10-Q 1 hlly20231001_10q.htm FORM 10-Q hlly20231001_10q.htm
0001822928 Holley Inc. false --12-31 Q3 2023 1,852 1,550 0.0001 0.0001 5,000,000 5,000,000 0 0 0 0 0.0001 0.0001 550,000,000 550,000,000 117,473,122 117,473,122 117,147,997 117,147,997 0 0 0 7 5 7.25 1 5 125 1 4 3 10 3 1 false false false false Includes costs incurred as part of the restructuring of operations including professional and consulting services. Includes professional fees for legal, accounting, consulting, administrative, and other professional services directly attributable to potential acquisitions. 00018229282023-01-012023-10-01 0001822928us-gaap:CommonStockMember2023-01-012023-10-01 0001822928us-gaap:WarrantMember2023-01-012023-10-01 xbrli:shares 00018229282023-11-03 thunderdome:item iso4217:USD 00018229282023-10-01 00018229282022-12-31 iso4217:USDxbrli:shares 00018229282023-07-032023-10-01 00018229282022-07-042022-10-02 00018229282022-01-012022-10-02 0001822928us-gaap:CommonStockMember2021-12-31 0001822928us-gaap:AdditionalPaidInCapitalMember2021-12-31 0001822928us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-31 0001822928us-gaap:RetainedEarningsMember2021-12-31 00018229282021-12-31 0001822928us-gaap:CommonStockMember2022-01-012022-04-03 0001822928us-gaap:AdditionalPaidInCapitalMember2022-01-012022-04-03 0001822928us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-04-03 0001822928us-gaap:RetainedEarningsMember2022-01-012022-04-03 00018229282022-01-012022-04-03 0001822928us-gaap:CommonStockMember2022-04-03 0001822928us-gaap:AdditionalPaidInCapitalMember2022-04-03 0001822928us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-03 0001822928us-gaap:RetainedEarningsMember2022-04-03 00018229282022-04-03 0001822928us-gaap:CommonStockMember2022-04-042022-07-03 0001822928us-gaap:AdditionalPaidInCapitalMember2022-04-042022-07-03 0001822928us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-042022-07-03 0001822928us-gaap:RetainedEarningsMember2022-04-042022-07-03 00018229282022-04-042022-07-03 0001822928us-gaap:CommonStockMember2022-07-03 0001822928us-gaap:AdditionalPaidInCapitalMember2022-07-03 0001822928us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-03 0001822928us-gaap:RetainedEarningsMember2022-07-03 00018229282022-07-03 0001822928us-gaap:CommonStockMember2022-07-042022-10-02 0001822928us-gaap:AdditionalPaidInCapitalMember2022-07-042022-10-02 0001822928us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-042022-10-02 0001822928us-gaap:RetainedEarningsMember2022-07-042022-10-02 0001822928us-gaap:CommonStockMember2022-10-02 0001822928us-gaap:AdditionalPaidInCapitalMember2022-10-02 0001822928us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-10-02 0001822928us-gaap:RetainedEarningsMember2022-10-02 00018229282022-10-02 0001822928us-gaap:CommonStockMember2022-12-31 0001822928us-gaap:AdditionalPaidInCapitalMember2022-12-31 0001822928us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-31 0001822928us-gaap:RetainedEarningsMember2022-12-31 0001822928us-gaap:CommonStockMember2023-01-012023-04-02 0001822928us-gaap:AdditionalPaidInCapitalMember2023-01-012023-04-02 0001822928us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-04-02 0001822928us-gaap:RetainedEarningsMember2023-01-012023-04-02 00018229282023-01-012023-04-02 0001822928us-gaap:CommonStockMember2023-04-02 0001822928us-gaap:AdditionalPaidInCapitalMember2023-04-02 0001822928us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-02 0001822928us-gaap:RetainedEarningsMember2023-04-02 00018229282023-04-02 0001822928us-gaap:CommonStockMember2023-04-032023-07-02 0001822928us-gaap:AdditionalPaidInCapitalMember2023-04-032023-07-02 0001822928us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-032023-07-02 0001822928us-gaap:RetainedEarningsMember2023-04-032023-07-02 00018229282023-04-032023-07-02 0001822928us-gaap:CommonStockMember2023-07-02 0001822928us-gaap:AdditionalPaidInCapitalMember2023-07-02 0001822928us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-02 0001822928us-gaap:RetainedEarningsMember2023-07-02 00018229282023-07-02 0001822928us-gaap:CommonStockMember2023-07-032023-10-01 0001822928us-gaap:AdditionalPaidInCapitalMember2023-07-032023-10-01 0001822928us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-032023-10-01 0001822928us-gaap:RetainedEarningsMember2023-07-032023-10-01 0001822928us-gaap:CommonStockMember2023-10-01 0001822928us-gaap:AdditionalPaidInCapitalMember2023-10-01 0001822928us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-10-01 0001822928us-gaap:RetainedEarningsMember2023-10-01 0001822928hlly:PrincipalPaymentMember2023-01-012023-10-01 0001822928hlly:PrincipalPaymentMember2022-01-012022-10-02 0001822928hlly:EmpowerSponsorHoldingsLlcMember2023-01-012023-10-01 0001822928hlly:EmpowerSponsorHoldingsLlcMember2022-01-012022-10-02 0001822928hlly:JohnsSouthernKentuckyClassicsAndVestaMotorsportsMember2022-01-012022-12-31 0001822928hlly:JohnsSouthernKentuckyClassicsAndVestaMotorsportsMember2022-12-31 0001822928hlly:JohnsSouthernKentuckyClassicsAndVestaMotorsportsMembersrt:ScenarioPreviouslyReportedMember2022-12-31 0001822928hlly:JohnsSouthernKentuckyClassicsAndVestaMotorsportsMembersrt:RestatementAdjustmentMember2022-12-31 