THIRD QUARTER FISCAL 2024 SUMMARY
- Net Sales increased 3% year-over-year to $227.6 million
- Net Income increased 40% year-over-year to $16.5 million
- Adjusted EBITDA* increased 8% year-over-year to $51.1
million
- Diluted EPS increased 40% year-over-year to $0.07 and adjusted
diluted EPS* increased 22% year-over-year to $0.11
- Year-to-date cash flow from operations increased 27%
year-over-year to $275.8 million
Hayward Holdings, Inc. (NYSE: HAYW) (“Hayward” or the
“Company”), a global designer, manufacturer and marketer of a broad
portfolio of pool and outdoor living technology, today announced
financial results for the third quarter ended September 28, 2024 of
its fiscal year 2024. Comparisons are to financial results for the
prior-year third fiscal quarter.
CEO COMMENTS
“I am pleased to report third quarter results consistent with
expectations,” said Kevin Holleran, Hayward’s President and Chief
Executive Officer. “We delivered sales and earnings growth, strong
gross profit margin expansion, and increased cash flow. This
performance enabled us to reduce net leverage into our targeted
range. ChlorKing performed well in the first full quarter of
ownership, and we are already seeing the synergies of the
integration with Hayward’s existing commercial pool business. The
early buy program is progressing in line with our expected
participation. We continue to execute our growth strategy by
advancing our technology leadership position with innovative
connected pool solutions, leveraging our culture of continuous
improvement and operational excellence, and expanding customer
relationships. We are updating our 2024 outlook to reflect modestly
improved sales and profitability.”
THIRD QUARTER FISCAL 2024 CONSOLIDATED RESULTS
Net sales increased by 3% to $227.6 million for the third
quarter of fiscal 2024. The increase in net sales during the
quarter was the result of positive net price impact including
normalized allowances and discounts and the positive impact from
acquisitions, partially offset by reduced volumes. The decrease in
volume resulted from market declines in the Middle East and Asia
and lower new construction and remodel activity in the U.S.
Gross profit increased by 7% to $113.1 million for the third
quarter of fiscal 2024. Gross profit margin increased 190 basis
points to 49.7%. The increase in gross profit margin was primarily
due to operational efficiencies in our manufacturing facilities and
net price increases, including normalized allowances and discounts,
partially offset by a non-cash increase to cost of goods sold
resulting from the fair value inventory step-up adjustment
recognized as part of the purchase accounting for the acquisition
of the ChlorKing business.
Selling, general, and administrative expense (“SG&A”)
increased by 9% to $64.5 million for the third quarter of fiscal
2024. The increase in SG&A was primarily due to higher salary
costs driven by wage inflation and investments in our customer care
and selling teams, discrete legal expenses and increased
professional service costs. As a percentage of net sales, SG&A
increased 130 basis points to 28.3%, compared to the prior-year
period of 27.0%, driven by the factors discussed above. Research,
development, and engineering expenses were $6.4 million for the
third quarter of fiscal 2024, or 3% of net sales, as compared to
$6.2 million for the prior-year period, or 3% of net sales.
Operating income increased by 16% to $33.4 million for the third
quarter of fiscal 2024, due to the aggregated effects of the items
described above. Operating income as a percentage of net sales
(“operating margin”) was 14.7% for the third quarter of fiscal
2024, a 160 basis point increase from the 13.1% operating margin in
the prior-year period.
Interest expense, net, decreased by 24% to $13.2 million for the
third quarter of fiscal 2024 primarily due to the repayment of the
Incremental Term Loan B principal balance in April 2024 and higher
interest income on cash investment balances.
Income tax expense for the third quarter of fiscal 2024 was $4.4
million, for an effective tax rate of 21.1%, compared to an income
tax benefit of $2.3 million, for an effective tax rate of (23.7)%,
for the prior-year period. The change in the effective tax rate was
primarily due to the exercise of stock options, the release of the
valuation allowance against foreign tax credit carryovers and
return-to-provision adjustments during the prior-year period.
Net income increased by 40% to $16.5 million for the third
quarter of fiscal 2024. Net income margin expanded 190 basis points
to 7.3%.
