Hayward (HAYW)2021-08-02 16:41Financial Data and Key Metrics Changes - The company reported record net sales of 110 million, an 81% increase year-over-year despite inflationary and supply chain challenges [6][15][18] - Gross profit increased to 52.8 million, a 182.3% increase, with an adjusted EBITDA margin of 30.3%, up 259 basis points [17][18] Business Line Data and Key Metrics Changes - North America segment net sales increased 66% to 140.4 million and gross margin expanding to 47.8% [18] - Europe and rest of the world segment net sales also increased 66% to 27.6 million and gross margin expanding to 38.9% [19] Market Data and Key Metrics Changes - The company noted strong demand for pools and pool equipment, driven by new pool construction and upgrades, with builder backlogs expected to continue into 2022 [8][9] - The industry is supported by favorable housing dynamics, including increased home ownership and a strong repair and remodel market [8][10] Company Strategy and Development Direction - The company is focused on product innovation and expanding its environmentally sustainable product offerings, with significant investments in engineering [22][23] - The strategic emphasis is on leveraging competitive advantages such as a strong brand, extensive dealer network, and operational excellence to drive growth [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to benefit from market expansion and favorable industry trends, projecting continued strong demand beyond 2021 [7][9] - The company raised its full-year guidance, expecting net sales growth of 54% to 58% and adjusted EBITDA of 425 million [9][10] Other Important Information - The company has made significant strides in deleveraging, reducing its leverage ratio to 2.1 times as of July 3, 2021, from 5.2 times at the end of 2020 [20] - Total liquidity at the end of the second quarter was 252 million in cash [20] Q&A Session Summary Question: Backlog levels and medium-term growth outlook - Management indicated that the order file is larger than usual for this time of year, reflecting strong demand and enthusiasm in the market [25][26] Question: Trends in aftermarket versus new construction - Management noted that new builds are being pushed out into 2022, with strong demand for both new construction and aftermarket upgrades [28][29] Question: Pricing outlook for the year - The company has implemented price increases of 5% to 7% and expects to normalize the price-cost dynamic by Q4 [31][33] Question: Lead times and backlog stretching - Management confirmed that they have a larger order file than usual and are working to increase production capacity to meet demand [39][40] Question: Capital usage and M&A focus - The company is prioritizing growth investments and is actively looking at M&A opportunities while maintaining a focus on deleveraging [41] Question: Sales outlook and adjusted EBITDA outlook - Management expects sales growth to contribute significantly to the bottom line, with margins improving towards the end of Q3 and fully normalizing in Q4 [44] Question: Capacity utilization and sales potential - Current capacity utilization is over 90%, with plans to expand shift models to increase production capacity [45] Question: Share gains and distributor behavior - Management highlighted that share gains are driven by builders and servicers, with a growing number of new dealers joining their rewards program [55] Question: Acquisition pipeline and technology focus - The company is focused on acquiring businesses with similar financial profiles and technology attributes to expand its market position [63] Question: Confidence in growth outlook for 2022 - Management identified several growth levers, including pricing, new construction, and aftermarket upgrades, indicating strong demand trends will continue into 2022 [66]