment [Member]
Goodwill				(79)
Accounts payable				$ 79
Brothers Mail Order Industries Inc [Member]
Accounts receivable					$ 22
Inventory					1,682
Property, plant and equipment					20
Other assets					13
Goodwill					19,860
Accounts payable					(34)
Accrued liabilities					(403)
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net					26,135
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net					26,135
Brothers Mail Order Industries Inc [Member] | Trade Names [Member]
Intangible assets					4,975
Brothers Mail Order Industries Inc [Member] | Previously Reported [Member]
Accounts receivable					22
Inventory					1,682
Property, plant and equipment					20
Other assets					13
Goodwill					19,561
Accounts payable					(34)
Accrued liabilities					(403)
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net					25,836
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net					25,836
Brothers Mail Order Industries Inc [Member] | Previously Reported [Member] | Trade Names [Member]
Intangible assets					4,975
Brothers Mail Order Industries Inc [Member] | Revision of Prior Period, Adjustment [Member]
Goodwill					299
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net					299
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net					$ 299
Advance Engine Management Inc [Member]
Accounts receivable						$ 3,393
Inventory						3,892
Property, plant and equipment						1,342
Other assets						402
Goodwill						17,006
Accounts payable						(1,922)
Accrued liabilities						(350)
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net						51,243
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net						51,243
Advance Engine Management Inc [Member] | Trade Names [Member]
Intangible assets						10,760
Advance Engine Management Inc [Member] | Customer Relationships [Member]
Intangible assets						14,640
Advance Engine Management Inc [Member] | Patents [Member]
Intangible assets						1,970
Advance Engine Management Inc [Member] | Technology-Based Intangible Assets [Member]
Intangible assets						110
Advance Engine Management Inc [Member] | Previously Reported [Member]
Accounts receivable						3,454
Inventory						3,892
Property, plant and equipment						1,342
Other assets						493
Goodwill						17,426
Accounts payable						(2,032)
Accrued liabilities						(489)
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net						51,566
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net						51,566
Advance Engine Management Inc [Member] | Previously Reported [Member] | Trade Names [Member]
Intangible assets						10,760
Advance Engine Management Inc [Member] | Previously Reported [Member] | Customer Relationships [Member]
Intangible assets						14,640
Advance Engine Management Inc [Member] | Previously Reported [Member] | Patents [Member]
Intangible assets						1,970
Advance Engine Management Inc [Member] | Previously Reported [Member] | Technology-Based Intangible Assets [Member]
Intangible assets						110
Advance Engine Management Inc [Member] | Revision of Prior Period, Adjustment [Member]
Accounts receivable						(61)
Other assets						(91)
Goodwill						(420)
Accounts payable						110
Accrued liabilities						139
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net						(323)
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net						$ (323)
Finspeed Llc [Member]
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net			19,909
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net			19,909
Finspeed Llc [Member] | Previously Reported [Member]
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net			22,615
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net			$ 22,615

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Note 2 - Business Combination, Acquisitions, and Divestiture - Summary of Pro Forma Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($)
Pro forma net sales	$ 727,369
Pro forma net income	$ (16,248)

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Note 3 - Inventory - Schedule of Inventory (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Raw materials	$ 63,552	$ 78,586
Work-in-process	22,619	23,906
Finished goods	106,089	131,081
Inventory, Net	$ 192,260	$ 233,573

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Note 4 - Property, Plant and Equipment, Net - Schedule of Property, Plant, and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Property, Plant, and Equipment, Gross	$ 94,286	$ 90,180
Less: accumulated depreciation	47,080	37,999
Property, plant and equipment, net	47,206	52,181
Land [Member]
Property, Plant, and Equipment, Gross	3,326	3,426
Building and Building Improvements [Member]
Property, Plant, and Equipment, Gross	11,404	11,051
Machinery and Equipment [Member]
Property, Plant, and Equipment, Gross	73,332	66,140
Construction in Progress [Member]
Property, Plant, and Equipment, Gross	$ 6,224	$ 9,563

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Note 4 - Property, Plant and Equipment, Net - Schedule of Long-lived Assets by Geographic Locations (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Property, plant, and equipment, net	$ 47,206	$ 52,181
UNITED STATES
Property, plant, and equipment, net	44,931	50,434
Non-US [Member]
Property, plant, and equipment, net	$ 2,275	$ 1,747

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Note 5 - Goodwill and Other Intangible Assets (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Goodwill, Impairment Loss	$ 0	$ 0
Impairment of Intangible Assets, Indefinite-Lived (Excluding Goodwill)	$ 0	2,395	$ 0
Trade Names [Member]
Impairment of Intangible Assets, Indefinite-Lived (Excluding Goodwill)		$ 2,395

