HAYW - Earnings call transcript Q2 2021

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Operator

Welcome to Hayward Holdings Second Quarter 2021 Earnings Call. My name is Ashley 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. [Operator Instructions]. conference recorded. this that note is being Please I Baker, and Vice turn the Business to Stuart call over President, would now Development. Global Strategic Planning Mr. Baker, may begin. you

Stuart Baker

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

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

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

Kevin Holleran

welcome Thank everyone. to highlights results. I you our Slide some quarter X you pleasure quarter second Hayward’s will to Stuart good earnings call. of presentation earnings start It's second all my from morning on and of our with

quarter sales of year-over-year record XXX an the During of flexibility adjusted profitability Significant with headwinds. chain inflationary million, XX% deleveraging. result supply increase XXX enhance we net XX% continued to rapid our of and increase growth million, of This an financial delivered year-over-year. EBITDA despite through

year growth grew Our grew XX%. results during which same XX% build upon sales the period the and last adjusted in reported solid EBITDA we net

operational totally exceptional circular channel, tailwinds, in The remains pool of growth of deliver strong will equipment adoption and this to dealers. Our across the industry Hayward's and performance expansion for believe the sustainable demand technology Hayward especially and an continue our is innovative aftermarket. product products quarter proof excellence, and we pools

relationships. competitive and advantages to in product and to expansion our platform, around operational from increasingly our confident are continue market We range given partner ability technology, benefit

labor SmartPad this project we as and driving Now products repair why near-term only industry's the the in of construction inflation the backlogs in chain demand with higher global the and XXXX In with XXXX capabilities moving driven trend some and expanded to along new through on and upgrades will successfully which I expect greatly beyond. continues supply to backdrop in by Slide remodel continue to Builder XXXX activity. pool passing resulting remain XXXX our and strong were summarize recent trends in outlook channel. in to guidance X, excess but market XXXX and is look not into we

housing dynamics strong of driven particularly favorable by the and an prospective repair millennial home a by and Migration remodel industry including supported aging sunbelt the to overall and Our ownership increased suburbs stock. market buyer. levels is housing

We to pool to due that upgrades seasons capabilities as are more innovative with and point the usage the also rise with pool extended levels the seeing of continue evidence focal backyard.

were the home While pandemic beyond at through these these believe stay conditions, trends with well XXXX. are significant magnified secular trends during we runway

influenced to financial Now guidance full turning date. financial including results our a number to year by our XXXX which factors of is

and activity to strength partners the considerable which have levels visibility backlogs As our we year builder show and through have progresses greater and insight continued channel into sustainability.

year-over-year order expect raising of net our or EBITDA million the fiscal of execute, a XX% to Given file the year of for previous range million to of guidance XXX the the year-over-year. XXX guidance adjusted sales year-over-year and and months XX% grow million, strong six in year-over-year. first XXX visibility confidence growth to to XXXX. XXX ability year, full now the adjusted of to XX% for for We XX% a of XX% in increased to to into EBITDA XX% to to our XX% million are compares This performance and growth XX% growth sales the we year net

X. Slide to Turning

total reminder a our given this segment the America sales has which best margin profile approximately North and we Europe America and is world. industry. business XX% the at Hayward into As region is in of North rest and pricing of advantageous

of of pure in back trends innovative, climates, warmer the secular industry. type the of pool is providing vast the everything sales sustainable environmentally a offer sustainable de-urbanization, is living. industry and Hayward safely operate our needed any complete by supported play as in the migration outdoor the brands We investment increased equipment to growing such leading yard. also majority with line and owner pool manufacturer products to with innovator The tied pool. a to most known are our residential We trusted

installed a of is we pools pillar of New driving growth overall key that serve. construction the base

and of profile non-discretionary pool from However, replacement, includes aftermarket remodels. revenue our equipment XX% stems resilient a which upgrades,

key Hayward creating delivering for several has X, Slide our and competitive stickiness customer to advantages Turning stakeholders. growth

