Strong Quarter Driven by North America
Sales
SECOND QUARTER FISCAL 2022 HIGHLIGHTS
- Net Sales increased 10% year-over-year to $399.4 million, North
America increased by 17%
- Net Income increased 25% year-over-year to $66.3 million
- Adjusted EBITDA increased 16% year-over-year to $127.6
million
Hayward Holdings, Inc. (“Hayward”) (NYSE: HAYW), a global
designer, manufacturer and marketer of a broad portfolio of pool
equipment and associated automation systems, today announced
financial results for the second quarter ended July 2, 2022 of its
fiscal year 2022.
CEO COMMENTS
“I am pleased to report another quarter of growth and improved
operational results,” said Kevin Holleran, Hayward’s President and
Chief Executive Officer. “Our strong execution and price
realization drove improved gross margins, and our recent product
introductions continue to drive good share gains. Overall in our
core U.S. market, we see healthy demand driven by product upgrade
trends in the aftermarket and resilient new construction activity.
Additionally, we closed on the acquisition of a specialty lighting
business which strengthens our portfolio of lighting solutions.
However, during the quarter, we started to see the impact of the
macro-economic environment, particularly in Europe, while seasonal
markets in North America were impacted by the cool and wet spring
weather. Given these trends and improving supply chain
predictability, we expect our channel partners will reduce their
Hayward inventory on hand by approximately 4 to 6 weeks in the
second half of 2022. We are reducing our 2022 guidance to reflect
this inventory reduction, and are taking the appropriate actions to
manage our production and costs to maintain our industry leading
margins. We and our Board are very confident in Hayward’s long term
growth and free cash flow generation and as such are replenishing
our share repurchase program to $450 million over 3 years.”
SECOND QUARTER FISCAL 2022 CONSOLIDATED RESULTS
Net sales increased by 10% to $399.4 million for the second
quarter of fiscal 2022. Net sales continue to be driven by trends
in aftermarket upgrades and consumer investments in outdoor living
spaces. Net sales growth during the quarter was the result of
favorable pricing and acquisitions, partially offset by lower
volumes and unfavorable foreign exchange impact. The decline in
volume was primarily the result of 20% lower volume sales in Europe
due to geopolitical factors, poor weather in seasonal markets in
North America, and initial channel inventory reductions.
Gross profit increased by 13% to $189.4 million for the second
quarter of fiscal 2022. Gross profit margin increased 130 basis
points to 47.4%. The increase in gross margin was due to the full
impact of our pricing actions implemented over the last 18 months
to offset inflation.
Selling, general, and administrative (“SG&A”) expenses
decreased by 4% to $68.9 million for the second quarter of fiscal
2022. The decrease in SG&A was a result of lower performance
related incentive-based compensation and warranty expenses. As a
percentage of net sales, SG&A decreased 244 basis points to
17%, compared to the prior year period. Research, development, and
engineering expenses were $5.0 million for the second quarter of
fiscal 2022, or 1% of net sales, as compared to $5.0 million for
the prior year period, or 1% of net sales.
Operating income increased by 27% to $102.7 million for the
second quarter of fiscal 2022. The increase in operating income was
driven by higher sales.
Interest expense, net, decreased by approximately 11% to $11.6
million for the second quarter of fiscal 2022 primarily as a result
of lower interest rates as a result of the amendment to our credit
facilities in the second quarter of fiscal 2021.
During the quarter we incurred an income tax expense of $21.1
million with an effective tax rate of 24.1% compared to $12.6
million at an effective tax rate of 19.4% for the prior year
period. The increase is primarily due to the increase in income
from operations in the current year.
Net income increased by 25% to $66.3 million for the second
quarter of fiscal 2022.
Adjusted EBITDA increased by 16% to $127.6 million for the
second quarter of fiscal 2022. Adjusted EBITDA margin expanded 166
basis points to 32.0%.