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Note 5 - Goodwill and Other Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2023	Dec. 31, 2022
Balance		$ 418,121	$ 411,383
Measurement period adjustments	[1]	935	880
Balance		$ 419,056	418,121
Johns Acquisition [Member]
Acquisition			240
Southern Kentucky Classics [Member]
Acquisition			1,270
RaceQuip [Member]
Acquisition			$ 4,348

[1] See Note 2, "Business Combination, Acquisitions, and Divestiture"

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Note 5 - Goodwill and Other Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets, Gross	$ 310,401	$ 310,401
Finite-Lived Intangible Assets, Accumulated Amortization	(75,101)	(60,544)
Finite-Lived Intangible Assets, Net	235,300	249,857
Trade Names 1 [Member]
Tradenames	175,165	174,998
Customer Relationships [Member]
Finite-Lived Intangible Assets, Gross	269,950	269,950
Finite-Lived Intangible Assets, Accumulated Amortization	(55,732)	(44,178)
Finite-Lived Intangible Assets, Net	214,218	225,772
Trade Names [Member]
Finite-Lived Intangible Assets, Gross	13,775	13,775
Finite-Lived Intangible Assets, Accumulated Amortization	(5,569)	(4,843)
Finite-Lived Intangible Assets, Net	8,206	8,932
Technology-Based Intangible Assets [Member]
Finite-Lived Intangible Assets, Gross	26,676	26,676
Finite-Lived Intangible Assets, Accumulated Amortization	(13,800)	(11,523)
Finite-Lived Intangible Assets, Net	$ 12,876	$ 15,153

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Note 5 - Goodwill and Other Intangible Assets - Schedule of Finite-lived Intangible Assets, Future Amortization Expense (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
2024	$ 13,744
2025	13,714
2026	13,608
2027	13,601
2028	13,601
Thereafter	167,032
Total	$ 235,300	$ 249,857

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Note 6 - Accrued Liabilities - Accrued Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Accrued freight	$ 5,654	$ 6,861
Accrued employee compensation and benefits	11,696	7,635
Accrued returns, allowances and warranties	11,267	8,798
Accrued taxes	1,475	6,697
Current portion of operating lease liabilities	4,948	5,112
Accrued other	7,089	8,214
Total accrued liabilities	$ 42,129	$ 43,317

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Note 7 - Debt (Details Textual) $ in Thousands		12 Months Ended
	Nov. 18, 2021 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Feb. 28, 2023 USD ($)	May 31, 2022 USD ($)
Gain (Loss) on Extinguishment of Debt		$ 701	$ (0)	$ (13,650)
Property, Plant and Equipment, Net		47,206	$ 52,181
Revolving Credit Facility [Member]
Debt Instrument, Term (Year)	5 years
Line of Credit Facility, Maximum Borrowing Capacity	$ 125,000
Letter of Credit [Member]
Line of Credit Facility, Maximum Borrowing Capacity		10,000
Letters of Credit Outstanding, Amount		1,728
Delayed Draw Term Loan [Member]
Debt Instrument, Face Amount	100,000
Debt Instrument, Withdrawn Amount						$ 57,000
First Lien Note Due November 17, 2028 [Member]
Debt Issuance Costs, Gross	$ 13,413
First Lien Note Due November 17, 2028 [Member] | Term Loan [Member]
Debt Instrument, Term (Year)	7 years
Debt Instrument, Face Amount	$ 600,000
First Lien Note Due November 17, 2028 [Member] | Delayed Draw Term Loan [Member]
Gain (Loss) on Extinguishment of Debt		701
Debt Instrument, Periodic Payment, Principal	$ 1,643	$ 7,000
Debt Instrument, Periodic Payment, Percentage of Annual Excess Cash FLow		50.00%
Repayments of Long-Term Debt, Total		$ 56,845
Debt Instrument, Repurchase Amount		38,845
Early Repayment of Senior Debt		$ 11,000
The Credit Agreement [Member]
Debt Issuance Costs, Gross					$ 1,427
Debt, Weighted Average Interest Rate		9.20%
Debt Instrument, Covenant, Consolidated Net Leverage Ratio		5.75			7.25
Debt Instrument, Covenant, Minimum Liquidity					$ 45,000
The Credit Agreement [Member] | Asset Pledged as Collateral [Member] | Corporate Headquarters [Member]
Property, Plant and Equipment, Net		$ 2,999