Adjusted EBITDA* increased by 8% to $51.1 million for the third
quarter of fiscal 2024 from $47.2 million in the prior-year period.
Adjusted EBITDA margin* expanded 110 basis points to 22.5%.
Diluted EPS increased by 40% to $0.07 for the third quarter of
fiscal 2024. Adjusted diluted EPS* increased by 22% to $0.11 for
the third quarter of fiscal 2024.
THIRD QUARTER FISCAL 2024 SEGMENT RESULTS
North America
Net sales increased by 5% to $195.0 million for the third
quarter of fiscal 2024. The increase was driven by positive net
price impact including normalized allowances and discounts, the
positive impact from acquisitions and volume growth in Canada,
partially offset by a decline in volume in the US due to lower new
construction and remodels.
Segment income increased by 29% to $51.6 million for the third
quarter of fiscal 2024. Adjusted segment income* increased by 29%
to $59.5 million.
Europe & Rest of World
Net sales decreased by 7% to $32.6 million for the third quarter
of fiscal 2024. The decline was primarily due to a decline in
volume, partially offset by the favorable impact of net price. The
decline in volume is driven primarily by market declines in the
Middle East and Asia.
Segment income decreased by 61% to $2.5 million for the third
quarter of fiscal 2024. Adjusted segment income* decreased by 59%
to $2.7 million.
BALANCE SHEET AND CASH FLOW
As of September 28, 2024, Hayward had cash and cash equivalents
of $274.2 million and approximately $114.3 million available for
future borrowings under its revolving credit facilities. Cash flow
provided by operations for the nine months ended September 28, 2024
of $275.8 million was an increase of $58.8 million from the
prior-year period. The increase in cash provided was primarily
driven by greater cash generated by working capital compared to the
prior-year period and due to an increase in net income.
OUTLOOK
Hayward is refining its full-year 2024 guidance ranges to
reflect continued strong execution resulting in modestly improved
sales and profitability. For fiscal year 2024, Hayward now expects
net sales of $1.020 billion to $1.040 billion, or an increase of
approximately 3% to 5% from fiscal year 2023, compared to our prior
guidance of $1.010 billion to $1.040 billion. We now expect
Adjusted EBITDA* of $260 million to $270 million, or an increase of
approximately 5% to 9% from fiscal year 2023, compared to our prior
guidance of $255 million to $270 million.
The pool industry remains attractive and benefits from
sustainable secular demand trends in outdoor living. Hayward
continues to leverage its competitive advantages and drive
increasing adoption of its leading SmartPad™ pool equipment
products both in new construction and the aftermarket, which has
historically represented approximately 80% of net sales. Hayward is
confident in its long-term outlook for profitable growth and robust
cash flow generation, driven by its technology leadership,
operational excellence, strong brand and installed base, and
multi-channel capabilities.
Please see the Forward-Looking Statements section of this
release for a discussion of certain risks relevant to Hayward’s
outlook.
CONFERENCE CALL INFORMATION
Hayward will hold a conference call to discuss the results
today, October 29, 2024 at 9:00 a.m. (ET).
Interested investors and other parties can 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.
The conference call can also be accessed by dialing (877)
423-9813 or (201) 689-8573.
For those unable to listen to the live conference call, a replay
will be available approximately three hours after the call through
the archived webcast on the Hayward website or by dialing (844)
512-2921 or (412) 317-6671. The access code for the replay is
13749102. The replay will be available until 11:59 p.m. Eastern
Time on November 12, 2024.
ABOUT HAYWARD HOLDINGS, INC.
Hayward Holdings, Inc. (NYSE: HAYW) is a leading global designer
and manufacturer of pool and outdoor living technology. With a
mission to deliver exceptional products, outstanding service and
innovative solutions to transform the experience of water, Hayward
offers a full line of energy-efficient and sustainable residential
and commercial pool equipment including pumps, heaters, sanitizers,
filters, LED lighting, water features, and cleaners all digitally
connected through Hayward’s intuitive IoT-enabled SmartPad™.
