United States securities and exchange commission logo
January 8, 2021
Eifion Jones
Senior Vice President and Chief Financial Officer
Hayward Holdings, Inc.
400 Connell Drive
Suite 6100
Berkeley Heights, NJ 07922
Re: Hayward Holdings,
Inc.
Draft Registration
Statement on Form S-1
Submitted December
14, 2020
CIK No. 0001834622
Dear Mr. Jones:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1 Confidentially Submitted on
December 14, 2020
A Message from Hayward President and CEO Kevin Holleran, page iv
1. We note you intend to
provide your trade customer retention rate for 2020. Please revise
to disclose how this
measure is calculated, and include the rate for 2019 to provide
comparability between
periods.
Eifion Jones
FirstName LastNameEifion Jones
Hayward Holdings, Inc.
Comapany
January NameHayward Holdings, Inc.
8, 2021
January
Page 2 8, 2021 Page 2
FirstName LastName
Resilient, Strong Financial Performance, page 8
2. You present growth in net sales, adjusted EBITDA, and adjusted free
cash flow from 2012
to 2020. Please explain the significance of presenting such measures
for this time period
and why you chose 2012 as the baseline year. Tell us whether the trend
has been
consistent over the entire measurement period and provide appropriate
context regarding
any material changes to these metrics on a year-by-year basis.
Prospectus Summary
Grow Additional Share in the International and Commercial Markets, page 9
3. We note your disclosure here and elsewhere that you have an estimated
30% market share
of the North American residential pool market, as well as an estimated
#3 share in Europe
and #4 in Australia. Please tell us how you estimated these figures
and what source you
relied on to determine market share.
Risk Factors, page 22
4. We note that you are an emerging growth company. Please add a risk
factor that discusses
the reduced disclosure requirements applicable to emerging growth
companies.
We have identified material weaknesses in our internal control over financial
reporting, page 45
5. Please revise to describe what steps management has taken to remediate
the identified
material weaknesses in your internal control over financial reporting
and what remains to
be completed in your remediation efforts. Also, disclose how long you
estimate it will
take to complete your plans and disclose any associated material costs
that you have
incurred or expect to incur.
Management s Discussion and Analysis of Financial Condition and Results of
Operations
Our Company, page 62
6. You state that approximately 74% of fiscal 2019 net sales were
recurring in nature. Please
revise to clarify, if true, that you are referring to your aftermarket
product sales or explain
how these two differ. Also, explain here what you mean by "recurring"
and disclose the
typical time period over which such revenues recur.
Non-GAAP Reconciliation, page 70
7. You state that you present various non-GAAP measures as you believe
they provide
investors with useful information regarding your historical operating
results and allow for
a more complete analysis of your results of operations. Please revise
to explain further
why these measures are useful to investors in analyzing your
historical operations and
how management uses these measures in evaluating your business
strategies. Refer to
Item 10(e)(1)(i)(C) and (D) of Regulation S-K.
Eifion Jones
Hayward Holdings, Inc.
January 8, 2021
Page 3
8. We note that adjustment (d) to your adjusted EBITDA measure is net of
operating losses
generated in fiscal 2019 relating to an early stage product acquired
in 2018. Please tell us
the amount included in this adjustment that is related to such losses.
Explain further what
this adjustment represents and how it complies with the non-GAAP
C&DIs, with specific
reference to Question 100.04.
9. We note that you present a measure of adjusted EBITDA within your
reconciliation of
adjusted free cash flow. As you begin this reconciliation with net
cash provided by
operating activities, it appears that you are presenting a liquidity
measure. Pursuant to
Item 10(e)(1)(ii)(A) of Regulation S-K, a non-GAAP liquidity measure,
other than
EBITDA, cannot exclude charges that require cash settlement. Please
revise your
reconciliation of free cash flow and ensure that your non-GAAP
liquidity measure does
not exclude charges or liabilities that required or will require cash
settlement. Refer to
Question 102.07 of the non-GAAP C&DIs.
10. Notwithstanding the above, we note your disclosure of adjusted free
cash flow and
adjusted free cash flow conversion rate on page iv and elsewhere
throughout the
filing without presentation of the most comparable GAAP measure with
equal or greater
prominence. Should you chose to continue to include these two
measures, please revise
accordingly. Similar revisions should be made with regards to your
adjusted EBITDA
margin on page 19. Lastly, you discuss the CAGR in adjusted EBITDA on
page 1 and
elsewhere without discussing the CAGR for net income. Refer to Item
10(e)(1)(i) of
Regulation S-K and Question 102.10 of the Non-GAAP C&DIs.
Business, page 82
11. You state that you have the #1 Rated Pumps in Energy Efficiency.
Please provide the
source of this rating.
Executive Compensation, page 109
12. Please provide executive compensation for the year ended December 31,
2019. Note that
executive compensation disclosure for the year ended December 31, 2019
is required to be
included in your registration statement as that information previously
was required to be
provided in response to a Commission filing requirement. Refer to
Instruction 1 to Item
402(c) of Regulation S-K.
Certain Relationships and Related Party Transactions, page 121
FirstName LastNameEifion Jones
13. Please disclose whether the amended Stockholders Agreement will provide
any rights to
Comapany NameHayward
the Sponsors Holdings,
to appoint membersInc.of the board of directors. We note
that several of your
Januarycurrent
8, 2021board
Pagemembers
3 are affiliated with your Sponsors.