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Note 7 - Debt - Schedule of Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Long-Term Debt, Gross	$ 594,479
Other	1,974	$ 2,770
Less unamortized debt issuance costs	(10,308)	(11,557)
Long-Term Debt	584,171	650,563
Less current portion of long-term debt	(7,461)	(7,000)
Long-Term Debt, Excluding Current Maturities	576,710	643,563
Revolving Credit Facility [Member]
Long-Term Debt, Gross	0	10,000
First Lien Note Due November 17, 2028 [Member]
Long-Term Debt, Gross	$ 592,505	$ 649,350

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Note 7 - Debt - Future Maturities of Long-term Debt and Amortization of Debt Issuance Cost (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
2024, future maturities	$ 7,461
2024, debt issuance costs amortization	1,770
2025, future maturities	7,656
2025, debt issuance costs amortization	1,921
2026, future maturities	6,571
2026, debt issuance costs amortization	2,087
2027, future maturities	6,572
2027, debt issuance costs amortization	2,271
2028, future maturities	566,219
2028, debt issuance costs amortization	2,259
Future maturities	594,479
Debt Issuance Cost Amortization	$ 10,308	$ 11,557

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Note 8 - Common Stock Warrants and Earn-out Liability (Details Textual) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended	12 Months Ended
	Jul. 16, 2021	Apr. 03, 2022	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021	Oct. 09, 2021
Class of Warrant or Right, Outstanding (in shares)			14,633,311	14,633,311		14,666,644
Warrant Liability			$ 8,383	$ 4,272
Fair Value Adjustment of Warrants			4,111	(57,021)	$ 32,580
Business Combination, Contingent Consideration, Liability, Noncurrent			3,479	1,176
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability			2,303	(10,731)	$ 8,875
Empower Sponsor Holdings LLC [Member]
Business Combination, Contingent Consideration, Liability, Noncurrent			3,479	1,176
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability			$ 2,303	$ (10,731)
Empower Sponsor Holdings LLC [Member] | Earn Out Shares [Member]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in shares)	2,187,500
Empower Sponsor Holdings LLC [Member] | Tranche One [Member]
Stock Issued During Period, Shares, Acquisitions (in shares)		1,093,750
Stock Issued During Period, Value, Acquisitions		$ 14,689
Public Warrants [Member]
Class of Warrant or Right, Outstanding (in shares)						9,999,977
Public Warrants [Member] | Measurement Input, Share Price [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)						$ 0.01
Share Price (in dollars per share)						18
Public Warrants [Member] | Measurement Input Share Price1 [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)						0.1
Share Price (in dollars per share)						$ 10
Private Placement Warrants [Member]
Class of Warrant or Right, Outstanding (in shares)						4,666,667
Private and Public Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)						1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)						$ 11.5
Warrants and Rights Outstanding, Term (Year)						5 years

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Note 9 - Derivative Instruments (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021	Jan. 04, 2023
Unrealized Gain (Loss) on Derivatives	$ (1,164)	$ (0)	$ (0)
Designated as Hedging Instrument [Member] | Interest Rate Contract [Member]
Derivative, Notional Amount				$ 500,000
Derivative, Floor Interest Rate				2.811%
Derivative, Cap Interest Rate				5.00%
Derivative Liability	1,164
Unrealized Gain (Loss) on Derivatives	1,164
Payments for (Proceeds from) Hedge, Investing Activities	$ 620

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Note 10 - Fair Value Measurements - Schedule of Value Assets and Liabilities Measured on Recurring Basis (Details) - Fair Value, Recurring [Member] - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Liability	$ 13,026	$ 5,448
Fair Value, Inputs, Level 1 [Member]
Liability	5,480	2,691
Fair Value, Inputs, Level 2 [Member]
Liability	1,164	0
Fair Value, Inputs, Level 3 [Member]
Liability	6,382	2,757
Warrant Liability Public Warrants [Member]
Liability	5,480	2,691
Warrant Liability Public Warrants [Member] | Fair Value, Inputs, Level 1 [Member]
Liability	5,480	2,691
Warrant Liability Public Warrants [Member] | Fair Value, Inputs, Level 2 [Member]
Liability	0	0
Warrant Liability Public Warrants [Member] | Fair Value, Inputs, Level 3 [Member]
Liability	0	0
Warrant Liability Private Placement Warrants [Member]
Liability	2,903	1,581
Warrant Liability Private Placement Warrants [Member] | Fair Value, Inputs, Level 1 [Member]
Liability	0	0
Warrant Liability Private Placement Warrants [Member] | Fair Value, Inputs, Level 2 [Member]
Liability	0	0
Warrant Liability Private Placement Warrants [Member] | Fair Value, Inputs, Level 3 [Member]
Liability	2,903	1,581
Earn Out Liability [Member]
Liability	3,479	1,176
Earn Out Liability [Member] | Fair Value, Inputs, Level 1 [Member]
Liability	0	0
Earn Out Liability [Member] | Fair Value, Inputs, Level 2 [Member]
Liability	0	0
Earn Out Liability [Member] | Fair Value, Inputs, Level 3 [Member]
Liability	3,479	$ 1,176
Interest Rate Collar Liability [Member]
Liability	1,164
Interest Rate Collar Liability [Member] | Fair Value, Inputs, Level 1 [Member]
Liability	0
Interest Rate Collar Liability [Member] | Fair Value, Inputs, Level 2 [Member]
Liability	1,164
Interest Rate Collar Liability [Member] | Fair Value, Inputs, Level 3 [Member]
Liability	$ 0