0001822928hlly:JohnsSouthernKentuckyClassicsAndVestaMotorsportsMemberus-gaap:TradeNamesMembersrt:ScenarioPreviouslyReportedMember2022-12-31 0001822928hlly:JohnsSouthernKentuckyClassicsAndVestaMotorsportsMemberus-gaap:TradeNamesMember2022-12-31 0001822928hlly:JohnsSouthernKentuckyClassicsAndVestaMotorsportsMemberus-gaap:CustomerRelationshipsMembersrt:ScenarioPreviouslyReportedMember2022-12-31 0001822928hlly:JohnsSouthernKentuckyClassicsAndVestaMotorsportsMemberus-gaap:CustomerRelationshipsMember2022-12-31 utr:Y 0001822928us-gaap:LandMember2023-10-01 0001822928us-gaap:LandMember2022-12-31 0001822928us-gaap:BuildingAndBuildingImprovementsMember2023-10-01 0001822928us-gaap:BuildingAndBuildingImprovementsMember2022-12-31 0001822928us-gaap:MachineryAndEquipmentMember2023-10-01 0001822928us-gaap:MachineryAndEquipmentMember2022-12-31 0001822928us-gaap:ConstructionInProgressMember2023-10-01 0001822928us-gaap:ConstructionInProgressMember2022-12-31 0001822928country:US2023-10-01 0001822928country:US2022-12-31 0001822928us-gaap:NonUsMember2023-10-01 0001822928us-gaap:NonUsMember2022-12-31 0001822928us-gaap:CustomerRelationshipsMember2023-10-01 0001822928us-gaap:TradeNamesMember2023-10-01 0001822928us-gaap:TechnologyBasedIntangibleAssetsMember2023-10-01 0001822928hlly:TradeNames1Member2023-10-01 0001822928us-gaap:CustomerRelationshipsMember2022-12-31 0001822928us-gaap:TradeNamesMember2022-12-31 0001822928us-gaap:TechnologyBasedIntangibleAssetsMember2022-12-31 0001822928hlly:TradeNames1Member2022-12-31 0001822928hlly:FirstLienNoteDueNovember172028Member2023-10-01 0001822928hlly:FirstLienNoteDueNovember172028Member2022-12-31 0001822928us-gaap:RevolvingCreditFacilityMember2023-10-01 0001822928us-gaap:RevolvingCreditFacilityMember2022-12-31 0001822928hlly:FirstLienNoteDueNovember172028Memberhlly:TermLoanMember2021-11-182021-11-18 0001822928hlly:FirstLienNoteDueNovember172028Memberhlly:TermLoanMember2021-11-18 0001822928us-gaap:RevolvingCreditFacilityMember2021-11-182021-11-18 0001822928us-gaap:RevolvingCreditFacilityMember2021-11-18 0001822928hlly:DelayedDrawTermLoanMember2021-11-18 0001822928hlly:DelayedDrawTermLoanMember2022-10-02 0001822928us-gaap:LetterOfCreditMember2021-11-18 0001822928us-gaap:LetterOfCreditMember2023-04-02 0001822928hlly:FirstLienNoteDueNovember172028Member2021-11-18 0001822928hlly:FirstLienNoteDueNovember172028Memberhlly:DelayedDrawTermLoanMember2021-11-182021-11-18 xbrli:pure 0001822928hlly:FirstLienNoteDueNovember172028Memberhlly:DelayedDrawTermLoanMember2023-07-032023-10-01 0001822928hlly:FirstLienNoteDueNovember172028Memberhlly:DelayedDrawTermLoanMember2023-10-01 0001822928hlly:TheCreditAgreementMember2023-10-01 0001822928us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-04-02 0001822928hlly:TheCreditAgreementMember2023-02-28 00018229282021-10-09 0001822928hlly:PublicWarrantsMember2021-10-09 0001822928hlly:PrivatePlacementWarrantsMember2021-10-09 0001822928hlly:PublicWarrantsMemberus-gaap:MeasurementInputSharePriceMember2021-10-09 0001822928hlly:PublicWarrantsMemberhlly:MeasurementInputSharePrice1Member2021-10-09 0001822928hlly:PublicWarrantsMember2022-04-012022-04-30 0001822928hlly:EmpowerSponsorHoldingsLlcMemberhlly:EarnOutSharesMember2021-07-162021-07-16 0001822928hlly:EmpowerSponsorHoldingsLlcMemberhlly:TrancheOneMember2022-01-012022-04-03 0001822928hlly:EmpowerSponsorHoldingsLlcMember2023-10-01 0001822928hlly:EmpowerSponsorHoldingsLlcMember2022-12-31 0001822928hlly:EmpowerSponsorHoldingsLlcMember2023-07-032023-10-01 0001822928hlly:EmpowerSponsorHoldingsLlcMember2022-07-042022-10-02 0001822928hlly:EmpowerSponsorHoldingsLlcMember2023-01-012023-10-01 0001822928hlly:EmpowerSponsorHoldingsLlcMember2022-01-012022-10-02 0001822928us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-01-04 0001822928us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-10-01 0001822928us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-07-032023-10-01 0001822928us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-01-012023-10-01 0001822928us-gaap:InterestRateContractMemberus-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:InterestRateContractMemberus-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:InterestRateContractMemberus-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:InterestRateContractMemberus-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:FairValueInputsLevel1Memberhlly:WarrantLiabilityPublicWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:FairValueInputsLevel2Memberhlly:WarrantLiabilityPublicWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:FairValueInputsLevel3Memberhlly:WarrantLiabilityPublicWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928hlly:WarrantLiabilityPublicWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:FairValueInputsLevel1Memberhlly:WarrantLiabilityPrivatePlacementWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:FairValueInputsLevel2Memberhlly:WarrantLiabilityPrivatePlacementWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:FairValueInputsLevel3Memberhlly:WarrantLiabilityPrivatePlacementWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928hlly:WarrantLiabilityPrivatePlacementWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:FairValueInputsLevel1Memberhlly:EarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:FairValueInputsLevel2Memberhlly:EarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:FairValueInputsLevel3Memberhlly:EarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928hlly:EarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:FairValueMeasurementsRecurringMember2023-10-01 