Delaware | 001-40208 | 82-2060643 | ||||||||||||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Common stock, par value $0.001 per share | HAYW | New York Stock Exchange |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits |
Exhibit No. | Description | |||||||
Press Release of the Company, dated February 28, 2023 | ||||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
HAYWARD HOLDINGS, INC. | ||||||||
Date: February 28, 2023 | By: | /s/ Eifion Jones | ||||||
Eifion Jones | ||||||||
Senior Vice President and Chief Financial Officer |
December 31, 2022 | December 31, 2021 | |||||||||||||
Assets | ||||||||||||||
Current assets | ||||||||||||||
Cash and cash equivalents | $ | 56,177 | $ | 265,796 | ||||||||||
Accounts receivable, net of allowances of $3,937 and $2,003, respectively | 209,109 | 208,112 | ||||||||||||
Inventories, net | 283,658 | 233,449 | ||||||||||||
Prepaid expenses | 14,981 | 12,459 | ||||||||||||
Income tax receivable | 27,173 | — | ||||||||||||
Other current assets | 21,186 | 30,705 | ||||||||||||
Total current assets | 612,284 | 750,521 | ||||||||||||
Property, plant, and equipment, net of accumulated depreciation of $82,127 and $67,366, respectively | 149,828 | 146,754 | ||||||||||||
Goodwill | 932,396 | 924,264 | ||||||||||||
Trademark | 736,000 | 736,000 | ||||||||||||
Customer relationships, net | 230,503 | 242,854 | ||||||||||||
Other intangibles, net | 106,673 | 103,192 | ||||||||||||
Other non-current assets | 107,329 | 74,885 | ||||||||||||
Total assets | $ | 2,875,013 | $ | 2,978,470 | ||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||
Current liabilities | ||||||||||||||
Current portion of the long-term debt | $ | 14,531 | $ | 12,155 | ||||||||||
Accounts payable | 54,022 | 87,445 | ||||||||||||
Accrued expenses and other liabilities | 163,283 | 190,378 | ||||||||||||
Income taxes payable | 574 | 13,886 | ||||||||||||
Total current liabilities | 232,410 | 303,864 | ||||||||||||
Long-term debt, net | 1,085,055 | 973,124 | ||||||||||||
Deferred tax liabilities, net | 264,111 | 262,378 | ||||||||||||
Other non-current liabilities | 70,403 | 69,591 | ||||||||||||
Total liabilities | 1,651,979 | 1,608,957 | ||||||||||||
Stockholders' equity | ||||||||||||||
Preferred stock, $0.001 par value, 100,000,000 authorized, no shares issued or outstanding as of December 31, 2022 and December 31, 2021 | — | — | ||||||||||||
Common stock $0.001 par value, 750,000,000 authorized; 240,529,150 issued and 211,862,781 outstanding at December 31, 2022; 238,432,216 issued and 233,056,799 outstanding at December 31, 2021 | 241 | 238 | ||||||||||||
Additional paid-in capital | 1,069,878 | 1,058,724 | ||||||||||||
Common stock in treasury; 28,666,369 and 5,375,417 at December 31, 2022 and December 31, 2021, respectively | (357,415) | (14,066) | ||||||||||||
Retained earnings | 500,222 | 320,875 | ||||||||||||
Accumulated other comprehensive income | 10,108 | 3,742 | ||||||||||||
Total stockholders' equity | 1,223,034 | 1,369,513 | ||||||||||||
Total liabilities, redeemable stock, and stockholders' equity | $ | 2,875,013 | $ | 2,978,470 |
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||
Net sales | $ | 258,967 | $ | 352,385 | $ | 1,314,136 | $ | 1,401,794 | ||||||||||||||||||
Cost of sales | 149,475 | 186,979 | 717,101 | 746,012 | ||||||||||||||||||||||
Gross profit | 109,492 | 165,406 | 597,035 | 655,782 | ||||||||||||||||||||||
Selling, general, and administrative expense | 60,515 | 60,135 | 248,812 | 267,264 | ||||||||||||||||||||||
Research, development, and engineering expense | 5,948 | 6,680 | 22,359 | 22,867 | ||||||||||||||||||||||
Acquisition and restructuring related (income) expense | (1,337) | 12,578 | 8,162 | 15,030 | ||||||||||||||||||||||
Amortization of intangible assets | 8,301 | 6,485 | 32,129 | 32,647 | ||||||||||||||||||||||
Operating income | 36,065 | 79,528 | 285,573 | 317,974 | ||||||||||||||||||||||
Interest expense, net | 16,282 | 8,557 | 51,387 | 50,854 | ||||||||||||||||||||||