in pool types. strong by incredibly very decades an product resulting and supported a all brand across from complete is the installed a layer trusted growing having line large making, base and first The

very our an strong have totally our distributors, authorized relationship comprised products products servicers we of the double-digit am of and clear that gain the and professionals day see I this our the and have as dealers builders building extensive our Hayward we relationships they're backyard. and partners retailers, products and on e-sellers, this rewards already builders reputation shared evidence Hayward of seen each stickiness centers service program number Secondly, and in their say joining Hayward. year. Hayward help in Through of from servicers We to that a is support June to trade pleased and support stake with believe the new totally of with our the sell benefits network us growth

built to XX% continue operational market product of excellence our We and in integrated. demonstrate the and manufacture we're attractive margins. with We ability vertically roughly our U.S. leverage to volume in at

As such our competitors. dynamic than we have a supply more simplified chain

build in spend automated leading over functionality. key on are we per product technology design our These is are capacity that of manageable innovative the are year engineering at products available blood advantage excess to by levels very our we final deploying capabilities. QX our product with Products year-over-year. to and XX in of ensure and We while forefront and life our million production more highly of increased as XX% were display The have capital. Hayward during factors

IP pending protect extensive have patents. with We we that active and

made top also shifts out the seek our have capabilities speed owners towards as categories variable and generators key growth sustainable omni pool which increasingly significant performers SmartPad We fueling product has industry salt many like controls, and in chlorine efficient digital environmentally technologies. energy these pumps, are and

Turning to home the and smart X, to continue homes around Sunbelt significant in the building activities. industry percentage to that trends heavily in are which continue on remodel, driving the and Slide for Confidence is key repair, centered increase market increased home concentrated new demand states. Hayward focus we believe There the towards of number we're a remodeling enhance upgrade is a there home awareness coming and secular products. levels to demand of seeing will buyers

the of from today levels with XX% that discuss With call turn projected I'd approximately XXXX. our highlighted, product to will in technology to like financial is who is This results XX% smart previously at the home to detail. driving growing which the Hayward As coincides and in Jones, conversion of forefront pools SmartPads. more approximately with over systems, Eifion innovation penetration to

Eifion Jones

you year-over-year Thank Kevin on I'll All on Slide X. and start good made comparisons morning. basis. be will a

X consequential related represented sales our million the leverage during non-cash lien costs primarily and to basis and expense our features. XX increase cost continue XXXX the and is XX.X to innovative million SG&A logistic partially as net profit operating expenses. increase primarily comparative decreased sales As term an drag increased favorable excellence XX gross of basis trends, Research, or XXX inflation year. by Spain an the amendment increased net of as to channel in the and the of in net we're the successful charges as income in facility pool of continue pleased expansion prior throughout the very driven invest or increased Selling, the a XX.X XX% strong sales stock-based our by the by in SG&A volumes, demand was or demanding XXX.X interest items costs increase savings Gross In mentioned first margin discussed outdoor of we or million The net completed to million. earlier. we or facility and related expenses points XXXX. products compensation, million volume result in Yuncos, X, quarter, period continued the for engineering or materials our X.X% profit for well debt XX.X%, rates net these million results increase predominantly a expenses. increase by to increase our of costs XX% decreased the July one-time write acceleration these higher reduced at $XX.X non-recurring and of the down Manufacturing X.X of our an quarter. of million result IPO XXX the Gross reduction term operational adoption XXX% product pool resulting sales, income refinancing of or well second a to driven new general, to the new period, operating currency through sales with and to amendments proceeds ended from XX%, environment. prior offset offset residential of of a down sales improvement associated in basis a same approximately Net the This percentage net quarter increase following aggregate partially and to as year with quarter. fire facility SG&A increase in million XXX also increased related higher and of as asset X I months points. to quarter compared along expenses raw XX%. second driven result equipment XX equipment, the million, IPO, to X.X was ABL X.X% three with the Operating first living during second to as increases or quarter. of price from a pay lien XX% development, see in in by fiscal XX.X million as constructions, million an points million Despite and as profit our net administrative upgrades of an foreign in XXX.X million XX.X leverage, mentioned. The higher use pool of from interest earlier, the in compared expenses our of facility the was with effects price Net for by in mainly