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Note 10 - Fair Value Measurements - Summary of Assumptions for Estimated Fair Value Using Monte Carlo Simulation Model (Details) - Monte Carlo Simulation Model [Member]	Dec. 31, 2023	Dec. 31, 2022
Measurement Input, Share Price [Member] | Earn Out Liability [Member]
Alternative Investment, Measurement Input	4.87	2.12
Measurement Input, Share Price [Member] | Warrant Liability Private Placement Warrants [Member]
Alternative Investment, Measurement Input	4.87	2.12
Measurement Input Strike Price [Member] | Warrant Liability Private Placement Warrants [Member]
Alternative Investment, Measurement Input	11.5	11.5
Measurement Input, Expected Term [Member] | Earn Out Liability [Member]
Alternative Investment, Measurement Input	4.54	5.54
Measurement Input, Expected Term [Member] | Warrant Liability Private Placement Warrants [Member]
Alternative Investment, Measurement Input	2.54	3.54
Measurement Input, Price Volatility [Member] | Earn Out Liability [Member]
Alternative Investment, Measurement Input	0.672	0.7033
Measurement Input, Risk Free Interest Rate [Member] | Earn Out Liability [Member]
Alternative Investment, Measurement Input	0.0379	0.0388
Measurement Input, Risk Free Interest Rate [Member] | Warrant Liability Private Placement Warrants [Member]
Alternative Investment, Measurement Input	0.0401	0.0406
Measurement Input Price Hurdle One [Member] | Earn Out Liability [Member]
Alternative Investment, Measurement Input	15	15
Measurement Input Price Threshold [Member] | Warrant Liability Private Placement Warrants [Member]
Alternative Investment, Measurement Input	18	18

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Note 10 - Fair Value Measurements - Reconciliation of Changes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Balance	$ 2,757	$ 48,389
Liabilities reclassed to equity		(14,689)
Gains included in earnings	3,625	(30,943)
Balance	6,382	2,757
Private Placement Warrants [Member]
Balance	1,581	21,793
Liabilities reclassed to equity		0
Gains included in earnings	1,322	(20,212)
Balance	2,903	1,581
Earn Out Liability [Member]
Balance	1,176	26,596
Liabilities reclassed to equity		(14,689)
Gains included in earnings	2,303	(10,731)
Balance	$ 3,479	$ 1,176

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Note 11 - Revenue - Summary of Revenue by Product Category (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Net sales	$ 659,704	$ 688,415	$ 692,847
Electronic Systems [Member]
Net sales	287,215	282,865	309,233
Mechanical System [Member]
Net sales	157,427	165,007	154,878
Exhaust [Member]
Net sales	59,938	66,767	78,179
Accessories [Member]
Net sales	98,899	108,150	85,280
Safety [Member]
Net sales	$ 56,225	$ 65,626	$ 65,277

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Note 11 - Revenue - Summary of Revenue Based on Geographic Location (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Net sales	$ 659,704	$ 688,415	$ 692,847
UNITED STATES
Net sales	644,652	669,187	674,491
ITALY
Net sales	$ 15,052	$ 19,228	$ 18,356

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Note 12 - Income Taxes (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%	21.00%	21.00%
Deferred Tax Assets, Operating Loss Carryforwards, State and Local	$ 5
Unrecognized Tax Benefits	329	$ 0
Income Tax Examination, Penalties and Interest Accrued	0	$ 0
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	9
Decrease in Unrecognized Tax Benefits is Reasonably Possible	9
Domestic Tax Authority [Member]
Operating Loss Carryforwards	381
State and Local Jurisdiction [Member]
Operating Loss Carryforwards	$ 2,064