Loss on debt extinguishment | — | — | — | 9,418 | ||||||||||||||||||||||
Other (income) expense, net | (3,107) | (7,094) | (51) | (2,439) | ||||||||||||||||||||||
Total other expense | 13,175 | 1,463 | 51,336 | 57,833 | ||||||||||||||||||||||
Income from operations before income taxes | 22,890 | 78,065 | 234,237 | 260,141 | ||||||||||||||||||||||
Provision for income taxes | 6,922 | 14,344 | 54,890 | 56,416 | ||||||||||||||||||||||
Net income | $ | 15,968 | $ | 63,721 | $ | 179,347 | $ | 203,725 | ||||||||||||||||||
Earnings per share | ||||||||||||||||||||||||||
Basic | $ | 0.08 | $ | 0.27 | $ | 0.82 | $ | 0.52 | ||||||||||||||||||
Diluted | $ | 0.07 | $ | 0.26 | $ | 0.78 | $ | 0.49 | ||||||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||||||
Basic | 211,406,214 | 232,454,438 | 219,945,024 | 187,688,087 | ||||||||||||||||||||||
Diluted | 219,958,655 | 244,514,387 | 229,726,497 | 200,574,232 |
Hayward Holdings, Inc. Unaudited Consolidated Statements of Cash Flows (In thousands) | Year Ended | |||||||||||||
December 31, 2022 | December 31, 2021 | |||||||||||||
Cash flows from operating activities | ||||||||||||||
Net income | $ | 179,347 | $ | 203,725 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||||
Depreciation | 19,246 | 18,826 | ||||||||||||
Amortization of intangible assets | 38,393 | 38,990 | ||||||||||||
Amortization of deferred debt issuance fees | 3,271 | 4,005 | ||||||||||||
Stock-based compensation | 7,948 | 15,005 | ||||||||||||
Deferred income taxes | (5,345) | (15,314) | ||||||||||||
Allowance for bad debts | 1,934 | 644 | ||||||||||||
Loss on debt extinguishment | — | 9,418 | ||||||||||||
Loss on write-off of intangible assets | — | 6,319 | ||||||||||||
Loss on disposal of property, plant and equipment | 6,128 | 4,219 | ||||||||||||
Changes in operating assets and liabilities | ||||||||||||||
Accounts receivable | (3,409) | (70,115) | ||||||||||||
Inventories | (35,117) | (89,660) | ||||||||||||
Other current and non-current assets | (40,197) | (17,161) | ||||||||||||
Accounts payable | (36,773) | 18,365 | ||||||||||||
Accrued expenses and other liabilities | (19,482) | 62,121 | ||||||||||||
Net cash provided by operating activities | 115,944 | 189,387 | ||||||||||||
Cash flows from investing activities | ||||||||||||||
Purchases of property, plant, and equipment | (29,625) | (26,222) | ||||||||||||
Purchases of intangibles | — | (914) | ||||||||||||
Acquisitions, net of cash acquired | (62,952) | (21,509) | ||||||||||||
Proceeds from sale of property, plant, and equipment | 4 | 25 | ||||||||||||
Proceeds from settlements of investment currency hedge | — | (157) | ||||||||||||
Net cash used in investing activities | (92,573) | (48,777) | ||||||||||||
Cash flows from financing activities | ||||||||||||||
Proceeds from issuance of common stock - Initial Public Offering | — | 377,400 | ||||||||||||
Costs associated with Initial Public Offering | — | (26,124) | ||||||||||||
Purchase of common stock for treasury | (343,349) | (9,524) | ||||||||||||
Proceeds from issuance of long-term debt | 129,725 | 51,659 | ||||||||||||
Debt issuance costs | (8,547) | (12,551) | ||||||||||||
Payments of long-term debt | (10,445) | (369,644) | ||||||||||||
Proceeds from revolving credit facility | 150,000 | 68,000 | ||||||||||||
Payments on revolving credit facility | (150,000) | (68,000) | ||||||||||||
Proceeds from issuance of short term debt | 8,119 | — | ||||||||||||
Payments of short term debt | (5,063) | — | ||||||||||||
Other, net | 320 | (259) | ||||||||||||
Net cash (used in) provided by financing activities | (229,240) | 10,957 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (3,750) | (1,065) | ||||||||||||
Change in cash and cash equivalents and restricted cash | (209,619) | 150,502 | ||||||||||||
Cash and cash equivalents and restricted cash, beginning of period | 265,796 | 115,294 | ||||||||||||
Cash and cash equivalents and restricted cash, end of period | $ | 56,177 | $ | 265,796 | ||||||||||
