A maker of high-performance automotive parts for car enthusiasts, Holley designs and sells fuel, exhaust, ignition, and safety gear through brands like Holley EFI, MSD, Flowmaster, and Simpson, offering them directly to consumers and through distribution partners. Brothers George and Earl Holley started the company in Bradford, Pennsylvania, and after an 1901 trip to Paris they licensed a French carburetor design that became famous as the "Iron Pot" — a part that powered early Ford Model Ts and Oldsmobiles.
Holley swung to a net loss in Q2 FY2026 as a $28.3M loss on brand divestitures wiped out operating gains.
A portfolio rebalance reshaped the quarter. rose 3.2% to $172.0 million and held at 41.0%, but a $28.3 million loss on the sale of three brands drove a net loss of $2.4 million, down from a $10.9 million profit a year ago. The company is trading near-term earnings for a sharper focus on its core.
Key takeaways
A $28.3 million loss on the sale of ADS, Speartech, and Drake Brands was the primary driver of the swing from a $10.9 million in Q2 2025 to a $2.4 million net loss.
rose 3.2% to $172.0 million, as $4.7 million from the HRX acquisition and $10.0 million in improved price realization more than offset lower unit volume.
narrowed 0.7 percentage points to 41.0%, pressured by higher tariff-related costs, a one-time prior-year tariff adjustment, and on lower volume.
Section summaries
Management's Discussion and Analysis
Q2 FY2026 net sales rose 3.2% to $172M, but a $28.3M loss on brand divestitures drove a net loss of $2.4M.
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increased 3.2% to $172.0M in Q2, driven by $4.7M from the HRX acquisition and $10.0M in improved price realization, partially offset by lower volume.
declined 70 to 41.0% due to higher tariff-related costs, a one-time prior-year tariff adjustment, and fixed cost deleverage on lower volume.
Selling, general and administrative costs rose 22.7% to $40.4 million, driven by higher legal fees for a securities class action, insurance, and consulting tied to the portfolio rebalance.
fell 38.7% to $8.2 million, helped by a lower debt balance and a favorable swing in the fair value of the interest rate collar.
for the first half of FY2026 improved to $34.6 million from $24.8 million a year ago, supported by stronger of $44.3 million.
What changed
The multi-year demand contraction flagged in earlier filings continued: unit volume declined again, though grew on price and the HRX acquisition, marking a shift in the growth engine from volume to pricing and M&A.
The 41.0% fell short of the 41.7% level sustained in Q2 2025, as the tariff-related costs and that emerged as a in Q1 2026 persisted.
SG&A costs, which had been declining as a percentage of , reversed course sharply to 23.5% of sales, driven by one-time legal and consulting costs rather than the recurring compliance investments flagged in prior quarters.
The interest rate collar, previously a source of earnings volatility, swung favorably this quarter, cutting by 38.7% and contributing to , a reversal from the $5.0 million unfavorable swing that pressured Q1 2025.
The company acted on its portfolio rebalancing strategy, divesting three brands in a single quarter, a concrete step beyond the SKU rationalization and Detroit Speed Engineering sale discussed in earlier filings.
What to watch
Whether the divestiture of ADS, Speartech, and Drake Brands leads to a measurable improvement in quality and margin profile in coming quarters, or whether the lost contribution margin outweighs the strategic benefit.
The trajectory of SG&A costs once the one-time legal and consulting fees tied to the portfolio rebalance and securities class action subside, and whether the underlying run-rate returns to the ~$33-35 million range seen in recent quarters.
Whether unit volume stabilizes or returns to growth now that the brand divestitures and SKU rationalization are largely complete, confirming that the core business has found a demand floor.
The direction of the interest rate collar's fair value in Q3 2026, given that a favorable swing drove a material portion of the decline in this quarter and a reversal would pressure pre-tax income.
Selling, general and administrative costs surged 22.7% to $40.4M, primarily from higher legal fees for a securities class action, insurance, and consulting for the portfolio rebalance.
A $28.3M loss on the sale of ADS, Speartech, and Drake Brands was the primary driver of the swing from a $10.9M in Q2 2025 to a $2.4M net loss.
fell 38.7% to $8.2M due to a lower debt balance and a favorable swing in the fair value of the .
for the first half of FY2026 improved to $34.6M from $24.8M, supported by stronger of $44.3M.
Quantitative and Qualitative Disclosures About Market Risk
Holley faces interest-rate risk on $527.7M variable-rate debt and credit/concentration risk on unsecured trade receivables; FX risk is currently unhedged.
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A 100 rate rise would increase annual by ~$1.3M, while a 100 bps decline would decrease it by ~$5.3M, reflecting the effect of interest-rate collars.
As of June 28, 2026, $527.7 million of term loan carried a variable rate with a weighted-average borrowing rate of 7.5%.
The Company uses interest-rate collars to partially mitigate the impact of rising rates on its variable-rate debt.
Credit risk on trade is concentrated among significant customers and could rise in a prolonged downturn; Holley performs ongoing credit evaluations and maintains an .
Cash equivalents are held with major financial institutions and are not considered to present significant credit risk, though some deposit balances exceed FDIC insurance limits.
Foreign-currency exposure, primarily to the Euro and Canadian dollar, is currently unhedged; the Company may adopt hedging strategies in the future if needed.
See Litigation in Note 17 “Commitments and Contingencies” to the condensed consolidated financial statements, which is incorporated by reference in this Item 1. Legal Proceedings.
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See Litigation in Note 17 “Commitments and Contingencies” to the condensed consolidated financial statements, which is incorporated by reference in this Item 1. Legal Proceedings.
We operate in a changing environment that involves numerous known and unknown risks and uncertainties that could materially affect our operations. Factors that could materially affect our actual results, levels of activity, performance or achievements include, but are not limite…
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We operate in a changing environment that involves numerous known and unknown risks and uncertainties that could materially affect our operations. Factors that could materially affect our actual results, levels of activity, performance or achievements include, but are not limited to, those under the caption “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 16, 2026. Such risks, uncertainties and other factors may cause our actual results, performance, and achievements to be materially different from those expressed or implied by our forward-looking statements. If any of these risks or events occur, our business, financial condition or results of operations may be adversely affected.