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Note 12 - Income Taxes - Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Current income tax expense:
Federal	$ 10,909	$ 12,356	$ 7,422
State	927	1,253	323
Foreign	1,715	2,450	2,602
Total current income tax expense	13,551	16,059	10,347
Deferred income tax expense (benefit):
Federal	(5,986)	(8,679)	823
State	811	(2,591)	(552)
Foreign	23	(296)	(189)
Total deferred income tax expense (benefit)	(5,152)	(11,566)	82
Total income tax expense	$ 8,399	$ 4,493	$ 10,429

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Note 12 - Income Taxes - Schedule of Income Before Income Tax, Domestic and Foreign Jurisdictions (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
United States	$ 23,971	$ 72,276	$ (24,772)
Foreign	3,608	5,991	8,062
Income (loss) before income taxes	$ 27,579	$ 78,267	$ (16,710)

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Note 12 - Income Taxes - Schedule of Provision and Effective Tax Rates (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Expected tax expense (benefit) at U.S. Federal statutory rates	$ 5,792	$ 16,479	$ (3,510)
State income tax expense (benefit)	1,373	(1,057)	(180)
Permanent tax differences	375	4,275	825
Foreign-derived intangible income deduction	(397)	(298)	0
Global intangible low-taxed income	0	0	375
Section 162(m) limitation	709	0	0
Foreign rate differential	782	560	719
Tax credit	(1,506)	(1,393)	(1,620)
Earn-outs	484	(2,254)	5,470
Change in fair value of Warrants	863	(11,974)	6,842
Transaction costs	0	0	1,465
Other differences, net	(76)	155	43
Total income tax expense	$ 8,399	$ 4,493	$ 10,429

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Note 12 - Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Deferred tax assets:
Reserves on assets	$ 10,283	$ 12,305
Liabilities not yet deductible	781	3,371
Interest expense limitation	16,040	9,624
Right-of-use liability	6,791	6,899
Section 174 expenses	10,049	6,197
Net operating losses	2,446	1,493
Other	1,113	526
Total gross deferred tax assets	47,503	40,415
Valuation allowance	(5)	0
Total gross deferred tax assets, net of valuation allowance	47,498	40,415
Deferred tax liabilities:
Tradename	33,801	33,770
Intangible assets	41,715	41,126
Goodwill	12,310	10,037
Property, plant and equipment	6,634	7,110
Right-of-use asset	6,585	6,762
Total gross deferred tax liabilities	101,045	98,805
Net deferred tax liabilities	$ 53,542	$ 58,390

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Note 12 - Income Taxes - Change in the Valuation Allowance for Deferred Tax Assets (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2023 USD ($)
Valuation allowance, January 1	$ (0)
Additions charged to expense accounts	5
Valuation allowance, December 31	$ 5

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Note 12 - Income Taxes - Changes in Unrecognized Tax Benefits (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2023 USD ($)
Gross unrecognized tax benefits, January 1	$ 0
Changes in balance related to tax position taken during prior periods	329
Gross unrecognized tax benefits, December 31	$ 329

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Note 13 - Earnings Per Share - Schedule of Basic and Diluted Earning Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Net income (loss)	$ 19,180	$ 73,774	$ (27,139)
Less: fair value adjustment for Warrants	0	(57,021)	0
Net income (loss) - diluted	$ 19,180	$ 16,753	$ (27,139)
Weighted average common shares outstanding - basic (in shares)	117,378,854	116,762,928	89,959,993
Dilutive effect of potential common shares from Warrants (in shares)	0	384,078	0
Weighted average common shares outstanding - diluted (in shares)	118,510,800	117,248,296	89,959,993
Earnings (loss) per share:
Basic net income (loss) per share (in dollars per share)	$ 0.16	$ 0.63	$ (0.3)
Diluted net income (loss) per share (in dollars per share)	$ 0.16	$ 0.14	$ (0.3)
Restricted Stock Units (RSUs) [Member]
Dilutive effect of potential common shares from share-based payment arrangement (in shares)	952,161	101,290	0
Performance Shares [Member]
Dilutive effect of potential common shares from share-based payment arrangement (in shares)	179,785	0	0

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Note 13 - Earnings Per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share (in shares)	18,582,576	3,343,784	18,897,603
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share (in shares)	14,633,311	0	14,666,644
Share-Based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share (in shares)	886,046	1,709,690	1,386,974
Restricted Stock Units (RSUs) [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share (in shares)	146,475	540,344	656,485
Performance Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share (in shares)	1,822,994	0	0
Earn Out Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share (in shares)	1,093,750	1,093,750	2,187,500

