Hayward Holdings Announces Fourth Quarter and Record Full Year 2021 Financial Results

Hayward's Leading Product Portfolio and Production Footprint Drives Strong Quarterly and Full Year Results; Strategic Initiatives, Enhanced Products, and Improved Positioning Support Continued Success in 2022

FOURTH QUARTER FISCAL 2021 HIGHLIGHTS

  • Net Sales increased 35% year-over-year to $352.4 million
  • Net Income increased 222% year-over-year to $63.7 million
  • Adjusted Net Income increased 55% year-over-year to $67.4 million
  • Adjusted EBITDA increased 43% year-over-year to $105.7 million
  • Adjusted EBITDA margin expanded 169 basis points to 30.0%
  • Announced new $450 million stock repurchase program

FULL FISCAL YEAR 2021 HIGHLIGHTS

  • Record Net Sales increased 60% year-over-year to $1,401.8 million
  • Net Income increased 370% year-over-year to $203.7 million
  • Adjusted Net Income increased 112% year-over-year to $271.0 million
  • Record Adjusted EBITDA increased 82.1% year-over-year to $421.7 million
  • Adjusted EBITDA margin expanded 363 basis points to 30.1%
  • Net debt to Adjusted EBITDA at year-end was 1.7x, compared to 5.2x at year-end 2020

FULL FISCAL YEAR 2022 GUIDANCE HIGHLIGHTS

  • Net Sales growth 9% to 12%
  • Adjusted EBITDA range of $460 million to $475 million, reflecting growth of 9% to 13% year-over-year

BERKELEY HEIGHTS, N.J.--()--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 fourth quarter and full fiscal year ended December 31, 2021.

CEO COMMENTS

“I am extremely proud of the strong quarter and year-end results Hayward employees delivered in our first year as a public company, where we saw a continuation of robust organic growth in net sales and significant margin expansion. Our successes this year with servicing our end markets with reliable product and innovative new technologies in a demanding operating environment is a direct result of our agile manufacturing capabilities and investments in strengthening our competitive positioning,” said Kevin Holleran, Hayward’s President and Chief Executive Officer. “We delivered these results while executing on a number of strategic initiatives involving our manufacturing and distribution footprint as well as strengthening our balance sheet through ample deleveraging. We continue to benefit from key secular tailwinds within our industry and with our leading product portfolio and technology we were able to enhance our market share at improved profitability levels. We are entering 2022 with significant momentum, we remain encouraged by underlying industry demand levels supported by both new construction and aftermarket activity, and an enhanced positioning within the pool industry as a result of recent acquisitions and additions to our team.”

FOURTH QUARTER FISCAL 2021 CONSOLIDATED RESULTS

Net sales increased by 35% to $352.4 million for the fourth quarter of fiscal 2021 entirely from the base business. The increase in net sales was primarily driven by continued demand in residential pool equipment sales, in particular aftermarket upgrades, service and new construction. Net sales growth continues to benefit from a robust demand environment for outdoor living products, increased capacity and capabilities leading to higher output, and strategic pricing actions.

Gross profit increased by 41% to $165.4 million for the fourth quarter of fiscal 2021. Gross profit margin increased 188 basis points to 46.9%. The increase in gross margin was driven by operating leverage and increased output as well as favorable pricing actions and a one-time inventory reserve taken last year, offsetting the escalating inflationary impact on raw materials, freight, and higher import duties.

Selling, general, and administrative (“SG&A”) expenses increased by 3% to $60.1 million for the fourth quarter of fiscal 2021. The increase in SG&A was primarily driven by volume related incentives, distribution costs, and other one-time expenses. As a percentage of net sales, SG&A decreased 532 basis points to 17.1%, compared to the prior year period. Research, development, and engineering expenses were $6.7 million for the fourth quarter of fiscal 2021, or 2% of net sales, as compared to $6.2 million for the prior year period, or 2% of net sales.

Operating income increased by 90% to $79.5 million for the fourth quarter of fiscal 2021. The increase in operating income was driven by higher net sales and gross profit as well as improved operating leverage.

Net interest expense decreased by 56% to $8.6 million for the fourth quarter of fiscal 2021 primarily as a result of debt repayment during the first quarter of fiscal 2021 of $364.6 million and lower interest rates as a result of the second quarter amendment to our credit facilities.

During the quarter we incurred an income tax expense of $14.3 million compared to $6.6 million for the prior year period.

