Hayward (HAYW) 30 Jul 222022 Q2 Earnings call transcript

Welcome to Hayward Holdings Second Quarter 2022 Earnings Call. My name is Sam and I will be your operator for today’s call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Kevin Maczka, Vice President of Investor Relations. Mr. begin. may you Maczka,

at good press We has release Investor earnings Officer we will slide our Chief to Senior and can quarter been President and our I Eifion this reference President Holleran, Financial that XXXX the website by and of today Jones, portion earnings this Relations joined There, morning, Kevin you presentation you issued Officer. and also an everyone. second during posted investor.hayward.com. Thank morning, call. find am Chief Executive Vice which

about Before a factors we meaning like forecasts, estimates, that to variety other make that These that Securities to everyone prospects. future constitute and the are remind and plans subject remarks Act the statements of of call, company statements expectations, begin, or differ I Reform anticipation, does certain the the could by uncertainties cause undertake with company’s would to in our filed website any actual during posted and forward-looking statements. XXXX. earnings forth Litigation and second this Such Securities beliefs, update within risks, Such Private forward-looking statements and of Commission. implied may such Exchange release, results for to provided XXXX on quarter materially factors set Form in company be risks such the as the those other are will The from XX-Q duty indicated not statements. include

substitute measures for we this in included non-GAAP to in in Holleran. EBITDA as Reconciliations performance. call reconciliations to turn like discussed which found considered earnings to information discuss Additionally, can the Form release under as not as be be calculated other U.S. GAAP I XX-Q. The now will additional will our prepared this accordance of believe in adjusted be would over or on during and income of call should well useful Kevin isolation results GAAP. today’s the call, evaluating net a presentation measures, can with in our company for be non-GAAP

to marked prior of of and I Thank to welcome second all you, with some We growth Hayward’s quarter our million, highlights growth to top channel current morning, the Kevin second XX% year year-over-year of over macroeconomic sustained sales X increased have Good will solid the In sales XX% XX% of which the quarter headwinds. on year, call. XX%. from year-over-year our presentation quarter we earnings increase inventory second in team. revised margin. of $XXX dynamics to XXX pleasure you net This inflationary for XX% to level was discuss Slide the basis of points American a earnings in delivered our my welcome an will start second core by It’s North everyone. another market, of quarter despite and quarter. on the to grew net EBITDA the represents outlook conditions. million, exceptional yielding XXXX. Adjusted in Later which $XXX we presentation, the reflect

and the like the why Hayward growth take industry. so we’re I’d through that, confident do model in we Before long-term to for you

environmental to on operational products, performance conversions, the and outlined our by our drivers channel As excellence, core to X, broad growth, dealer new digital ability execute Slide access driven leadership, be including continues of and on sustainability.

controller over grown year. strength IoT-enabled growth Importantly, last in installations, to Notably, have pool which XX% our I’d last in months. the in OmniLogic XX% the continued this resulted net sales solid like over XX of highlight

through Hayward Totally our added advocacy We long-term dealer year-to-date over approximately continued team dedication X,XXX additions sales products. full Hayward X,XXX who and to are see have strong their our in of momentum These also year growth Partners after with XXXX. key

the digital large omni conversions part that our on is LED through Slide position industry’s to X, The pumps, acquisitions. continuing our which most IoT controls increased success Finally, products categories systems. energy-efficient Hayward all top Variable with development industry’s lighting. focus these product investments Pumps, On XX%, to efficient attention take vitality growth product speed our new include strengthening place made I’d with automation your development in variable our of the new with our across leadership significant controls Speed ongoing products. like to SmartPad pair due and innovation, and through index, has market categories OmnioLogic new draw and sanitization to

recognition of offering fully replace, our aftermarket brand to overall and allowed Our ability key remodeling This pool end diversification, across repair provides and to new construction. upgrades, markets penetration. market and enhance and us expand strengthens participate has our