death Additionally, second with we extinguishment XXXX associated of amendment. quarter incurred during fiscal the of million X.X the costs

the for quarter, to million operations, XXX the of increased XXX.X we quarter million or to margin period. in tax incurred tax increased XX.X% XX.X EBITDA period. effective from was for income of XX.X income due increased increased our to This XX.X During the million. Adjusted XX.X% compared primarily X.X Net expense XXX.X% compared prior million the year representing an XX.X%. an million XX.X income to million income year Adjusted points basis XX%. was to rate or to increase prior EBITDA

beginning on our results Now turning segment Slide to XX.

to and go-to by second reminder, million. key XXX.X management and Gross XXX pricing. basis net partially offset XX.X%. as In market increased increased of and residential raw savings sales was margin America to higher a to and XX% increases well resulting sales two tariffs. Europe The of North higher to higher points North million, XX% operational reportable to pool XXX.X to margin increases, Segment was mainly driven as North XX% increase structure increased to XX% from equipment was XX.X material to driven aligned income offset for Gross segment in million by America and the increased Gross driven income expanded leverage, profit price expense. quarter. SG&A inflation adjusted by Hayward’s and America a its rest income profit cost manufacturing partially sales XX.X As segments, segment related geographies of higher expansion and the increased the by million. world. import net strategy freight increased volume

impact as million higher world exchange due rest to higher order from segment was the to strong increased XX.X segment due Adjusted XX.X XX.X was increases, in costs. of entry the offset points sales The XXX all margin was as partially income the sustained to expanded Turning volume world, XX% favorable to income net tailwind driven XX% of to by currency territories. XX.X price demand increase period. profit income million. Gross by mix, to XX% in market well and higher X.X to basis This Europe Slide by raw and rates. Europe million increased and The increased to XX.X%. shipping segment for from Gross from a to and volume, year million. X.X prior foreign leverage, inflation increased costs XX, primarily million for material million. increase rest and

EBITDA. a position our XX, pay was as in of facilitated to we December times from to financial balance we as continue growth debt the delever compared as the to XXXX. down sheet, XXXX by Turning as strengthen our to X.X LTM to X, X.X IPO as our proceeds well July adjusted This of robust times

to pursue capital. We organic and growth our fund are consider future initiatives, well-positioned shareholder of M&A, return

investing cash months was X.X on XXX million at now prior flow XX.X July end ended liquidity in compared year during XXXX was million Cash of XXX.X year I'll the X.X activities X, six the in quarter to Total with back period. second million cash hand. to XXX the the to inclusive For from the compared million Kevin. turn of million of the prior million used period. And operations was call that,

Kevin Holleran

ESG. drive Slide I'll values Thanks up XX. pick core back Eifion. on Hayward's our to commitment

our You will about products, well a capabilities. environmental hear lot the our us as manufacturing benefits as of talk

energy a pumps. XX% harsh approximately X.X years environment a We a backgrounds unique an is to to chemical built on have the few kilowatt is a pumps example examples, employees. previous pounds for strong speed culture the we more diverse and and talents focus avoid the We've leading with efficient, by all We XX three committed finally, creating team by hours of energy with attractive approximately chlorine and water, ethics, we savings, energy friendly leadership providing and our at To products environmentally XX, policies generation safe we work helped chlorine organization. have usage. reduction usage of variable the innovation. remained use integrity, past of Slide And that and strong be sustainable in over forefront compared product and On billion million reduced our which generate our being expand through of we to as with ensuring design installation solutions. conserve our salt generators. And highlight the throughout focused continually on to committed product compliance are offerings, to

UV the the will Additionally, properly chlorine up pool water. to require following the less installation treat system, ozone XX% the of to

cartridge and position X with the chemically filters. water outdoor growing products the market. in conversions expanding and billion XX wrap Slide over treated I'll Hayward's grow share pure market heated and on a saved gallons we've Hayward's highlight innovative to play as up leading environmentally of SmartPad transition and helped Finally, living has our conscious to us space. competitive are technology mode driving our addressable

results Finally, questions. superior now and to aftermarket large, With business. recurring that open financial we're an for by the are attractive, our operator, line backed ready