Net income increased by 222% to $63.7 million for the fourth quarter of fiscal 2021. Adjusted Net income increased by 55% to $67.4 million.

Adjusted EBITDA increased by 43% to $105.7 million for the fourth quarter of fiscal 2021. Adjusted EBITDA margin expanded 169 basis points to 30.0%. Margin expansion was primarily driven by higher net sales and operating leverage.

FOURTH QUARTER FISCAL 2021 SEGMENT RESULTS

North America

Net sales increased by 40% to $297.6 million for the fourth quarter of fiscal 2021. The increase was driven by higher sales of residential pool equipment and increased pricing.

Segment income increased by 70% to $92.9 million for the fourth quarter of fiscal 2021. Adjusted segment income increased by 53% to $103.2 million.

Europe & Rest of World

Net sales increased by 14% to $54.8 million for the fourth quarter of fiscal 2021. The increase was primarily driven by continued strong demand for pool products and price increases, partially offset by unfavorable impact from foreign currency exchange.

Segment income increased by 114% to $21.4 million for the fourth quarter of fiscal 2021. Adjusted segment income increased by 39% to $16.4 million.

FULL FISCAL YEAR 2021 CONSOLIDATED RESULTS

Net sales increased by 60% to $1,401.8 million for the full fiscal year 2021 entirely from our base business. The increase in net sales was primarily the result of higher volumes, mainly in residential pool equipment sales from strong demand for pool upgrades and increases in new pool construction.

Gross profit increased by 65% to $655.8 million for the full fiscal year 2021. Gross profit margin increased to 46.8% for the fiscal year 2021, an increase of 143 basis points compared to the prior full year, primarily resulting from higher sales volumes, price increases to offset inflationary pressures, and a favorable regional mix.

Net income increased by 370% to $203.7 million for the full fiscal year 2021. Adjusted net income increased by 112% to $271.0 million compared to the prior fiscal year.

Adjusted EBITDA increased by 82% to $421.7 million for the full fiscal year 2021 driven primarily by higher net sales and strong operating leverage. Adjusted EBITDA margin increased by 363 basis points to 30.1% for the full fiscal year 2021 compared to the prior fiscal year.

Undistributed earnings for the year ended December 31, 2021, used as the numerator in our EPS computation, is reduced by a non-cash charge due to the beneficial conversion feature related to the redemption in March 2021 of Hayward's former class A shares for common shares. Such one-time non-cash charge in the first quarter of fiscal 2021 is treated as a deemed dividend which in turn reduces undistributed earnings. There is no current or future income statement or cash impact due to this US GAAP accounting treatment.

BALANCE SHEET AND LIQUIDITY

Net debt to Adjusted EBITDA as of December 31, 2021 was 1.7 times compared to 5.2 times as of December 31, 2020. The reduction in net debt and leverage reflects debt repayments made from the proceeds from our March 2021 IPO and strong cash generation from operating activities of $187.5 million for the current year to date.

As of December 31, 2021, Hayward had cash and cash equivalents of $265.8 million and approximately $128.9 million available for future borrowings under its ABL Facility.

OUTLOOK

Hayward is well positioned to deliver continued net sales and adjusted EBITDA growth in 2022 following the tremendous success in 2021 given the sustainable secular trends driving demand for pool products, specifically within our SmartPad conversion opportunities and environmentally conscious technology products.

For the full fiscal year 2022, Hayward expects net sales growth of 9% to 12% year-over-year and Adjusted EBITDA in the range of $460 million to $475 million, or a growth range of 9% to 13% year-over-year

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, March 2, 2022 at 9:00 a.m. (ET).

To access the live conference call, please register for the call in advance by visiting http://www.directeventreg.com/registration/event/8308368. Registration will also be available during the call. After registering, a confirmation e-mail will be sent including dial-in details and a unique conference call 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 (800) 585-8367 or (416) 621-4642. The conference ID for the replay is 8308368. The replay will be available until 11:59 p.m. Eastern Time on March 14, 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 us are based on the beliefs of Hayward’s management as well as assumptions made by, and information currently available to, us. 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 us 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 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; 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; 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 the final prospectus for Hayward’s initial public offering and in Hayward’s subsequent SEC filings.

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 report. 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, 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) or other measures of profitability, liquidity 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 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 management cannot estimate on a forward-looking basis without unreasonable effort the impact these variables and individual adjustments will have on its reported results.