X, slide and total driver addressable with important the upgrade key ever-increasing trends Moving before market I’d market an occurring highlighted we’ve some in an to in chemical energy. Slide A is that technology industry aftermarket reflecting our digital, opportunities like with opportunity. conversion to the for updated revisit

penetration. as For new compelling rate educated at the building each We we of same chlorination pools the premise pool of aftermarket if new to current technologies construction of these X the consumers speed the compare these take the they categories of time believe controls, of are, that existing and pumps, IoT-enabled merits benefits. pool salt to in level owners, desire as would variable

the manual easier call First pool what controlled dynamically delivered and IoT-enabled individual clocks. while with we cost use ownership. lowering components is Adding enjoyable time digital replacing more conversion SmartPad, controls the make equipment of and to automation controls

to replaced Ozone experience. Second generators of products, sanitization is safer, chemical nonchemical natural swimming with more forms and chlorine is conversion UV salt-chlorine water a making as

conversion products, candescent replacing to energy-efficient single-speed a more variable LED lights and speed notably color pumps lights. replacing Finally, pumps white and

exciting are these teams technologies working to upgrades. promote as professionals aftermarket sales new with Our trade

equipment. comfort, legacy have older a cost new of technologies great levels Slide construction of On three at pool of convenience market opportunity $X in when several compared over penetration offer and full also available technologies the billion. aftermarket new well These deliver categories as remodel, of to benefit ownership. mentioned, new alone homeowners to ambience these to I or Moving compelling X, construction ownership affords time

the win-win pool of the with essential here, is provide content owner pool a average pool. OEM backyard construction, day and a a reality. Hayward. night feature both see more a technologies non-SmartPad pool legacy the SmartPad now compared when for point At as These $X,XXX or to on has reimagining you a As both real

life $XX,XXX pools there span XX have replacing two a equipment most replacement pool. per years, incremental Given and be years, typical will a value XX of typically cycles, needs yielding every lifetime

base million M&A industry, X, approximately remodel construction in for or will the United while pools product in various and the a focused the core pool resilient This States. always grown Slide and as a years, adjacencies. as shown discuss now our lifetime now in-ground On Turning new to X.X over need XX driver installed cycles last technology tuck-ins our briefly through on key core business activity I is here of upgrade. the of orange, backyard part Slide XX, creates the repair, aftermarket is is economic has replace, well the

During the and Electronics the quarter, of Halco. business acquisition we which lighting J&J Sollos, the of specialty completed represent

living As leveraging and highlighting their the to categories ambience top discussed one by Omni of is function industry, lighting earlier, outdoor app. of growth pool the desire in space increase the owners’ the

to as I’d our like leading over businesses we increasingly Jones, call With our financial with detail. last the These late and integrating product turn that, made the year. technologies to added will to results as lifestyle portfolio. Hayward these progress pleased differentiate in to are other the family well products in discuss the date Eifion We businesses will more who

product net by prior quarter the to growth Thank driven another a mitigate escalating partially you, Kevin growth acquisitions, reflected for Net of full period price volumes price the impact and X% XX year-over-year and from of The quarter impact unfavorable increases months the delivered with supported announced rate our and realization All a during adoption X%. XX% Slide price of profitability good sales start was impact made and be $XXX.X the management over last quarter XX. basis. of increased inflationary to the previously on by performance by ongoing We the exchange agility, second over on offset morning. pressures. successful new year XX% decline accumulative contribution in cost I’ll X% comparisons operational will The million. inflation. and

our businesses in certain European notably the to the sales, acquisitions, area, was consumers’ acquisition the that a confidence quarter, volume during result quarter sharp contribution the The the lighting decline from us During from the war reduction led announced saw by it exit in Halco. which driven to from we across region. Ukraine, initial primarily has reduction and also specialty the in required in the general recently a

drive good new year-on-year. increase challenges, pool which experienced expected initial demand of products quarter price were the wet of experienced seasonal as unusually heaters. variable categories well improve million, regions the These XX.X%, poor U.S., decline the conditions offsetting Midwest, also an very sales in increase margin from increased increases conditions an pools, for increased than product impact sanitization, pumps markets and of by were in construction Northeast end These We lighting. channel evidenced weather and Growth as the Gross the speed controls, of equipment markets, mix cooler quarter. energy-efficient serving from Consequently, delayed at offset suffered Canada. adoption our these profit openings we namely of to and of in primarily XX% pleased XXX as inflation. the these points, second gross inventories an of We to profit the throughout higher $XXX.X Despite to quarter. remodel resulting in basis demand. all these volume usual existing of projects the

capabilities profile initiatives pricing business. protecting been have structural the our Our of and supply successful in margin chain

administrative the While compensation. of project and small by the has decreased and to cost and it X% $XX.X over during materials. remains the million, general meaningfully driven raw overall expenses primarily price to the expenses lower incentives, years, pool stock-based warranty pool relatively a of construction other labor, volume-related Selling, last quarter of few compared equipment increased second a component