Operator

Goldman Brian and with [Operator question Instructions]. company. Sachs Lee your from first comes And

Brian Lee

Thanks and clearly tracking you to on Imagine here. you morning. wondering on track kind or Good I of than with mid medium I of single-digits guiding growth guys. taking Hey high off, the have it start you're levels quarter the metrics quantification other whether of longer-term the of and time first been of can sort half for think backlog term outlined at a quite at guess outlook the the and guys of growth better IPO? on to just visibility, year typical or for that and guys track then the give had it's I Maybe in questions congrats the backlog but some you if for whether point that of robust. business you kind not year, this are few the you follow-ups. And

Kevin Holleran

Brian. Thanks, sure. Yeah,

the me, I from as of year industry this the defines, are the file, quarter We July, is June time year. is -- this normally final -- is move order the our into to this very larger than we Again, where of it reduced. But exited and previous. that, time but that exited excuse seasonal that's than inventories of QX activity, time know XX start we year. ask a in strong file larger terms of with inventories still. Again, didn't order it's you We the that's exceptional order about days get

our those the really think and sails with months reflects last so. of as over to which to nine there reception channel market the sorry, has product unveiled the general, exists trade I wind really the and pleased enthusiasm with the put some products or launches, out it enthusiasm, general in secular recent trends and six So, some secular that we've the in

attitude order about generally channel the and partners trade is the then our file with and our we in where So partners. right the now is what feel with good channel

Brian Lee

great. that's Yeah,

order maybe bills, In a there to it maybe and seeing stretch maybe to little terms of sounds of the to so book full more, out relative order that just sort a a XXXX. is the upgrade drill in you're continues new of bit between more activity backlog in aftermarket type file, to delineation like there

of bit you're both delineate seeing you little what terms can in segments? across a So trends

Kevin Holleran

talking into this SmartPad starting a a to conversion a XXXX comes much with order if in end a on really and and hard point that's heaters, you there, we've look water been the frequently this a is of a salt, things, industry on on that you the the With on really beyond bases one. and being by the you couple order does new When variable do highlights out about some versus chlorine synchronized omni take speed out or I that salt really content hand going at or DigitalPad DigitalPad we've the LED growth, lights, you their has decipher this is a SmartPad actually rate gives our But than are pushed at there when seeing, think it gateway controls file, what project to product through it's what you richer the XXXX seeing control think But up features, controls, construction with That's into like the performance are out the to example, product up. even backyard uptake that happening go right this order it from that palm new construction and app. that products see we're industry more generation. that pumps, upgrade hearing look day conversion to I And own it populating homeowner is to the products in their in the really the in just been will. now. some. it's file regions, reinforce new population builds we're coined file, product indicated in the construction and the our what then that we're for what lower Yeah, now percentage new seeing What together of omni or an installed our what's to at the point. a a as the all categories look of control, when

that short heightened strong to number our we're of of this is is, the construction, demand So, new at and a numbers really very both continues seeing it a driving industry and aftermarket but occur long level. what's the out upgrading

Brian Lee

one Okay, lot makes sense. a of on. me last from pass it Maybe and that I'll

of your something Just the the implemented year, for peers second the one pricing for outlook I [indiscernible] half. think

So wondering it's net and and realized, you're pricing updated cost, you're price just for to realized outlook that year. catch Thanks lastly maybe, year, net the as neutral maybe this guys. XXXX into what for the baked still views if what timeframe under -- What's price where you left year-to-date, on up potentially? be dynamic trying then what's or are been what's over on then to neutral back to planning