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Note 14 - Benefit Plans (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Defined Benefit Plan, Accumulated Benefit Obligation		$ 0
Defined Benefit Plan, Plan Assets, Contributions by Employer		765	$ 471
Defined Benefit Plan, Plan Assets, Contributions by Plan Participant		$ 0	$ 0
Defined Contribution Plan, Employer Matching Contribution, Percent of Match	3.50%
Defined Contribution Plan, Employer Discretionary Contribution, Percent of Match	1.20%	0.00%	1.00%
Defined Contribution Pension [Member]
Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss)		$ 154
The 401K [Member]
Defined Contribution Plan, Employer Discretionary Contribution Amount	$ 3,154	$ 2,990	$ 2,579

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Note 14 - Benefit Plans - Summary of Changes in the Benefit Obligation and Plan Assets and the Plan Funded Status (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Service cost	$ 113	$ 143
Interest cost	138	152
Defined Benefit Plan, Plan Assets, Contributions by Employer	765	471
Funded status at end of period	0
Pension Plan [Member]
Benefit obligation	6,104
Service cost	113
Interest cost	138
Plan curtailments	(5,185)
Benefits paid	(299)
Expenses paid	(149)
Actuarial (gain) loss	(722)
Benefit obligation	0	6,104
Fair value of plan net assets	5,242
Actual return on plan assets	(374)
Defined Benefit Plan, Plan Assets, Contributions by Employer	765
Plan settlements	(5,185)
Benefits paid from plan assets	(299)
Expenses paid	(149)
Fair value of plan net assets	$ 0	$ 5,242

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Note 14 - Benefit Plans - Schedule of Pre Tax Amounts Recognized in Other Comprehensive Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Actuarial gain arising during measurement period	$ (129)	$ (513)
Amortization of actuarial loss	(154)	(25)
Total recognized in other comprehensive (income) loss	$ (283)	$ (538)

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Note 14 - Benefit Plans - Summarizes the Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Service cost	$ 113	$ 143
Interest cost	138	152
Expected return on plan assets	(218)	(240)
Settlement loss recognized	154	0
Amortization of net loss	0	25
Net periodic benefit cost	$ 187	$ 80

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Note 14 - Benefit Plans - Schedule of Defined Benefit Plan, Assumptions (Details)	12 Months Ended
	Dec. 31, 2022
Discount rate	2.78%
Expected return on plan assets	5.20%

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Note 15 - Equity-based Compensation Plans (Details Textual) - USD ($)					1 Months Ended	12 Months Ended				34 Months Ended
		Jun. 06, 2023	May 08, 2023	Mar. 08, 2023	Oct. 31, 2022	Dec. 31, 2023		Dec. 31, 2022	Dec. 31, 2021	Oct. 31, 2020
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	[1]					4,954,177
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount						$ 9,071,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)						2 years 3 months 18 days
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share)						$ 2.6	[1]	$ 5.87	$ 12.06
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value						$ 4,231,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Vested in Period (in shares)						823,337
Restricted Stock Units (RSUs) [Member] | Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)						1 year
Restricted Stock Units (RSUs) [Member] | Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)						4 years
Restricted Stock Units (RSUs) [Member] | President [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)		1,000,000
Performance Shares [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)			8,050	949,412
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)						3 years
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share)			$ 2.43	$ 1.98		$ 1.98
Share-based Compensation Arrangement, Equity Instruments Other Than Options, Time-based Awards (in shares)						1,000,000
Performance Shares [Member] | Minimum [Member]
Share-based Compensation Arrangement, Vesting Award Rights, Percentage of Initial Target Awards						0.00%
Performance Shares [Member] | Maximum [Member]
Share-based Compensation Arrangement, Vesting Award Rights, Percentage of Initial Target Awards						150.00%
Performance Shares [Member] | President [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)		1,520,000
Share-Based Payment Arrangement [Member]
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount						$ 893,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)						10 months 24 days
Share-Based Compensation Arrangement by Share-Based Payment Award, Expiration Period (Year)						10 years
Share-Based Compensation Arrangement by Share-Based Payment Award, Option, Nonvested, Weighted Average Exercise Price, Ending Balance (in dollars per share)								$ 4.65	$ 3.88
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Dividend Rate						0.00%
Share-Based Payment Arrangement [Member] | Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)						3 years
Profit Interest Units [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized (in shares)						41,400,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)										24,074,944
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount						$ 0
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value								$ 20,276,000	$ 535,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant (in shares)						0
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Vested in Period (in shares)								36,506,814	1,693,804
Accelerated Share-Based Payment Arrangement, Expense					$ 11,351
The 2021 Omnibus Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized (in shares)									8,850,000
Common Stock, Capital Shares Reserved for Future Issuance (in shares)						4,679,306

[1] Includes 1.0 million PSUs subject to the Company achieving certain Adjusted EBITDA and sales performance targets during each of fiscal years 2023, 2024, and 2025. The criteria are based on a range of these performance targets in which participants may earn between 0% to 150% of the base number of awards granted. The weighted average grant date fair value of these PSUs was $1.98. The Company assesses the attainment of target payout rates each reporting period. Equity-based compensation expense is recognized for awards deemed probable of vesting.

