Hayward Holdings Announces Fourth Quarter and Record Full Year 2021 Financial Results

Hayward’s Leading Product Portfolio and Production Footprint Drives Strong Quarterly and Full Year Results; Strategic Initiatives, Enhanced Products, and Improved Positioning Support Continued Success in 2022

FOURTH QUARTER FISCAL 2021 HIGHLIGHTS

• Net Sales increased 35% year-over-year to $352.4 million
• Net Income increased 222% year-over-year to $63.7 million
• Adjusted Net Income increased 55% year-over-year to $67.4 million
• Adjusted EBITDA increased 43% year-over-year to $105.7 million
• Adjusted EBITDA margin expanded 169 basis points to 30.0%
• Announced new $450 million stock repurchase program

FULL FISCAL YEAR 2021 HIGHLIGHTS

• Record Net Sales increased 60% year-over-year to $1,401.8 million
• Net Income increased 370% year-over-year to $203.7 million
• Adjusted Net Income increased 112% year-over-year to $271.0 million
• Record Adjusted EBITDA increased 82.1% year-over-year to $421.7 million
• Adjusted EBITDA margin expanded 363 basis points to 30.1%
• Net debt to Adjusted EBITDA at year-end was 1.7x, compared to 5.2x at year-end 2020

FULL FISCAL YEAR 2022 GUIDANCE HIGHLIGHTS

• Net Sales growth 9% to 12%
• Adjusted EBITDA range of $460 million to $475 million, reflecting growth of 9% to 13% year-over-year

BERKELEY HEIGHTS, N.J.–(BUSINESS WIRE)–Hayward Holdings, Inc. (“Hayward”) (NYSE: HAYW), a global designer, manufacturer and marketer of a broad portfolio of pool equipment and associated automation systems, today announced financial results for the fourth quarter and full fiscal year ended December 31, 2021.

CEO COMMENTS

“I am extremely proud of the strong quarter and year-end results Hayward employees delivered in our first year as a public company, where we saw a continuation of robust organic growth in net sales and significant margin expansion. Our successes this year with servicing our end markets with reliable product and innovative new technologies in a demanding operating environment is a direct result of our agile manufacturing capabilities and investments in strengthening our competitive positioning,” said Kevin Holleran, Hayward’s President and Chief Executive Officer. “We delivered these results while executing on a number of strategic initiatives involving our manufacturing and distribution footprint as well as strengthening our balance sheet through ample deleveraging. We continue to benefit from key secular tailwinds within our industry and with our leading product portfolio and technology we were able to enhance our market share at improved profitability levels. We are entering 2022 with significant momentum, we remain encouraged by underlying industry demand levels supported by both new construction and aftermarket activity, and an enhanced positioning within the pool industry as a result of recent acquisitions and additions to our team.”

FOURTH QUARTER FISCAL 2021 CONSOLIDATED RESULTS

Net sales increased by 35% to $352.4 million for the fourth quarter of fiscal 2021 entirely from the base business. The increase in net sales was primarily driven by continued demand in residential pool equipment sales, in particular aftermarket upgrades, service and new construction. Net sales growth continues to benefit from a robust demand environment for outdoor living products, increased capacity and capabilities leading to higher output, and strategic pricing actions.

Gross profit increased by 41% to $165.4 million for the fourth quarter of fiscal 2021. Gross profit margin increased 188 basis points to 46.9%. The increase in gross margin was driven by operating leverage and increased output as well as favorable pricing actions and a one-time inventory reserve taken last year, offsetting the escalating inflationary impact on raw materials, freight, and higher import duties.

Selling, general, and administrative (“SG&A”) expenses increased by 3% to $60.1 million for the fourth quarter of fiscal 2021. The increase in SG&A was primarily driven by volume related incentives, distribution costs, and other one-time expenses. As a percentage of net sales, SG&A decreased 532 basis points to 17.1%, compared to the prior year period. Research, development, and engineering expenses were $6.7 million for the fourth quarter of fiscal 2021, or 2% of net sales, as compared to $6.2 million for the prior year period, or 2% of net sales.

Operating income increased by 90% to $79.5 million for the fourth quarter of fiscal 2021. The increase in operating income was driven by higher net sales and gross profit as well as improved operating leverage.

Net interest expense decreased by 56% to $8.6 million for the fourth quarter of fiscal 2021 primarily as a result of debt repayment during the first quarter of fiscal 2021 of $364.6 million and lower interest rates as a result of the second quarter amendment to our credit facilities.

During the quarter we incurred an income tax expense of $14.3 million compared to $6.6 million for the prior year period.

Net income increased by 222% to $63.7 million for the fourth quarter of fiscal 2021. Adjusted Net income increased by 55% to $67.4 million.

Adjusted EBITDA increased by 43% to $105.7 million for the fourth quarter of fiscal 2021. Adjusted EBITDA margin expanded 169 basis points to 30.0%. Margin expansion was primarily driven by higher net sales and operating leverage.