as XXX As increased and quarter. Operating decreased to EBITDA XXX XX% $XX.X leverage and driven incremental an by net an profitability. net Adjusted we by increase margin XX.X%, prior quarter, operational $XXX.X higher conversion EBITDA a net XX%. the the driven Adjusted basis improvements. to bps decrease increase million. second XX%, sales to increased $XXX.X points, of we the higher income to the a operating achieved to to million reflecting second was has of increased of percentage continue achieve sales, was in and reflecting year have representing income period, sales income. grown, XX% in XX% income This of business Net of SG&A margin compared operating to million at increased the

of impacts for increased of quarter $XXX.X increased markets specific to segment results second primarily driven XX% was for our XX% recalibration. in by as $XXX.X XX% the segment for North reducing Beginning and Now to inventory sales profit initial moderate impact, declined basis increased times million, Slide for to of Adjusted a quarter the flow X% the volumes a acquisitions. The demand while the of beginning a chain quarter. supply second start margin channel seasonal income the segment discuss increase the net strong favorable approximately began and I’ll a order XXX the XX, Sales following safety to year, increased American the poor from at lead XX% result to products. Distributors the shorter stocks price X% income million. reportable on channel weather saw Gross as started million. points into XX.X%. $XXX.X adjusted we contribution improved

$XX.X consumer second were a currency of geopolitical quarter margin addition by negatively translations. or decline a segment XX.X% have in XXX on in net Turning to approximately $XX on income the adversely sentiment an foreign Net X% for XX% headwind and Europe sales decrease impacted unfavorable price points. million. Europe million, segment benefited basis increase income net in circumstances yielding rest to to but Slide decreased world decreased from of from XX% Adjusted adjusted to a as XX% XX, X% volumes of sales weighed

includes use source leverage stock and year-to-date XXXX, acquired compared the Halco. materials raw of certain This Cash liquidity specialty at for the ended safety period. million December X of million positions reflects months just of At increase higher to period. quarter, activities was the hand. And cash now we last quarter investing year for of expenditures lighting second XX, used was to the cash the of on adjusted call the source million in our of during primarily million. million acquisition a months Holleran. to acquisition prior X, compared The to turn For the mentioned in in end XXXX. has EBITDA debt and as was business $X.X the $XX.X cash million, we quarter end of took Working was been $XXX the Net flow million, XXX $XXX Total Kevin the X.Xx from finished goods. share in I stock for second the as outstanding from the $XX.X to million with I’ll million a comparably closing count cash X.Xx prior $XXX.X inclusive $XXX compared XX $XX.X the of shares. July in of capital the repurchases operations was year completed that, have common of back

by United recognizes focus an and Protection operations Partner The Year Eifion. Award. of protection always develop products and States it’s roadmap. recognized Environmental as We’ve to to shareholders we well of pick products overall the our pools the as the the agency’s been on Hayward, as sustainable with up to making such commitment We continued environmentally back know our technology XXXX At to was more and Thanks, I’ll important focus leadership, STAR Slide product has energy acknowledgment technology products, The make we XX. award that development product sustainable. important efficiency. energy us, Agency, help development to appreciate the on continue as to ENERGY environmental earning of and key innovation, Hayward throughout new our ESG industry through consumption a well.

supporting increase We announce upgrade In health the first the every proven main to the operating outlook. provides grow remodel of describe the with XX, been aftermarket. backdrop, be aftermarket to we appreciation addition, to ESG positive as the and cycles. It that be and On will has there continues of of environment. third I backyard a firmly during across remain about for trends. tearsheet of the We secular has rich numerous we quarter. economic resilient pleased to publishing current particularly pool now long-term very the believe are the as Hayward’s the base as to addition industry, favorable in this continues significant age. installed opportunity me long-term a consequence address trends Slide the With that the strength will our new pools the base a let The year

more macro conditions is where foreign challenging war, As and dynamic exchange especially continent we in know, all are declining ongoing with dealing environment. Europe, an the consumer sentiment a

decline now we in result, a Europe sales As expect to in XXXX.

markets, leading enabled chain half a U.S., XXXX, where American have growth in primarily due on in us unfavorable robust we weather XXXX North operational to in markets core softened our orders supply but backlog to in deliver has market the Turning and economic been have agility Market of and uncertainty capabilities seasonal the has and first positive to of XXXX. share.