0001822928us-gaap:FairValueInputsLevel1Memberhlly:WarrantLiabilityPublicWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928us-gaap:FairValueInputsLevel2Memberhlly:WarrantLiabilityPublicWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928us-gaap:FairValueInputsLevel3Memberhlly:WarrantLiabilityPublicWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928hlly:WarrantLiabilityPublicWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928us-gaap:FairValueInputsLevel1Memberhlly:WarrantLiabilityPrivatePlacementWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928us-gaap:FairValueInputsLevel2Memberhlly:WarrantLiabilityPrivatePlacementWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928us-gaap:FairValueInputsLevel3Memberhlly:WarrantLiabilityPrivatePlacementWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928hlly:WarrantLiabilityPrivatePlacementWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928us-gaap:FairValueInputsLevel1Memberhlly:EarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928us-gaap:FairValueInputsLevel2Memberhlly:EarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928us-gaap:FairValueInputsLevel3Memberhlly:EarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928hlly:EarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928us-gaap:FairValueMeasurementsRecurringMember2022-12-31 0001822928hlly:WarrantLiabilityPrivatePlacementWarrantsMemberus-gaap:MeasurementInputSharePriceMemberhlly:MonteCarloSimulationModelMember2023-10-01 0001822928hlly:WarrantLiabilityPrivatePlacementWarrantsMemberus-gaap:MeasurementInputSharePriceMemberhlly:MonteCarloSimulationModelMember2022-12-31 0001822928hlly:WarrantLiabilityPrivatePlacementWarrantsMemberhlly:MeasurementInputStrikePriceMemberhlly:MonteCarloSimulationModelMember2023-10-01 0001822928hlly:WarrantLiabilityPrivatePlacementWarrantsMemberhlly:MeasurementInputStrikePriceMemberhlly:MonteCarloSimulationModelMember2022-12-31 0001822928hlly:WarrantLiabilityPrivatePlacementWarrantsMemberus-gaap:MeasurementInputExpectedTermMemberhlly:MonteCarloSimulationModelMember2023-10-01 0001822928hlly:WarrantLiabilityPrivatePlacementWarrantsMemberus-gaap:MeasurementInputExpectedTermMemberhlly:MonteCarloSimulationModelMember2022-12-31 0001822928hlly:WarrantLiabilityPrivatePlacementWarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMemberhlly:MonteCarloSimulationModelMember2023-10-01 0001822928hlly:WarrantLiabilityPrivatePlacementWarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMemberhlly:MonteCarloSimulationModelMember2022-12-31 0001822928hlly:WarrantLiabilityPrivatePlacementWarrantsMemberhlly:MeasurementInputPriceThresholdMemberhlly:MonteCarloSimulationModelMember2023-10-01 0001822928hlly:WarrantLiabilityPrivatePlacementWarrantsMemberhlly:MeasurementInputPriceThresholdMemberhlly:MonteCarloSimulationModelMember2022-12-31 0001822928hlly:EarnOutLiabilityMemberus-gaap:MeasurementInputSharePriceMemberhlly:MonteCarloSimulationModelMember2023-10-01 0001822928hlly:EarnOutLiabilityMemberus-gaap:MeasurementInputSharePriceMemberhlly:MonteCarloSimulationModelMember2022-12-31 0001822928hlly:EarnOutLiabilityMemberus-gaap:MeasurementInputExpectedTermMemberhlly:MonteCarloSimulationModelMember2023-10-01 0001822928hlly:EarnOutLiabilityMemberus-gaap:MeasurementInputExpectedTermMemberhlly:MonteCarloSimulationModelMember2022-12-31 0001822928hlly:EarnOutLiabilityMemberus-gaap:MeasurementInputPriceVolatilityMemberhlly:MonteCarloSimulationModelMember2023-10-01 0001822928hlly:EarnOutLiabilityMemberus-gaap:MeasurementInputPriceVolatilityMemberhlly:MonteCarloSimulationModelMember2022-12-31 0001822928hlly:EarnOutLiabilityMemberus-gaap:MeasurementInputRiskFreeInterestRateMemberhlly:MonteCarloSimulationModelMember2023-10-01 0001822928hlly:EarnOutLiabilityMemberus-gaap:MeasurementInputRiskFreeInterestRateMemberhlly:MonteCarloSimulationModelMember2022-12-31 0001822928hlly:EarnOutLiabilityMemberhlly:MeasurementInputPriceHurdleOneMemberhlly:MonteCarloSimulationModelMember2023-10-01 0001822928hlly:EarnOutLiabilityMemberhlly:MeasurementInputPriceHurdleOneMemberhlly:MonteCarloSimulationModelMember2022-12-31 0001822928hlly:PrivatePlacementWarrantsMember2021-12-31 0001822928hlly:EarnOutLiabilityMember2021-12-31 0001822928hlly:PrivatePlacementWarrantsMember2022-01-012022-10-02 0001822928hlly:EarnOutLiabilityMember2022-01-012022-10-02 0001822928hlly:PrivatePlacementWarrantsMember2022-10-02 0001822928hlly:EarnOutLiabilityMember2022-10-02 0001822928hlly:PrivatePlacementWarrantsMember2022-12-31 0001822928hlly:EarnOutLiabilityMember2022-12-31 0001822928hlly:PrivatePlacementWarrantsMember2023-01-012023-10-01 0001822928hlly:EarnOutLiabilityMember2023-01-012023-10-01 0001822928hlly:PrivatePlacementWarrantsMember2023-10-01 0001822928hlly:EarnOutLiabilityMember2023-10-01 