Supplemental disclosures of cash flow information | ||||||||||||||
Cash paid-interest | $ | 51,499 | $ | 46,763 | ||||||||||
Cash paid-income taxes | 99,395 | 62,467 | ||||||||||||
Equipment financed under finance leases | 1,603 | — |
(Dollars in thousands) | Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||
December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||
Net income | $ | 15,968 | $ | 63,721 | $ | 179,347 | $ | 203,725 | ||||||||||||||||||
Depreciation | 5,315 | 4,730 | 19,246 | 18,826 | ||||||||||||||||||||||
Amortization | 9,956 | 8,087 | 38,393 | 38,990 | ||||||||||||||||||||||
Interest expense | 16,282 | 8,557 | 51,387 | 50,854 | ||||||||||||||||||||||
Income taxes | 6,922 | 14,344 | 54,890 | 56,416 | ||||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | 9,418 | ||||||||||||||||||||||
EBITDA | 54,443 | 99,439 | 343,263 | 378,229 | ||||||||||||||||||||||
Stock-based compensation (a) | 354 | 2,636 | 1,602 | 19,019 | ||||||||||||||||||||||
Sponsor management fees (b) | — | — | — | 90 | ||||||||||||||||||||||
Currency exchange items (c) | (1,850) | 106 | 926 | 4,485 | ||||||||||||||||||||||
Acquisition and restructuring related expense, net (d) | (1,337) | 12,578 | 8,162 | 15,030 | ||||||||||||||||||||||
Other (e) | 1,652 | (9,056) | 13,622 | 4,884 | ||||||||||||||||||||||
Total Adjustments | (1,181) | 6,264 | 24,312 | 43,508 | ||||||||||||||||||||||
Adjusted EBITDA | $ | 53,262 | $ | 105,703 | $ | 367,575 | $ | 421,737 | ||||||||||||||||||
Adjusted EBITDA margin | 20.6 | % | 30.0 | % | 28.0 | % | 30.1 | % |
(a) | Represents non-cash stock-based compensation expense related to equity awards issued to management, employees, and directors. Beginning in the three months ended July 2, 2022, the adjustment includes only expense related to awards issued under the 2017 Equity Incentive Plan, which were awards granted prior to the effective date of Hayward’s initial public offering (the “IPO”), whereas in prior periods, the adjustment included stock-based compensation expense for all equity awards. Under the historical presentation, the stock-based compensation adjustment for the three months and twelve months ended December 31, 2022 would have been an expense of $2.2 million and $6.9 million, respectively. | |||||||
(b) | Represents fees paid to certain of the Company’s controlling stockholders for services rendered pursuant to a 2017 management services agreement. This agreement and the corresponding payment obligation ceased on March 16, 2021, the effective date of the IPO. | |||||||
(c) | Represents unrealized non-cash losses (gains) on foreign denominated monetary assets and liabilities and foreign currency contracts. | |||||||
(d) | Adjustments in the fiscal quarter ended December 31, 2022 include a $2.4 million gain resulting from the release of certain reserves associated with the exit of an early-stage product line discontinued in 2021, partially offset by separation costs associated with a reduction-in-force. Adjustments in the fiscal quarter ended December 31, 2021 include $9.9 million of business restructuring related costs associated with the exit of an early-stage product line acquired in 2018, and $2.6 million severance and retention costs associated with the relocation of our Corporate headquarters. | |||||||
Adjustments in the year ended December 31, 2022 primarily include $5.0 million of costs associated with the relocation of the Corporate headquarters, $2.9 million separation costs associated with a reduction-in-force, and $1.9 million transaction costs associated with the acquisition of the specialty lighting business of Halco Technologies, LLC ("Specialty Lighting Business"), partially offset by a $2.4 million gain resulting from the release of certain reserves associated with the exit of an early-stage product line discontinued in 2021. Adjustments in the year ended December 31, 2021 primarily include $9.9 million of business restructuring related costs associated with the exit of an early-stage product line acquired in 2018, $3.0 million severance and relocation costs associated with the relocation of our Corporate headquarters, and $2.1 million of business restructuring related costs associated with the exit of redundant manufacturing and distribution facilities. | ||||||||