Kevin Holleran

Let me it of specifics. turn start that more one, over Brian, and the some then for Eifion to I'll

we price point call two, this increases. off actually at them So have made let's cycle

time this we call that price May first of we take a new quarter, spoke starting March announced at would the end had written orders on X% Xst. effect about increase, The it last

point, the Xst be it. orders to made and had we say we to attached long. an order X%, announcement range to file, priced that be into new wait couldn't to that July, We As waiting our of early one we channel, that because buy. it entire X% we us any file. that considered realize work July, recently, extinguish order quarter later or More of the with we actually in it QX actually or the will that the were that at written before by XXth price through on Xst orders new third increase the invoice the a September kind than of important it more started to received would at be announced rather would of had by to shipped But the not that by distinction, call really are typical frankly really indicated four out this

the change of applied normal price So, the into before it's year new be that start the waiting quarter, orders. as an opposed call increase realized new to more fourth effectiveness to going to the it on that

So hopefully helps. that

I'll turn to Eifion address parts other of Now some to question. the the over of it

Eifion Jones

end the the will normalize dynamic QX’s deliver full mentioned the of the think to increases price in the very be the fine to cost in as and of start will and at price price implication QX Yeah, margin dynamic, we then similar with to will QX, he mentioned, I in Kevin QX normalize cost back that able come margin.

Brian Lee

Alright, thanks guys. Appreciate all the color.

Kevin Holleran

Okay Brian, thank you.

Operator

question Baird. comes Halloran from next Your Michael with

Michael Halloran

Hey, good morning, everyone.

Kevin Holleran

Hey Mike, good morning.

Michael Halloran

can spread can talk how then guys any about commentary little out, how bit So, how times, backlog those what and is between you're stretching out, is meet lead you kind your that looking demand? on demand how currently just a we the are where at of is quickly stretching far and

Kevin Holleran

order this quote don't file prepared going we a specifics that third we than ago. larger XX I starting quarter, the have on had I Well, think discuss the size. to the we're time was Again, today to fact days

to operations facilities. footage going work for to We frees up square additional pairing Carolina that facilities, material, complement shifts getting up, into additional Clemens, distribution increased our our do town in phenomenal continue implementing move some into. announced then to during in with in Phoenix, center our quarter in a same the Coast up West production to to neighboring of we're ramping arrival our We the do more staffing supply chain North which

continues very as production possible marry everything that capacity we and doing very, be strong. can. we staffing obviously to are increases the flow material capacity order And, as to So, quickly to grow

Michael Halloran

time all like give it and ask factors, what a differently. I'll far When you this think normally you of at visibility would those Maybe does visibility how about year? that look little about of out

Kevin Holleran

year of have now. higher of mean, than orders I we file much second would Frankly it it's time where order at ordinarily much half massive time. needing mean, it than we multiples additional a half second is monetizing to what in as reduced much this be a I as the to is, a have really we traditionally hit have -- Yeah, deliver about order influx on guidance the guidance. file the and building point the this

launches dealers, point. the obviously as team with to a have channel a well that file full order possible but Hayward we file at not or factories any the we're So, operations allows have with as efforts halting totally this product plan very and because our we meaningful

Michael Halloran

about times, how then that prioritized near usage? or follow-up, And little starting think with when two pay offensive you process, change does thought are bit your is down the capital think that levels more leverage still you to a

Kevin Holleran

to a in remain stretched automate we Yeah, prioritized can It's capacity. months. company, the where else in given we about see we've think last facilities look now our the to XX expand to to our growth footprint what the time take and hard at manufacturing do

year. initiate be maybe we those plans So organic a to getting all investment at entered the quicker rate than as have we

line M&A our is obviously of focus. in Secondly, clearly

that upon -- said times the as our initiatives to that three end That's bottom growth two meaningful, the we'll a look both execute two the are always times the but before of in range, policy, opportunities continue shareholder range, of If business. those we for have to sustained closer as We remain ambitions. we at. we several consider we've not priority to that remained it

Michael Halloran

it. Appreciate you. Thank

Operator

Your question comes Merkel next Ryan with from Blair. William

Ryan Merkel

everyone. morning, first Good My is Thanks. question EBITDA adjusted sales the outlook outlook. on or

costs? sales So overdrive or my sounds question benefit for guidance the is, that higher price also like some is outlook it costs the is and second half maybe from driver there's the less you primarily it raise and there,