restocking second the channel of inventories XXXX typically elevated the in-season of at All resulted reduced would end and in QX quarter. in level of late and third deliver orders this we quarter

and distributors and prepare increased confidence X the we’ve levels lead require inventory of OEM partners channel chains reset stock, normalize season in same to don’t safety of with XXXX. shorter of they a recalibration X resulting for supply times less to level weeks the the in close channel With approaching, our inventory. and to work elected With

and partners We enable reductions over our to channel by channel X closer of of for will inventory with are us months for XXXX level believe in XXXX We from planning mix year. on to product pool right months this the X and the hand the the inventory end to season. start of

lower a $XXX decline now result and adjusted to anticipates million X% and forecast this $XXX consolidated of the sales a As of for Europe, million. sales of to the EBITDA X% company

operational pricing margins efforts manage production in I on respectively, generation Hayward XXX%, enable XXXX Based and and enhancing will proactive to products positioning XXXX, Board the for steps net period. grown structure. with XX% this the SmartPad I’m levels My long-term by have have taking us our our EBITDA to new flow and are and technology initiatives We and market outlook. growth. confidence adjusted of confident and business, since will growth and cash while resiliency revised guidance, Hayward the through position cost manage we sales

are over share a As we $XXX back result, repurchase to million years. X program reloading the

XX. Slide to now Turning

proposition. Before we me elements the five value key reiterate let close, of our

where We this living category. XX% outdoor pool over derived net play sales from a pure of are is

and moat the defend within the resilient addressable layers Conversion the to SmartPads leading is IoT-enabled have Hayward position growth. are growing We Omni connected way deliver aftermarket. our pool that our and competitive Controls growing owners convert our actively leading strategies and products. market as with

Finally, we’re shareholders open disciplined for financial now questions. also our to we’re the that, by delivering underpinned free strong allocation, generation. performance, driven ready capital flow leverage operational With cash line best-in-class by

[Operator Instructions] Capital Jeff comes Hammond your Jeff, question the line of with open. from Markets. is first Our KeyBanc line

morning, good Hey, guys.

Jeff. morning, Good

really going half. the stark, I to want on you that So particularly it just seems through understand first like had destock what just – magnitude and is given hit quite the in the is price and

So it on North level kind the hold of a set more comfortable Europe looks And the of just little do negative? how with year or – like do America for declines? you we got level flat us we in that is is also weak,

areas what comprised Let things it. of X the is weeks of say really more overall channel to like in a Northeast Canada, Eifion Midwest. may somewhere remarks, inventory, new me around than to is that season would really they Jeff, I than shortened more weather-impacted the related prepared of reguide number balance mentioned from and half of half as is, be add the to there, in guidance start the the and X I’d

the in slight is clearly then Ukraine-related we moderation, to around you acquisitions. guidance. a year it expectation with headwind and year-over-year Europe a offset original consequences. our is earlier not out Some we mentioned, still growth, demand as laid FX are but when seeing And

factors. America all Europe, contributing and did sentiment As call, so their due economies. seen environment bridge So in we consumer we’ve the macro-economic effect here? especially the of awards is we to where in consequential discussed sort our QX uncertain North continued the that’s clearly get How on and the in deterioration a of

sellout We channel versus expected end to into channel less many the strategic took of that the partners due to sell our XXXX. at the of positions

actively and reduce the supply try clearly occurred, And channel inventories. inventories as said, I those high, working chains have now QX we’re and to improved. remain As with

stock channel hold to sales we reduced have Our responsive. times there to so the of and is work destock to more partners have published our like fewer safety lead months so with improved, substantially and need higher these we’d that channel in levels, can forward-looking be

So kind Anything into that’s thinking to add what’s out our gone what in Eifion? to of and that, played QX.