(e) | Adjustments in the fiscal quarter ended December 31, 2022 primarily includes a $0.7 million non-cash increase in cost of goods sold resulting from the fair value inventory step-up adjustment recognized as part of the purchase accounting for the Specialty Lighting Business, $0.7 million of transitional expenses incurred to enable go-forward public company regulatory compliance, and other immaterial items. Adjustments in the fiscal quarter ended December 31, 2021 primarily include $12.8 million income related to the property damage and business interruption as a result of the fire incident in our manufacturing and administrative facilities in Yuncos, Spain as well as $2.5 million of operating losses associated with the early-stage product line mentioned above, and other immaterial items. | |||||||
Adjustments in the year ended December 31, 2022 include $5.5 million of expenses associated with the discontinuation of a product joint development agreement, a $3.3 million non-cash increase in cost of goods sold resulting from the fair value inventory step-up adjustment recognized as part of the purchase accounting for the Specialty Lighting Business, $2.3 million of transitional expenses incurred to enable go-forward public company regulatory compliance, $1.4 million of costs incurred related to the selling stockholder offering of shares in May 2022, which are reported in SG&A in our consolidated statements of operations, $0.9 million of expenses related to the Corporate headquarters transition, $0.2 million bad debt reserves related to certain customers impacted by the conflict in Russia and Ukraine, and other immaterial items, partially offset by subsequent collections and $1.1 million of gains resulting from an insurance policy reimbursement related to the fire incident in our manufacturing and administrative facilities in Yuncos, Spain. Adjustments in the year ended December 31, 2021 primarily include $7.4 million net insurance settlement proceeds which reflects an incurred property damage loss of $5.4 million, recorded in the second quarter, offset by an insurance policy reimbursement of $12.8 million received in the fourth quarter for the aforementioned property loss as well as the consequential business interruption loss amount caused by the fire incident in Yuncos Spain, a $4.0 million legal reserve and fees, $4.0 million of operating losses related to the early-stage product line acquired in 2018 mentioned above, $1.9 million related to debt refinancing, $1.0 million related to our IPO, and other immaterial items. |
(Dollars in thousands, except per share data) | Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||
December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||
Net income | $ | 15,968 | $ | 63,721 | $ | 179,347 | $ | 203,725 | ||||||||||||||||||
Tax adjustments (a) | 1,164 | (6,799) | (2,676) | (6,799) | ||||||||||||||||||||||
Other adjustments and amortization: | ||||||||||||||||||||||||||
Stock-based compensation (b) | 354 | 2,636 | 1,602 | 19,019 | ||||||||||||||||||||||
Sponsor management fees (c) | — | — | — | 90 | ||||||||||||||||||||||
Currency exchange items (d) | (1,850) | 106 | 926 | 4,485 | ||||||||||||||||||||||
Acquisition and restructuring related expense, net (e) | (1,337) | 12,578 | 8,162 | 15,030 | ||||||||||||||||||||||
Other (f) | 1,652 | (9,056) | 13,622 | 4,884 | ||||||||||||||||||||||
Total other adjustments | (1,181) | 6,264 | 24,312 | 43,508 | ||||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | 9,418 | ||||||||||||||||||||||
Amortization | 9,956 | 8,087 | 38,393 | 38,990 | ||||||||||||||||||||||
Tax effect (g) | (2,207) | (3,887) | (15,379) | (22,519) | ||||||||||||||||||||||