Hayward Holdings, Inc.

 

Unaudited Consolidated Balance Sheets

(Dollars in thousands, except per share data)

 

 

 

December 31,
2021

 

December 31,
2020 (1)

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

265,796

 

 

$

114,864

 

Accounts receivable, net of allowances of $2,003 and $1,359, respectively

 

 

208,112

 

 

 

140,216

 

Inventories, net

 

 

233,449

 

 

 

145,330

 

Prepaid expenses

 

 

12,459

 

 

 

10,266

 

Other current assets

 

 

30,705

 

 

 

13,738

 

Total current assets

 

 

750,521

 

 

 

424,414

 

Property, plant, and equipment, net of accumulated depreciation of $66,074 and $51,900, respectively

 

 

146,754

 

 

 

142,318

 

Goodwill

 

 

924,264

 

 

 

920,325

 

Trademark

 

 

736,000

 

 

 

736,000

 

Customer relationships, net

 

 

242,854

 

 

 

271,462

 

Other intangibles, net

 

 

103,192

 

 

 

106,697

 

Other non-current assets

 

 

74,885

 

 

 

5,934

 

Total assets

 

 

2,978,470

 

 

 

2,607,150

 

Liabilities, Redeemable Stock, and Stockholders' Equity

 

 

 

 

Current liabilities

 

 

 

 

Current portion of the long-term debt

 

 

12,155

 

 

 

2,768

 

Accounts payable

 

 

87,445

 

 

 

69,632

 

Accrued expenses and other liabilities

 

 

190,378

 

 

 

141,819

 

Income taxes payable

 

 

13,886

 

 

 

4,435

 

Total current liabilities

 

 

303,864

 

 

 

218,654

 

Long-term debt, net

 

 

973,124

 

 

 

1,300,256

 

Deferred tax liabilities, net

 

 

262,378

 

 

 

273,628

 

Other non-current liabilities

 

 

69,591

 

 

 

10,851

 

Total liabilities

 

 

1,608,957

 

 

 

1,803,389

 

Commitments and contingencies

 

 

 

 

Redeemable stock

 

 

 

 

Class A stock $0.001 par value, no shares authorized, issued, or outstanding at December 31, 2021; 1,500,000 shares authorized, 872,598 issued and 869,823 outstanding at December 31, 2020

 

 

 

 

 

594,500

 

Class C stock $0.001 par value, no shares authorized, issued, or outstanding at December 31, 2021; 100 authorized, issued and outstanding at December 31, 2020

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

Preferred stock, $0.001 par value, 100,000,000 authorized, no shares issued or outstanding as of December 31, 2021 and 2020

 

 

 

 

 

 

Common stock $0.001 par value, 750,000,000 authorized; 238,432,216 issued and 233,056,799 outstanding at December 31, 2021; 3,846,960 issued and 2,772,900 outstanding at December 31, 2020

 

 

238

 

 

 

3

 

Additional paid-in capital

 

 

1,058,724

 

 

 

10,297

 

Treasury stock; 5,375,417 and 4,340,310 at December 31, 2021 and 2020, respectively

 

 

(14,066

)

 

 

(3,686

)

Retained earnings

 

 

320,875

 

 

 

202,997

 

Accumulated other comprehensive income (loss)

 

 

3,742

 

 

 

(350

)

Total stockholders' equity

 

 

1,369,513

 

 

 

209,261

 

Total liabilities, redeemable stock, and stockholders' equity

 

$

2,978,470

 

 

$

2,607,150

 

 

(1) Derived from audited financial statements.

 

Hayward Holdings, Inc.

 

Unaudited Consolidated Statements of Operations and Comprehensive Income

(Dollars in thousands, except per share data)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020 (1)

Net sales

 

$

352,385

 

 

$

260,698

 

 

$

1,401,794

 

 

$

875,402

 

Cost of sales

 

 

186,979

 

 

 

143,243

 

 

 

746,012

 

 

 

478,371

 

Gross profit

 

 

165,406

 

 

 

117,455

 

 

 

655,782

 

 

 

397,031

 

Selling, general, and administrative expense

 

 

60,135

 

 

 

58,366

 

 

 

267,264

 

 

 

195,220

 

Research, development, and engineering expense

 

 

6,680

 

 

 

6,151

 

 

 

22,867

 

 

 

20,046

 

Acquisition and restructuring related expense

 

 

12,578

 

 