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Note 15 - Equity-based Compensation Plans - Summary of Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares		12 Months Ended
		Dec. 31, 2023		Dec. 31, 2022	Dec. 31, 2021
Balance on December 31, 2022 (in shares)		1,108,330
Balance on December 31, 2022 (in dollars per share)		$ 9.43
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	[1]	4,954,177
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share)		$ 2.6	[1]	$ 5.87	$ 12.06
Vested, shares (in shares)		(823,337)
Vested, weighted average grant date fair value (in dollars per share)		$ 4.96
Forfeited, shares (in shares)		(334,369)
Forfeited, weighted average grant date fair value (in dollars per share)		$ 8.19
Balance on December 31, 2023 (in shares)		4,904,801		1,108,330
Balance on December 31, 2023 (in dollars per share)		$ 2.86		$ 9.43

[1] Includes 1.0 million PSUs subject to the Company achieving certain Adjusted EBITDA and sales performance targets during each of fiscal years 2023, 2024, and 2025. The criteria are based on a range of these performance targets in which participants may earn between 0% to 150% of the base number of awards granted. The weighted average grant date fair value of these PSUs was $1.98. The Company assesses the attainment of target payout rates each reporting period. Equity-based compensation expense is recognized for awards deemed probable of vesting.

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Note 15 - Equity-based Compensation Plans - Schedule of Share-Based Payment Award Equity Instruments Other Than Options Valuation Using Black-Scholes Option Pricing Model (Details) - Performance Shares [Member]	12 Months Ended
	Dec. 31, 2023
Expected volatility	60.50%
Risk-free interest rate	3.67%

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Note 15 - Equity-based Compensation Plans - Summary of Stock Option Activity (Details)	12 Months Ended
	Dec. 31, 2023 USD ($) $ / shares shares
Options outstanding, shares (in shares) | shares	1,709,690
Options outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 10.97
Forfeited, shares (in shares) | shares	(628,770)
Forfeited, weighted average exercise price (in dollars per share) | $ / shares	$ 11.12
Expired, shares (in shares) | shares	(194,874)
Expired, weighted average exercise price (in dollars per share) | $ / shares	$ 10.5
Options outstanding, shares (in shares) | shares	886,046
Options outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 10.97
Options outstanding, weighted average remaining contractual term (Year)	7 years 3 months 29 days
Options outstanding, aggregate intrinsic value | $	$ 0
Options exercisable, shares (in shares) | shares	512,370
Options exercisable, weighted average exercise price (in dollars per share) | $ / shares	$ 10.79
Options exercisable, weighted average remaining contractual term (Year)	6 years 11 months 8 days
Options exercisable, aggregate intrinsic value | $	$ 0

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Note 15 - Equity-based Compensation Plans - Schedule of Share-Based Payment Award Stock Options Valuation Using Black-Scholes Option Pricing Model (Details) - Share-Based Payment Arrangement, Option [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Weighted-average expected term (Year)	6 years	6 years
Expected volatility		40.30%
Expected dividend	$ 0	$ 0
Risk-free interest rate		0.94%
Minimum [Member]
Expected volatility	36.00%
Risk-free interest rate	1.98%
Maximum [Member]
Expected volatility	40.00%
Risk-free interest rate	3.06%

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Note 15 - Equity-based Compensation Plans - Schedule of Profit Interest Units Valuation using Black-Scholes Option Pricing Model (Details) - Profit Interest Units [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Weighted-average expected term (Year)	3 years	2 years
Expected volatility	65.00%	55.00%
Expected dividend	$ 0	$ 0
Risk-free interest rate	4.30%	0.30%

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Note 15 - Equity-based Compensation Plans - Schedule of Components of Equity-based Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Restricted Stock Units (RSUs) [Member]
Share-Based Payment Arrangement, Expense	$ 4,371	$ 4,304	$ 1,070
Performance Shares [Member]
Share-Based Payment Arrangement, Expense	2,343	0	0
Share-Based Payment Arrangement, Option [Member]
Share-Based Payment Arrangement, Expense	577	2,349	824
Profit Interest Units [Member]
Share-Based Payment Arrangement, Expense	$ 0	$ 17,742	$ 3,069