Eifion Jones

see contribution bottom line. so continue top to line will Yeah, to we look,

a growth will sales inside be the line the contributor So structurally to bottom meaningful income statement.

in we'll obviously QX fully to back and and be the then price We expect see margins in established very expect QX equilibrium continue to end to costs do We EBITDA towards the QX. SG&A improve we you of the margins the will just the at QX. adjusted XX.X% mid-point leverage where the get that’s of margin throughout guidance, at across year. it's when balance base But of in look the midpoint, the over were rise

should year. that the about of we how balance of give you indication So an the feel

step meaningful see of we full improvement improved year-over-year of at does a as in step terms terms of last back up then In year-over-year look XXXX, XX.X% I XXX terms significant, through EBITDA bp half. at that margins the what of statement. structure the that margin, would at up the definitely XX.X% of very the again income year, And the gross structural for year very and it's have in margin. been midpoint say When in first we the closed a adjusted

Ryan Merkel

half question what stronger really my Got what the for then, then is be in my capacity? follow-up, would That's second sales utilization capacity it. if had is and And quarter, and helpful. the was the you more for outlook

Kevin Holleran

Yeah.

You two the in with model about shift think we that have. we currently ways, know, capacity capacity

to the shift So model. that. be capacity in clear of And I fair running that current it's XX% to utilization excess clarifying of on the we're say want all

opportunity management We second to, time and to shift utilization the into across of manufacturing looking have. the have fully realize to to facilities that go more six our of a at that's growth it that contribute the will partially investment XXXX. half that. we're and capacity to further mode That But next we some continuous into will models expand a take operational phase

Ryan Merkel

pass will it I Thanks. Perfect. on.

Operator

KeyBanc with question Jeff next Markets. from Hammond Your Capital comes

Jeff Hammond

good Hey guys. morning,

Kevin Holleran

Hey, Jeff.

Jeff Hammond

kind shifts in just clarity normally you're kind buy baked Just thinking of early the you how kind and then for that what two I and think XQ half, you've XQ of of between and what some on have on second is XQ? dip seasonality, terms of

Kevin Holleran

percentage is. quote our normal can quarterly what Eifion

profile just you be year, as it I that's there. last will indicated year, this Jeff like think different a I think

mentioned really buy might some fulfillment. come the at I of frame be time so, get think individual and a will it price orders call XXXX skews in in month fulfillment specifics a There program terms early in over half. early early early on the as or quarters, be up mid out individual program. that that with I increase announcement, We in on would without buy, buy program was early So the buy, assume would next month come QX. late lines But of largely that doing we we're given are say QX a looking that’s earlier actually orders a concerts the I to or really on would that that the it buy that

Eifion Jones

Yeah.

the Just first but ourselves, half it's years about time tends to QX to unusual of the is you QX speaking tends XX% two been quarter be has been reverse. last frame, second season be slightly up as -- the here. the and typically follow-up represents But by particular to somewhat QX finish XX%, quarters half the pool the lower this year, softer the saying be it be almost It's going four in the different. and to to going

first half will -- half, have be order XX%, half to We book I leaned liquidation first expect in to significantly sales think in the XX%. second the so be

as So to that an normal slight seasonality OEM. see modifications we

Jeff Hammond

Okay.

So sounds it seasonality XQ a balanced more like than half maybe though have? second you normally XQ to little

Kevin Holleran

Yes.