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,” “outlook,” “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 2024 guidance and
outlook; business plans and objectives; general economic and
industry trends; business prospects; future product development and
acquisition strategies; future channel stocking levels; and growth
and expansion opportunities. 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 relationships with and the performance of
distributors, builders, buying groups, retailers and servicers who
sell Hayward’s products to pool owners; impacts on Hayward’s
business from the sensitivity of its business to seasonality and
unfavorable economic business and weather conditions; competition
from national and global companies, as well as lower-cost
manufacturers; Hayward’s ability to develop, manufacture and
effectively and profitably market and sell its new planned and
future products; its ability to execute on its growth strategies
and expansion opportunities; Hayward’s exposure to credit risk on
its accounts receivable, impacts on Hayward’s business from
political, regulatory, economic, trade, and other risks associated
with operating foreign businesses, including risks associated with
geopolitical conflict; its ability to maintain favorable
relationships with suppliers and manage disruptions to its global
supply chain and the availability of raw materials; Hayward’s
ability to identify emerging technological and other trends in its
target end markets; failure of markets to accept new product
introductions and enhancements; the ability to successfully
identify, finance, complete and integrate acquisitions; its
reliance on information technology systems and susceptibility to
threats to those systems, including cybersecurity threats, and
risks arising from its collection and use of personal information
data; regulatory changes and developments affecting Hayward’s
current and future products; volatility in currency exchange rates
and interest rates; Hayward’s ability to service its existing
indebtedness and obtain additional capital to finance operations
and its growth opportunities; Hayward’s ability to establish,
maintain and effectively enforce 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; Hayward’s ability to attract and retain senior
management and other qualified personnel; 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 product
manufacturing disruptions, including as a result of catastrophic
and other events beyond its control; uncertainties related to
distribution channel inventory practices and the impact on net
sales volumes; Hayward’s ability to realize cost savings from
restructuring activities; Hayward’s and its customers’ ability to
manage product inventory in an effective and efficient manner; and
other factors set forth in Hayward’s most recent Annual Report on
Form 10-K and Quarterly Report on Form 10-Q.
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”) including adjusted net
income, adjusted basic EPS, adjusted diluted EPS, EBITDA, adjusted
EBITDA, adjusted EBITDA margin, adjusted segment income and
adjusted segment income margin. 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. Hayward believes these non-GAAP
measures provide analysts, investors and other interested parties
with additional insight into the underlying trends of its business
and assist these parties in analyzing the Company’s performance
across reporting periods on a consistent basis by excluding items
that it does not believe are indicative of its core operating
performance, which allows for a better comparison against
historical results and expectations for future performance.
Management uses these non-GAAP measures to understand and compare
operating results across reporting periods for various purposes
including internal budgeting and forecasting, short and long-term
operating planning, employee incentive compensation, and debt
compliance. Therefore, these measures should not be considered in
isolation or as an alternative to net income, segment income or
other measures of profitability, performance or financial condition
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 of full fiscal year 2024 adjusted EBITDA outlook
to the comparable GAAP measure is not being provided, as Hayward
does not currently have sufficient data to accurately estimate the
variables and individual adjustments for such reconciliation.
Adjusted EBITDA outlook for full year 2024 is calculated in a
manner consistent with the historical presentation of this measure
in the appendix.
Hayward Holdings, Inc.