SECOND QUARTER FISCAL 2022 SEGMENT RESULTS
North America Net sales increased by 17% to $342.1 million for
the second quarter of fiscal 2022. The increase was driven by
improved pricing and acquisitions, which offset the lower volume in
weather effected seasonal markets, namely the Midwest, Northeast
and Canada, as well as a moderating of channel inventory.
Segment income increased by 24% to $110.5 million for the second
quarter of fiscal 2022. Adjusted segment income increased by 24% to
$122.5 million.
Europe & Rest of World Net sales decreased by 19% to $57.4
million for the second quarter of fiscal 2022. The decrease was
primarily driven by a decline in volume and the unfavorable impact
from foreign currency, as well as channel inventory reductions.
Segment income increased by 7% to $13.2 million for the second
quarter of fiscal 2022. Adjusted segment income decreased by 27% to
$13.0 million.
BALANCE SHEET AND CASH FLOW
As of July 2, 2022, Hayward had cash and cash equivalents of
$109.0 million and approximately $130.1 million available for
future borrowings under its ABL Facility. Cash flow from operations
for the six months ended July 2, 2022, of approximately $64 million
was a decrease of approximately $60 million from the comparative
period as a result of the increase in working capital.
OUTLOOK
Hayward is reducing its full fiscal year 2022 guidance to
reflect its outlook for the expected channel inventory reduction in
the second half of the year as well as continued impact of
geopolitical events in Europe and unfavorable exchange rates.
Hayward continues to see robust consumer demand for pool equipment
products in the U.S., specifically, for our suite of SmartPadTM
products into both new construction and the aftermarket. In
addition, recent acquisitions and new products support Hayward's
leading market position. Hayward is confident in its ability to
successfully execute in an evolving environment in the near-term
and remains positive about its long-term growth outlook.
For the full fiscal year 2022, Hayward's outlook for net sales
is a decline of 2% to 6% year-over-year and for Adjusted EBITDA, is
$385 million to $400 million. Despite the reduction in current year
outlook, we are very proud that the midpoint of our revised
guidance for fiscal year 2022 implies a three year aggregate growth
of $613 million, or 84%, in net sales and $220 million, or 128%, in
Adjusted EBITDA.
Please see the Forward-Looking Statements section of this
release for a discussion of certain risks relevant to Hayward’s
outlook.
SHARE REPURCHASE PROGRAM
In the first half of 2022, Hayward repurchased approximately
$293.1 million in common stock under its previously approved share
repurchase program, leaving approximately $156.9 million remaining
under the initial authorization. On July 26, 2022, Hayward's Board
of Directors renewed the initial authorization of the existing
repurchase program and authorized Hayward to repurchase up to an
aggregate of $450 million of its common stock over the next three
years. The repurchase program will continue to be funded by cash on
hand and cash generated from operations.
CONFERENCE CALL INFORMATION
Hayward will hold a conference call to discuss the results
today, July 28, 2022 at 9:00 a.m. (ET).
To access the live conference call, please register for the call
in advance by visiting
https://ige.netroadshow.com/registration/q4inc/11296/hayward-holdings-inc-2q22-earnings-call/.
Registration will also be available during the call. After
registering, a confirmation e-mail will be sent including dial-in
details and a unique access code for entry. To ensure you are
connected for the full call please register at least 10 minutes
before the start of the call.
Interested investors and other parties can also listen to a
webcast of the live conference call by logging onto the Investor
Relations section of the company's website at
https://investor.hayward.com/events-and-presentations/default.aspx.
An earnings presentation will be posted to the Investor Relations
section of the company’s website prior to the conference call
For those unable to listen to the live conference call, a replay
will be available approximately two hours after the call through
the archived webcast on the Hayward website or by dialing (866)
813-9403 or (44) 204-525-0658. The access code for the replay is
061360. The replay will be available until 11:59 p.m. Eastern Time
on August 11, 2022.
ABOUT HAYWARD HOLDINGS, INC.