0001822928hlly:ElectronicSystemsMember2023-07-032023-10-01 0001822928hlly:ElectronicSystemsMember2022-07-042022-10-02 0001822928hlly:ElectronicSystemsMember2023-01-012023-10-01 0001822928hlly:ElectronicSystemsMember2022-01-012022-10-02 0001822928hlly:MechanicalSystemMember2023-07-032023-10-01 0001822928hlly:MechanicalSystemMember2022-07-042022-10-02 0001822928hlly:MechanicalSystemMember2023-01-012023-10-01 0001822928hlly:MechanicalSystemMember2022-01-012022-10-02 0001822928hlly:ExhaustMember2023-07-032023-10-01 0001822928hlly:ExhaustMember2022-07-042022-10-02 0001822928hlly:ExhaustMember2023-01-012023-10-01 0001822928hlly:ExhaustMember2022-01-012022-10-02 0001822928hlly:AccessoriesMember2023-07-032023-10-01 0001822928hlly:AccessoriesMember2022-07-042022-10-02 0001822928hlly:AccessoriesMember2023-01-012023-10-01 0001822928hlly:AccessoriesMember2022-01-012022-10-02 0001822928hlly:SafetyMember2023-07-032023-10-01 0001822928hlly:SafetyMember2022-07-042022-10-02 0001822928hlly:SafetyMember2023-01-012023-10-01 0001822928hlly:SafetyMember2022-01-012022-10-02 0001822928country:US2023-07-032023-10-01 0001822928country:US2022-07-042022-10-02 0001822928country:US2023-01-012023-10-01 0001822928country:US2022-01-012022-10-02 0001822928country:IT2023-07-032023-10-01 0001822928country:IT2022-07-042022-10-02 0001822928country:IT2023-01-012023-10-01 0001822928country:IT2022-01-012022-10-02 0001822928us-gaap:WarrantMember2023-07-032023-10-01 0001822928us-gaap:WarrantMember2022-07-042022-10-02 0001822928us-gaap:WarrantMember2023-01-012023-10-01 0001822928us-gaap:WarrantMember2022-01-012022-10-02 0001822928us-gaap:EmployeeStockOptionMember2023-07-032023-10-01 0001822928us-gaap:EmployeeStockOptionMember2022-07-042022-10-02 0001822928us-gaap:EmployeeStockOptionMember2023-01-012023-10-01 0001822928us-gaap:EmployeeStockOptionMember2022-01-012022-10-02 0001822928us-gaap:RestrictedStockUnitsRSUMember2023-07-032023-10-01 0001822928us-gaap:RestrictedStockUnitsRSUMember2022-07-042022-10-02 0001822928us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-10-01 0001822928us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-10-02 0001822928us-gaap:PerformanceSharesMember2023-07-032023-10-01 0001822928us-gaap:PerformanceSharesMember2022-07-042022-10-02 0001822928us-gaap:PerformanceSharesMember2023-01-012023-10-01 0001822928us-gaap:PerformanceSharesMember2022-01-012022-10-02 0001822928hlly:EarnOutSharesMember2023-07-032023-10-01 0001822928hlly:EarnOutSharesMember2022-07-042022-10-02 0001822928hlly:EarnOutSharesMember2023-01-012023-10-01 0001822928hlly:EarnOutSharesMember2022-01-012022-10-02 0001822928hlly:DefinedContributionPensionMember2022-01-012022-10-02 0001822928hlly:The401kMember2023-07-032023-10-01 0001822928hlly:The401kMember2022-07-042022-10-02 0001822928hlly:The401kMember2023-01-012023-10-01 0001822928hlly:The401kMember2022-01-012022-10-02 0001822928hlly:The2021OmnibusIncentivePlanMember2021-12-31 0001822928hlly:The2021OmnibusIncentivePlanMember2023-10-01 0001822928us-gaap:RestrictedStockUnitsRSUMembersrt:PresidentMember2023-06-062023-06-06 0001822928us-gaap:PerformanceSharesMembersrt:PresidentMember2023-06-062023-06-06 0001822928us-gaap:RestrictedStockUnitsRSUMember2023-07-032023-10-01 0001822928us-gaap:RestrictedStockUnitsRSUMember2022-07-042022-10-02 0001822928us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-10-01 0001822928us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-10-02 0001822928us-gaap:PerformanceSharesMember2023-07-032023-10-01 0001822928us-gaap:PerformanceSharesMember2022-07-042022-10-02 0001822928us-gaap:PerformanceSharesMember2023-01-012023-10-01 0001822928us-gaap:PerformanceSharesMember2022-01-012022-10-02 0001822928us-gaap:EmployeeStockOptionMember2023-07-032023-10-01 0001822928us-gaap:EmployeeStockOptionMember2022-07-042022-10-02 0001822928us-gaap:EmployeeStockOptionMember2023-01-012023-10-01 0001822928us-gaap:EmployeeStockOptionMember2022-01-012022-10-02 0001822928hlly:ProfitInterestUnitsMember2023-07-032023-10-01 0001822928hlly:ProfitInterestUnitsMember2022-07-042022-10-02 0001822928hlly:ProfitInterestUnitsMember2023-01-012023-10-01 0001822928hlly:ProfitInterestUnitsMember2022-01-012022-10-02 0001822928us-gaap:RestrictedStockUnitsRSUMembersrt:MinimumMember2023-01-012023-10-01 0001822928us-gaap:RestrictedStockUnitsRSUMembersrt:MaximumMember2023-01-012023-10-01 0001822928us-gaap:RestrictedStockUnitsRSUMember2023-10-01 0001822928us-gaap:RestrictedStockUnitsRSUMember2022-12-31 0001822928us-gaap:PerformanceSharesMember2023-03-082023-03-08 0001822928us-gaap:PerformanceSharesMember2023-05-082023-05-08 0001822928us-gaap:PerformanceSharesMembersrt:MinimumMember2023-10-01 0001822928us-gaap:PerformanceSharesMembersrt:MaximumMember2023-10-01 0001822928us-gaap:PerformanceSharesMember2023-10-01 0001822928us-gaap:EmployeeStockOptionMember2023-10-01 0001822928hlly:ProfitInterestUnitsMember2023-10-01 00018229282022-01-01 0001822928srt:MinimumMember2023-10-01 0001822928srt:MaximumMember2023-10-01 0001822928hlly:AccruedLiabilitiesAndOtherNoncurrentLiabilitiesMember2023-10-01 00018229282023-07-012023-09-30 00018229282022-07-012022-09-30 00018229282023-01-012023-09-30 00018229282022-01-012022-09-30