No.

about but saw the there Jeff, sheets will Both would a further America. Europe. some think be correction balance the that first recalibration will be than in America the half. probably will That’s you stronger still correction the were in North destocking will It Europe, I it As take will be larger of both North year, for partners. restocking channel the program. regions in We say where in our will balance have in second destocking. half the in regions higher But be

And variable the short still like products, chlorinators one in your third like then It speed, the just the controls, destock. Okay. seems supply. salt the on follow-on quick of are

differently. hold what to kind if them don’t can what talk you’re you margin And of then secondly, just think actions about decrementals to as and it’s mitigate you decline? you skewed that taking destock I So and know

is pumps. anxious trying continue hand sales OEMs most metal a things specialty particularly chain but the us that. still and think a things speed categories chips same I the those the we said, affects Things where maybe and you of challenges in salt but solve for have overall, – some a type lesser there not and others to extent, like and with that standpoint, are backlogs is But to healthy as to those address from variable channel be to supply mean, and mouth, I little controls to short are products. Yes. around supply

the the and variable working reset quarter actions facilities are here at the aggressively early We costs of appropriate end some levels taking very the the into the quarter to production for been to time second get resize to have third out.

our the we’ve highlighted more quarters, cost business we’ve And through will current largely as will to forecast. in broadly we look the able As size prior and reset. to ramp than be we been entire cost up facilities the across same just variable doing base our structure, and we

guys. Okay, thanks,

Jeff. Brian Brian, The is Sachs. from with Thank question Lee you, open. your Goldman line next is

morning. Couple Hi, guys. question. for my I of morning. good Good questions from taking the Thanks guess end. –

does in Can new seeing to, color trying demand, on it more of inventory is coming all in you segments? sense of moderation guys it’s to is that’s around this that pool with maybe there increases? downside us risk give demand and into guys some where seeing you additional aftermarket? alluding build, kind First, a get some And are seeing whether beyond where some you you’re an affordability like demand. bullish builders, issue with softening sound have price the the here? for different Whether channel the you’re Just been where the and you’re maybe year, the

channel a out the clearly we certainly still that the economic weather attribute as of a there. But very, expected. expected. the There are would by what mix point, that’s front say, the regions and of been as think we address extremely pull-through off haven’t of There that not well From of are areas while into playing originally volume the expected where but we let to some But the we quite me some growth been it at or little volume – with and we is doing lot pull there, a it, is not us, And of moderation year. that I that’s it. basis, uncertainty Overall, equation some there mix, there on kind are last as I of Lots very has And what the a we’re retail year, geopolitical. – coming last bit try some through high affected quite side. price contributing we regional volume the but the year-over-year, general, is in halfway set some not price. in year’s see Yes. volume when the is would there.

construction, permitting year, New extremely see the and are last quite is days we this time this some building they we quotes busy still with time are these and summer extremely They not are affected And and but saying builders their have leads lost up, the what a full. it was busy. Mother based some may that are sure our upon fall, still that the if not able to the or books We was in regions cooperating by be late for but lost of late weather. we Nature, make year. some of that it probably

to technology that from we So bring Controls on and to continue backyard. folks of of lots take Omni opting control see standpoint, a

we is positive So very still us and really see it. that how for trend that’s

time Okay. whole channel of your the That’s What’s season? And reset, reset? what is you on to the here how of guys real – normalized a a it maybe heading precedents itself? sort you’re around just from sort based of of maybe evolve. then sort the of process great. terms saw Like, kind Appreciate like or historical pool color. to came got ‘XX it you’ve channel of recalibrating one where the the thought into hearing this two-quarter degree timing channel your What’s secondly, backdrop more in the sounds it’s on it this inventory whether

with work – is XXXX the get of address range has a with wide to for this. responsible a want the to the thing for whatever XXXX shipping markets economy is months position do healthy that to a the accommodate days Yes. timing what give allow XX this, to that be to and to to We to various clip. looking been more We’ve us able we’re pull-through Brian. better affected That’s will be a on these sure uncertainty at flying ultimately and Clearly, them really look outlooks. channel, strong in down or to exactly the in all much around the into the really which that make will address hand us store closely which level, us XX

pass guys. Alright, I will fair on. enough, Thanks, it

you. Thank

William question is Ryan The Ryan, Thank with your open. you, Brian. Merkel next Blair. line of line the is from

morning. guys. Hey, Good

Good morning.