 

1,742

 

 

 

15,030

 

 

 

19,317

 

Amortization of intangible assets

 

 

6,485

 

 

 

9,359

 

 

 

32,647

 

 

 

37,896

 

Operating income

 

 

79,528

 

 

 

41,837

 

 

 

317,974

 

 

 

124,552

 

Interest expense, net

 

 

8,557

 

 

 

19,446

 

 

 

50,854

 

 

 

73,615

 

Loss on debt extinguishment

 

 

 

 

 

 

 

 

9,418

 

 

 

 

Other (income) expense, net

 

 

(7,094

)

 

 

(3,993

)

 

 

(2,439

)

 

 

(6,848

)

Total other expense

 

 

1,463

 

 

 

15,453

 

 

 

57,833

 

 

 

66,767

 

Income from operations before income taxes

 

 

78,065

 

 

 

26,384

 

 

 

260,141

 

 

 

57,785

 

Provision for income taxes

 

 

14,344

 

 

 

6,585

 

 

 

56,416

 

 

 

14,483

 

Net income

 

$

63,721

 

 

$

19,799

 

 

$

203,725

 

 

$

43,302

 

 

 

 

 

 

 

 

 

 

Comprehensive income, net of tax

 

 

 

 

 

 

 

 

Net income

 

$

63,721

 

 

$

19,799

 

 

$

203,725

 

 

$

43,302

 

Foreign currency translation adjustments, net of tax expense (benefit) of $1,620, $(1,430), and $1,498, respectively

 

 

500

 

 

 

6,069

 

 

 

(768

)

 

 

5,196

 

Change in fair value of derivatives, net of tax expense (benefit) of $763, $(994), and $(3,309), respectively

 

 

 

 

 

1,941

 

 

 

4,860

 

 

 

(2,876

)

Comprehensive income

 

$

64,221

 

 

$

27,809

 

 

$

207,817

 

 

$

45,622

 

 

 

 

 

 

 

 

 

 

Income per common share

 

 

 

 

 

 

 

 

Basic

 

$

0.27

 

 

$

0.09

 

 

$

0.52

 

 

$

0.25

 

Diluted

 

$

0.26

 

 

$

0.09

 

 

$

0.49

 

 

$

0.25

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

232,454,438

 

 

 

1,563,848

 

 

 

187,688,087

 

 

 

1,331,850

 

Diluted

 

 

244,514,387

 

 

 

3,531,729

 

 

 

200,574,232

 

 

 

2,468,895

 

 

(1) Derived from audited financial statements.

 

Hayward Holdings, Inc.

 

Unaudited Consolidated Statements of Cash Flows

(Dollars in thousands)

 

 

 

Twelve Months Ended

 

 

December 31,
2021

 

December 31,
2020 (1)

Cash flows from operating activities

 

 

 

 

Net income

 

 

203,725

 

 

 

43,302

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

Depreciation

 

 

18,826

 

 

 

18,783

 

Amortization of intangible assets

 

 

38,990

 

 

 

44,039

 

Amortization of deferred debt issuance fees

 

 

4,005

 

 

 

5,418

 

Stock-based compensation

 

 

15,005

 

 

 

1,945

 

Deferred income taxes

 

 

(15,314

)

 

 

(277

)

Allowance for bad debts

 

 

644

 

 

 

(207

)

Loss on debt extinguishment

 

 

9,418

 

 

 

 

Loss on write-off on intangible assets

 

 

6,319

 

 

 

 

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

 

 

4,219

 

 

 

2,017

 

Changes in operating assets and liabilities

 

 

 

 

Accounts receivable

 

 

(70,115

)

 

 

47,260

 

Inventories

 

 

(89,660

)

 

 

(4,652

)

Other current and non-current assets

 

 

(17,161

)

 

 

(13,039

)

Accounts payable

 

 

18,365

 

 

 

15,883

 

Accrued expenses and other liabilities

 

 

60,240

 

 

 

53,369

 

Net cash provided by operating activities

 

 

187,506

 

 

 

213,841

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Purchases of property, plant, and equipment

 

 

(26,222

)

 

 

(14,221

)

Purchases of intangibles

 

 

(914

)

 

 

(1,360

)

Acquisitions, net of cash acquired

 

 

(21,509

)

 

 

 

Proceeds from sale of property, plant, and equipment

 

 

25

 

 

 

458

 

Cash received (paid) for settlements of investment currency hedge

 