Unaudited Condensed
Consolidated Balance Sheets
(In thousands)
September 28, 2024
December 31, 2023
Assets
Current assets
Cash and cash equivalents
$
274,184
$
178,097
Short-term investments
—
25,000
Accounts receivable, net of allowances of
$2,881 and $2,870, respectively
99,932
270,875
Inventories, net
229,363
215,180
Prepaid expenses
15,541
14,331
Income tax receivable
11,634
9,994
Other current assets
18,898
11,264
Total current assets
649,552
724,741
Property, plant, and equipment, net of
accumulated depreciation of $108,726 and $95,917, respectively
164,654
158,979
Goodwill
953,175
935,013
Trademark
736,000
736,000
Customer relationships, net
209,836
206,308
Other intangibles, net
92,479
94,082
Other non-current assets
84,168
91,161
Total assets
$
2,889,864
$
2,946,284
Liabilities and Stockholders’
Equity
Current liabilities
Current portion of long-term debt
$
14,079
$
15,088
Accounts payable
73,562
68,943
Accrued expenses and other liabilities
159,709
155,543
Income taxes payable
825
109
Total current liabilities
248,175
239,683
Long-term debt, net
959,906
1,079,280
Deferred tax liabilities, net
239,362
248,967
Other non-current liabilities
69,266
66,896
Total liabilities
1,516,709
1,634,826
Stockholders’ equity
Preferred stock, $0.001 par value,
100,000,000 authorized, no shares issued or outstanding as of
September 28, 2024 and December 31, 2023
—
—
Common stock $0.001 par value, 750,000,000
authorized; 244,078,929 issued and 215,412,560 outstanding at
September 28, 2024; 242,832,045 issued and 214,165,676 outstanding
at December 31, 2023
244
243
Additional paid-in capital
1,089,782
1,080,894
Common stock in treasury; 28,666,369 and
28,666,369 at September 28, 2024 and December 31, 2023,
respectively
(358,125
)
(357,755
)
Retained earnings
644,831
580,909
Accumulated other comprehensive income
(3,577
)
7,167
Total stockholders’ equity
1,373,155
1,311,458
Total liabilities, redeemable stock, and
stockholders’ equity
$
2,889,864
$
2,946,284
Hayward Holdings, Inc.
Unaudited Condensed Consolidated
Statements of Operations
(Dollars in thousands, except per share
data)
Three Months Ended
Nine Months Ended
September 28, 2024
September 30, 2023
September 28, 2024
September 30, 2023
Net sales
$
227,569
$
220,304
$
724,531
$
713,983
Cost of sales
114,474
114,893
361,770
374,171
Gross profit
113,095
105,411
362,761
339,812
Selling, general and administrative
expense
64,509
59,454
187,678
172,057
Research, development and engineering
expense
6,449
6,177
18,870
19,027
Acquisition and restructuring related
expense
1,145
3,348
2,488
6,220
Amortization of intangible assets
7,576
7,523
21,425
22,777
Operating income
33,416
28,909
132,300
119,731
Interest expense, net
13,209
17,448
48,600
55,939
Loss on debt extinguishment
—
—
4,926
—
Other (income) expense, net
(705
)
1,932
(1,989
)
1,798
Total other expense
12,504
19,380
51,537
57,737
Income from operations before income
taxes
20,912
9,529
80,763
61,994
Provision (benefit) for income taxes
4,411
(2,259
)
16,841
12,343
Net income
$
16,501
$
11,788
$
63,922
$
49,651
Earnings per share
Basic
$
0.08
$
0.06
$
0.30
$
0.23
Diluted
$
0.07
$
0.05
$
0.29
$
0.23
Weighted average common shares
outstanding
Basic
215,231,886
213,416,502
214,836,643
212,933,763
Diluted
221,436,206
220,863,228
221,251,355
220,634,232
Hayward Holdings, Inc.