Table of Contents



Washington, DC 20549






For the quarterly period ended October 1, 2023






For the transition period from __________to__________


Commission file number: 001-39599



(Exact name of registrant as specified in its charter)




(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

(Registrants telephone number, including area code)


(Former name, former address and former fiscal year, if changed since last report) N/A


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


Title of each class





Name of each exchange

on which registered

Common Stock, par value $0.0001

Warrants to purchase common stock





New York Stock Exchange

New York Stock Exchange


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 is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes No ☒


There were 118,566,872 shares of Common Stock, including 1,093,750 restricted earn-out shares, par value $0.0001 per share, issued and outstanding as of November 3, 2023.







This Quarterly Report on Form 10-Q 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. 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 its 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 increased constraints 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;



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 its common stock (“Common Stock”) and warrants to purchase Common Stock;



comply with existing and/or future laws and regulations applicable to its business, including laws and regulations related to environmental health and safety;



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



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. tax 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



respond to other risks and factors, listed under the caption “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the U.S. Securities and Exchange Commission (the "SEC") on March 15, 2023, in Part II. Item 1A of this Quarterly Report on Form 10-Q, 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 Quarterly Report on Form 10-Q 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.






Item 1. Financial Statements




(in thousands, except share data)




As of


October 1, 2023


December 31, 2022




Cash and cash equivalents

 $36,833  $26,150 

Accounts receivable, less allowance for credit losses of $1,852 and $1,550 respectively

  47,390   47,083 


  207,161   233,573 

Prepaids and other current assets

  13,283   18,157 

Total current assets

  304,667   324,963 

Property, plant, and equipment, net

  48,026   52,181 


  419,056   418,121 

Other intangibles assets, net

  413,774   424,855 

Right-of-use assets

  30,415   29,522 

Other noncurrent assets


Total assets

 $1,219,123  $1,249,642 



Accounts payable

 $39,762  $44,948 

Accrued interest

  324   5,994 

Accrued liabilities

  42,225   43,317 

Current portion of long-term debt

  6,571   7,000 

Total current liabilities

  88,882   101,259 

Long-term debt, net of current portion

  603,507   643,563 

Warrant liability

  9,788   4,272 

Earn-out liability

  3,265   1,176 

Deferred taxes

  49,774   58,390 

Long-term operating lease liabilities

  26,006   24,992 

Total liabilities

  781,222   833,652 

Commitments and contingencies (Refer to Note 18 - Commitments and Contingencies)


Stockholders' equity:


Preferred stock, $0.0001 par value, 5,000,000 shares authorized, none issued and outstanding on October 1, 2023 and December 31, 2022


Common stock, $0.0001 par value, 550,000,000 shares authorized, 117,473,122 and 117,147,997 shares issued and outstanding on October 1, 2023 and December 31, 2022, respectively

  12   12 

Additional paid-in capital

  372,158   368,122 

Accumulated other comprehensive loss

  (1,047)  (944)

Retained earnings

  66,778   48,800 

Total stockholders' equity

  437,901   415,990 

Total liabilities and stockholders' equity

 $1,219,123  $1,249,642 


The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.






(in thousands)




For the thirteen weeks ended


For the thirty-nine weeks ended


October 1, 2023


October 2, 2022


October 1, 2023


October 2, 2022


Net sales

 $156,530  $154,775  $503,997  $534,250 

Cost of goods sold

  98,156   106,383   308,162   327,849 

Gross profit

  58,374   48,392   195,835   206,401 

Selling, general, and administrative

  28,880   31,921   87,998   102,532 

Research and development costs

  6,100   6,039   18,935   22,396 

Amortization of intangible assets

  3,687   3,662   11,040   10,985 

Impairment of indefinite-lived intangible assets

     2,395      2,395 

Acquisition and restructuring costs

  415   1,266   2,106   3,247 

Other operating expense (income)

  (28)  47   508   594 

Total operating expense

  39,054   45,330   120,587   142,149 

Operating income

  19,320   3,062   75,248   64,252 

Change in fair value of warrant liability

  2,064   (30,171)  5,516   (51,112)

Change in fair value of earn-out liability

  700   (7,429)  2,089   (9,282)

Interest expense, net

  13,712   10,428   41,909   26,780 

Total non-operating expense (income)

  16,476   (27,172)  49,514   (33,614)

Income before income taxes

  2,844   30,234   25,734   97,866 

Income tax expense (benefit)

  2,092   (1,345)  7,756   8,866 

Net income

 $752  $31,579  $17,978  $89,000 

Comprehensive income:


Foreign currency translation adjustment

  (176)  516   (103)  1,258 

Total comprehensive income

 $576  $32,095  $17,875  $90,258 

Common Share Data:


Weighted average common shares outstanding - basic

  117,397,069   117,119,609   117,256,959   116,636,906 

Weighted average common shares outstanding - diluted

  119,245,956   117,138,134   118,119,501   117,273,613 

Basic net income per share

 $0.01  $0.27  $0.15  $0.76 

Diluted net income per share

 $0.01  $0.27  $0.15  $0.32 


The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.






