Hayward Holdings, Inc.

Greetings. Welcome to Hayward Holdings second quarter 2025 earnings call. My name is Latonya and I will 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 questions, please press star one then on your telephone keypad. Please note this conference call is being recorded. I will now turn the call over to Kevin Masca, Vice President of Investor Relations and FNP&A. Mr. Masca, you may begin please.

Thank you and good morning everyone. We issued our second quarter 2025 earnings press release this morning, which has been posted to the investor relations section of our website at .hayward.com. There you can also find the earnings slide presentation reference during this call. I'm joined today by Kevin Holleran, President and Chief Executive Officer and Ivy and 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 outlook for 2025 and future periods. Such statements are subject to a variety of risks and uncertainties, including those discussed in our most recent forms 10 K and 10 Q filed 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 Non-GAAP measures, reconciliation of historical non-GAAP measures discussed on this call to the comparable GAAP measures and be found in our earnings release and the appendix to the slide presentation. All comparisons will be made on a year over year basis unless otherwise indicated. I will now turn the call over to Kevin Holleran.

Thank you, Kevin and good morning. It's my pleasure to welcome all of you to Hayward's second quarter earnings call. I'll begin on slide four of our earnings presentation with today's key messages. I'm pleased to report second quarter results exceeded expectations. Net sales increased 5% with growth across both our North America and Europe and rest of world segments. We delivered strong profitability with gross profit margins increasing to a record .7% and adjusted EBITDA margin increasing to 29.5%. This represents the 10th consecutive quarter of year over year gross margin expansion, a direct result of the strong performance of our commercial and operations teams. Robust sales growth and profitability coupled with effective working capital management enabled us to significantly reduce net leverage to 2.1 times. This is near the low end of our targeted range of two to three times and the lowest level in over three years, providing enhanced financial flexibility as we execute our strategic growth plans. During this period of tariff uncertainty, we continue to aggressively execute our plans to mitigate the impact of tariffs, support margins, and deliver on our commitments to shareholders and customers. We have a resilient business model with approximately 85% of our sales aligned with serving the aftermarket needs of the existing installed base. I'm confident in our team's ability to navigate this dynamic environment. We are refining our guidance for the full year 2025, raising the low end of our guidance range for net sales. We now expect net sales to increase approximately two to 5% and we continue to expect adjusted EBITDA of 280 to $290 million. Turning now to slide five, highlighting the results of the second quarter. Net sales increased 5% to approximately $300 million, driven by a 5% increase in net price, 2% lower volumes, and a 2% contribution from the Clark King acquisition. By segment, total net sales increased 6% in North America and 3% in Europe and the rest of the world. End demand improved in June, resulting in customer orders generally in line with normal seasonal patterns for the quarter. Non-discretionary aftermarket maintenance demand remains resilient, but the more discretionary elements of the market have been pressured. Consistent with the trend of prior quarters, homeowners building new pools or remodeling existing pools are increasingly electing to add technology to deliver the desired ambiance and experience, rather than cutting costs to de-feature their pool investment. Last quarter, we introduced you to OmniX, an industry-first suite of innovative products for the aftermarket. This automation platform provides a cost-effective way to accelerate technology adoption in the install base, increasing aftermarket equipment content per pool pad, and advance our technology leadership position in the market. We are pleased with the initial dealer response to the new OmniX-enabled variable speed pump and will launch other product categories with embedded OmniX control capabilities in the coming quarters. In addition, our commercial pool business continues to grow organically and benefit from the addition of the Clark King acquisition in June of 2024. As I reflect on our first full year of ownership, this has been a very successful integration for Hayward, providing a key building block as we expand our commercial pool business, delivering the expected sales and operational synergies. -to-date, our commercial sales in North America have approximately doubled while generating strong profitability. Consolidated gross profit margins increased 170 basis points to a quarterly record 52.7%. Adjusted EBITDA increased 7% to $88 million and adjusted EBITDA margin increased 50 basis points to 29.5%. We continue to make SG&A investments in the business to drive future growth. We are investing in advanced engineering and new product development to continue bringing innovative, industry-leading products to market. On the commercial side, we are increasing investments in customer care and executing targeted sales and marketing strategies to further increase our presence in high-growth regions and capture market share. During the quarter, Hayward sponsored the prestigious 2025 Pool and Spa Network Top 50 Builder Awards event. As we continue to invest in the industry and build upon our unified customer-first approach, we are seeing greater traction with higher-end builders and servicers. Finally, adjusted diluted EPS increased 14% to $0.24. Turning now to slide six, the tariff environment continues to evolve and will likely remain unsettled for some time. As of our last earnings call, the incremental tariffs were 145% for China and 10% for the rest of the world. Since then, we have seen movement in those rates, most significantly a reduction to 30% incremental for China. As a reminder, we are predominantly a domestic manufacturer with approximately 85% of our North America sales produced in the United States and increasing, as I'll discuss in a moment. However, we do source certain products from our Hayward facility in China and other third-party Chinese suppliers who are also impacted by the tariffs. Based on the latest available information, we estimate a total annualized tariff impact of approximately $30 million, with a partial year impact in 2025 of approximately $18 million, most related to China. This is down from an annualized impact of approximately $85 million when the China tariff was 145%. Our planning assumption is the current tariff arrangements remain in place and our outlook does not consider any changes that may potentially take effect in August. We remain agile and prepared to respond as needed. Our team is focused on aggressively executing our mitigation action plans. As previously communicated, we expect our direct sourcing from China into the U.S. as a percent of cost of goods sold to decline from approximately 10% to 3% by year end. We intend to achieve that target regardless of the eventual tariff resolution as it de-risks our supply chain and limits exposure to geopolitical uncertainty. On the pricing side, we announced a 3% tariff-related price increase in North America effective late April. This will remain in place. However, we elected not to implement a previously announced second price increase after the 145% China tariff was reduced. Our teams are working diligently to support our customers while protecting profitability. At this point, we expect to fully offset the current tariff-related cost increases. And with that, I'd like to turn the call over to Ivan to discuss our financial results in more detail.