Unaudited Condensed Consolidated
Statements of Cash Flows
(In thousands)
Nine Months Ended
September 28, 2024
September 30, 2023
Cash flows from operating
activities
Net income
$
63,922
$
49,651
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation
13,929
13,018
Amortization of intangible assets
26,299
27,803
Amortization of deferred debt issuance
fees
3,248
3,458
Stock-based compensation
7,299
6,701
Deferred income taxes
(8,344
)
(5,965
)
Allowance for bad debts
(62
)
(906
)
Loss on debt extinguishment
4,926
—
(Gain) loss on sale of property, plant and
equipment
(451
)
945
Changes in operating assets and
liabilities
Accounts receivable
173,400
85,216
Inventories
(4,204
)
61,715
Other current and non-current assets
(6,203
)
9,500
Accounts payable
2,871
(6,265
)
Accrued expenses and other liabilities
(868
)
(27,934
)
Net cash provided by operating
activities
275,762
216,937
Cash flows from investing
activities
Purchases of property, plant, and
equipment
(17,552
)
(22,623
)
Acquisitions, net of cash acquired
(61,636
)
—
Proceeds from sale of property, plant, and
equipment
311
13
Proceeds from short-term investments
25,000
—
Net cash used in investing activities
(53,877
)
(22,610
)
Cash flows from financing
activities
Proceeds from revolving credit
facility
—
144,100
Payments on revolving credit facility
—
(144,100
)
Proceeds from issuance of long-term
debt
2,886
3,320
Payments of long-term debt
(129,971
)
(9,325
)
Proceeds from issuance of short-term notes
payable
6,340
6,130
Payments of short-term notes payable
(4,676
)
(5,174
)
Other, net
(427
)
(149
)
Net cash used in financing activities
(125,848
)
(5,198
)
Effect of exchange rate changes on cash
and cash equivalents
50
(1,061
)
Change in cash and cash equivalents
96,087
188,068
Cash and cash equivalents, beginning of
period
178,097
56,177
Cash and cash equivalents, end of
period
$
274,184
$
244,245
Supplemental disclosures of cash flow
information
Cash paid-interest
$
47,965
$
56,438
Cash paid-income taxes
26,853
14,913
Equipment financed under finance
leases
843
—
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
Nine Months Ended
September 28, 2024
September 30, 2023
September 28, 2024
September 30, 2023
Net income
$
16,501
$
11,788
$
63,922
$
49,651
Depreciation
4,862
4,428
13,929
13,018
Amortization
9,253
9,260
26,299
27,803
Interest expense
13,209
17,448
48,600
55,939
Income taxes
4,411
(2,259
)
16,841
12,343
Loss on debt extinguishment
—
—
4,926
—
EBITDA
48,236
40,665
174,517
158,754
Stock-based compensation (a)
136
269
556
1,001
Currency exchange items (b)
(344
)
145
(470
)
1,276
Acquisition and restructuring related
expense, net (c)
1,145
3,348
2,488
6,220
Other (d)
1,920
2,784
1,657
4,367
Total Adjustments
2,857
6,546
4,231
12,864
Adjusted EBITDA
$
51,093
$
47,211
$
178,748
$
171,618
Net income margin
7.3
%
5.4
%
8.8
%
7.0
%
Adjusted EBITDA margin
22.5
%
21.4
%
24.7
%
24.0
%
(a)
Represents non-cash stock-based
compensation expense related to equity awards issued to management,
employees, and directors. 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”).
(b)
Represents unrealized non-cash (gains)
losses on foreign denominated monetary assets and liabilities and
foreign currency contracts.
(c)
Adjustments in the three months ended
September 28, 2024 are primarily driven by $0.7 million of
transaction and integration costs associated with the acquisition
of the ChlorKing business and $0.4 million of costs to finalize
actions initiated in prior years. Adjustments in the three months
ended September 30, 2023 are primarily driven by $1.9 million of
separation costs associated with the centralization and
consolidation of operations in Europe and $1.5 million of costs
associated with the relocation of the corporate headquarters.
Adjustments in the nine months ended
September 28, 2024 are primarily driven by $1.3 million of
transaction and integration costs associated with the acquisition
of ChlorKing, $0.7 million of separation and other costs associated
with the centralization and consolidation of operations in Europe
and $0.4 million of costs to finalize actions initiated in prior
years. Adjustments in the nine months ended September 30, 2023 are
primarily driven by $2.1 million of costs associated with the
relocation of the corporate headquarters, $1.9 million of
separation costs associated with the centralization and
consolidation of operations in Europe, $1.3 million of separation
costs associated with the enterprise cost-reduction program
initiated in 2022 and $0.8 million of integration costs from prior
acquisitions.