Hayward Holdings, Inc. (NYSE: HAYW) is a leading global designer
and manufacturer of pool equipment and technology all key to the
SmartPad™ conversion strategy designed to provide superior outdoor
living experience. Hayward offers a full line of innovative,
energy-efficient and sustainable residential and commercial pool
equipment, including a complete line of advanced pumps, filters,
heaters, automatic pool cleaners, LED lighting, internet of things
(IoT) enabled controls, alternate sanitizers and water
features.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains certain statements that are
“forward-looking statements” as that term is defined under the
Private Securities Litigation Reform Act of 1995 (the “Act”) and
releases issued by the Securities and Exchange Commission (the
“SEC”). Such forward-looking statements relating to Hayward are
based on the beliefs of Hayward’s management as well as assumptions
made by, and information currently available to it. These
forward-looking statements include, but are not limited to,
statements about Hayward’s strategies, plans, objectives,
expectations, intentions, expenditures and assumptions and other
statements contained in or incorporated by reference in this
earnings release that are not historical facts. When used in this
document, words such as “guidance,” “may,” “will,” “should,”
“could,” “intend,” “potential,” “continue,” “anticipate,”
“believe,” “estimate,” “expect,” “plan,” “target,” “predict,”
“project,” “seek” and similar expressions as they relate to Hayward
are intended to identify forward-looking statements. Hayward
believes that it is important to communicate its future
expectations to its stockholders, and it therefore makes
forward-looking statements in reliance upon the safe harbor
provisions of the Act. However, there may be events in the future
that Hayward is not able to accurately predict or control, and
actual results may differ materially from the expectations it
describes in its forward-looking statements.
Examples of forward-looking statements include, among others,
statements Hayward makes regarding: Hayward’s outlook, financial
position; business plans and objectives; general economic and
industry trends; business prospects; future product development and
acquisition strategies; growth and expansion opportunities;
operating results; and working capital and liquidity. The
forward-looking statements in this earnings release are only
predictions. Hayward may not achieve the plans, intentions or
expectations disclosed in Hayward’s forward-looking statements, and
you should not place significant reliance on its forward-looking
statements. Hayward has based these forward-looking statements
largely on its current expectations and projections about future
events and financial trends that it believes may affect its
business, financial condition and results of operations. Moreover,
neither Hayward nor any other person assumes responsibility for the
accuracy and completeness of forward-looking statements taken from
third-party industry and market reports.
Important factors that could affect Hayward’s future results and
could cause those results or other outcomes to differ materially
from those indicated in its forward-looking statements include the
following: its ability to execute on its growth strategies and
expansion opportunities; its ability to maintain favorable
relationships with suppliers and manage disruptions to its global
supply chain and the availability of raw materials, including as a
result of the COVID-19 pandemic; its relationships with and the
performance of distributors, builders, buying groups, retailers and
servicers who sell Hayward’s products to pool owners; competition
from national and global companies, as well as lower-cost
manufacturers; impacts on Hayward’s business from the sensitivity
of its business to seasonality and unfavorable economic and
business conditions; Hayward’s ability to identify emerging
technological and other trends in its target end markets; Hayward’s
ability to develop, manufacture and effectively and profitably
market and sell its new planned and future products; failure of
markets to accept new product introductions and enhancements; the
ability to successfully identify, finance, complete and integrate
acquisitions; Hayward’s ability to attract and retain senior
management and other qualified personnel; regulatory changes and
developments affecting Hayward’s current and future products;
volatility in currency exchange rates; Hayward’s ability to service
its existing indebtedness and obtain additional capital to finance
operations and its growth opportunities; impacts on Hayward’s
business from political, regulatory, economic, trade, and other
risks associated with operating foreign businesses, including risks
associated with geopolitical conflict; Hayward’s ability to
establish and maintain intellectual property protection for its
products, as well as its ability to operate its business without
infringing, misappropriating or otherwise violating the
intellectual property rights of others; the impact of material cost
and other inflation; the impact of changes in laws, regulations and
administrative policy, including those that limit U.S. tax
benefits, impact trade agreements and tariffs, or address the
impacts of climate change; the outcome of litigation and
governmental proceedings; impacts on Hayward’s business from the
COVID-19 pandemic; and other factors set forth in “Risk Factors” in
Hayward’s Annual Report on Form 10-K for the year ended December
31, 2021.