demand So would the through what weather I I know start in and what April I be in the seeing trends July? then if with South you’re demand is quarter, a helpful to doing and wanted could? to was it factor May, off for but understand

up broke bit. You little a

the guidance. was retail the and informed what really were second would it year-over-year. for net think of year. half maybe us But climates. it conversations our early Frankly, had expectations in markets some yet. the specifically don’t recovery have the not how we’re the based warmer pull-through asking quarter I you original the second affected it at guided later I we pull-through, a – upon we down were looks hard bit as who clearly, into with had in July when weather That’s looked quarter on saw in We visibility QX, nice seeing we say and July. for regions. volume half in general, you being as the to There at the some later that look

it. Got

I And harder this you’re you’re are mentioned Okay. like about you to about being the destock? I could can want That’s destock? conservative. there impact sales ‘XX you is, more question then helpful. It quantify to as from how ask be at think sounds but mean, that? it’s that months could guess ‘XX, the X go And hard of months? that the thinking point, to you’re to for think being call just you know I channel. the conservative? X you I going go to inventory I

than inventory the has can X.X is at go to I’d takedown more and the the top of to say weeks. it’s it reduction line to X to Ryan, top guidance reduction. of Eifion. of ability down end the X to before X a to And channel between half the Hi, The it’s short. hold X in channel related starts feel

taken inventory the down the channel low end to of have the We forecast X.

‘XX down, fiscal to a of we period. about in and takedown the consequential hand channel around the impact U.S. on take time shortened position the inventory basically months healthy really the Canada. and X.XX season believe and balance of that’s the the start markets is very related seasonal the of So, Outside to the

And Some demand by business the moderation there FX. is slight over a the believe is well in that with in full offset the I But which the months the the of acquired the the on that And of Kevin the for the channel. to, the is X a right Ukraine inventory events alluded just impacted associated Europe, over half business, as exit – of two-thirds situation takedown newly year to or reduction lighting obviously, hand is as we place Halco. from channel say just the the inventory. should impact year in in

helpful. you. Thank Very

Thanks, Ryan.

The the Ryan. line is Baird. question your is open. with of Halloran Thanks, line Michael, Michael next from

Good morning, Hi, you. thank everyone.

thoughts equal? discipline that some there be the just all in pretty holding across else is how concerns So industry been going has players as point? think there And or good on here at in pricing, destocking, any you about the pricing the is price bleed to this some

surcharge months, industry gives we’ve in cumulative aggregate year around say, on great commodity it as January surcharge. does has of Yes. conscious price that to XX I conclude inclusion, saying pricing institutionalized mean of the It’s you But cumulative of We at of cost the industry see our matches since continuation XXXX. sticky. XX% instituted is this index we’ve flexibility, over always, not the are but last of this sold raw our of last XX of had XX% that XX% least power, put Look, the in we it’s still guidance or a some not I That always certain pricing the that more should December up XX to globally, at that, power. It’s decrease if recently like type little price believe around goods the increase The this That given, with America. we materials. witnessed since includes then of North us point, price a we’ve close last XX% bit over months. increases X%. into

costs. we not believe deflationary will warranted, have can we But lot moving period of next over a months. that’s further continue into X the in contemplated if And and price a we of year. pricing this we any get mindful are and see monitor to very action the necessarily further don’t costs that We’re we price, do inflation balance

installation of of not low channel in was cause we overall – I case. Pool So will is element We relatively in do do value. equipment second – the actions think remains the the price believe pressure? the that pool still going, maybe a are terms we believe destocking of your the cost some question

and the to these pumps, products market the for which had pumps high-priced If consumer. into demand products. of going that brought and controls, have have for terms great coupled climbing we look win-wins multi-speed categories win-win with demand speed variable strong reflecting We very at in clearly, products of the market, been are and consumer value-creating

in we our of up. walls there have costs existing footprint have therefore, ability And of a margins, believe base how price price That’s cost into So, decreasing about leading business. last will four decreases, over our to this far will as the the within we we organization hold pressure grown sticky, the going our pressure the believe price we is lot of XX or manage don’t be manufacturing talked variabilization business, as increase months. to

addressing We are that now on takedown. the

margins to year. at level setting the our are we will as the our hold our out hold targets absolute high-XXs, gross believe and our adjusted EBITDA we XX% we sorry, in – margins that gross So, close

that. for Thanks Alright.

