hayw-20240330

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-40208

Hayward Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

1415 Vantage Park Drive

Suite 400

Charlotte, NC

(Address of Principal Executive

Office)

82-2060643

(I.R.S. Employer Identification No.)

28203

(Zip Code)

(704) 837-8002

Registrant’s telephone number, including area code

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $.001 per share

HAYW

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The registrant had outstanding 214,858,340 shares of common stock as of April 30, 2024.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q of Hayward Holdings, Inc. (the “Company,” “we” or “us”) contains certain “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relating to us are based on the beliefs of our management as well as assumptions made by, and information currently available to, us. These statements include, but are not limited to, statements about our strategies, plans, objectives, expectations, intentions, expenditures and assumptions and other statements contained in or incorporated by reference in this Quarterly Report on Form 10-Q that are not historical facts. When used in this document, words such as “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. We believe that it is important to communicate our future expectations to our shareholders, and we therefore make forward-looking statements in reliance upon the safe harbor provisions of the Act. However, there may be events in the future that we are not able to accurately predict or control, and actual results may differ materially from the expectations we describe in our forward-looking statements.

Examples of forward-looking statements include, among others, statements we make regarding: our financial position; business plans and objectives; general economic and industry trends; business prospects; future product development and acquisition strategies; future channel stocking levels; growth and expansion opportunities; operating results; and working capital and liquidity. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We may not achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place significant reliance on our forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Moreover, neither we 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 our future results and could cause those results or other outcomes to differ materially from those indicated in our forward-looking statements include the following:

• our relationships with and the performance of distributors, builders, buying groups, retailers and servicers who sell our products to pool owners;

• impacts on our business from the sensitivity of our business to seasonality and unfavorable economic and business conditions;

• competition from national and global companies, as well as lower cost manufacturers;

• our ability to develop, manufacture and effectively and profitably market and sell our new planned and future products;

• our ability to execute on our growth strategies and expansion opportunities;

• our exposure to credit risk on our accounts receivable;

• impacts on our business from political, regulatory, economic, trade and other risks associated with operating foreign businesses, including risks associated with geopolitical conflict;

• our ability to maintain favorable relationships with suppliers and manage disruptions to our global supply chain and the availability of raw materials;

• our ability to identify emerging technological and other trends in our target end markets;

• failure of markets to accept new product introductions and enhancements;

• the ability to successfully identify, finance, complete and integrate acquisitions;

• our reliance on information technology systems and susceptibility to threats to those systems, including cybersecurity threats, and risks arising from our collection and use of personal information data;

• regulatory changes and developments affecting our current and future products;

• volatility in currency exchange rates and interest rates;

• our ability to service our existing indebtedness and obtain additional capital to finance operations and our growth opportunities;

• our ability to establish and maintain intellectual property protection for our products, as well as our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property rights of others;

• the impact of material cost and other inflation;

• our 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;

• the impact of product manufacturing disruptions, including as a result of catastrophic and other events beyond our businesses;

• uncertainties related to distribution channel inventory practices and the impact on net sales volumes;

• our ability to realize cost savings from restructuring activities; and

• other factors set forth in the respective “Risk Factors” section of this Quarterly Report on Form 10-Q and of our Annual Report on Form 10-K for the year ended December 31, 2023.

Many of these factors are macroeconomic in nature and are, therefore, beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this Quarterly Report on Form 10-Q as anticipated, believed, estimated, expected, intended, planned or projected. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this report. Unless required by United States federal securities laws, we neither intend nor assume any obligation to update these forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations.


HAYWARD HOLDINGS, INC.
Table of Contents

PART I—FINANCIAL INFORMATION
	ITEM 1.	Financial Statements (unaudited)	1
		Unaudited Condensed Consolidated Balance Sheets	1
		Unaudited Condensed Consolidated Statements of Operations	2
		Unaudited Condensed Consolidated Statements of Comprehensive Income	3
		Unaudited Condensed Consolidated Statements of Changes in Redeemable Stock and Stockholders ’ Equity	4
		Unaudited Condensed Consolidated Statements of Cash Flows	5
		Notes to Unaudited Condensed Consolidated Financial Statements	6
		Note 1 Nature of Operations and Organization	6
		Note 2 Significant Accounting Policies	6
		Note 3 Revenue	7
		Note 4 Inventories	7
		Note 5 Accrued Expenses and Other Liabilities	7
		Note 6 Income Taxes	8
		Note 7 Long-Term Debt	8
		Note 8 Derivatives and Hedging Transactions	9
		Note 9 Fair Value Measurements	10
		Note 10 Segments and Related Information	11
		Note 11 Earnings Per Share	12
		Note 12 Commitments and Contingencies	13
		Note 13 Leases	13
		Note 14 Stockholders’ Equity	14
		Note 15 Stock-based Compensation	14
		Note 16 Acquisitions and Restructuring	15
		Note 17 Related-Party Transactions	16
		Note 18 Subsequent Events	16
	I TEM 2.	Management ’s Discussion and Analysis of Financial Condition and Results of Operations	17
	I TEM 3.	Quantitative and Qualitative Disclosures About Market Risk	29
	I TEM 4.	Controls and Procedures	30