Many of these factors are macroeconomic in nature and are,
therefore, beyond Hayward’s control. Should one or more of these
risks or uncertainties materialize, or should underlying
assumptions prove incorrect, Hayward’s actual results, performance
or achievements may vary materially from those described in this
earnings release as anticipated, believed, estimated, expected,
intended, planned or projected. The forward-looking statements
included in this earnings release are made only as of the date of
this earnings release. Unless required by United States federal
securities laws, Hayward neither intends nor assumes any obligation
to update these forward-looking statements for any reason after the
date of this earnings release to conform these statements to actual
results or to changes in Hayward’s expectations.
NON-GAAP FINANCIAL MEASURES
This earnings release includes certain financial measures not
presented in accordance with the generally accepted accounting
principles in the United States (“GAAP”), EBITDA, adjusted EBITDA,
adjusted EBITDA margin, adjusted segment income, adjusted segment
income margin and net debt. These financial measures are not
measures of financial performance in accordance with GAAP and may
exclude items that are significant in understanding and assessing
the Company’s financial results. Therefore, these measures should
not be considered in isolation or as an alternative to net income
(loss), segment income or other measures of profitability or
performance under GAAP. You should be aware that the Company’s
presentation of these measures may not be comparable to similarly
titled measures used by other companies, which may be defined and
calculated differently. See the appendix for a reconciliation of
historical non-GAAP measures to the most directly comparable GAAP
measures.
Reconciliation for the forward-looking full year fiscal 2022 net
sales and adjusted EBITDA outlook is not being provided, as Hayward
does not currently have sufficient data to accurately estimate the
variables and individual adjustments for such reconciliation.
Hayward Holdings, Inc.
Unaudited Condensed Consolidated
Balance Sheets
(Dollars in thousands, except per share
data)
July 2, 2022
December 31, 2021
Assets
Current assets
Cash and cash equivalents
$
108,965
$
265,796
Accounts receivable, net of allowances of
$3,235 and $2,003, respectively
248,639
208,112
Inventories, net
312,461
233,449
Prepaid expenses
17,709
12,459
Other current assets
21,126
30,705
Total current assets
708,900
750,521
Property, plant, and equipment, net of
accumulated depreciation of $74,683 and $67,366, respectively
147,651
146,754
Goodwill
926,730
924,264
Trademark
736,000
736,000
Customer relationships, net
228,491
242,854
Other intangibles, net
138,708
103,192
Other non-current assets
94,875
74,885
Total assets
$
2,981,355
$
2,978,470
Liabilities and Stockholders'
Equity
Current liabilities
Current portion of the long-term debt
$
11,957
$
12,155
Accounts payable
97,500
87,445
Accrued expenses and other liabilities
200,686
190,378
Income taxes payable
—
13,886
Total current liabilities
310,143
303,864
Long-term debt, net
1,119,312
973,124
Deferred tax liabilities, net
256,453
262,378
Other non-current liabilities
73,826
69,591
Total liabilities
1,759,734
1,608,957
Stockholders' equity
Preferred stock, $0.001 par value,
100,000,000 authorized, no shares issued or outstanding as of July
2, 2022 and December 31, 2021
—
—
Common stock $0.001 par value, 750,000,000
authorized; 239,583,621 issued and 215,687,086 outstanding at July
2, 2022; 238,432,216 issued and 233,056,799 outstanding at December
31, 2021
240
238
Additional paid-in capital
1,064,113
1,058,724
Common stock in treasury; 23,896,535 and
5,375,417 at July 2, 2022 and December 31, 2021, respectively
(307,225)
(14,066)
Retained earnings
461,167
320,875
Accumulated other comprehensive income
3,326
3,742
Total stockholders' equity
1,221,621
1,369,513
Total liabilities, redeemable stock, and
stockholders' equity
$
2,981,355
$
2,978,470
Hayward Holdings, Inc.