Jeff Hammond

seen catch any and feel up, share of about of around distributor to pool if Clearly, and your being share and have you behavior both on availability you've how stickiness just your as new then your from well competitors gains. think outperforming, I guidance, particularly you're around spoken And just wondering gains, change to Okay. equipment base thanks? these as results of kind as sustainability, in peers you able of and some product products I'm ship

Kevin Holleran

as I Yes. totally year the distribution. and I and coming huge. the the up mean, gains new would feel are enjoyed number And Hayward dealers our share think more I builders that I through pulling the with prepared in the rewards remarks, of of really services we've into program we is say mentioned loyalty ramp this result

fact year-to-date marketplace with. the fact and to they I new associate want to only than the better to really is and not I with producing highlighting something others that we're the innovation want better that it's maybe than think product think the others, or it to the that of launches bringing that speaks align some are we some

So look line feel and share when you services about new of a with market aligning to at now an the our builders stickiness launches additional the gains. success us, and complete product very competitive recent and of more the good we already product

Jeff Hammond

Okay, thanks much. so

Kevin Holleran

Thanks.

Operator

Research. Wertheimer Rob with from Melius next comes Your question

Rob Wertheimer

everyone. as that home question on that your Hey, or you good was I a that Kevin you little on Thank on sort my just wonder now thinking if expand of somewhat kind that morning, us a little of what similar, to your give could this on a prepared you are bit builder actually the bit ground means would creating installing. teaching share, remarks it just great. Any selling see teaching with and doing what game sticky as product about seem and more familiar and A servicer share comfortable be you're how a the game? on of you. touched

Kevin Holleran

sure. Yes,

environment line team, trained in bringing our where helping technology our folks and game a to helping think there our say, are out are that's as training conversion tenth. markets great with that of product service having brought pad. to this have on We and new product all, training under is First technical I kind the digital on are efforts units out the sales a the well the team, the mobile that of used the very and recruitment and sales it's that seeing the coming great add that conversion through about good through on are our in as pool ground a you co-pilot we're just now who ground with we team technology there some happening great in very, on a with understands the do we're we feel

in share they really product their early that sticky feedback installed pads. of And and gains And are that's on go going new again, our replacements reinforcing some after what's pads enthusiasm existing forward. have these

Rob Wertheimer

you. thank Okay,

Operator

from comes Jefferies. with question Boroditsky next Saree Your

Saree Boroditsky

my questions. taking for thanks Hi,

of you the size having mentioned interested focus could looking several deals, the you that on just you're the in in? pipeline So that acquisitions expand you're meaningful at, the technology most

Kevin Holleran

a clearly to where the as us an at and well presently important looking our backyard as acquisitions the what that's we're say is specifics those as remain have on I which would profile around this have They Yes. pool, on and financial ourselves. is are on geographic We side obviously never expanded we both that attribute businesses, as industry Hayward, focus footprint our technology to where focused the but underrepresented. position to in similar gave expand in

are the done, those are acquisitions. those there areas. ahead on of which at So sizing a come say typically, the in said but out continue metrics more and when businesses growth focus that step I several are the more of type drive those to meaningful has that look to let's We'll deals smaller there, investment, our as we the tuck M&A

Saree Boroditsky

Thanks. maybe could the you little bit growth you're challenging gives just more about that little a looking XXXX, the Okay. channel bit demand seeing And outlook what into the comparables, for be then confidence talk seeing just positive more on in obviously about some XXXX? we will a

Kevin Holleran

for age quoting I into we and there's Yeah, more what new of higher that's really there, at more already activity. see We've volumes what remodeling in those levers. the don't to line XXXX environmentally continues look the all into is installed like aftermarket digital that's pools turning this into of levers XXXX, five really the those year-over-year think lower of I as Folks the not not the it existing there's on get believe pricing that's the upgrade up out at salt, the we're are be heaters, is built saving enthusiasm, growing it think is it to reason to carry you remodeling. built. average all talking that connected, industry is with really different that do growth what last end when who it mean lights, plenty trends when pumps. offsetting upgrade of been get them products in are will you will to look that I needing I pools look the conversion then functioning, most at things year, a and sustainable, I'm Saree, XXXX. this I'm already speed I that products announced. kind controls, driving from across older, variable that Where is ones touched new of that and out are over of satisfied XXXX, to that in replacements some And going all the PoolPad really It's want we to XXXX. And something base. But no construction it's and pricing of and in inflation, that XXXX really parts there's completely three ending is functioning good percentage three think

synchronized can smart to the will ability beyond us into All be enthusiasm into gives XXXX look app. the out of and out backyard profile give as their those have next year. a omni we that That and through things growth a homeowner control strong

Saree Boroditsky

Okay, Thanks I appreciate color. the guys.