Certain transactional-related adjustments (h): | ||||||||||||||||||||||||||
Interest savings | — | — | — | 6,443 | ||||||||||||||||||||||
Acquisitions | — | 744 | 2,761 | 3,823 | ||||||||||||||||||||||
Tax effect (g) | — | (151) | (678) | (2,774) | ||||||||||||||||||||||
Adjusted net income | $ | 23,700 | $ | 67,979 | $ | 226,080 | $ | 273,815 | ||||||||||||||||||
Weighted average number of common shares outstanding, basic | 211,406,214 | 232,454,438 | 219,945,024 | 187,688,087 | ||||||||||||||||||||||
Weighted average number of common shares outstanding, diluted | 219,958,655 | 244,514,387 | 229,726,497 | 200,574,232 | ||||||||||||||||||||||
Basic EPS | $ | 0.08 | $ | 0.27 | $ | 0.82 | $ | 0.52 | ||||||||||||||||||
Diluted EPS | $ | 0.07 | $ | 0.26 | $ | 0.78 | $ | 0.49 | ||||||||||||||||||
Adjusted basic EPS (i) | $ | 0.11 | $ | 0.29 | 1.03 | 1.46 | ||||||||||||||||||||
Adjusted diluted EPS (i) | $ | 0.11 | $ | 0.28 | 0.98 | 1.37 |
(a) | Tax adjustments for the three and twelve months ended December 31, 2022 reflect a normalized tax rate of 25.2% and 24.6% compared to our effective tax rate of 30.2% and 23.4%, respectively. Our effective tax rate for the three months ended December 31, 2022 includes a 4% impact from withholding taxes related to the repatriation of foreign earnings and 1% impact associated with share-based compensation activity. Our effective tax rate for the twelve months ended December 31, 2022 includes a (0.9)% impact of the revaluation of deferred tax liabilities as a result of state tax law changes, (0.6)% impact from the exercise of stock options and a (0.1)% impact from return to provision items, partially offset by a 0.4% impact from withholding taxes related to the repatriation of foreign earnings. Tax adjustments for the three and twelve months ended December 31, 2021 reflect a normalized tax rate of 20.4% and 24.3% compared to our effective tax rate of 18.4% and 21.7%, respectively. Our effective tax rate for the three and twelve months ended December 31, 2021 includes the tax impacts associated with reversal of certain valuation allowances, the impact associated with share-based compensation activity and the impact of our exit of an early-stage product line phased out in 2021. The impact to the effective tax rate of the aforementioned items on the three- months ended December 31, 2021 were (1.1%), (0.7)% and (0.2)%, respectively. The impact to the effective tax rate of the aforementioned items on the twelve months ended December 31, 2021 were (1.4%), (0.9)% and (0.3)%, respectively. | |||||||
(b) | Represents non-cash stock-based compensation expense related to equity awards issued to management, employees, and directors. Beginning in the three months ended July 2, 2022, the adjustment includes only expense related to awards issued under the 2017 Equity Incentive Plan, which were awards granted prior to the effective date of the IPO, whereas in prior periods, the adjustment included stock-based compensation expense for all equity awards. Under the historical presentation, the stock-based compensation adjustment for the three months and twelve months ended December 31, 2022 would have been an expense of $2.2 million and $6.9 million, respectively. | |||||||
(c) | Represents fees paid to certain of the Company’s controlling stockholders for services rendered pursuant to a 2017 management services agreement. This agreement and the corresponding payment obligation ceased on March 16, 2021, the effective date of the IPO. | |||||||
(d) | Represents unrealized non-cash losses (gains) on foreign denominated monetary assets and liabilities and foreign currency contracts. | |||||||
(e) | Adjustments in the fiscal quarter ended December 31, 2022 include a $2.4 million gain resulting from the release of certain reserves associated with the exit of an early-stage product line discontinued in 2021, partially offset by separation costs associated with a reduction-in-force. Adjustments in the fiscal quarter ended December 31, 2021 include $9.9 million of business restructuring related costs associated with the exit of an early-stage product line acquired in 2018, and $2.6 million severance and retention costs associated with the relocation of our Corporate headquarters. | |||||||