Unaudited Condensed Consolidated
Statements of Operations
(Dollars in thousands, except per share
data)
Three Months Ended
Six Months Ended
July 2, 2022
July 3, 2021
July 2, 2022
July 3, 2021
Net sales
$
399,442
$
364,422
$
809,902
$
698,785
Cost of sales
210,077
196,404
430,143
370,863
Gross profit
189,365
168,018
379,759
327,922
Selling, general, and administrative
expense
68,947
71,802
137,804
138,322
Research, development, and engineering
expense
5,033
4,997
10,269
9,817
Acquisition and restructuring related
expense
4,940
1,636
7,211
1,669
Amortization of intangible assets
7,697
8,632
15,307
17,462
Operating income
102,748
80,951
209,168
160,652
Interest expense, net
11,605
12,975
21,167
31,247
Loss on debt extinguishment
—
3,608
—
9,418
Other (income) expense, net
3,804
(1,000)
3,290
2,568
Total other expense
15,409
15,583
24,457
43,233
Income from operations before income
taxes
87,339
65,368
184,711
117,419
Provision for income taxes
21,079
12,552
44,419
27,736
Net income
$
66,260
$
52,816
$
140,292
$
89,683
Earnings per share
Basic
$
0.30
$
0.23
$
0.62
$
0.02
Diluted
$
0.29
$
0.22
$
0.59
$
0.02
Weighted average common shares
outstanding
Basic
218,401,182
231,103,424
225,358,529
143,721,029
Diluted
228,642,982
244,203,652
235,943,099
153,571,905
Hayward Holdings, Inc.
Unaudited Condensed Consolidated
Statements of Cash Flows
(Dollars in thousands)
Six Months Ended
July 2, 2022
July 3, 2021
Cash flows from operating
activities
Net income
$
140,292
$
89,683
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation
9,598
9,251
Amortization of intangible assets
18,188
20,497
Amortization of deferred debt issuance
fees
1,478
2,253
Stock-based compensation
3,632
12,478
Deferred income taxes
(9,423)
(3,403)
Allowance for bad debts
1,232
131
Loss on debt extinguishment
—
9,418
Loss on disposal of property, plant and
equipment
5,359
3,742
Changes in operating assets and
liabilities
Accounts receivable
(40,727)
(36,989)
Inventories
(67,946)
(26,586)
Other current and non-current assets
5,918
(1,534)
Accounts payable
5,982
29,817
Accrued expenses and other liabilities
(9,907)
14,631
Net cash provided by operating
activities
63,676
123,389
Cash flows from investing
activities
Purchases of property, plant, and
equipment
(15,855)
(9,854)
Purchases of intangibles
—
(528)
Acquisitions, net of cash acquired
(61,337)
—
Proceeds from sale of property, plant, and
equipment
4
25
Proceeds from settlements of investment
currency hedge
—
699
Net cash used in investing activities
(77,188)
(9,658)
Cash flows from financing
activities
Proceeds from issuance of common stock -
Initial Public Offering
—
377,400
Costs associated with Initial Public
Offering
—
(26,124)
Purchase of common stock for treasury
(293,159)
(1,044)
Proceeds from issuance of long-term
debt
—
51,659
Debt issuance costs
—
(12,289)
Payments of long-term debt
(5,000)
(364,644)
Proceeds from revolving credit
facility
150,000
68,000
Payments on revolving credit facility
—
(68,000)
Issuance of Class A stock
—
—
Proceeds from issuance of short term
debt
6,979
—
Payments of short term debt
(642)
—
Other, net
721
(108)
Net cash (used in) provided by financing
activities
(141,101)
24,850
Effect of exchange rate changes on cash
and cash equivalents and restricted cash
(2,218)
(52)
Change in cash and cash equivalents and
restricted cash
(156,831)
138,529
Cash and cash equivalents and restricted
cash, beginning of period
265,796
115,294
Cash and cash equivalents and restricted
cash, end of period
$
108,965
$
253,823
Supplemental disclosures of cash flow
information
Cash paid-interest
$
19,358
$
29,152
Cash paid-income taxes
67,286
25,675
Equipment financed under finance
leases
1,531
—
Reconciliations
Consolidated
Reconciliations
Adjusted EBITDA and Adjusted EBITDA Margin
Reconciliations (Non-GAAP)
Following is a reconciliation from net
income to adjusted EBITDA:
(Dollars in thousands)
Three Months Ended
Six Months Ended