 

(157

)

 

 

2,125

 

Net cash used in investing activities

 

 

(48,777

)

 

 

(12,998

)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Proceeds from issuance of common stock - Initial Public Offering

 

 

377,400

 

 

 

 

Costs associated with Initial Public Offering

 

 

(26,124

)

 

 

 

Purchases of common stock for treasury

 

 

(9,524

)

 

 

(2,498

)

Cash received related to taxes on share withholdings, net

 

 

2,058

 

 

 

 

Proceeds from issuance of long-term debt

 

 

51,659

 

 

 

150,000

 

Debt issuance costs

 

 

(12,551

)

 

 

(4,017

)

Payments of long-term debt

 

 

(369,644

)

 

 

(3,500

)

Net change in revolving credit facility

 

 

 

 

 

 

Issuance of Class A stock

 

 

221

 

 

 

54

 

Distributions paid to Class A and Class C stockholders

 

 

 

 

 

(275,208

)

Dividends paid

 

 

(41

)

 

 

(205

)

Other, net

 

 

(616

)

 

 

253

 

Net cash provided by (used in) financing activities

 

 

12,838

 

 

 

(135,121

)

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents and restricted cash

 

 

(1,065

)

 

 

2,366

 

Change in cash and cash equivalents and restricted cash

 

 

150,502

 

 

 

68,088

 

Cash and cash equivalents and restricted cash, beginning of year

 

 

115,294

 

 

 

47,206

 

Cash and cash equivalents and restricted cash, end of year

 

$

265,796

 

 

$

115,294

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

Cash paid-interest

 

$

46,763

 

 

$

68,461

 

Cash paid-income taxes

 

 

62,467

 

 

 

12,041

 

Equipment financed under finance leases

 

 

 

 

 

8,100

 

 

(1) Derived from audited financial statements.

 

Reconciliations

Consolidated Reconciliations

Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations (Non-GAAP)

Following is a reconciliation from net income to adjusted EBITDA:

(In thousands)

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

Net income

 

$

63,721

 

 

$

19,799

 

 

$

203,725

 

 

$

43,302

 

Depreciation

 

 

4,730

 

 

 

4,292

 

 

 

18,826

 

 

 

18,783

 

Amortization

 

 

8,087

 

 

 

11,217

 

 

 

38,990

 

 

 

44,039

 

Interest expense

 

 

8,557

 

 

 

19,446

 

 

 

50,854

 

 

 

73,615

 

Income taxes

 

 

14,344

 

 

 

6,585

 

 

 

56,416

 

 

 

14,483

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

9,418

 

 

 

 

EBITDA

 

 

99,439

 

 

 

61,339

 

 

 

378,229

 

 

 

194,222

 

Stock-based compensation(a)

 

 

2,636

 

 

 

(16

)

 

 

19,019

 

 

 

1,946

 

Sponsor management fees(b)

 

 

 

 

 

199

 

 

 

90

 

 

 

796

 

Currency exchange items(c)

 

 

106

 

 

 

(1,943

)

 

 

4,485

 

 

 

(4,721

)

Acquisition and restructuring related expense, net(d)

 

 

12,578

 

 

 

1,742

 

 

 

15,030

 

 

 

19,311

 

Other(e)

 

 

(9,056

)

 

 

12,485

 

 

 

4,884

 

 

 

19,997

 

Total Adjustments

 

 

6,264

 

 

 

12,467

 

 

 

43,508

 

 

 

37,329

 

Adjusted EBITDA

 

 

105,703

 

 

 

73,806

 

 

$

421,737

 

 

$

231,551

 

Adjusted EBITDA margin

 

 

30.0

%

 

 

28.3

%

 

 

30.1

%

 

 

26.5

%

(a)

 

Represents stock based compensation expense related to equity awards issued.

(b)

 

Represents discretionary fees paid to certain of our Sponsors for management 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 our IPO.

(c)

 

Represents non-cash mark-to-market losses (gains) on foreign currency contracts.

(d)

 

Adjustments for the fiscal quarter ended December 31, 2021 include $9.9 million of business restructuring related costs associated with the exit of an early stage product business acquired in 2018, and $2.6 million severance and retention costs associated with the relocation of our Corporate headquarters. Adjustments for the fiscal quarter ended December 31, 2020 include $1.8 million of business restructuring related costs associated with the exit of manufacturing and distribution facilities. Costs associated with an early stage product business acquired in 2018 and being phased out in 2021 that were recorded in prior periods have been reclassified from "Acquisition and restructuring related expense, net" to "Other" to be consistent with the current period's presentation.