terms, the is on buyback essentially I know been side willingness then the share So, question have to mentioned, the capital of things. exact here, you second reinvigorating forget just you I use looks Maybe pipelines about the M&A as the what kind a – perspective? willingness lever M&A as as well talk that what of short-term pipeline like to the just in your deploy from

to continue the fiscal we those to focus certainly, now I manufacturing opportunity, at the But close that last business. the That’s business mean we address concentrated actions organic the the the right have M&A accretive on reduction base continue If as of look right now of over is deals. right and on XX to priority we now, the – we interesting up management to an team got months. we organic year. management are out side is is there cost variabilized this

current very at interesting fundamentals flow business provide share the We use opportunities that points wisely. price program, and long-term repurchase. current the enviable replenish price and cash share of stock our cash across – this and But strong announcement capital But attractive point, agile in profile the to terms deploy the price repurchase the high-margin repurchase we M&A all opportunity at believe remain of Hayward our look, be the this attractive business have. we In enforce want believe could may an buy. the opportunity to an certainly, price organization, Hayward share of with a is the organic generation we an to and with

Thanks everyone. it. Appreciate

of are is you, line I Saree Michael. your Saree, can with from you the line open. not Jefferies. Saree, Boroditsky is Thank next question confirm The muted.

that, about I Sorry was.

is abrupt. change rather guidance this So,

how talk can inventory So, gets you with does levels into sales? XXXX? your through visibility heading comfortable you And just into visibility

we standpoint, see see still IoT is, to I upgrading from and demand construction connected there. mean what occurring healthy Yes. again, a products. new We

as We of continue financial deferred in and been the extremely continue resilient, opportunity couple which will the it years, the couple play prior that the crisis to cycles most believe has has out is be will an last aftermarket that that being years to of economic been great next over with over down the renovation, recent.

nature. to that. held semi-discretionary construction But due the non-discretionary aftermarket New or impacted was certainly by its overall, up

that’s growth and experiencing performance, a Coming to that, been. has growth high-single I us for feel digit it’s the is growth, continue off industry experiencing extremely encouraging industry. which growth great couple this greater good. overall, And news. algorithm to historic still is We is that’s than very of of mean for very great the years mid that what

remain continue that it of XX getting what future. is the what market just last did we properly exceptional and now we in and bullish. we it’s months. the the expect to the job is So, backlog make channel, want for We an to consumption sure inventory sized The after our over to in be

Great. talk if talked are Could Thanks. certain customer seeing end you demand about versus products And moderation. just you about then in others? some you

we industry, it see well the product about these about many done energy-efficient really we more feel well. in what still we upgrading the But we construction there. like standpoint, what and curious very conversions. thus I occurring, continue controls seen remarks, these share performance the of really, upgrades both have extremely good looks have to profile shipment across prepared our that’s will the do is whether to We around is perform to the products a see are pumps, we at anxious the far, Perhaps continue are data forward. spoke related and recently. From rate that very wholesale variable about new speed going

taking my questions today. Thanks for Great.

comes Thank Dan line the your is Credit Suisse. you, Saree. of question line with Dan, open. next The from Oppenheim

the that Thanks percentage at your sort very the terms sharp about guess And a year terms expectations would based some sort the obviously this. much on assumption of comments Is there. to half, much what the here third for year in second the then of in the quarter? sort new of destocking then and I looking destocking full full and second decline a half. the full based of of sales guess imply that I appreciate of on implies XX wondering all decline sales, in the color the seem such, the of year during occurs on

to potentially thinking worse than sort that is So, decline are quarter XX% XX% in that sales? third the you of

when second quarter of correct. naturally inventories. to more we in pool reduced. And the inventory are are are a actively it Yes, period working correction the to season those your to this through half as would we It’s in third quarter. the close expect channel the comes numbers a channel inventories directionally with take Yes, reduce

inventory majority will in occur the channel third correction quarter. of that So, the

it. Got

– sort of And the to Thanks. adding demand business easing terms there? in the about of the talked area you this what taking terms such. time? can How dealers in of think and sort that then do place you you in you much are development during of Okay. efforts of offset of do some And

commercial sales There recruit bringing with camp. of And dealers SmartPad we recruiting our team years, continue as have enabling I the some great teams meet mean some have over Hayward products to that’s remodelers swelling product we and to the of married family. offer. is There the we a launches Yes. is to more that’s key been focus builder, key to service been couple our are upgrade. as with a be the last that focus into and demand a had lot our additional, that great are going folks is to Hayward innovative lot able a Totally arming into

of So, team. continue to focus the to our that’s commercial of Hayward a effort over key is bringing now that team folks right

Great. Thank you.