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Note 16 - Lease Commitments (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2023
Short-Term Lease Commitment, Amount		$ 540
Operating Leases, Rent Expense, Net	$ 8,412
Minimum [Member]
Lessee, Operating Lease, Remaining Lease Term (Year)		1 year
Maximum [Member]
Lessee, Operating Lease, Remaining Lease Term (Year)		14 years

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Note 16 - Lease Commitments - Schedule of Operating Lease Assets and Obligations (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Right-of-use assets	$ 29,250	$ 29,522
Current operating lease liabilities - Accrued liabilities	$ 4,948	$ 5,112
Weighted average remaining lease term (in years) (Year)	7 years 2 months 12 days	7 years 10 months 24 days
Weighted average discount rate	6.21%	5.77%
Accrued Liabilities [Member]
Current operating lease liabilities - Accrued liabilities	$ 4,948	$ 5,112
Other Noncurrent Liabilities [Member]
Long-term operating lease liabilities - Other noncurrent liabilities	25,177	24,992
Accrued Liabilities and Other Noncurrent Liabilities [Member]
Total lease liabilities	$ 30,125	$ 30,104

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Note 16 - Lease Commitments - Schedule of Operating Lease Expense Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Components of lease expense:
Operating lease expense	$ 6,629	$ 7,294
Short-term lease expense	1,953	2,402
Variable lease expense	314	763
Total lease expense	8,896	10,459
Cash paid for amounts included in measurement of operating lease liabilities	7,024	7,311
Right-of-use assets obtained in exchange for new operating lease liabilities	6,531	13,942
Decapitalization of right-of-use assets upon lease termination or modification	$ 1,320	$ 12,658

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Note 16 - Lease Commitments - Schedule of Future Minimum Rental Payments for Operating Leases (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
2024	$ 6,651
2025	5,202
2026	4,715
2027	4,695
2028	4,442
Thereafter	11,918
Total lease payments	37,623
Less imputed interest	(7,498)
Accrued Liabilities and Other Noncurrent Liabilities [Member]
Present value of lease liabilities	$ 30,125	$ 30,104

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Note 17 - Major Reseller Customers (Details Textual) - Minimum [Member] - Customer Concentration Risk [Member] - Reseller Customers [Member]	12 Months Ended
	Dec. 31, 2023
Revenue Benchmark [Member]
Concentration Risk, Percentage	5.00%
Accounts Receivable [Member]
Concentration Risk, Percentage	10.00%

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Note 17 - Major Reseller Customers - Schedules of Concentration of Risk (Details) - Customer Concentration Risk [Member] - Customer A [Member]	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Revenue Benchmark [Member]
Concentration risk, percentage	21.40%	19.20%	19.30%
Accounts Receivable [Member]
Concentration risk, percentage	16.40%	11.30%

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Note 18 - Acquisition, Restructuring and Management Fee Costs (Details Textual) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Restructuring Costs	[1]	$ 2,641	$ 2,626	$ 1,421
Sentinel Capital Partners [Member]
Acquisition Costs and Management Fees				$ 23,275
Employee Severance [Member] | Executive Officer [Member]
Restructuring Costs		591
Payments for Restructuring		407
Restructuring Reserve		$ 184

[1] Includes costs incurred as part of the restructuring of operations including professional and consulting services and executive severance. 2023 includes executive severance cost of $591, of which $407 was paid during the year and $184 remained accrued as of December 31, 2023.

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Note 18 - Acquisition, Restructuring and Management Fee Costs - Summary of Total Acquisitions and Restructuring Costs (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Acquisitions (1)	[1]	$ 0	$ 1,887	$ 5,074
Restructuring (2)	[2]	2,641	2,626	1,421
Management fees (3)	[3]	0	0	25,789
Earn out adjustment (4)	[4]	0	0	17,173
Total acquisition and restructuring costs		$ 2,641	$ 4,513	$ 49,457

[1] Includes professional fees for legal, accounting, consulting, administrative, and other professional services directly attributable to acquisitions.

[2] Includes costs incurred as part of the restructuring of operations including professional and consulting services and executive severance. 2023 includes executive severance cost of $591, of which $407 was paid during the year and $184 remained accrued as of December 31, 2023.

[3] Includes acquisition costs and management fees paid to Sentinel Capital Partners, including a fee of $23,275 paid in 2021 upon the Closing of the Business Combination.

[4] A fair value adjustment to the contingent consideration payable from the Simpson acquisition.

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Note 19 - Commitments and Contingencies - Schedule of Accrual For Product Warranties (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Beginning balance	$ 3,584	$ 3,994	$ 3,989
Accrued for current year warranty claims	11,362	12,261	10,185
Settlement of warranty claims	(11,621)	(12,671)	(10,180)
Ending balance	$ 3,325	$ 3,584	$ 3,994