Adjustments in the year ended December 31, 2022 primarily include $5.0 million of costs associated with the relocation of the Corporate headquarters, $2.9 million separation costs associated with a reduction-in-force, and $1.9 million transaction costs associated with the acquisition of the Specialty Lighting Business, partially offset by a $2.4 million gain resulting from the release of certain reserves associated with the exit of an early-stage product line discontinued in 2021. Adjustments in the year ended December 31, 2021 primarily include $9.9 million of business restructuring related costs associated with the exit of an early-stage product line acquired in 2018, $3.0 million severance and relocation costs associated with the relocation of our Corporate headquarters, and $2.1 million of business restructuring related costs associated with the exit of redundant manufacturing and distribution facilities. | ||||||||
(f) | Adjustments in the fiscal quarter ended December 31, 2022 primarily includes a $0.7 million non-cash increase in cost of goods sold resulting from the fair value inventory step-up adjustment recognized as part of the purchase accounting for the Specialty Lighting Business, $0.7 million of transitional expenses incurred to enable go-forward public company regulatory compliance, and other immaterial items. Adjustments in the fiscal quarter ended December 31, 2021 primarily include $12.8 million income related to the property damage and business interruption as a result of the fire incident in our manufacturing and administrative facilities in Yuncos, Spain as well as $2.5 million of operating losses associated with the early-stage product line mentioned above, and other immaterial items. | |||||||
Adjustments in the year ended December 31, 2022 include $5.5 million of expenses associated with the discontinuation of a product joint development agreement, a $3.3 million non-cash increase in cost of goods sold resulting from the fair value inventory step-up adjustment recognized as part of the purchase accounting for the Specialty Lighting Business, $2.3 million of transitional expenses incurred to enable go-forward public company regulatory compliance, $1.4 million of costs incurred related to the selling stockholder offering of shares in May 2022, which are reported in SG&A in our consolidated statements of operations, $0.9 million of expenses related to the Corporate headquarters transition, $0.2 million bad debt reserves related to certain customers impacted by the conflict in Russia and Ukraine, and other immaterial items, partially offset by subsequent collections and $1.1 million of gains resulting from an insurance policy reimbursement related to the fire incident in our manufacturing and administrative facilities in Yuncos, Spain. Adjustments in the year ended December 31, 2021 primarily include $7.4 million net insurance settlement proceeds which reflects an incurred property damage loss of $5.4 million, recorded in the second quarter, offset by an insurance policy reimbursement of $12.8 million received in the fourth quarter for the aforementioned property loss as well as the consequential business interruption loss amount caused by the fire incident in Yuncos Spain, a $4.0 million legal reserve and fees, $4.0 million of operating losses related to the early-stage product line acquired in 2018 mentioned above, $1.9 million related to debt refinancing, $1.0 million related to our IPO, and other immaterial items. | ||||||||
(g) | The tax effect represents the immediately preceding adjustments at the normalized tax rates as discussed in footnote (a) above. | |||||||
