Hayward Holdings, Inc.

Welcome to Hayward Holdings fourth quarter 2024 earnings call. My name is Christine and I'll be your operator 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 Kevin Masca, Vice President, Investor Relations and FP&A. Mr. Masca, you may begin.

Thank you and good morning, everyone. We issued our fourth quarter 2024 earnings press release this morning, which has been posted to the Investor Relations section of our website at investor.hayward.com. There you can also find an earnings slide presentation that we will reference during this call. I'm joined today by Kevin Halloran, President and Chief Executive Officer and Evian Jones, Senior Vice President and Chief Financial Officer. Before we begin, I would like to remind everyone that during this call, the company may make certain statements that are considered forward-looking in nature, including management's outlook for 2025 and future periods. Such statements are subject to a variety of risks and uncertainties, including those discussed in our most recent Form 10-K and 10-Q filings with the Securities and Exchange Commission that could cause actual results to differ materially. 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. Reconciliations of historical non-GAAP measures discussed on this call to the comparable GAAP measures can be found in our earnings release and the appendix to the slide presentation. All comparisons will be made on a year-over-year basis. I will now turn the call over to Kevin Holleran.

Thank you, Kevin. Good morning, everyone. It's my pleasure to welcome all of you to Hayward's fourth quarter earnings call. I'll begin on slide four of our earnings presentation by highlighting a tremendous milestone for Hayward, the 100-year anniversary of the company's founding in 1925. As we celebrate this achievement, we reflect with immense pride on our journey from the founding by Irving Hayward as a tool and die maker to Oscar Davis acquiring the business in the 1960s and entering the pool market to the global public company we are today. For a century, we've served our customers with outstanding products and services, and our centennial celebration is a testament to our resilience and past accomplishments. Our company has a solid foundation for future growth and value creation. We are extremely excited about the long-term prospects for the pool industry and our ability to execute our growth plans. Turning now to slide five of our presentation for today's key messages. I'm pleased to report strong fourth quarter results significantly exceeding expectations. We finished the year on a high note with better than anticipated in quarter demand plus robust early buy orders for the upcoming 2025 pool season. This resulted in solid sales and earnings growth, margin expansion, and increased cashflow generation. Net sales increased 17% for the quarter and 6% for the year through positive contributions from both volume and price. Gross profit margins expanded to record levels. and full-year free cash flow increased 22%, exceeding our guidance. Solid profitability and cash flow enabled us to reduce net leverage into our targeted range of two to three times, while completing accretive capital deployments for early debt repayment and a strategic acquisition. As I reflect on 2024, it was a successful year for Hayward. I'm proud of the performance of our team in a challenging global environment. And I'd like to thank all our valued customers and vendor partners for their efforts during the year. In addition to delivering solid financial results, we further strengthened the senior leadership team and executed key strategic initiatives to position us for pop for profitable growth. This included expanding our customer relationships. advancing our technology leadership position with the introduction of innovative new products and leveraging our operational excellence capabilities. I'll discuss our accomplishments in more detail in a moment. Moving to 2025, we expect to deliver sales and earnings growth on a full year basis in a continued dynamic operating environment. For the full year 2025, we expect net sales to increase approximately 1% to 5%. Turning now to slide six, highlighting the results of the fourth quarter and full year. Net sales in the fourth quarter increased 17% to 327 million, driven by price and a double-digit increase in volume. By segment, net sales increased 20% in North America and 2% in Europe and rest of the world. Gross profit margins expanded 220 basis points year over year and 170 basis points sequentially to a record 51.4%. Adjusted EBITDA increased 30% in the fourth quarter, and adjusted EBITDA margin was a robust 30.2%. Adjusted diluted EPS increased 35% to 27 cents. For the full year 2024, the net sales increased 6% to $1,052,000,000, and adjusted EBITDA increased 12% to $277,000,000, each exceeding our most recent guidance. We delivered strong profitability with gross margins, exceeding 50% for the first time on a full year basis adjusted EBITDA margin for the full year was 26.4% and adjusted diluted EPS increased 20% to 67 cents. Turning now to slide seven. I'd like to share some perspective on the