FOURTH QUARTER FISCAL 2021 SEGMENT RESULTS

North America

Net sales increased by 40% to $297.6 million for the fourth quarter of fiscal 2021. The increase was driven by higher sales of residential pool equipment and increased pricing.

Segment income increased by 70% to $92.9 million for the fourth quarter of fiscal 2021. Adjusted segment income increased by 53% to $103.2 million.

Europe & Rest of World

Net sales increased by 14% to $54.8 million for the fourth quarter of fiscal 2021. The increase was primarily driven by continued strong demand for pool products and price increases, partially offset by unfavorable impact from foreign currency exchange.

Segment income increased by 114% to $21.4 million for the fourth quarter of fiscal 2021. Adjusted segment income increased by 39% to $16.4 million.

FULL FISCAL YEAR 2021 CONSOLIDATED RESULTS

Net sales increased by 60% to $1,401.8 million for the full fiscal year 2021 entirely from our base business. The increase in net sales was primarily the result of higher volumes, mainly in residential pool equipment sales from strong demand for pool upgrades and increases in new pool construction.

Gross profit increased by 65% to $655.8 million for the full fiscal year 2021. Gross profit margin increased to 46.8% for the fiscal year 2021, an increase of 143 basis points compared to the prior full year, primarily resulting from higher sales volumes, price increases to offset inflationary pressures, and a favorable regional mix.

Net income increased by 370% to $203.7 million for the full fiscal year 2021. Adjusted net income increased by 112% to $271.0 million compared to the prior fiscal year.

Adjusted EBITDA increased by 82% to $421.7 million for the full fiscal year 2021 driven primarily by higher net sales and strong operating leverage. Adjusted EBITDA margin increased by 363 basis points to 30.1% for the full fiscal year 2021 compared to the prior fiscal year.

Undistributed earnings for the year ended December 31, 2021, used as the numerator in our EPS computation, is reduced by a non-cash charge due to the beneficial conversion feature related to the redemption in March 2021 of Hayward’s former class A shares for common shares. Such one-time non-cash charge in the first quarter of fiscal 2021 is treated as a deemed dividend which in turn reduces undistributed earnings. There is no current or future income statement or cash impact due to this US GAAP accounting treatment.

BALANCE SHEET AND LIQUIDITY

Net debt to Adjusted EBITDA as of December 31, 2021 was 1.7 times compared to 5.2 times as of December 31, 2020. The reduction in net debt and leverage reflects debt repayments made from the proceeds from our March 2021 IPO and strong cash generation from operating activities of $187.5 million for the current year to date.

As of December 31, 2021, Hayward had cash and cash equivalents of $265.8 million and approximately $128.9 million available for future borrowings under its ABL Facility.

OUTLOOK

Hayward is well positioned to deliver continued net sales and adjusted EBITDA growth in 2022 following the tremendous success in 2021 given the sustainable secular trends driving demand for pool products, specifically within our SmartPad conversion opportunities and environmentally conscious technology products.

For the full fiscal year 2022, Hayward expects net sales growth of 9% to 12% year-over-year and Adjusted EBITDA in the range of $460 million to $475 million, or a growth range of 9% to 13% year-over-year

Please see the Forward-Looking Statements section of this release for a discussion of certain risks relevant to Hayward’s outlook.

CONFERENCE CALL INFORMATION

Hayward will hold a conference call to discuss the results today, March 2, 2022 at 9:00 a.m. (ET).

To access the live conference call, please register for the call in advance by visiting http://www.directeventreg.com/registration/event/8308368. Registration will also be available during the call. After registering, a confirmation e-mail will be sent including dial-in details and a unique conference call code for entry. To ensure you are connected for the full call please register at least 10 minutes before the start of the call.

Interested investors and other parties can also listen to a webcast of the live conference call by logging onto the Investor Relations section of the company’s website at https://investor.hayward.com/events-and-presentations/default.aspx. An earnings presentation will be posted to the Investor Relations section of the company’s website prior to the conference call.

For those unable to listen to the live conference call, a replay will be available approximately two hours after the call through the archived webcast on the Hayward website or by dialing (800) 585-8367 or (416) 621-4642. The conference ID for the replay is 8308368. The replay will be available until 11:59 p.m. Eastern Time on March 14, 2022.

ABOUT HAYWARD HOLDINGS, INC.

