Hayward Holdings, Inc.

Good morning and welcome to Hayward Holdings first quarter 2022 earnings call. My name is Austin and I'll be the moderator for today's call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star then one on your touch tone phone. Please note that this conference is being recorded. I will now turn the call over to Stuart Baker, Vice President, Global Strategic Planning and Business Development. Mr. Baker, you may begin.

Thank you. Good morning, everyone. We issued our first quarter 2022 earnings press release this morning, which has been posted to the investor relations portion of our website at investor.hayward.com, where you can also find an earnings slide presentation that we'll reference during this call. I'm joined today by Kevin Holland, President, Chief Executive Officer, and Ifean Jones, Senior Vice President and Chief Financial Officer. Before we begin, I'd like to remind everyone that during this call, the company may make certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include remarks about future expectations, anticipation, beliefs, estimates, forecasts, plans, and prospects. Such statements are subject to a variety of risks and certainties and other factors that could cause actual results to differ materially from those indicated or implied by such statements. Such risks and other factors are set forth in the company's earnings release posted on the website and will be provided in our form 10Q for our first quarter of 2022 as filed with the Securities and Exchange Commission. The company does not undertake any duty to update such forward-looking statements. Additionally, during today's call, the company will discuss non-GAAP measures which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations of net income calculated under U.S. GAAP to adjusted EBITDA, as well as reconciliations for other non-GAAP measures discussed on this call, can be found in our earnings release and will be included in our form 10Q. I'd now like to turn the call over to Cameron Holman.

Thank you, Stuart, and good morning, everyone. It's my pleasure to welcome all of you to Hayward's first quarter earnings call. Near the end of the quarter, we celebrated our one-year anniversary as a public company. I'd like to personally thank our employees, dealers, channel, and vendor partners for making this inaugural year a great success. As I look back over the last 12 months, we have many accomplishments to be proud of. We have executed on key strategic initiatives and made investments in our product portfolio, both organically and through M&A that have advanced our reputation as the innovative market leader in technology. We significantly strengthened Hayward's position in the market by leveraging our supply chain advantages and vertically integrated production model. This has proved especially beneficial in the current environment, resulting in share gains. The hard work of our teammates across our global organization have led to consistently strong financial and operational performance. We look forward to many years of success as a public company as we continue to build a track record of performance and strive to create meaningful value for all our stakeholders. I'll start on slide four of our earnings presentation with some highlights from the first quarter. we delivered another very strong quarter marked by net sales growth of 23% year over year to a record 410 million net sales, which was on top of an exceptional growth of 96% in Q1 of 2021 over Q1 of 2020. Adjusted EBITDA grew 18% year over year to a record 126 million, yielding a 31% margin. As outlined on slide five, Our performance continues to be driven by our ability to execute on the core drivers of growth, digital leadership, conversions, new products, operational excellence, broad channel access, and environmental sustainability. Importantly, we have a wide range of factors supporting our growth, and this diversification gives me confidence as we look to expand our business in the years to come. I'll provide more detail on some of these items as we move through the presentation. But first, let me address a key pillar of our success, that being our operational excellence. Our vertically integrated operations and our procurement expertise have provided greater supply chain flexibility, giving us the ability to increase output while maintaining the recent improvements to our structural margin profile. Our focus on operational excellence allows us to ensure product quality and availability despite the operational and logistical challenges most companies are experiencing. We're also pleased to report the opening of a new facility in Europe focused on automation and sanitization technologies that will help us to expand our sales in region through the more than doubling of production capacity in these product lines. On slide six, I'll focus on our IoT digital leadership driven by the powerful smart pad conversion taking place in our industry led by our Omni automation systems as well as highlight the breadth of our product offering. Omni is at the heart of the smart pad, creating the pole for IoT enabled devices. Our adoption rate continues to improve with a user base increase of 45%. The power and simplicity of use has driven connectivity of a broad array of technologies with the top five growth categories in the industry being LED color lights, controls, variable speed pumps, heaters, and sanitization. Hayward's growth in these categories continues to outperform the industry, supported by recent new product launches, including ColorLogic LED lights, OmniPL controls, XC variable speed pumps, small footprint universal gas heater, and AquaRite S3 chlorine salt generator, all of which have increased our new product vitality index by 37% year over year. Our complete offering provides diversification allowing us to fully participate across our key end markets of aftermarket upgrade, repair and replace, remodeling, and new pool construction. Moving to slide seven, I'd like to highlight that an important part of our growth strategy is the aftermarket conversion upgrade opportunities for digital, chemical, and energy. There is a significantly higher take rate in new pool construction compared to the current level of aftermarket penetration for key products such as controls, salt chlorination, and variable speed pumps. Our sales teams are working with trade professionals to promote these exciting new technologies as aftermarket upgrades. We have seen greater dealer acceptance as evidenced by our greater than 20% growth in our Totally Hayward loyalty program participation. We see this as a $6 billion incremental market opportunity by simply increasing the aftermarket penetration in these three categories to the new construction levels. On slide eight, we highlight the initial spend for new key technology adoption at the point of construction or full-scale remodel and the aftermarket lifetime revenue stream. The difference between a smart pad pool and a legacy lower technology non-automated pool is typically around $7,000 for the equipment manufacturer And the technology feature rich smart pad provides compelling sustainability and energy efficiency benefits to the end user. Given a typical pool has a lifetime of around 30 years and an equipment replacement every 10 years, there is compelling lifetime value stream associated with this conversion. One which we feel provides a long runway for growth. This opportunity is a key focus for our sales and marketing teams. as we work with trade professionals to execute the vision. On slide nine, I will briefly discuss our M&A strategy, which focuses on core pool product or technology tuck-ins, as well as backyard adjacencies. You'll recall that we announced at the beginning of the quarter the closing of three strategic tuck-in acquisitions, which have compelling technologies and further leveraging Hayward's leading omni-control solutions to increase the ambiance of the pool, spa, and backyard with a variety of novel water features, all of which benefit from our leading LED lighting technology. We are making good progress integrating these businesses into the Hayward family and are excited about the contribution they will make to help increasingly differentiate our leading lifestyle product portfolio. We would expect these products to be fully launched across Hayward Channel partners in second quarter with further product releases in time for the 2023 pool season. As we look forward, we have a strong pipeline of opportunities that we are pursuing, and acquisitions will continue to be an important component of our capital allocation. With that, I'd like to turn the call over to Ivy and Jones, who will discuss our financial results in more detail.