(d)
Adjustments in the three months ended
September 28, 2024 are primarily driven by a $1.6 million non-cash
increase in cost of goods sold resulting from the fair value
inventory step-up adjustment recognized as part of the purchase
accounting for the acquisition of the ChlorKing business and $0.3
million of costs incurred related to litigation. Adjustments in the
three months ended September 30, 2023 primarily include $1.9
million of costs related to inventory and fixed assets as part of
the centralization and consolidation of operations in Europe and
$0.8 million of costs incurred related to the selling stockholder
offerings of shares during 2023, which are reported in SG&A in
the unaudited condensed consolidated statement of operations
Adjustments in the nine months ended
September 28, 2024 are primarily driven by a $1.6 million non-cash
increase in cost of goods sold resulting from the fair value
inventory step-up adjustment recognized as part of the purchase
accounting for the acquisition of the ChlorKing business and $0.5
million of costs incurred related to litigation, partially offset
by $0.5 million of gains on the sale of assets. Adjustments in the
nine months ended September 30, 2023 primarily includes $1.9
million of costs related to inventory and fixed assets as part of
the centralization of operations in Europe, $1.5 million of costs
associated with follow-on equity offerings, $0.4 million of
transitional expenses incurred to enable go-forward public company
regulatory compliance and other miscellaneous items the Company
believes are not representative of its ongoing business
operations.
Following is a reconciliation from net income to adjusted EBITDA
for the last twelve months:
(Dollars in thousands)
Last Twelve Months(e)
Fiscal Year
September 28, 2024
December 31, 2023
Net income
$
94,958
$
80,687
Depreciation
16,894
15,983
Amortization
35,575
37,079
Interest expense
66,245
73,584
Income taxes
24,898
20,400
Loss on debt extinguishment
4,926
—
EBITDA
243,496
227,733
Stock-based compensation (a)
825
1,270
Currency exchange items (b)
(960
)
786
Acquisition and restructuring related
expense, net (c)
9,481
13,213
Other (d)
1,561
4,271
Total Adjustments
10,907
19,540
Adjusted EBITDA
$
254,403
$
247,273
Net income margin
9.5
%
8.1
%
Adjusted EBITDA margin
25.4
%
24.9
%
(a)
Represents non-cash stock-based
compensation expense related to equity awards issued to management,
employees, and directors. 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 the
IPO.
(b)
Represents unrealized non-cash (gains)
losses on foreign denominated monetary assets and liabilities and
foreign currency contracts.
(c)
Adjustments in the last twelve months
ended September 28, 2024 primarily include $6.7 million of costs
related to the discontinuation of a product line leading to an
impairment of the associated fixed assets, inventory and intangible
assets, $1.3 million of transaction and integration costs
associated with the acquisition of ChlorKing, $1.2 million related
to programs to centralize and consolidate operations and
professional services in Europe and $0.3 million of costs to
finalize actions initiated in prior years.
Adjustments in the year ended December 31,
2023 primarily include $6.7 million of costs related to the
discontinuation of a product line leading to an impairment of the
associated fixed assets, inventory and intangible assets, $2.4
million related to programs to centralize and consolidate
operations and professional services in Europe, $1.9 million of
costs associated with the relocation of the corporate headquarters,
$1.2 million separation costs associated with the 2022 cost
reduction program and $0.8 million of costs associated with
integration costs from prior acquisitions.
(d)
Adjustments in the last twelve months
ended September 28, 2024 are primarily driven by a $1.6 million
non-cash increase in cost of goods sold resulting from the fair
value inventory step-up adjustment recognized as part of the
purchase accounting for the acquisition of the ChlorKing business,
$0.5 million of costs incurred related to litigation, partially
offset by $0.5 million of gains on the sale of assets.
Adjustments in the year ended December 31,
2023 primarily include $1.8 million related to inventory and fixed
asset write-offs in Europe and $1.5 million of costs incurred
related to the selling stockholder offerings of shares in March,
May and August 2023, which are reported in SG&A in our
consolidated statements of operations.
(e)
Items for the last twelve months ended
September 28, 2024 are calculated by adding the items for the nine
months ended September 28, 2024 plus fiscal year ended December 31,
2023 and subtracting the items for the nine months ended September
30, 2023.