July 2, 2022
July 3, 2021
July 2, 2022
July 3, 2021
Net income
$
66,260
$
52,816
$
140,292
$
89,683
Depreciation
4,758
4,503
9,598
9,251
Amortization
9,091
10,105
18,188
20,497
Interest expense
11,605
12,975
21,167
31,247
Income taxes
21,079
12,552
44,419
27,736
Loss on extinguishment of debt
—
3,608
—
9,418
EBITDA
112,793
96,559
233,664
187,832
Stock-based compensation (a)
315
5,265
1,252
15,899
Sponsor management fees (b)
—
—
—
90
Currency exchange items (c)
3,453
(593)
2,724
3,230
Acquisition and restructuring related
expense, net (d)
4,940
1,636
7,211
1,669
Other (e)
6,136
7,527
9,035
8,986
Total Adjustments
14,844
13,835
20,222
29,874
Adjusted EBITDA
$
127,637
$
110,394
$
253,886
$
217,706
Adjusted EBITDA margin
32.0 %
30.3 %
31.3 %
31.2 %
(a) Represents non-cash stock-based
compensation expense related to equity awards issued to management,
employees, and directors. Beginning in the three months ended July
2, 2022, the adjustment includes only expense related to awards
issued under the 2017 Equity Incentive Plan, which were awards
granted prior to the effective date of Hayward’s initial public
offering (the “IPO”), whereas in prior periods, the adjustment
included stock-based compensation expense for all equity awards.
Under the historical presentation, the stock-based compensation
adjustment for the three and six months ended July 2, 2022 would
have been an expense of $1.9 million and $2.9 million,
respectively.
(b) Represents fees paid to certain of the
Company’s controlling stockholders for services rendered pursuant
to a 2017 management services agreement. This agreement and the
corresponding payment obligation ceased on March 16, 2021, the
effective date of the IPO.
(c) Represents unrealized non-cash losses
(gains) on foreign denominated monetary assets and liabilities and
foreign currency contracts.
(d) Adjustments in the three and six
months ended July 2, 2022 are primarily driven by transaction costs
associated with the acquisition of the specialty lighting business
of Halco Lighting Technologies, LLC and costs associated with the
relocation of the corporate headquarters. Adjustments in the three
and six months ended July 3, 2021 are primarily driven by
restructuring related costs associated with the exit of a redundant
manufacturing and distribution facility.
(e) Adjustments in the three months ended
July 2, 2022 include expenses associated with the discontinuation
of a product joint development agreement, costs incurred for
follow-on equity offerings in May 2022, which are reported in
SG&A in our unaudited condensed consolidated statements of
operations, partially offset by gains resulting from an insurance
policy reimbursement related to the fire incident in Yuncos, Spain.
Adjustments in the three months ended July 3, 2021 include a
write-off related to the aforementioned fire in Yuncos, Spain,
costs related to our debt refinancing, and operating losses related
to an early stage product business acquired in 2018 that was phased
out.
Adjustments in the six months ended July
2, 2022 include expenses associated with the discontinuation of a
product joint development agreement, follow-on equity offerings in
May 2022, which are reported in SG&A in our unaudited condensed
consolidated statements of operations, partially offset by gains
resulting from an insurance policy reimbursement related to the
fire incident in Yuncos, Spain. Also included in the six months
ended are bad debt reserves for certain customers in Russia and
Ukraine partially offset by collections of these previously
reserved receivables. Adjustments in the six months ended July 3,
2021 include a write-off related to the aforementioned fire in
Yuncos, Spain, expenses incurred in preparation for the IPO and
transaction related bonuses, costs related to our debt refinancing,
and operating losses related to an early stage product business
acquired in 2018 that was phased out.