 

Adjustments for the year ended December 31, 2021 primarily include $9.9 million of business restructuring related costs associated with the exit of an early-stage product business acquired in 2018, $3.0 million severance and relocation costs associated with the relocation of our Corporate headquarters, and $2.1 million of business restructuring related costs associated with the exit of redundant manufacturing and distribution facilities. Adjustments in 2020 include business restructuring costs related to a global manufacturing and distribution consolidation and expansion project. Costs associated with an early stage product business acquired in 2018 have been reclassified from “Acquisition and restructuring related expense, net” to “Other” to be consistent with the current period’s presentation.

(e)

 

Adjustments for the fiscal quarter ended December 31, 2021 primarily include $12.8 million income related to the property damage and business interruption as a result of the second quarter fire accident in Yuncos, Spain for which payment was received in the fourth quarter as well as $2.5 million of operating losses associated with the early stage product business mentioned above, and other immaterial items. Adjustments for the fiscal quarter ended December 31, 2020 include $2.1 million of operating losses related to an early stage product business purchased in 2018 that were recorded in prior periods as restructuring related costs, $4.0 million of inventory write-offs, $2.3 million of severance and retention costs, $2.0 million of IPO related costs, $0.6 million of additional health and safety expenses related to COVID-19, $0.6 million for a legal settlement, and other miscellaneous costs that we believe are not representative of our ongoing business operations.

 

Adjustments for the year ended December 31, 2021 primarily include $7.4 million net insurance settlement proceeds which reflects an incurred property damage loss of $5.4 million, recorded in the second quarter, offset by insurance policy reimbursement of $12.8 million received in the fourth quarter for the aforementioned property loss as well as the consequential business interruption loss amount caused by the fire incident in Yuncos Spain, a $4.0 million legal reserve and fees, $4.0 million of operating losses related to the early stage product business acquired in 2018 mentioned above, $1.9 million related to debt refinancing, $1.0 million related to our IPO, and other immaterial items. Adjustments for the year ended December 31, 2020 include $5.1 million of operating losses related to the same early stage product business, $4.0 million of inventory write-offs, $2.5 million of COVID-19 related health and safety expenses, $2.3 million of severance and retention costs, $2.0 million of IPO related costs and other miscellaneous costs that we believe are not representative of our ongoing business operations.

Adjusted Segment Income Reconciliation (Non-GAAP)

Following is a quarterly reconciliation from segment income to adjusted segment income:

(In thousands)

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

Segment income

 

$

114,233

 

 

$

64,540

 

 

$

419,081

 

 

$

202,619

 

Depreciation

 

 

4,395

 

 

 

4,331

 

 

 

17,891

 

 

 

18,082

 

Amortization

 

 

1,612

 

 

 

1,948

 

 

 

6,352

 

 

 

6,233

 

Stock-based compensation

 

 

1,327

 

 

 

(49

)

 

 

9,231

 

 

 

1,521

 

Other (a)

 

 

(2,043

)

 

 

8,551

 

 

 

4,948

 

 

 

12,685

 

Total adjustments

 

 

5,291

 

 

 

14,781

 

 

 

38,422

 

 

 

38,521

 

Adjusted segment income

 

$

119,524

 

 

$

79,321

 

 

$

457,503

 

 

$

241,140

 

Adjusted segment income margin

 

 

33.9

%

 

 

30.4

%

 

 

32.6

%

 

 

27.5

%

(a)

 

Adjustments for the fiscal quarter ended December 31, 2021 primarily include $5.4 million insurance income related to the property damage and business interruption as a result of the second quarter fire accident in Yuncos, Spain for which payment was received in the fourth quarter as well as $2.5 million of operating losses associated with the early stage product business mentioned above, and other immaterial items. Adjustments for the fiscal quarter ended December 31, 2020 include $2.1 million of operating losses related to an early stage product business purchased in 2018 that were recorded in prior periods as restructuring related costs, $4.0 million of inventory write-offs and other miscellaneous costs that we believe are not representative of our ongoing business operations.