(in thousands, except share data)




Common Stock
























Gain (Loss)






Balance at December 31, 2021

    115,805,639     $ 12     $ 329,705     $ (256 )   $ (24,974 )   $ 304,487  

Net income

                            16,858       16,858  

Equity compensation

                3,162                   3,162  

Foreign currency translation

                      241             241  

Issuance of vested Earn-Out Shares

    1,093,750             14,689                   14,689  

Balance at April 3, 2022

    116,899,389       12       347,556       (15 )     (8,116 )     339,437  

Net income

                            40,563       40,563  

Equity compensation

                3,483                   3,483  

Foreign currency translation

                      501             501  

Warrants exercised

    33,333             383                   383  

Balance at July 3, 2022

    116,932,722       12       351,422       486       32,447       384,367  

Net income

                            31,579       31,579  

Equity compensation

                2,873                   2,873  

Foreign currency translation

                      516             516  

Tax withholding related to vesting of restricted stock units

                (1,050 )                 (1,050 )

Issuance of shares for restricted stock units


Balance at October 2, 2022

    117,147,997     $ 12     $ 353,245     $ 1,002     $ 64,026     $ 418,285  

Balance at December 31, 2022

    117,147,997     $ 12     $ 368,122     $ (944 )   $ 48,800     $ 415,990  

Net income

                            4,247       4,247  

Equity compensation

                394                   394  

Foreign currency translation

                      (199 )           (199 )

Tax withholding related to vesting of restricted stock units

                (34 )                 (34 )

Issuance of shares for restricted stock units


Balance at April 2, 2023

    117,172,216       12       368,482       (1,143 )     53,047       420,398  

Net income

                            12,979       12,979  

Equity compensation

                1,806                   1,806  

Foreign currency translation

                      272             272  

Tax withholding related to vesting of restricted stock units

                (39 )                 (39 )

Issuance of shares for restricted stock units


Balance at July 2, 2023

    117,249,854       12       370,249       (871 )     66,026       435,416  

Net income

                            752       752  

Equity compensation

                2,970                   2,970  

Foreign currency translation

                      (176 )           (176 )

Tax withholding related to vesting of restricted stock units

                (1,061 )                 (1,061 )

Issuance of shares for restricted stock units


Balance at October 1, 2023

    117,473,122     $ 12     $ 372,158     $ (1,047 )   $ 66,778     $ 437,901  


The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.






(in thousands)



For the thirty-nine weeks ended


October 1, 2023


October 2, 2022




Net income

  $ 17,978     $ 89,000  

Adjustments to reconcile net income to net cash from operating activities:



    7,738       7,500  

Amortization of intangible assets

    11,040       10,985  

Impairment of indefinite-lived intangible assets


Amortization of deferred loan costs

    1,339       1,277  

Amortization of right of use assets

    4,014       4,203  

Gain on termination of leases

          (279 )

Fair value adjustments to warrant liability

    5,516       (51,112 )

Fair value adjustments to earn-out liability

    2,089       (9,282 )

Fair value adjustments to interest rate collar

    (3,185 )      

Equity compensation

    5,170       9,518  

Change in deferred taxes

    (8,616 )     (4,219 )

Loss (gain) on disposal of property, plant and equipment

    (227 )     559  

Provision for inventory reserves

    3,824       5,432  

Provision for credit losses

    744       403  

Change in operating assets and liabilities:


Accounts receivable

    (1,054 )     (8,573 )


    21,046       (46,299 )

Prepaids and other current assets

    4,862       1,027  

Accounts payable

    (5,413 )     (1,922 )

Accrued interest

    (5,670 )     1,416  

Accrued and other liabilities

    (4,332 )     135  

Net cash provided by operating activities

    56,863       12,164  



Capital expenditures

    (4,417 )     (11,745 )

Proceeds from the disposal of fixed assets

    1,292       473  

Cash paid for acquisitions, net

          (14,077 )

Net cash used in investing activities

    (3,125 )     (25,349 )



Proceeds from issuance of long-term debt


Principal payments on long-term debt

    (40,437 )     (31,790 )

Deferred financing fees

    (1,427 )      

Payments from stock-based award activities

    (1,134 )     (1,050 )

Proceeds from issuance of common stock in connection with the exercise of Warrants


Net cash used in financing activities

    (42,998 )     (5,457 )

Effect of foreign currency rate fluctuations on cash

    (57 )     (1,077 )

Net change in cash and cash equivalents

    10,683       (19,719 )

Cash and cash equivalents:


Beginning of period

    26,150       36,325  

End of period

  $ 36,833     $ 16,606  

Supplemental disclosures of cash flow information:


Cash paid for interest

  $ 50,290     $ 25,070  

Cash paid for income taxes

    16,041       6,834  

Noncash investing and financing activities:


Vested Earn-Out Shares issued to Empower Sponsor Holdings LLC

  $     $ 14,689  


The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.


(in thousands, except share data)






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 (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., Empower Merger Sub II LLC, and Holley Intermediate Holdings, Inc. (“Holley Intermediate”) on July 16, 2021, (the “Closing” and such date, the “Closing Date”). The Business Combination was accounted for as a reverse recapitalization 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 the conflict in Ukraine, the conflict in Israel and surrounding areas, and the possible expansion of such conflicts and potential geopolitical consequences. 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 increasing 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.



(in thousands, except share data)

Basis of Presentation


The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP" or “GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2022, as filed with the SEC on March 15, 2023, in the Company’s annual report on Form 10-K. In management’s opinion, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are of a normal and recurring nature, that are necessary for a fair presentation of financial results for the interim periods presented. Operating results for any quarter are not necessarily indicative of the results for the full fiscal year.