(h) | The adjustments for the three and twelve months ended December 31, 2021 represent adjustments related to the acquisition of the Specialty Lighting Business as if the acquisition had occurred at the beginning of the period and adjustments related to interest savings from repayment in full of our Second Lien Term Facility and partial repayment of our First Lien Credit Agreement as if such payments had occurred at the beginning of the period. | |||||||
(i) | For the twelve months ended December 31, 2021, adjusted net income used in the computation of adjusted basic and diluted EPS does not include certain IPO related items impacting net income attributable to common stockholders used as the numerator of the GAAP basic and diluted EPS computations, including a deemed dividend to Class A shareholders of $85.5 million and dividends to Class C shareholders of $41 thousand. Including these items in the calculation of adjusted EPS would result in adjusted basic and diluted EPS of $0.90 and $0.84 per share, respectively. |
(Dollars in thousands) | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||||||||
December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||
Total | NAM | E&RW | Total | NAM | E&RW | |||||||||||||||||||||||||||||||||
Net sales | $ | 258,967 | $ | 216,809 | $ | 42,158 | $ | 352,385 | $ | 297,574 | $ | 54,811 | ||||||||||||||||||||||||||
Gross profit | 109,492 | 93,130 | 16,362 | 165,406 | 142,197 | 23,209 | ||||||||||||||||||||||||||||||||
Gross profit margin % | 42.3 | % | 43.0 | % | 38.8 | % | 46.9 | % | 47.8 | % | 42.3 | % | ||||||||||||||||||||||||||
Income from operations before income taxes | $ | 22,890 | $ | 78,065 | ||||||||||||||||||||||||||||||||||
Expenses not allocated to segments | ||||||||||||||||||||||||||||||||||||||
Corporate expense, net | 6,142 | 15,642 | ||||||||||||||||||||||||||||||||||||
Acquisition and restructuring related expense | (1,337) | 12,578 | ||||||||||||||||||||||||||||||||||||
Amortization of intangible assets in selling, general, and administrative expense | 8,301 | 6,485 | ||||||||||||||||||||||||||||||||||||
Interest expense, net | 16,282 | 8,557 | ||||||||||||||||||||||||||||||||||||
Loss on debt extinguishment | — | — | ||||||||||||||||||||||||||||||||||||
Other (income) expense, net | (3,107) | (7,094) | ||||||||||||||||||||||||||||||||||||
Segment income | $ | 49,171 | $ | 40,773 | $ | 8,398 | $ | 114,233 | $ | 92,866 | $ | 21,367 | ||||||||||||||||||||||||||
Segment income margin % | 19.0 | % | 18.8 | % | 19.9 | % | 32.4 | % | 31.2 | % | 39.0 | % | ||||||||||||||||||||||||||
Depreciation | $ | 4,809 | $ | 4,614 | $ | 195 | $ | 4,395 | $ | 4,218 | $ | 177 | ||||||||||||||||||||||||||
Amortization | 1,656 | 1,656 | — | 1,612 | 1,611 | 1 | ||||||||||||||||||||||||||||||||
Stock-based compensation (a) | (617) | (566) | (51) | 1,327 | 1,323 | 4 | ||||||||||||||||||||||||||||||||
Other (b) | 568 | 716 | (148) | (2,043) | 3,114 | (5,157) | ||||||||||||||||||||||||||||||||
Total adjustments | 6,416 | 6,420 | (4) | 5,291 | 10,266 | (4,975) | ||||||||||||||||||||||||||||||||
Adjusted segment income | $ | 55,587 | $ | 47,193 | $ | 8,394 | $ | 119,524 | $ | 103,132 | $ | 16,392 | ||||||||||||||||||||||||||
Adjusted segment income margin % | 21.5 | % | 21.8 | % | 19.9 | % | 33.9 | % | 34.7 | % | 29.9 | % |
(a) | Represents non-cash stock-based compensation expense related to equity awards issued to management, employees, and directors. Beginning in the three months ended July 2, 2022, the adjustment includes only expense related to awards issued under the 2017 Equity Incentive Plan, which were awards granted prior to the effective date of the IPO, whereas in prior periods, the adjustment included stock-based compensation expense for all equity awards. Under the historical presentation, the stock-based compensation adjustment for the fiscal quarter ended December 31, 2022 would have been an expense of $0.5 million and $0.1 million for NAM and E&RW, respectively. | |||||||