Adjusted Net Income and Adjusted EPS Reconciliation
(Non-GAAP)
Following is a reconciliation of net income to adjusted net
income and earnings per share to adjusted earnings per share:
(Dollars in thousands)
Three Months Ended
Nine Months Ended
September 28, 2024
September 30, 2023
September 28, 2024
September 30, 2023
Net income
$
16,501
$
11,788
$
63,922
$
49,651
Tax adjustments (a)
(451
)
(4,401
)
(2,203
)
(2,905
)
Other adjustments and amortization:
Stock-based compensation (b)
136
269
556
1,001
Currency exchange items (c)
(344
)
145
(470
)
1,276
Acquisition and restructuring related
expense, net (d)
1,145
3,348
2,488
6,220
Other (e)
1,920
2,784
1,657
4,367
Total other adjustments
2,857
6,546
4,231
12,864
Loss on debt extinguishment
—
—
4,926
—
Amortization
9,253
9,260
26,299
27,803
Tax effect (f)
(2,815
)
(3,554
)
(8,360
)
(9,838
)
Adjusted net income
$
25,345
$
19,639
$
88,815
$
77,575
Weighted average number of common shares
outstanding, basic
215,231,886
213,416,502
214,836,643
212,933,763
Weighted average number of common shares
outstanding, diluted
221,436,206
220,863,228
221,251,355
220,634,232
Basic EPS
$
0.08
$
0.06
$
0.30
$
0.23
Diluted EPS
$
0.07
$
0.05
$
0.29
$
0.23
Adjusted basic EPS
$
0.12
$
0.09
$
0.41
$
0.36
Adjusted diluted EPS
$
0.11
$
0.09
$
0.40
$
0.35
(a)
Tax adjustments for the three and nine
months ended September 28, 2024 reflect a normalized tax rate of
23.2% and 22.5%, respectively, compared to the Company’s effective
tax rate of 21.1% and 20.9%, respectively. The Company’s effective
tax rate for the three months ended September 28, 2024 primarily
includes the tax benefits resulting from stock compensation and the
nine months ended September 28, 2024 additionally includes a tax
benefit resulting from a return-to-provision adjustment. Tax
adjustments for the three and nine months ended September 30, 2023
reflect a normalized tax rate of 22.5% and 24.2%, respectively,
compared to the Company's effective tax rate of (23.7)% and 19.9%,
respectively. The Company’s effective tax rate for the three months
ended September 30, 2023 includes the tax benefits resulting from
the exercise of stock options, the release of the valuation
allowance against foreign tax credit carryovers and prior-period
return-to-provision adjustments, while the nine months ended rate
includes the aforementioned items, partially offset by the impact
of a discrete tax expense related to a change in the indefinite
reinvestment assertion for one jurisdiction.
(b)
Represents non-cash stock-based
compensation expense related to equity awards issued to management,
employees, and directors. 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 the
IPO.
(c)
Represents unrealized non-cash (gains)
losses on foreign denominated monetary assets and liabilities and
foreign currency contracts.
(d)
Adjustments in the three months ended
September 28, 2024 are primarily driven by $0.7 million of
transaction and integration costs associated with the acquisition
of the ChlorKing business and $0.4 million of costs to finalize
actions initiated in prior years. Adjustments in the three months
ended September 30, 2023 are primarily driven by $1.9 million of
separation costs associated with the centralization and
consolidation of operations in Europe and $1.5 million of costs
associated with the relocation of the corporate headquarters.
Adjustments in the nine months ended
September 28, 2024 are primarily driven by $1.3 million of
transaction and integration costs associated with the acquisition
of ChlorKing, $0.7 million of separation and other costs associated
with the centralization and consolidation of operations in Europe
and $0.4 million of costs to finalize actions initiated in prior
years. Adjustments in the nine months ended September 30, 2023 are
primarily driven by $2.1 million of costs associated with the
relocation of the corporate headquarters, $1.9 million of
separation costs associated with the centralization and
consolidation of operations in Europe, $1.3 million of separation
costs associated with the enterprise cost-reduction program
initiated in 2022 and $0.8 million of integration costs from prior
acquisitions.