The Company operates on a fiscal year that ends on  December 31. The three- and nine-month periods ended October 1, 2023 and October 2, 2022 each included 13 weeks and 39 weeks, respectively.


Principles of Consolidation


These unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation.


Summary of Significant Accounting Policies


The following are updates to the significant accounting policies described in our audited consolidated financial statements as of and for the year ended December 31, 2022.


Equity-Based Compensation


The Company accounts for equity-based awards granted to employees and nonemployees under the fair value method prescribed by Accounting Standards Codification ("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 Holley Parent Holdings, LLC (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.



(in thousands, except share data)

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. 


Recent Accounting Pronouncements


Accounting Standards Recently Adopted


In October 2021, the Financial Accounting Standards Board 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.



(in thousands, except share data)




In 2022, the Company completed three 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. 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. The final allocation of the 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:











(as initially reported)




(as adjusted)


Accounts receivable

  $ 959     $ (397 )   $ 562  


    3,481       146       3,627  

Property, plant and equipment

    275             275  

Other assets

    1,132       (1,108 )     24  


    1,689             1,689  

Customer relationships

    1,512             1,512  


    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 thousands, except share data)




Inventories of the Company consisted of the following:



As of


October 1, 2023


December 31, 2022


Raw materials

  $ 67,811     $ 78,586  


    23,424       23,906  

Finished goods

    115,926       131,081  
    $ 207,161     $ 233,573  






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



As of


October 1, 2023


December 31, 2022



  $ 3,326     $ 3,426  

Buildings and improvements

    11,164       11,051  

Machinery and equipment

    71,620       66,140  

Construction in process

    6,592       9,563  

Total property, plant and equipment

    92,702       90,180  

Less: accumulated depreciation

    44,676       37,999  

Property, plant and equipment, net

  $ 48,026     $ 52,181  


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



As of


October 1, 2023


December 31, 2022


United States

  $ 46,056     $ 50,434  


    1,970       1,747  

Total property, plant and equipment, net

  $ 48,026     $ 52,181  



(in thousands, except share data)




The following presents changes to goodwill for the period indicated:



For the thirty-nine weeks ended


October 1, 2023


Balance on December 31, 2022


Measurement period adjustments


Balance on October 1, 2023



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. 


No goodwill impairment charges were incurred during the 13-week and 39-week periods ended October 1, 2023 and October 2, 2022. During the third quarter of 2022, management concluded that it was necessary to reevaluate goodwill and indefinite-lived intangible assets for impairment due to supply chain constraints that resulted in the Company revising its earnings estimates for 2022. As a result of this evaluation, a pre-tax impairment of $2.4 million was recognized on certain indefinite-lived tradenames. Potential changes in the Company's costs and operating structure, the implementation of synergies, and overall performance in the automotive aftermarket industry, could negatively impact 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. 


Intangible assets consisted of the following:



October 1, 2023


Gross Carrying Amount


Accumulated Amortization


Net Carrying Value


Finite-lived intangible assets:


Customer relationships

 $269,950  $(52,844) $217,106 


  13,775   (5,387)  8,388 


  26,676   (13,353)  13,323 

Total finite-lived intangible assets

 $310,401  $(71,584) $238,817 

Indefinite-lived intangible assets:



 $174,957     $174,957 



December 31, 2022


Gross Carrying Amount


Accumulated Amortization


Net Carrying Value


Finite-lived intangible assets:


Customer relationships

 $269,950  $(44,178) $225,772 


  13,775   (4,843)  8,932 


  26,676   (11,523)  15,153 

Total finite-lived intangible assets

 $310,401  $(60,544) $249,857 

Indefinite-lived intangible assets:



 $174,998     $174,998 


The following outlines the estimated future amortization expense related to intangible assets held as of October 1, 2023:


2023 (excluding the thirty-nine weeks ended October 1, 2023)
















(in thousands, except share data)




Accrued liabilities of the Company consisted of the following:



As of


October 1, 2023


December 31, 2022


Accrued freight

  $ 5,468     $ 6,861  

Accrued employee compensation and benefits

    11,327       6,259  

Accrued returns and allowances

    5,758       5,214  

Accrued taxes

    4,030       5,222  

Current portion of operating lease liabilities

    5,231       5,112  

Accrued other

    10,411       14,649  

Total accrued liabilities

  $ 42,225     $ 43,317  






Debt of the Company consisted of the following:



As of


October 1, 2023


December 31, 2022


First lien term loan due November 17, 2028

  $ 619,147     $ 649,350  




    2,122       2,770  

Less unamortized debt issuance costs

    (11,191 )     (11,557 )
      610,078       650,563  

Less current portion of long-term debt

    (6,571 )     (7,000 )
    $ 603,507     $ 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 consisted 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 October 1, 2023.


Proceeds from the credit facility were used to repay in full the Company’s obligations under its previously existing first lien and second lien notes and to pay $13,413 in deferred financing fees related to the refinancing.


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 2022, no excess cash flow payment was required in 2023. 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 $24,845 in principal on its outstanding first lien term loan by repurchasing $13,845 at a discount to par and making a voluntary repayment of $11,000 during the 13-week period ended October 1, 2023.



(in thousands, except share data)

As of October 1, 2023, amounts outstanding under the credit facility accrue interest at a rate equal to either the Secured Overnight Financing Rate ("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 October 1, 2023, the weighted average interest rate on the Company's borrowings under the credit facility was 9.4%.


The Company has entered into an interest rate collar in the notional amount of $500,000 to hedge the Company's exposure to fluctuations in interest rates on its variable-rate debt. Refer to Note 9, "Derivative Instruments," for additional information.


Obligations under the Credit Agreement are secured by substantially all of the Company’s assets. 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.