Following is a reconciliation from net
income to adjusted EBITDA for the last twelve months:
(Dollars in thousands)
Last Twelve Months (f)
Fiscal Year
July 2, 2022
December 31, 2021
Net income
$
254,334
$
203,725
Depreciation
19,175
18,826
Amortization
36,680
38,990
Interest expense
40,774
50,854
Income taxes
73,099
56,416
Loss on extinguishment of debt
—
9,418
EBITDA
424,062
378,229
Stock-based compensation (a)
4,372
19,019
Sponsor management fees (b)
—
90
Currency exchange items (c)
3,979
4,485
Acquisition and restructuring related
expense, net (d)
20,572
15,030
Other (e)
4,933
4,884
Total Adjustments
33,856
43,508
Adjusted EBITDA
$
457,918
$
421,737
Adjusted EBITDA margin
30.3 %
30.1 %
(a) Represents non-cash stock-based compensation expense related
to equity awards issued to management, employees, and directors.
Beginning in the three months ended July 2, 2022, the adjustment
includes only expense related to awards issued under the 2017
Equity Incentive Plan, which were awards granted prior to the
effective date of Hayward’s initial public offering (the “IPO”),
whereas in prior periods, the adjustment included stock-based
compensation expense for all equity awards. Under the historical
presentation, the stock-based compensation adjustment for the three
and six months ended July 2, 2022 would have been an expense of
$1.9 million and $2.9 million, respectively.
(b) Represents fees paid to certain of the Company’s controlling
stockholders for services rendered pursuant to a 2017 management
services agreement. This agreement and the corresponding payment
obligation ceased on March 16, 2021, the effective date of the
IPO.
(c) Represents unrealized non-cash losses (gains) on foreign
denominated monetary assets and liabilities and foreign currency
contracts.
(d) Adjustments in the last twelve months ended July 2, 2022 and
December 31, 2021 each include business restructuring related costs
associated with the exit of an early-stage product business
acquired in 2018, severance and relocation costs associated with
the relocation of our Corporate headquarters, and business
restructuring related costs associated with the exit of redundant
manufacturing and distribution facilities.
(e) Adjustments in the last twelve months ended July 2, 2022
include expenses associated with the discontinuation of a product
joint development agreement, follow-on equity offerings, legal
reserve and fee expenses, operating losses related to the early
stage product business acquired in 2018 mentioned above, and bad
debt reserves for certain customers in Russia and Ukraine,
partially offset by gains resulting from an insurance policy
reimbursement related to the fire incident in Yuncos, Spain
Adjustments in the twelve months ended December 31, 2021 include
net insurance settlement proceeds for property damage loss as well
as the consequential business interruption loss amount caused by
the fire incident in Yuncos Spain, legal reserve and fee expenses,
operating losses related to the early stage product business
acquired in 2018 mentioned above, debt refinancing expenses, and
expenses incurred in preparation with the IPO.
(f) Last twelve months adjusted
EBITDA is calculated as six months ended July 2, 2022 Adjusted
EBITDA plus Fiscal Year ended December 31, 2021 Adjusted EBITDA
less six months ended July 3, 2021 Adjusted EBITDA.