year. 2024 was a successful year for Hayward, despite the macro economic challenges faced by the pool industry. We delivered on our financial commitments and strengthened our position as a premier company in the industry. As a technology leader, we increased investment in both R&D and engineering to support our commitment to innovation. We successfully launched several differentiated products during the year, Two great examples of new innovations are the micro channel temperature control unit and industry first single unit product offering the ability to both heat pool water and cool it as low as 40 degrees for a cold plunge. Secondly, our proprietary OmniPro app, a cloud based productivity tool for trade professionals, enabling real time remote monitoring and equipment configuration. We're excited by the adoption of these unique products in the marketplace. Hayward has a long standing culture of operational excellence and continuous improvement. We demonstrated our capabilities again in 2024, consolidating our manufacturing footprint in Spain, investing in automation and productivity initiatives, and expanding gross margins. As a testament to our product and operational performance and the value we provide customers, Hayward was recognized during the year by the largest global distributor with separate awards for both innovation leadership and operational excellence. On the commercial side, we increased investment in customer care, leveraging new technologies and tools to enhance customer experience. We upgraded our customer loyalty programs, rewards trips, and partner summits to strengthen and expand our dealer relationships to help grow our respective businesses. We also launched Hayward Hub DFW in Texas, a first-of-its-kind Hayward training and support facility for dealers and trade professionals in this important growth market. During the year, we further strengthened the senior leadership team by appointing four accomplished executives to key positions within the organization. With these additions and expanded capabilities, I'm convinced we have the right leadership talent in place to execute our growth strategies. These achievements contributed to solid financial performance, including a return to sales growth and continued margin expansion. This enabled us to reduce net leverage while reinvesting in the business, repaying 123 million of our debt early and completing the strategic acquisition of Corking, advancing our position in the commercial pool market. Turning now to slide eight. Following that review of 2024, I'd like to look forward and highlight the company's strategy to drive compelling growth and shareholder value. At our core, we are a products company. Our product management and engineering roadmaps are designed to deliver innovative, energy efficient, automated solutions to transform the experience of water and increase the enjoyment of pool ownership. Leveraging best practices and capturing global trends, our teams are actively driving innovation and setting the pace for the industry. We are focused on creating customer advocacy for the Hayward brand. strengthening relationships with trade professionals, and in turn driving incremental growth. To enable this, our sales, marketing, and technical service teams continue to develop new value-added solutions for our trade professionals. Organizational changes and investment in our commercial teams allow us to further support, train, and develop our partners, as well as attract new professionals to Hayward. The ChlorKing acquisition was a key investment in our commercial pool product category. We are pleased with its performance and see many additional opportunities to grow this category with focused leadership and new product introductions. As we integrate ChlorKing into Hayward, we are identifying cross-selling opportunities with our existing flow control team. We now have the opportunity to specify UV and chemical water treatment systems in addition to our core engineered thermoplastic valves into a broad and expanding water industry we have a proven ability to drive margin expansion from already robust levels specifically our gross profit margin expanded over 600 basis points in the last five years to 50.5 percent and nearly 400 basis points since 2021 despite reduced volumes as the industry normalized after the pandemic We see the opportunity for further margin upside over the long-term driven by four key pillars of our margin strategy. Productivity gains resulting from our operational excellence culture, a higher margin mix of technology products, operating leverage given current low capacity utilization levels, and proactive price cost management. Finally, as we've highlighted before, we maintain a disciplined and balanced approach to capital allocation. emphasizing organic growth investments and strategic acquisition opportunities to complement our product offering, geographic footprint, and commercial relationships. In summary, I'm confident we have the right strategy in place to drive profitable growth and compelling shareholder returns. And with that, I'd like to turn the call over to Avian to discuss our financial results in more detail.