Oppenheim. Mr. you, Thank

Our your line final open. America. question today is of the comes with Rafe from Rafe, Jadrosich of line Bank

Thanks Good morning. my Hi. for taking questions.

of Just better in the what outlook understanding sales for so moving a On you what half. has talk the put that there the about second implies and year, that the half assumptions much a in is volume fact get there being of are the lot year? in updated the place can been given of parts, volume trying for the to just second

lesser sales QX obviously, of a positive will the expect, We second obviously, majority Yes. further in QX to reduction. FX in takedown the still is headwind volume takedown be extent, of comparatively acquisitions. the on a of get Pricing net we and moderating value will QX. QX, in still high The maybe half bit consequence the in is majority, and a little from slightly volumetric a contribution in comparatively based. half second But in of

Got it.

price of what think to Like year? How the you the second I realize? would I you are be that that year-to-date. much outlook think Just price expecting that was highlighted, half in the XX%

average last The be is second something to to half of comparatively half going over year. around second to price X% the closer over the X%

not you to the the but then when that increase And of sheet, levels, how helpful. your That’s within like on much Okay. versus at your price channel, related look volume? is inventory year-over-year inventory balance

since the So, our last just beginning COGS increased under of has index XX% year.

balance sheet. So, COGS the in dealing material raw increase about I would year-over-year, somewhere the or say, index within index with increase of magnitude in to our probably sheet balance are we XX% XX%

little a a to pull margins decline to the about are just be lower just but you the and pretty the second variable half the of give earlier, with up And compared guidance bit more second still able implies volumes are year, have in Okay. think the little lot on years. cost – in help the the what a Can to of going with coming model, X to some half of of talking such question, then levers were the were earlier how in you kind bit you in year? you volumes margins you implied You resilient. a your but I margins expecting sharp color last the

at have the going So, in there changes last higher kind we business up allow have that been seen the that in structural to like are these hold margins levels? of post-COVID to you

Yes.

I is key here. of think there factors consider to a couple

about talk second within price. second We increase in the which of quarter, the year. just benefit Let’s further price full a will this announced half have

contributing to our factor top a be will that So, line.

raw we it XX% about going of base freight. be over is low materials, is our goods cost understand structure, When really what’s our Secondly, a to sold of it at important XX% within to very slightly of fixed have generally cost you look business. is

the structure. of XX% within is raw variable aggregate freight and cost materials our So,

the channel We our walls into have months over increase the XX facility. manufacturing containing that able growth the by within been our our sales existing into production the of to and sales or out last four channel

large a over removing have degree we have agile weeks, the always last maintained been cost workforce very a labor from are temporary and of and with the We temporary labor, four that base. now

we do, within able over to base little confident a are be the we fully the of year more Rafe, but have reduce to will our the work cost to We balance protect margin, that clearly, the factory. bit

the continue will temp We material we base want are another we start focal thereafter obviously, months. the and course that point. in we get over then cost the – the Given able it highly we is raw at our be to over margins recover. make of confident into labor as at variable SG&A, next to level, move level QX, right-sized sure SG&A the and out variable was that base. And to see out three level will to

year. want but invest make continue We sure and new this we effective of guidance. have obviously year have programs product forecast of the we comfortable course next implicit introduction the sales given do to balance there that we and improvement, the our and we also have margin we development feel into do But opportunities some that force the within with the that over to to within

Okay. one more color. sneak will I all for Thank you in. the

allocation capital Just how more this think and about environment? your do we to macro approach in of M&A challenging sort

couple it customers. serve us want Eifion projects really I I our now. Yes. think We that of make growth for to questions that line mean we organic continue internally and well mean focused right ago. a said I we are continues generate funding the sure to top

not with a a really of internal from term. focus a for that’s We standpoint, M&A allocation much in more organic those us immediate It’s folks staying progressing focus in standpoint, capital Rafe. But conversations. contact will some more the and from continue

you. Thank helpful. very Thanks. It’s

That concludes Q&A today. Rafe. for session you, Thank our

back the So, at this to to Holleran Kevin for call time, like remarks. hand closing would I

Hayward. in closing, interest just to thank would for like In their Thanks. I everyone

October call to talking held you now. week we and earnings questions, follow-up the Thank can navigate very to any and on third have hard of generate partners again dedication This to while our challenges, end you for Sam, well growth if world. positioned all team resilience our the and of XXth. near-term is contact in you be Please continuing any look be Our ahead. quarter the business work, the around to to not without possible stakeholders you. call would years employees the forward

second Hayward you the all call. earnings for Thank XXXX concludes That your quarter Holdings participation.

You may now lines. your disconnect