Segment
Reconciliations
Following is a reconciliation from segment
income to adjusted segment income for the North America ("NAM") and
Europe & Rest of World ("E&RW") segments:
(Dollars in thousands)
Three Months Ended
Three Months Ended
July 2, 2022
July 3, 2021
Total
NAM
E&RW
Total
NAM
E&RW
Net sales
$
399,442
$
342,080
$
57,362
$
364,422
$
293,575
$
70,847
Gross profit
$
189,365
$
166,818
$
22,549
$
168,018
$
140,442
$
27,576
Gross profit margin %
47.4 %
48.8 %
39.3 %
46.1 %
47.8 %
38.9 %
Segment income
$
123,771
$
110,539
$
13,232
$
101,652
$
89,285
$
12,367
Segment income margin %
31.0 %
32.3 %
23.1 %
27.9 %
30.4 %
17.5 %
Depreciation
4,454
4,248
206
4,410
4,109
301
Amortization
1,394
1,394
—
1,473
1,473
—
Stock-based compensation
829
765
64
3,753
3,748
5
Other (a)
5,040
5,538
(498)
5,597
551
5,046
Total adjustments
11,717
11,945
(228)
15,233
9,881
5,352
Adjusted segment income
$
135,488
$
122,484
$
13,004
$
116,885
$
99,166
$
17,719
Adjusted segment income margin %
33.9 %
35.8 %
22.7 %
32.1 %
33.8 %
25.0 %
Expenses not allocated to segments
Corporate expense, net
$
8,386
$
10,433
Acquisition and restructuring related
expense
4,940
1,636
Amortization of intangible assets
7,697
8,632
Operating income
$
102,748
$
80,951
(a) The three months ended July 2, 2022 for NAM includes
expenses associated with the discontinuation of a product joint
development agreement that Hayward believes are not representative
of its ongoing business operations. The three months ended July 3,
2021 includes operating losses which relate to an early stage
product business acquired in 2018 that was phased out in 2021.
The three months ended July 2, 2022 for
E&RW includes collections of previously reserved bad debt
expense related to certain customers impacted by the conflict in
Russia and Ukraine. The three months ended July 3, 2021 represents
the impact of a fire at our manufacturing and administrative
facilities in Yuncos, Spain.
(Dollars in thousands)
Six Months Ended
Six Months Ended
July 2, 2022
July 3, 2021
Total
NAM
E&RW
Total
NAM
E&RW
Net sales
$
809,902
$
688,376
$
121,526
$
698,785
$
565,040
$
133,745
Gross profit
$
379,759
$
329,875
$
49,886
$
327,922
$
275,098
$
52,824
Gross profit margin %
46.9 %
47.9 %
41.0 %
46.9 %
48.7 %
39.5 %
Segment income
$
249,351
$
219,150
$
30,201
$
202,346
$
175,100
$
27,246
Segment income margin %
30.79 %
31.8 %
24.9 %
29.0 %
31.0 %
20.4 %
Depreciation
8,957
8,582
375
9,068
8,400
668
Amortization
2,881
2,881
—
3,035
3,035
—
Stock-based compensation
459
356
103
7,996
7,444
552
Other (a)
6,450
5,738
712
6,034
983
5,051
Total adjustments
18,747
17,557
1,190
26,133
19,862
6,271
Adjusted segment income (a)
$
268,098
$
236,707
$
31,391
$
228,479
$
194,962
$
33,517
Adjusted segment income margin % (a)
33.1 %
34.4 %
25.8 %
32.7 %
34.5 %
25.1 %
Expenses not allocated to segments
Corporate expense, net
$
17,665
$
22,563
Acquisition and restructuring related
expense
7,211
1,669
Amortization of intangible assets
15,307
17,462
Operating income
$
209,168
$
160,652
(a) The six months ended July 2, 2022 for NAM includes expenses
associated with the discontinuation of a product joint development
agreement and certain general and administrative expenses that
Hayward believes are not representative of its ongoing business
operations. The six months ended July 3, 2021 include operating
losses which relate to an early stage product business acquired in
2018 that was phased out in 2021.
The six months ended July 2, 2022 for
E&RW includes bad debt reserves related to certain customers
impacted by the conflict in Russia and Ukraine partially offset by
subsequent collections.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220728005185/en/
Investor Relations Contact: Hayward Investor Relations:
908-288-9706 investor.relations@hayward.com
Media Relations Contact: Tanya McNabb tmcnabb@hayward.com
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