07/30/2024 | Press release | Distributed by Public on 07/30/2024 05:07
June 29, 2024 | December 31, 2023 | |||
Assets | ||||
Current assets | ||||
Cash and cash equivalents | $ | 215,056 | $ | 178,097 |
Short-term investments | - | 25,000 | ||
Accounts receivable, net of allowances of $2,993 and $2,870, respectively
|
148,233 | 270,875 | ||
Inventories, net | 213,559 | 215,180 | ||
Prepaid expenses | 15,789 | 14,331 | ||
Income tax receivable | - | 9,994 | ||
Other current assets | 17,579 | 11,264 | ||
Total current assets | 610,216 | 724,741 | ||
Property, plant, and equipment, net of accumulated depreciation of $103,894 and $95,917, respectively
|
160,657 | 158,979 | ||
Goodwill | 951,879 | 935,013 | ||
Trademark | 736,000 | 736,000 | ||
Customer relationships, net | 218,252 | 206,308 | ||
Other intangibles, net | 95,656 | 94,082 | ||
Other non-current assets | 90,011 | 91,161 | ||
Total assets | $ | 2,862,671 | $ | 2,946,284 |
Liabilities and Stockholders' Equity
|
||||
Current liabilities | ||||
Current portion of long-term debt | $ | 14,261 | $ | 15,088 |
Accounts payable | 69,392 | 68,943 | ||
Accrued expenses and other liabilities | 148,813 | 155,543 | ||
Income taxes payable | 2,974 | 109 | ||
Total current liabilities | 235,440 | 239,683 | ||
Long-term debt, net | 959,840 | 1,079,280 | ||
Deferred tax liabilities, net | 242,608 | 248,967 | ||
Other non-current liabilities | 67,385 | 66,896 | ||
Total liabilities | 1,505,273 | 1,634,826 | ||
Stockholders' equity
|
||||
Preferred stock, $0.001 par value, 100,000,000 authorized, no shares issued or outstanding as of June 29, 2024 and December 31, 2023
|
- | - | ||
Common stock $0.001 par value, 750,000,000 authorized; 243,738,167 issued and 215,071,798 outstanding at June 29, 2024; 242,832,045 issued and 214,165,676 outstanding at December 31, 2023
|
244 | 243 | ||
Additional paid-in capital | 1,086,680 | 1,080,894 | ||
Common stock in treasury; 28,666,369 and 28,666,369 at June 29, 2024 and December 31, 2023, respectively
|
(358,110) | (357,755) | ||
Retained earnings | 628,330 | 580,909 | ||
Accumulated other comprehensive income | 254 | 7,167 | ||
Total stockholders' equity
|
1,357,398 | 1,311,458 | ||
Total liabilities, redeemable stock, and stockholders' equity
|
$ | 2,862,671 | $ | 2,946,284 |
Three Months Ended | Six Months Ended | |||||||
June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | |||||
Net sales | $ | 284,393 | $ | 283,543 | $ | 496,962 | $ | 493,679 |
Cost of sales | 139,306 | 147,033 | 247,296 | 259,278 | ||||
Gross profit | 145,087 | 136,510 | 249,666 | 234,401 | ||||
Selling, general and administrative expense | 63,155 | 57,716 | 123,169 | 112,603 | ||||
Research, development and engineering expense | 6,119 | 6,873 | 12,421 | 12,850 | ||||
Acquisition and restructuring related expense | 839 | 1,309 | 1,343 | 2,872 | ||||
Amortization of intangible assets | 6,949 | 7,637 | 13,849 | 15,254 | ||||
Operating income | 68,025 | 62,975 | 98,884 | 90,822 | ||||
Interest expense, net | 16,799 | 19,130 | 35,391 | 38,491 | ||||
Loss on debt extinguishment | 4,926 | - | 4,926 | - | ||||
Other (income) expense, net | (646) | 625 | (1,284) | (134) | ||||
Total other expense | 21,079 | 19,755 | 39,033 | 38,357 | ||||
Income from operations before income taxes | 46,946 | 43,220 | 59,851 | 52,465 | ||||
Provision for income taxes | 9,365 | 13,767 | 12,430 | 14,602 | ||||
Net income | $ | 37,581 | $ | 29,453 | $ | 47,421 | $ | 37,863 |
Earnings per share | ||||||||
Basic | $ | 0.17 | $ | 0.14 | $ | 0.22 | $ | 0.18 |
Diluted | $ | 0.17 | $ | 0.13 | $ | 0.21 | $ | 0.17 |
Weighted average common shares outstanding | ||||||||