In February 2023, the Company entered into an amendment to the Credit Agreement which, among other things, increases the consolidated net leverage ratio financial covenant level applicable under the Credit Agreement as of the quarter ending April 2, 2023 through the quarter ending March 31, 2024 (the “Covenant Relief Period”), to initially 7.25:1.00, and provides for modified step-down levels for such covenant thereafter. 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 October 1, 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 as of October 1, 2023 are as follows:





Debt Issuance Costs


2023 (excluding the thirty-nine weeks ended October 1, 2023)

  $ 1,855     $ 446  


    7,425       1,869  


    7,628       2,016  


    6,571       2,178  


    6,571       2,354  


    591,219       2,328  
    $ 621,269     $ 11,191  



(in thousands, except share data)




Upon the Closing, there were 14,666,644 Warrants, consisting of 9,999,977 public warrants ("Public Warrants") and 4,666,667 private warrants ("Private Warrants" and together with the Public Warrants, the “Warrants”), outstanding to purchase shares of 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, 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 Empower Sponsor Holdings, LLC (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 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, and 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 Company’s Warrants are accounted for as a liability in accordance with ASC 815-40 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. As of October 1, 2023 and  December 31, 2022, a warrant liability with a fair value of $9,788 and $4,272, respectively, was reflected as a long-term liability in the condensed consolidated balance sheet. An increase of $2,064 and a decrease of $30,171 in the fair value of the warrant liability was reflected as change in fair value of warrant liability in the condensed consolidated statements of comprehensive income for the 13-week periods ended October 1, 2023 and October 2, 2022, respectively. An increase of $5,516 and a decrease of $51,112 in the fair value of the warrant liability was reflected as change in fair value of warrant liability in the condensed consolidated statements of comprehensive income for the 39-week periods ended October 1, 2023 and October 2, 2022, respectively. In April 2022, the Company issued 33,333 shares of Common Stock in connection with the exercise of Public Warrants assumed in the Business Combination.


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. As of October 1, 2023 and  December 31, 2022, an earn-out liability with a fair value of $3,265 and $1,176, respectively, was reflected as a long-term liability in the condensed consolidated balance sheet. An increase of $700 and a decrease of $7,429 in the fair value of the earn-out liability was reflected as change in fair value of earn-out liability in the condensed consolidated statements of comprehensive income for the 13-week periods ended October 1, 2023 and October 2, 2022, respectively. An increase of $2,089 and a decrease of $9,282 in the fair value of the earn-out liability was reflected as change in fair value of earn-out liability in the condensed consolidated statements of comprehensive income for the 39-week periods ended October 1, 2023 and October 2, 2022, respectively. 



(in thousands, except share data)




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. 


As of October 1, 2023, the Company recognized a derivative asset of $3,185 for the Collar in other noncurrent assets on the condensed consolidated balance sheet. For the 13-week and 39-week periods ended October 1, 2023, the Company recorded a net change in the fair value of the Collar as a decrease to interest expense of $1,117 and $3,185, respectively. Cash receipts for the Collar totaled $125 for both the 13-week and 39-week periods ended October 1, 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").






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 October 1, 2023


Level 1


Level 2


Level 3






Interest rate collar

  $     $ 3,185     $     $ 3,185  



Warrant liability (Public)

  $ 6,379     $     $     $ 6,379  

Warrant liability (Private)

                3,409       3,409  

Earn-out liability

                3,265       3,265  

Total fair value liabilities

  $ 6,379     $     $ 6,674     $ 13,053  



Fair Value Measured on December 31, 2022


Level 1


Level 2


Level 3






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  


As of October 1, 2023, the Company's derivative liabilities for its Private and Public Warrants, earn-out liability, and derivative asset for its 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). 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 assets on the condensed 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 condensed consolidated statements of comprehensive income. Changes in the fair value of the Collar is recognized as an adjustment to interest expense in the condensed consolidated statements of comprehensive income.



(in thousands, except share data)

The fair value of Private Warrants was estimated as of the measurement date using the Monte Carlo simulation model with the following assumptions:



October 1, 2023


December 31, 2022


Valuation date price

  $ 4.99     $ 2.12  

Strike price

  $ 11.50     $ 11.50  

Remaining life (in years)

    2.79       3.54  

Expected dividend

  $     $  

Risk-free interest rate

    4.72 %     4.06 %

Price threshold

  $ 18.00     $ 18.00  


The fair value of the earn-out liability was estimated as of the measurement date using the Monte Carlo simulation model with the following assumptions:



October 1, 2023


December 31, 2022


Valuation date price

  $ 4.99     $ 2.12  

Expected term (in years)

    4.79       5.54  

Expected volatility

    57.68 %     70.33 %

Risk-free interest rate

    4.49 %     3.88 %

Price hurdle

  $ 15.00     $ 15.00  


As of October 1, 2023 and December 31, 2022, the Company has 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 liabilities during the 39-week periods ended October 1, 2023 and October 2, 2022 is as follows:



Private Warrants


Earn-Out Liability




Balance at December 31, 2021

  $ 21,793     $ 26,596     $ 48,389  

Liabilities reclassed to equity

          (14,689 )     (14,689 )

Gains included in earnings

    (7,653 )     (1,853 )     (9,506 )

Balance at October 2, 2022

  $ 14,140     $ 10,054     $ 24,194  

Balance at December 31, 2022

  $ 1,581     $ 1,176     $ 2,757  

Losses included in earnings

    1,828       2,089       3,917  

Balance at October 1, 2023

  $ 3,409     $ 3,265     $ 6,674  



(in thousands, except share data)




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 our 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 18,Commitments and Contingencies” for more information.


The following table summarizes total revenue by product category.



For the thirteen weeks ended


For the thirty-nine weeks ended


October 1, 2023


October 2, 2022


October 1, 2023


October 2, 2022


Electronic systems

  $ 70,062     $