(e)
Adjustments in the three months ended
September 28, 2024 are primarily driven by a $1.6 million non-cash
increase in cost of goods sold resulting from the fair value
inventory step-up adjustment recognized as part of the purchase
accounting for the acquisition of the ChlorKing business and $0.3
million of costs incurred related to litigation. Adjustments in the
three months ended September 30, 2023 primarily include $1.9
million of costs related to inventory and fixed assets as part of
the centralization and consolidation of operations in Europe and
$0.8 million of costs incurred related to the selling stockholder
offerings of shares during 2023, which are reported in SG&A in
the unaudited condensed consolidated statement of operations
Adjustments in the nine months ended
September 28, 2024 are primarily driven by a $1.6 million non-cash
increase in cost of goods sold resulting from the fair value
inventory step-up adjustment recognized as part of the purchase
accounting for the acquisition of the ChlorKing business and $0.5
million of costs incurred related to litigation, partially offset
by $0.5 million of gains on the sale of assets. Adjustments in the
nine months ended September 30, 2023 primarily includes $1.9
million of costs related to inventory and fixed assets as part of
the centralization of operations in Europe, $1.5 million of costs
associated with follow-on equity offerings, $0.4 million of
transitional expenses incurred to enable go-forward public company
regulatory compliance and other miscellaneous items the Company
believes are not representative of its ongoing business
operations.
(f)
The tax effect represents the immediately
preceding adjustments at the normalized tax rates as discussed in
footnote (a) above.
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
September 28, 2024
September 30, 2023
NAM
E&RW
NAM
E&RW
Net sales
$
194,968
$
32,601
$
185,070
$
35,234
Gross profit
$
101,877
$
11,218
$
91,456
$
13,955
Gross profit margin %
52.3
%
34.4
%
49.4
%
39.6
%
Segment income
$
51,569
$
2,475
$
40,108
$
6,413
Depreciation
$
4,404
$
271
$
4,027
$
246
Amortization
1,677
—
1,738
—
Stock-based compensation
107
—
75
11
Other (a)
1,704
—
115
—
Total adjustments
7,892
271
5,955
257
Adjusted segment income
$
59,461
$
2,746
$
46,063
$
6,670
Segment income margin %
26.4
%
7.6
%
21.7
%
18.2
%
Adjusted segment income margin %
30.5
%
8.4
%
24.9
%
18.9
%
(a)
The three months ended September 28, 2024
primarily includes a $1.6 million non-cash increase in cost of
goods sold resulting from the fair value inventory step-up
adjustment recognized as part of the purchase accounting for the
acquisition of the ChlorKing business. The three months ended
September 30, 2023 includes miscellaneous items the Company
believes are not representative of its ongoing business
operations.
(Dollars in thousands)
Nine Months Ended
Nine Months Ended
September 28, 2024
September 30, 2023
NAM
E&RW
NAM
E&RW
Net sales
$
609,510
$
115,021
$
585,126
$
128,857
Gross profit
$
319,184
$
43,577
$
288,911
$
50,901
Gross profit margin %
52.4
%
37.9
%
49.4
%
39.5
%
Segment income
$
166,646
$
16,800
$
144,346
$
25,647
Depreciation
$
12,619
$
791
$
11,952
$
694
Amortization
4,874
—
5,026
—
Stock-based compensation
176
10
417
34
Other (a)
1,723
—
503
—
Total adjustments
19,392
801
17,898
728
Adjusted segment income
$
186,038
$
17,601
$
162,244
$
26,375
Segment income margin %
27.3
%
14.6
%
24.7
%
19.9
%
Adjusted segment income margin %
30.5
%
15.3
%
27.7
%
20.5
%
(a)
The nine months ended September 28, 2024
primarily includes a $1.6 million non-cash increase in cost of
goods sold resulting from the fair value inventory step-up
adjustment recognized as part of the purchase accounting for the
acquisition of the ChlorKing business. The nine months ended
September 30, 2023 includes miscellaneous items the Company
believes are not representative of its ongoing business
operations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241029460170/en/
Investor Relations: Kevin Maczka
investor.relations@hayward.com
Media Relations: Stephanie Knight sknight@soleburystrat.com
Hayward (NYSE:HAYW)
Historical Stock Chart
From Nov 2024 to Dec 2024
Hayward (NYSE:HAYW)
Historical Stock Chart
From Dec 2023 to Dec 2024