Basic | 214,915,338 | 212,861,564 | 214,637,930 | 212,692,393 | ||||
Diluted | 221,259,232 | 220,503,544 | 221,159,419 | 220,506,921 |
Hayward Holdings, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
|
Six Months Ended | |||
June 29, 2024 | July 1, 2023 | |||
Cash flows from operating activities | ||||
Net income | $ | 47,421 | $ | 37,863 |
Adjustments to reconcile net income to net cash provided by operating activities | ||||
Depreciation | 9,067 | 8,590 | ||
Amortization of intangible assets | 17,046 | 18,543 | ||
Amortization of deferred debt issuance fees | 2,294 | 2,242 | ||
Stock-based compensation | 4,632 | 4,146 | ||
Deferred income taxes | (6,631) | (1,673) | ||
Allowance for bad debts | 81 | (879) | ||
Loss on debt extinguishment | 4,926 | - | ||
(Gain) loss on sale of property, plant and equipment | (504) | 137 | ||
Changes in operating assets and liabilities | ||||
Accounts receivable | 124,537 | 63,801 | ||
Inventories | 6,384 | 50,234 | ||
Other current and non-current assets | 7,803 | 15,225 | ||
Accounts payable | (562) | (427) | ||
Accrued expenses and other liabilities | (6,655) | (31,286) | ||
Net cash provided by operating activities | 209,839 | 166,516 | ||
Cash flows from investing activities | ||||
Purchases of property, plant, and equipment | (10,706) | (15,703) | ||
Acquisitions, net of cash acquired | (62,367) | - | ||
Proceeds from sale of property, plant, and equipment | 48 | 5 | ||
Proceeds from short-term investments | 25,000 | - | ||
Net cash used in investing activities | (48,025) | (15,698) | ||
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 | 2,856 | 1,827 | ||
Payments of long-term debt | (129,401) | (6,153) | ||
Proceeds from issuance of short-term notes payable | 6,340 | 5,347 | ||
Payments of short-term notes payable | (2,888) | (3,542) | ||
Other, net | (514) | (360) | ||
Net cash used in financing activities | (123,607) | (2,881) | ||
Effect of exchange rate changes on cash and cash equivalents | (1,248) | 888 | ||
Change in cash and cash equivalents | 36,959 | 148,825 | ||
Cash and cash equivalents, beginning of period | 178,097 | 56,177 | ||
Cash and cash equivalents, end of period | $ | 215,056 | $ | 205,002 |
Supplemental disclosures of cash flow information | ||||
Cash paid-interest | $ | 36,601 | $ | 37,223 |
Cash paid-income taxes | 6,221 | 6,779 | ||
Equipment financed under finance leases | 630 | - |
(Dollars in thousands) | Three Months Ended | Six Months Ended | ||||||
June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | |||||
Net income | $ | 37,581 | $ | 29,453 | $ | 47,421 | $ | 37,863 |
Depreciation | 4,757 | 4,228 | 9,067 | 8,590 | ||||
Amortization | 8,503 | 9,289 | 17,046 | 18,543 | ||||
Interest expense | 16,799 | 19,130 | 35,391 | 38,491 | ||||
Income taxes | 9,365 | 13,767 | 12,430 | 14,602 | ||||
Loss on debt extinguishment
|
4,926 | - | 4,926 | - | ||||
EBITDA | 81,931 | 75,867 | 126,281 | 118,089 | ||||
Stock-based compensation (a)
|
230 | 375 | 420 | 732 | ||||
Currency exchange items (b)
|
(180) | 1,205 | (126) | 1,131 | ||||
Acquisition and restructuring related expense, net (c)
|
839 | 1,309 | 1,343 | 2,872 | ||||
Other (d)
|
(206) | 722 | (263) | 1,583 | ||||
Total Adjustments | 683 | 3,611 | 1,374 | 6,318 | ||||
Adjusted EBITDA | $ | 82,614 | $ | 79,478 | $ | 127,655 | $ | 124,407 |
Adjusted EBITDA margin | 29.0 | % | 28.0 | % | 25.7 | % | 25.2 | % |
(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").
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(b) |
Represents unrealized non-cash (gains) losses on foreign denominated monetary assets and liabilities and foreign currency contracts.