Kevin Holleran

Thanks Saree.

Operator

Pokrzywinski with And your [Operator Stanley. from Morgan Instructions]. Josh next question comes

Joshua Pokrzywinski

guys. morning good Hi,

Kevin Holleran

Josh. morning Good

Joshua Pokrzywinski

different sort here portfolio. is you in on last a touched Just answer. think things your to dig few in in little five-year I a bit of mix, on it Mix

I maybe If you down guess to volume of components price breakdown the had first mix.

a give you sort think then just replacement guess, any within, color would And there? retrofit. of us markets, If kind break you what can, fix of this I versus of

broken in the case automation previously that's that's heater. the maybe of in a not So going where replacing heater something a or wasn’t

get the traditional much you're versus of to a how replacement? kind on trying for upgrade seeing Just on strength this side on is sense what

Kevin Holleran

upgrade, the part some definitely there performed Yes, a think replacement the it's whether When There's are in proactively when a about by whether it's more homeowner or categories there. a upgrade. I that of a more lot meet are good question. that's fails product

is it So the it. of as field or really I've low going today XX% the in construction. said, population gateway on The the so controls in higher percentage call new much with is so controls

what once which LED starting mirror. mechanical maybe upgraded So, see to lesser to a weeks waiting you're with the DOE to becomes efficient. only lights pad a are energy pad, is Obviously a more in change, digital being couple regulation the rearview

the improvements think filter cartridge chemical environmental much alternatives, other that's of harsh I the well to but speed without salt, which don't for pump. obvious were a as looking I would servicers we maintenance from start so deal, chlorine, the upgrading some your treated the as I of obvious filter, to and have much swimming finish drain shortage replacement of is on up cycle in [ph] new cycles. lot going preferred a or minds line folks to where to were is down with upgrade. improvements experience You're a I happening having chlorine who a it a sand you great our to water that lose is chemically maybe historically do XE cartridge builders variable just talk has the to also, as more guess and to resistant over as but people about pumps, more think their filtration as This year opened that much which backlog the very see some multispeed

So the someone when those of are some is percentage higher that a see those construction. on of are some in remodeling in categories or most existing the are upgrading demand. new products And that on pool, an going are we that

Joshua Pokrzywinski

being in these I kind majority on it mix of higher And newer that up the is ramp breakdown the is of -- on is or somewhat it categories? something it. replaced is, where guess growth this Got

Kevin Holleran

line. now Yes. I mean what the a we're seeing is towards right shift of product continuous technology side the

the and we controls, richer in and at sure it And could production refer U.S. that than of legacy we the mix we margin that into channel. facilities see And product element seeing pumps, third start in just costs sustained get the products QX investment products. back in the those margins to, line. to output question, the of QX invested the QX those the where to look the etcetera. side of invested consumer where we'll speed recover bundle the make data continue type And heaters, to wage smart we as And price in manufactured those purposely variable rates at product March get our through you of to we richer that's collaboration prices into we're of products a that majority those get when are the caustic could to richer subscribe side from so to SmartPad coming type that we've of the and we party much as of seen

Joshua Pokrzywinski

guys. color Got the it. for Thanks

Operator

hand for closing At this the remarks. now are back call I there will to management time questions. further no

Kevin Holleran

Hayward. thank you, Thank Ashley. closing, just interest wanted in for In I to their everyone

you see value you if to results, our financial and continue we soon. and have everyone. well ahead. call. talking questions the to operational please all phenomenal business follow-up the read, look is can producing As generate reach Please to any we're out team very you in positioned again forward years Thanks for to to and concludes our stakeholders That

Eifion Jones

Thank you.

Operator

That concludes participation. Thank today's you your conference. for

You may now disconnect.

Hayward (HAYW) 2 Aug 212021 Q2 Earnings call transcript