 

Adjustments in the years ended December 31, 2021 and December 31, 2020 include non-recurring severance expenses, retention bonuses, legal fees, and the operating losses of approximately $4.0 million and $5.1 million, respectively, related to an early stage product business acquired in 2018 that was phased out in 2021. $5.4 million of costs related to a fire at our manufacturing and administrative facilities in Yuncos Spain incurred in the second quarter of 2021 were offset by insurance proceeds received in the fourth quarter of 2021. The operating losses that were recorded in prior periods under “Acquisition and restructuring related expense, net” have been reclassified to “Other” to be consistent with the current period’s presentation. The remaining adjustments for Fiscal Year 2020 include $4.0 million of inventory write-offs, $2.5 million of additional health and safety expenses related to COVID-19, professional fees and other miscellaneous costs we believe are not representative of our ongoing business operations. Currency exchange items have been reclassified from “Currency exchange items” to “Other” to be consistent with the current period’s presentation.

Adjusted Net Income Reconciliation (Non-GAAP)

Following is a reconciliation of net income to adjusted net income:

(In thousands)

 

Three Months Ended

Twelve Months Ended

 

 

December 31,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

Net Income

 

$

63,721

 

 

$

19,799

 

 

$

203,725

 

 

$

43,302

 

Tax adjustments (a)

 

 

(6,799

)

 

 

 

 

 

(6,799

)

 

 

 

Other adjustments and amortization:

 

 

 

 

 

 

 

 

EBITDA adjustments

 

 

6,264

 

 

 

12,467

 

 

 

43,508

 

 

 

37,329

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

9,418

 

 

 

 

Amortization

 

 

8,087

 

 

 

11,217

 

 

 

38,990

 

 

 

44,039

 

Tax effect

 

 

(3,887

)

 

 

(5,929

)

 

 

(22,519

)

 

 

(19,627

)

 

 

 

 

 

 

 

 

 

Pro forma adjustments (b):

 

 

 

 

 

 

 

 

Interest savings

 

 

 

 

 

8,087

 

 

 

6,443

 

 

 

30,107

 

Tax effect

 

 

 

 

 

(2,026

)

 

 

(1,772

)

 

 

(7,276

)

Adjusted net income

 

 

67,386

 

 

 

43,615

 

 

 

270,994

 

 

 

127,874

 

(a)

 

Tax adjustments for the fiscal quarter and year ended December 31, 2021 include the tax impacts associated with reversal of certain valuation allowances, the impact associated with non-cash compensation charges and the impact of our exit of an early stage product business acquired in 2018 that was phased out in 2021. This results in a normalized tax rate for the fiscal quarter and year ended of 27.1% and 24.5% compared to our effective tax rate of 18.4% and 21.7%, respectively.

(b)

 

The adjustments for the fiscal quarter and year ended December 31, 2021 and for the year ended December 31, 2020 represent pro-forma adjustments related to the interest savings from repayment in full of our Second Lein Term Facility in the first quarter of 2021 and partial repayment in the first quarter of 2021 and amendment in the second quarter of 2021 of our First Lein Credit Agreement.

Net debt was $737.0 million and $1,207.9 million as of December 31, 2021 and December 31, 2020, respectively.

Segment Reconciliations

Following is a reconciliation from segment income to adjusted segment income for North America ("NAM"):

(In thousands)

 

 

 

 

 

 

 

 

NAM

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

Segment income

 

$

92,866

 

 

$

54,572

 

 

$

359,886

 

 

$

171,815

 

Depreciation

 

 

4,218

 

 

 

3,771

 

 

 

16,871

 

 

 

16,568

 

Amortization

 

 

1,611

 

 

 

1,948

 

 

 

6,351

 

 

 

6,233

 

Stock-based compensation

 

 

1,323

 

 

 

(73

)

 

 

8,641

 

 

 

1,183

 

Other (a)

 

 

3,114

 

 

 

7,320

 

 

 

4,665

 

 

 

11,105

 

Total adjustments

 

 

10,266

 

 

 

12,966

 

 

 

36,528

 

 

 

35,089

 

Adjusted segment income

 

$

103,132

 

 

$

67,538

 

 

$

396,414

 

 

$

206,904

 

Adjusted segment income margin

 

 

34.7

%

 

 

31.7

%

 

 

34.1

%

 

 

29.3

%

(a)

 

Adjustments for the fiscal quarter ended December 31, 2021 are primarily related to the operating losses of approximately $2.5 related to an early stage product business acquired in 2019 that was phased out in 2021. Adjustments for the fiscal quarter ended December 31, 2020 are primarily related to $3.5 million adjustment for inventory obsolescence and operating losses of $2.1 million related to an early stage product business acquired in 2018 that was phased out in 2021 as well as additional health and safety expenses associated with COVID-19.