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(c) |
Adjustments in the three months ended June 29, 2024 are primarily driven by $0.6 million of transaction costs associated with the acquisition of ChlorKing HoldCo, LLC and related entities ("ChlorKing") and $0.3 million of separation and other costs associated with the centralization of operations in Europe. Adjustments in the three months ended July 1, 2023 are primarily driven by $0.5 million of separation costs associated with the enterprise cost-reduction program initiated in 2022, $0.5 million of integration costs from prior acquisitions and $0.3 million of costs associated with the relocation of the corporate headquarters.
Adjustments in the six months ended June 29, 2024 are primarily driven by $0.7 million of separation and other costs associated with the centralization of operations in Europe and $0.6 million of transaction costs associated with the acquisition of ChlorKing. Adjustments in the six months ended July 1, 2023 are primarily driven by $1.3 million of separation costs associated with the enterprise cost-reduction program initiated in 2022, $0.8 million of integration costs from prior acquisitions and $0.6 million of costs associated with the relocation of the corporate headquarters.
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(d) |
Adjustments in the three months ended June 29, 2024 are primarily driven by $0.5 million of gains on the sale of assets, partially offset by $0.2 million of costs incurred related to litigation. Adjustments in the three months ended July 1, 2023 primarily include $0.3 million of costs incurred related to the selling stockholder offering of shares in May 2023, which are reported in SG&A in the unaudited condensed consolidated statement of operations, and other miscellaneous items the Company believes are not representative of its ongoing business operations.
Adjustments in the six months ended June 29, 2024 are primarily driven by $0.5 million of gains on the sale of assets, partially offset by $0.3 million of costs incurred related to litigation. Adjustments in the six months ended July 1, 2023 primarily includes $0.6 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.
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(Dollars in thousands) |
Last Twelve Months(e)
|
Fiscal Year | ||
June 29, 2024 | December 31, 2023 | |||
Net income | $ | 90,245 | $ | 80,687 |
Depreciation | 16,460 | 15,983 | ||
Amortization | 35,582 | 37,079 | ||
Interest expense | 70,484 | 73,584 | ||
Income taxes | 18,228 | 20,400 | ||
Loss on debt extinguishment
|
4,926 | - | ||
EBITDA | 235,925 | 227,733 | ||
Stock-based compensation (a)
|
958 | 1,270 | ||
Currency exchange items (b)
|
(471) | 786 | ||
Acquisition and restructuring related expense, net (c)
|
11,684 | 13,213 | ||
Other (d)
|
2,425 | 4,271 | ||
Total Adjustments | 14,596 | 19,540 | ||
Adjusted EBITDA | $ | 250,521 | $ | 247,273 |
Adjusted EBITDA margin | 25.2 | % | 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.
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(c) |
Adjustments in the last twelve months ended June 29, 2024 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, $3.0 million related to programs to centralize and consolidate operations and professional services in Europe, $1.5 million of costs associated with the relocation of the corporate headquarters and $0.6 million of transaction costs associated with the acquisition of ChlorKing.
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.
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(d) |
Adjustments in the last twelve months ended June 29, 2024 primarily include$1.3 million of costs related to inventory and fixed assets as part of the centralization of operations in Europe, $0.8 million of costs associated with follow-on equity offerings and $0.3 million of costs incurred related to litigation.
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.
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(e) |
Items for the last twelve months ended June 29, 2024 are calculated by adding the items for the six months ended June 29, 2024 plus fiscal year ended December 31, 2023 and subtracting the items for the six months ended July 1, 2023.