FirstName LastName
Eifion Jones
FirstName LastNameEifion Jones
Hayward Holdings, Inc.
Comapany
January NameHayward Holdings, Inc.
8, 2021
January
Page 4 8, 2021 Page 4
FirstName LastName
Notes to Consolidated Financial Statements
Note 3. Revenue Recognition, page F-14
14. You state that some arrangements include an annual incentive
agreement, which provide
for rebates, incentives and other discounts. Please revise here to
include a discussion of
your accounting for such incentives including the method, inputs and
assumptions used to
estimate such variable consideration. Refer to ASC 606-10-32-5 to
32-8.
15. You state that the transaction price in certain arrangements is
allocated between the
product sale and the reward program points based on the relative
stand-alone selling
price. Please revise here to disclose the methods and assumptions used
to determine
standalone selling price for each of your performance obligations.
Refer to ASC 606-10-
32-32 to 32-34.
16. We note your early-buy program offers favorable, extended payment
terms. Please revise
to disclose what your typical payment terms are as well as the
favorable terms allowed
under this program.
Note 12. Operating Segment and Related Information, page F-25
17. You state that sales are driven by product and geographic segment mix.
Tell us how you
considered the guidance in ASC 280-10-50-40 to provide revenue from
each product or
service. At a minimum, revise to provide product sales from new pool
construction versus
aftermarket sales both here and in your results of operations
discussion or explain why
you believe such disclosure is not necessary. Refer also to Item
303(a)(3) of Regulation
S-K.
13. Earnings per Share, page F-26
18. Please tell us how the dividends paid on Class C common shares were
factored into your
calculations of net income attributable to Class A and Class B
shareholders. Refer to ASC
260-10-45-60B. Also, explain why EPS for Class A common stock is not
included here or
on the face of the income statement. Refer to ASC 260-10-45-59A and
45-60.
Note 15. Stockholders' Equity, page F-27
19. You state here that the Class C common stock will be redeemed for an
aggregate purchase
price of $1.00 per share less any dividends paid; however, your
discussion of the
Reclassification transaction refers only to the $1.00 redemption
price. Please tell us what
impact, if any, the dividends paid to date on the Class C common stock
will have on the
redemption price and revise your disclosures as necessary to clarify
this apparent
inconsistency. Also, throughout the filing you refer to the conversion
of Class A common
stock. Please revise here to discuss all the pertinent rights and
privileges to your
outstanding securities including the conversion terms for your Class A
common
stock. Refer to ASC 505-10-50-3.
Eifion Jones
Hayward Holdings, Inc.
January 8, 2021
Page 5
16. Stock-based Compensation, page F-28
20. Please provide us with a breakdown of all stock options and restricted
stock awards
granted to date in fiscal 2020 and include the fair value of the
underlying common stock at
the date of such grants. To the extent there were any significant
fluctuations in the fair
values from period-to-period, describe for us the factors that
contributed to these
fluctuations, including any intervening events within the company or
changes in your
valuation assumptions or methodology, underlying common stock used to
value such
awards as determined by your board of directors.
21. Please revise to further describe the performance and market
conditions for each of the
stock option and restricted stock performance-based awards with market
conditions.
Clarify whether the completion of this offering will satisfy any of
the performance
conditions and, if applicable, disclose the amount of stock-based
compensation expense
that will be recorded upon completion of such event.
18. Acquisition and Restructuring Related Income, Net, page F-32
22. We note you leased-back real estate sold in 2019 to allow for the
orderly restructuring of
your discontinued manufacturing and distribution operations at this
facility. Please
describe the degree to which you had any continuing involvement in
these operations
during the lease period. To the extent you retained more than a minor
part in the use of
the property or operations, tell us how you determined the accounting
for the gain on sale.
Refer to ASC 840-40-25-3.
Note 20. Condensed Financial Information of Registrant (Parent Company Only),
page F-33
23. You state that the ability of Hayward Holdings, Inc. s operating
subsidiaries to pay
dividends may be restricted due to terms of the subsidiaries first
and second lien term
loans and ABL credit agreements. Please revise to describe the most
significant
restrictions on payments of dividends, indicating their sources,
pertinent provisions
and the amount of retained earnings or net income restricted or free
of restrictions. Refer
to Rule 4-08(e) of Regulation S-X.
General
24. Please supplementally provide us with copies of all written
communications, as defined in
FirstName LastNameEifion Jones
Rule 405 under the Securities Act, that you, or anyone authorized to do
so on your behalf,
Comapany NameHayward
present Holdings,inInc.
to potential investors reliance on Section 5(d) of the
Securities Act, whether or
Januarynot
8, they
2021retain
Page 5copies of the communications.
FirstName LastName
Eifion Jones
FirstName LastNameEifion Jones
Hayward Holdings, Inc.
Comapany
January NameHayward Holdings, Inc.
8, 2021
January
Page 6 8, 2021 Page 6
FirstName LastName
You may contact Brittany Ebbertt, Staff Accountant, at (202) 551-3572
or Kathleen
Collins, Accounting Branch Chief, at (202) 551-3499 if you have questions
regarding comments
on the financial statements and related matters. Please contact Michael Foland,
Staff
Attorney, at (202) 551-6711 or Jan Woo, Legal Branch Chief, at (202) 551-3453
with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Technology
cc: Rachel Phillips