 

Adjustments for the year ended December 31, 2021 and December 31, 2020 include non-recurring severance expenses, retention bonuses, legal fees, and the operating losses of approximately $4.0 million and $5.1 million, respectively, related to an early stage product business acquired in 2018 that was phased out in 2021. The operating losses that were recorded in prior periods under “Acquisition and restructuring related expense, net” have been reclassified to “Other” to be consistent with the current period’s presentation. The remaining adjustments for Fiscal Year 2020 include professional fees, additional health and safety expenses related to COVID-19, additional reserves for obsolete and nonsalable inventories and other miscellaneous costs we believe are not representative of our ongoing business operations.

Following is a reconciliation from segment income to adjusted segment income for Europe & Rest of World ("E&RW"):

(In thousands)

 

 

 

 

 

 

 

 

E&RW

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

Segment income

 

$

21,367

 

 

$

9,968

 

 

$

59,195

 

 

$

30,804

 

Depreciation

 

 

177

 

 

 

560

 

 

 

1,020

 

 

 

1,514

 

Amortization

 

 

1

 

 

 

 

 

 

1

 

 

 

 

Stock-based compensation

 

 

4

 

 

 

24

 

 

 

590

 

 

 

338

 

Other (a)

 

 

(5,157

)

 

 

1,231

 

 

 

283

 

 

 

1,580

 

Total adjustments

 

 

(4,975

)

 

 

1,815

 

 

 

1,894

 

 

 

3,432

 

Adjusted segment income

 

$

16,392

 

 

$

11,783

 

 

$

61,089

 

 

$

34,236

 

Adjusted segment income margin

 

 

29.9

%

 

 

24.6

%

 

 

25.4

%

 

 

20.3

%

(a)

 

The fiscal quarter ended December 31, 2021 includes $5.4 million insurance proceeds associated with the fire incident in our Spain facility. The twelve months ended December 31, 2021 includes $5.4 million of costs related to a fire at our manufacturing and administrative facilities in Yuncos Spain incurred in the second quarter of 2021 that were offset by the insurance proceeds received in the fourth quarter of 2021. The fiscal quarter and year ended December 31, 2020 include additional reserves for obsolete and nonsalable inventories, COVID-19 related health and safety expenses, and other miscellaneous costs we believe are not representative of our ongoing business operations. Currency exchange items have been reclassified from “Currency exchange items” to “Other” to be consistent with the current period’s presentation.

Segment Income to Income from Operations Reconciliation

Following is a reconciliation of segment income to income from operations before income taxes:

(In thousands)

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

Total segment income

 

$

114,233

 

 

$

64,540

 

 

$

419,081

 

 

$

202,619

 

Corporate expense, net

 

 

15,642

 

 

 

11,602

 

 

 

53,430

 

 

 

20,854

 

Acquisition and restructuring related expense

 

 

12,578

 

 

 

1,742

 

 

 

15,030

 

 

 

19,317

 

Amortization of intangible assets

 

 

6,485

 

 

 

9,359

 

 

 

32,647

 

 

 

37,896

 

Operating income

 

 

79,528

 

 

 

41,837

 

 

 

317,974

 

 

 

124,552

 

Interest expense, net

 

 

8,557

 

 

 

19,446

 

 

 

50,854

 

 

 

73,615

 

Loss on debt extinguishment

 

 

 

 

 

 

 

 

9,418

 

 

 

 

Other (income) expense, net

 

 

(7,094

)

 

 

(3,993

)

 

 

(2,439

)

 

 

(6,848

)

Total other expense

 

 

1,463

 

 

 

15,453

 

 

 

57,833

 

 

 

66,767

 

Income from operations before income taxes

 

$

78,065

 

 

$

26,384

 

 

$

260,141

 

 

$

57,785

 

 

Contacts

Investor Relations Contact:
Hayward Investor Relations:
908-288-9706
investor.relations@hayward.com

Media Relations Contact:
Tanya McNabb
tmcnabb@hayward.com

Contacts

Investor Relations Contact:
Hayward Investor Relations:
908-288-9706
investor.relations@hayward.com

Media Relations Contact:
Tanya McNabb
tmcnabb@hayward.com