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(Dollars in thousands) | Three Months Ended | Six Months Ended | ||||||
June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | |||||
Net income | $ | 37,581 | $ | 29,453 | $ | 47,421 | $ | 37,863 |
Tax adjustments (a)
|
(1,624) | 3,046 | (1,771) | 1,498 | ||||
Other adjustments and amortization: | ||||||||
Stock-based compensation (b)
|
230 | 375 | 420 | 732 | ||||
Currency exchange items (c)
|
(180) | 1,205 | (126) | 1,131 | ||||
Acquisition and restructuring related expense, net (d)
|
839 | 1,309 | 1,343 | 2,872 | ||||
Other (e)
|
(206) | 722 | (263) | 1,583 | ||||
Total other adjustments | 683 | 3,611 | 1,374 | 6,318 | ||||
Loss on debt extinguishment
|
4,926 | - | 4,926 | - | ||||
Amortization | 8,503 | 9,289 | 17,046 | 18,543 | ||||
Tax effect (f)
|
(3,304) | (3,200) | (5,539) | (6,284) | ||||
Adjusted net income | $ | 46,765 | $ | 42,199 | $ | 63,457 | $ | 57,938 |
Weighted average number of common shares outstanding, basic | 214,915,338 | 212,861,564 | 214,637,930 | 212,692,393 | ||||
Weighted average number of common shares outstanding, diluted | 221,259,232 | 220,503,544 | 221,159,419 | 220,506,921 | ||||
Basic EPS | $ | 0.17 | $ | 0.14 | $ | 0.22 | $ | 0.18 |
Diluted EPS | $ | 0.17 | $ | 0.13 | $ | 0.21 | $ | 0.17 |
Adjusted basic EPS | $ | 0.22 | $ | 0.20 | $ | 0.30 | $ | 0.27 |
Adjusted diluted EPS | $ | 0.21 | $ | 0.19 | $ | 0.29 | $ | 0.26 |
(a) |
Tax adjustments for the three and six months ended June 29, 2024 reflect a normalized tax rate of 23.4% and 23.7%, respectively, compared to the Company's effective tax rate of 19.9% and 20.8%, respectively. The Company's effective tax rate for the three months ended June 29, 2024 includes the tax benefits resulting from stock compensation and the six months ended June 29, 2024 additionally include a tax benefit resulting from a return-to-provision adjustment. Tax adjustments for the three and six months ended July 1, 2023 reflect a normalized tax rate of 24.8% and 25.0%, respectively, compared to the Company's effective tax rate of 31.9% and 27.8%, respectively. The Company's effective tax rate for the three and six months ended July 1, 2023 includes the impact of a discrete tax expense related to a change in the indefinite reinvestment assertion for one jurisdiction, partially offset by a tax benefit resulting from the exercise of stock options.
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(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 June 29, 2024 are primarily driven by $0.6 million of transaction costs associated with the acquisition of ChlorKing HoldCo, LLC and related entities ("ChlorKing") and $0.3 million of separation and other costs associated with the centralization of operations in Europe. Adjustments in the three months ended July 1, 2023 are primarily driven by $0.5 million of separation costs associated with the enterprise cost-reduction program initiated in 2022, $0.5 million of integration costs from prior acquisitions and $0.3 million of costs associated with the relocation of the corporate headquarters. Adjustments in the six months ended June 29, 2024 are primarily driven by $0.7 million of separation and other costs associated with the centralization of operations in Europe and $0.6 million of transaction costs associated with the acquisition of ChlorKing. Adjustments in the six months ended July 1, 2023 are primarily driven by $1.3 million of separation costs associated with the enterprise cost-reduction program initiated in 2022, $0.8 million of integration costs from prior acquisitions and $0.6 million of costs associated with the relocation of the corporate headquarters. |
(e) |
Adjustments in the three months ended June 29, 2024 are primarily driven by $0.5 million of gains on the sale of assets, partially offset by $0.2 million of costs incurred related to litigation. Adjustments in the three months ended July 1, 2023 primarily include $0.3 million of costs incurred related to the selling stockholder offering of shares in May 2023, which are reported in SG&A in the unaudited condensed consolidated statement of operations, and other miscellaneous items the Company believes are not representative of its ongoing business operations. Adjustments in the six months ended June 29, 2024 are primarily driven by $0.5 million of gains on the sale of assets, partially offset by $0.3 million of costs incurred related to litigation. Adjustments in the six months ended July 1, 2023 primarily includes $0.6 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. |