Hayward Holdings, Inc. (NYSE: HAYW) is a leading global designer and manufacturer of pool equipment and technology all key to the SmartPad™ conversion strategy designed to provide superior outdoor living experience. Hayward offers a full line of innovative, energy-efficient and sustainable residential and commercial pool equipment, including a complete line of advanced pumps, filters, heaters, automatic pool cleaners, LED lighting, internet of things (IoT) enabled controls, alternate sanitizers and water features.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release contains certain statements that are “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995 (the “Act”) and releases issued by the Securities and Exchange Commission (the “SEC”). Such forward-looking statements relating to us are based on the beliefs of Hayward’s management as well as assumptions made by, and information currently available to, us. These forward-looking statements include, but are not limited to, statements about Hayward’s strategies, plans, objectives, expectations, intentions, expenditures and assumptions and other statements contained in or incorporated by reference in this earnings release that are not historical facts. When used in this document, words such as “guidance,” “may,” “will,” “should,” “could,” “intend,” “potential,” “continue,” “anticipate,” “believe,” “estimate,” “expect,” “plan,” “target,” “predict,” “project,” “seek” and similar expressions as they relate to us are intended to identify forward-looking statements. Hayward believes that it is important to communicate its future expectations to its stockholders, and it therefore makes forward-looking statements in reliance upon the safe harbor provisions of the Act. However, there may be events in the future that Hayward is not able to accurately predict or control, and actual results may differ materially from the expectations it describes in its forward-looking statements.

Examples of forward-looking statements include, among others, statements Hayward makes regarding: Hayward’s financial position; business plans and objectives; general economic and industry trends; business prospects; future product development and acquisition strategies; growth and expansion opportunities; operating results; and working capital and liquidity. The forward-looking statements in this earnings release are only predictions. Hayward may not achieve the plans, intentions or expectations disclosed in Hayward’s forward-looking statements, and you should not place significant reliance on its forward-looking statements. Hayward has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its business, financial condition and results of operations. Moreover, neither Hayward nor any other person assumes responsibility for the accuracy and completeness of forward-looking statements taken from third-party industry and market reports.

Important factors that could affect Hayward’s future results and could cause those results or other outcomes to differ materially from those indicated in its forward-looking statements include the following: its ability to execute on its growth strategies and expansion opportunities; its ability to maintain favorable relationships with suppliers and manage disruptions to its global supply chain and the availability of raw materials; its relationships with and the performance of distributors, builders, buying groups, retailers and servicers who sell Hayward’s products to pool owners; competition from national and global companies, as well as lower-cost manufacturers; impacts on Hayward’s business from the sensitivity of its business to seasonality and unfavorable economic and business conditions; Hayward’s ability to identify emerging technological and other trends in its target end markets; Hayward’s ability to develop, manufacture and effectively and profitably market and sell its new planned and future products; failure of markets to accept new product introductions and enhancements; the ability to successfully identify, finance, complete and integrate acquisitions; Hayward’s ability to attract and retain senior management and other qualified personnel; regulatory changes and developments affecting Hayward’s current and future products; volatility in currency exchange rates; Hayward’s ability to service its existing indebtedness and obtain additional capital to finance operations and its growth opportunities; impacts on Hayward’s business from political, regulatory, economic, trade, and other risks associated with operating foreign businesses; Hayward’s ability to establish and maintain intellectual property protection for its products, as well as its ability to operate its business without infringing, misappropriating or otherwise violating the intellectual property rights of others; the impact of material cost and other inflation; the impact of changes in laws, regulations and administrative policy, including those that limit U.S. tax benefits, impact trade agreements and tariffs, or address the impacts of climate change; the outcome of litigation and governmental proceedings; impacts on Hayward’s business from the COVID-19 pandemic; and other factors set forth in “Risk Factors” in the final prospectus for Hayward’s initial public offering and in Hayward’s subsequent SEC filings.

Many of these factors are macroeconomic in nature and are, therefore, beyond Hayward’s control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, Hayward’s actual results, performance or achievements may vary materially from those described in this earnings release as anticipated, believed, estimated, expected, intended, planned or projected. The forward-looking statements included in this earnings release are made only as of the date of this report. Unless required by United States federal securities laws, Hayward neither intends nor assumes any obligation to update these forward-looking statements for any reason after the date of this earnings release to conform these statements to actual results or to changes in Hayward’s expectations.

NON-GAAP FINANCIAL MEASURES

This earnings release includes certain financial measures not presented in accordance with the generally accepted accounting principles in the United States (“GAAP”), including adjusted net income, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted segment income, adjusted segment income margin and net debt. These financial measures are not measures of financial performance in accordance with GAAP and may exclude items that are significant in understanding and assessing the Company’s financial results. Therefore, these measures should not be considered in isolation or as an alternative to net income (loss) or other measures of profitability, liquidity or performance under GAAP. You should be aware that the Company’s presentation of these measures may not be comparable to similarly titled measures used by other companies, which may be defined and calculated differently. See the appendix for a reconciliation of historical non-GAAP measures to the most directly comparable GAAP measures.

Reconciliation for the forward-looking full year fiscal 2022 Adjusted EBITDA outlook is not being provided, as Hayward does not currently have sufficient data to accurately estimate the variables and individual adjustments for such reconciliation. Hayward management cannot estimate on a forward-looking basis without unreasonable effort the impact these variables and individual adjustments will have on its reported results.

Contacts

Investor Relations Contact:

Hayward Investor Relations:

908-288-9706

investor.relations@hayward.com

Media Relations Contact:

Tanya McNabb

tmcnabb@hayward.com

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