PART II—OTHER INFORMATION
	I TEM 1.	Legal Proceedings	31
	I TEM 1A.	Risk Factors	31
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
	ITEM 5.	Other Information	32
	ITEM 6.	Exhibits	33

SIGNATURES			34


PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Hayward Holdings, Inc.

Unaudited Condensed Consolidated Balance Sheets

(Dollars in thousands, except per share data)


	March 30, 2024		December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	115,873	$	178,097
Short-term investments	—		25,000
Accounts receivable, net of allowances of $2,990 and $2,870, respectively	351,330		270,875
Inventories, net	220,856		215,180
Prepaid expenses	10,876		14,331
Income tax receivable	5,839		9,994
Other current assets	15,873		11,264
Total current assets	720,647		724,741
Property, plant, and equipment, net of accumulated depreciation of $99,509 and $95,917, respectively	159,976		158,979
Goodwill	932,575		935,013
Trademark	736,000		736,000
Customer relationships, net	200,001		206,308
Other intangibles, net	91,160		94,082
Other non-current assets	87,306		91,161
Total assets	$	2,927,665	$	2,946,284
Liabilities and Stockholders’ Equity
Current liabilities
Current portion of long-term debt	$	15,585	$	15,088
Accounts payable	75,881		68,943
Accrued expenses and other liabilities	122,575		155,543
Income taxes payable	—		109
Total current liabilities	214,041		239,683
Long-term debt, net	1,078,266		1,079,280
Deferred tax liabilities, net	248,485		248,967
Other non-current liabilities	66,381		66,896
Total liabilities	1,607,173		1,634,826
Commitments and contingencies (Note 12)

Stockholders’ equity
Preferred stock, $0.001 par value, 100,000,000 authorized, no shares issued or outstanding as of March 30, 2024 and December 31, 2023	—		—
Common stock $0.001 par value, 750,000,000 authorized; 243,382,758 issued and 214,716,389 outstanding at March 30, 2024; 242,832,045 issued and 214,165,676 outstanding at December 31, 2023	244		243
Additional paid-in capital	1,083,676		1,080,894
Common stock in treasury; 28,666,369 and 28,666,369 at March 30, 2024 and December 31, 2023, respectively	(358,110)		(357,755)
Retained earnings	590,749		580,909
Accumulated other comprehensive income	3,933		7,167
Total stockholders’ equity	1,320,492		1,311,458
Total liabilities, redeemable stock, and stockholders’ equity	$	2,927,665	$	2,946,284

See accompanying notes to the unaudited condensed consolidated financial statements.

Hayward Holdings, Inc.

Unaudited Condensed Consolidated Statements of Operations

(Dollars in thousands, except per share data)


	Three Months Ended
	March 30, 2024		April 1, 2023
Net sales	$	212,569	$	210,136
Cost of sales	107,990		112,245
Gross profit	104,579		97,891
Selling, general and administrative expense	60,014		54,887
Research, development and engineering expense	6,302		5,977
Acquisition and restructuring related expense	504		1,563
Amortization of intangible assets	6,900		7,617
Operating income	30,859		27,847
Interest expense, net	18,592		19,361

Other (income) expense, net	(638)		(759)
Total other expense	17,954		18,602
Income from operations before income taxes	12,905		9,245
Provision for income taxes	3,065		835
Net income	$	9,840	$	8,410

Earnings per share
Basic	$	0.05	$	0.04
Diluted	$	0.04	$	0.04

Weighted average common shares outstanding
Basic	214,357,439		212,523,221
Diluted	221,076,443		220,501,177

See accompanying notes to the unaudited condensed consolidated financial statements.

Hayward Holdings, Inc.

Unaudited Condensed Consolidated Statements of Comprehensive Income

(In thousands)

Three Months Ended

March 30, 2024

April 1, 2023

Gross

Taxes

Net

Gross

Taxes

Net

Net income

9,840

8,410

Other comprehensive income (loss):

Foreign currency translation adjustments

(5,709)

SEC Form 10-Q filed by Hayward Holdings Inc.