(Dollars in thousands) | Three Months Ended | Three Months Ended | ||||||||||
June 29, 2024 | July 1, 2023 | |||||||||||
Total | NAM | E&RW | Total | NAM | E&RW | |||||||
Net sales | $ | 284,393 | $ | 241,113 | $ | 43,280 | $ | 283,543 | $ | 237,352 | $ | 46,191 |
Gross profit | $ | 145,087 | $ | 127,430 | $ | 17,657 | $ | 136,510 | $ | 118,442 | $ | 18,068 |
Gross profit margin % | 51.0 | % | 52.9 | % | 40.8 | % | 48.1 | % | 49.9 | % | 39.1 | % |
Income from operations before income taxes | $ | 46,946 | $ | 43,220 | ||||||||
Expenses not allocated to segments | ||||||||||||
Corporate expense, net | 7,811 | 8,425 | ||||||||||
Acquisition and restructuring related expense | 839 | 1,309 | ||||||||||
Amortization of intangible assets | 6,949 | 7,637 | ||||||||||
Interest expense, net | 16,799 | 19,130 | ||||||||||
Loss on debt extinguishment | 4,926 | - | ||||||||||
Other (income) expense, net | (646) | 625 | ||||||||||
Segment income | $ | 83,624 | $ | 75,335 | $ | 8,289 | $ | 80,346 | $ | 70,962 | $ | 9,384 |
Segment income margin % | 29.4 | % | 31.2 | % | 19.2 | % | 28.3 | % | 29.9 | % | 20.3 | % |
Depreciation | $ | 4,591 | $ | 4,328 | $ | 263 | $ | 4,068 | $ | 3,837 | $ | 231 |
Amortization | 1,554 | 1,554 | - | 1,651 | 1,651 | - | ||||||
Stock-based compensation | 57 | 57 | - | 192 | 180 | 12 | ||||||
Other (a)
|
- | - | - | 290 | 290 | - | ||||||
Total adjustments | 6,202 | 5,939 | 263 | 6,201 | 5,958 | 243 | ||||||
Adjusted segment income | $ | 89,826 | $ | 81,274 | $ | 8,552 | $ | 86,547 | $ | 76,920 | $ | 9,627 |
Adjusted segment income margin % | 31.6 | % | 33.7 | % | 19.8 | % | 30.5 | % | 32.4 | % | 20.8 | % |
(a) |
The three months ended July 1, 2023 includes miscellaneous items the Company believes are not representative of its ongoing business operations.
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|
(Dollars in thousands) | Six Months Ended | Six Months Ended | ||||||||||
June 29, 2024 | July 1, 2023 | |||||||||||
Total | NAM | E&RW | Total | NAM | E&RW | |||||||
Net sales | $ | 496,962 | $ | 414,542 | $ | 82,420 | $ | 493,679 | $ | 400,056 | $ | 93,623 |
Gross profit | $ | 249,666 | $ | 217,307 | $ | 32,359 | $ | 234,401 | $ | 197,455 | $ | 36,946 |
Gross profit margin % | 50.2 | % | 52.4 | % | 39.3 | % | 47.5 | % | 49.4 | % | 39.5 | % |
Income from operations before income taxes | $ | 59,851 | $ | 52,465 | ||||||||
Expenses not allocated to segments | ||||||||||||
Corporate expense, net | 15,326 | 14,524 | ||||||||||
Acquisition and restructuring related expense | 1,343 | 2,872 | ||||||||||
Amortization of intangible assets | 13,849 | 15,254 | ||||||||||
Interest expense, net | 35,391 | 38,491 | ||||||||||
Loss on debt extinguishment | 4,926 | - | ||||||||||
Other (income) expense, net | (1,284) | (134) | ||||||||||
Segment income | $ | 129,402 | $ | 115,077 | $ | 14,325 | $ | 123,472 | $ | 104,238 | $ | 19,234 |
Segment income margin % | 26.0 | % | 27.8 | % | 17.4 | % | 25.0 | % | 26.1 | % | 20.5 | % |
Depreciation | $ | 8,735 | $ | 8,215 | $ | 520 | $ | 8,373 | $ | 7,925 | $ | 448 |
Amortization | 3,197 | 3,197 | - | 3,288 | 3,288 | - | ||||||
Stock-based compensation | 79 | 69 | 10 | 365 | 342 | 23 | ||||||
Other (a)
|
19 | 19 | - | 388 | 388 | - | ||||||
Total adjustments | 12,030 | 11,500 | 530 | 12,414 | 11,943 | 471 | ||||||
Adjusted segment income
|
$ | 141,432 | $ | 126,577 | $ | 14,855 | $ | 135,886 | $ | 116,181 | $ | 19,705 |
Adjusted segment income margin %
|
28.5 | % | 30.5 | % | 18.0 | % | 27.5 | % | 29.0 | % | 21.0 | % |
(a) |
The six months ended June 29, 2024 represents losses on the sale of assets. The six months ended July 1, 2023 includes miscellaneous items the Company believes are not representative of its ongoing business operations.
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