Hayward (US:HAYW)2022-03-02 17:46Financial Data and Key Metrics Changes - The company reported net sales of $352 million for Q4 2021, a 35% increase year-over-year, and adjusted EBITDA of $106 million, up 43% year-over-year [5][14]. - For the full year 2021, net sales grew by 60% to over $1.4 billion, with adjusted EBITDA reaching a record $422 million, an increase of 82% year-over-year [7][15]. - Adjusted EBITDA margin expanded by more than 360 basis points for the full year to 30.1% [7][15]. Business Line Data and Key Metrics Changes - The North America segment saw Q4 net sales increase approximately 40% to $297.6 million, driven by 24% higher sales volumes [16]. - In Europe and the Rest of the World, Q4 net sales increased 14% to $54.8 million, with gross profit margin expanding to 42.5% [18]. - For the full year, North America net sales increased 64% to $1.16 billion, while Europe and Rest of the World net sales increased 43% to $249 million [17][18]. Market Data and Key Metrics Changes - The company noted that the aftermarket represented approximately 80% of total sales in 2021, with repair, replace, and upgrade making up 65% of the sales mix [22]. - The company expects new construction to grow approximately 25% year-over-year, with strong order files carried into 2022 [22]. Company Strategy and Development Direction - The company is focused on expanding its market position through innovation, particularly in IoT products and the Omni control ecosystem [8][13]. - The M&A strategy includes acquiring technology companies to enhance product offerings and leverage existing technologies [13]. - The company aims to maintain a balanced capital allocation strategy while investing in growth initiatives and returning capital to shareholders [20]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the health of the overall pool industry, citing strong secular trends and favorable economic data supporting residential construction and remodeling activity [22]. - The company anticipates net sales growth of 9% to 12% in 2022, with adjusted EBITDA expected to be in the range of $460 to $475 million [22]. Other Important Information - The company has made significant progress in reducing net leverage from 5.2 times to 1.7 times, facilitating strong cash flow generation [19]. - The company is committed to ESG initiatives and plans to publish its inaugural ESG report later in the year [21]. Q&A Session Summary Question: Sequential margin improvement drivers and supply chain challenges - Management noted good volume growth and price realization as key drivers of margin improvement, with some supply chain improvements observed in steel and packaging, but ongoing challenges with electronic components [30]. Question: Market growth, price, and outgrowth expectations - Management indicated that the 11% to 14% growth guidance reflects a combination of price and volume growth, with expectations of continued outperformance against the market [32]. Question: European and Rest of World margins - Management highlighted improved margins in Europe due to better price management and local manufacturing leverage, with expectations for continued margin improvement in 2022 [43]. Question: Labor availability issues - Management expressed optimism about labor availability, noting that dealers are actively seeking to expand capacity to meet demand for new pools and remodels [44]. Question: Inventory levels and order credibility - Management indicated that inventory levels are returning to normal, with negligible cancellations observed, suggesting strong underlying demand [54]. Question: Aftermarket installed base penetration - Management acknowledged that there is significant growth potential in the aftermarket, particularly for salt chlorination products, and emphasized ongoing investments in new product development [68].