(b) | Adjustments in the fiscal quarter ended December 31, 2022 for NAM includes a $0.7 million non-cash increase in cost of goods sold resulting from the fair value inventory step-up adjustment recognized as part of the purchase accounting for the Specialty Lighting Business. The fiscal quarter ended December 31, 2021 primarily includes operating losses of approximately $2.5 million which relate to an early-stage product line acquired in 2018 that was phased out in 2021. | |||||||
Adjustments in the fiscal quarter ended December 31, 2022 for E&RW includes collections of previously reserved bad debt expense related to certain customers impacted by the conflict in Russia and Ukraine. The fiscal quarter ended December 31, 2021 primarily includes $5.4 million insurance proceeds associated with the fire incident in our Spain facility. |
(Dollars in thousands) | Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||
December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||
Total | NAM | E&RW | Total | NAM | E&RW | |||||||||||||||||||||||||||||||||
Net sales | $ | 1,314,136 | $ | 1,108,859 | $ | 205,277 | $ | 1,401,794 | $ | 1,160,850 | $ | 240,944 | ||||||||||||||||||||||||||
Gross profit | 597,035 | 514,855 | 82,180 | 655,782 | 558,950 | 96,832 | ||||||||||||||||||||||||||||||||
Gross profit margin % | 45.4 | % | 46.4 | % | 40.0 | % | 46.8 | % | 48.2 | % | 40.2 | % | ||||||||||||||||||||||||||
Income from operations before income taxes | $ | 234,237 | $ | 260,141 | ||||||||||||||||||||||||||||||||||
Expenses not allocated to segments | ||||||||||||||||||||||||||||||||||||||
Corporate expense, net | 30,151 | 53,430 | ||||||||||||||||||||||||||||||||||||
Acquisition and restructuring related expense | 8,162 | 15,030 | ||||||||||||||||||||||||||||||||||||
Amortization of intangible assets in selling, general, and administrative expense | 32,129 | 32,647 | ||||||||||||||||||||||||||||||||||||
Interest expense, net | 51,387 | 50,854 | ||||||||||||||||||||||||||||||||||||
Loss on debt extinguishment | — | 9,418 | ||||||||||||||||||||||||||||||||||||
Other (income) expense, net | (51) | (2,439) | ||||||||||||||||||||||||||||||||||||
Segment income | $ | 356,015 | $ | 308,627 | $ | 47,388 | $ | 419,081 | $ | 359,886 | $ | 59,195 | ||||||||||||||||||||||||||
Segment income margin % | 27.1 | % | 27.8 | % | 23.1 | % | 29.9 | % | 31.0 | % | 24.6 | % | ||||||||||||||||||||||||||
Depreciation | $ | 17,815 | $ | 17,049 | $ | 766 | $ | 17,891 | $ | 16,871 | $ | 1,020 | ||||||||||||||||||||||||||
Amortization | 6,265 | 6,265 | — | 6,352 | 6,351 | 1 | ||||||||||||||||||||||||||||||||
Stock-based compensation (a) | (434) | (494) | 60 | 9,231 | 8,641 | 590 | ||||||||||||||||||||||||||||||||
Other (b) | 9,534 | 9,332 | 202 | 4,948 | 4,665 | 283 | ||||||||||||||||||||||||||||||||
Total adjustments | 33,180 | 32,152 | 1,028 | 38,422 | 36,528 | 1,894 | ||||||||||||||||||||||||||||||||
Adjusted segment income | $ | 389,195 | $ | 340,779 | $ | 48,416 | $ | 457,503 | $ | 396,414 | $ | 61,089 | ||||||||||||||||||||||||||
Adjusted segment income margin % | 29.6 | % | 30.7 | % | 23.6 | % | 32.6 | % | 34.1 | % | 25.4 | % |
(a) | Represents non-cash stock-based compensation expense related to equity awards issued to management, employees, and directors. Beginning in the three months ended July 2, 2022, the adjustment includes only expense related to awards issued under the 2017 Equity Incentive Plan, which were awards granted prior to the effective date of the IPO, whereas in prior periods, the adjustment included stock-based compensation expense for all equity awards. Under the historical presentation, the stock-based compensation adjustment for the twelve months ended December 31, 2022 would have been an expense of $0.6 million and $0.2 million for NAM and E&RW, respectively. | |||||||
(b) | Adjustments in the year ended December 31, 2022 for NAM include $5.5 million of expenses associated with the discontinuation of a product joint development agreement and a $3.3 million non-cash increase in cost of goods sold resulting from the fair value inventory step-up adjustment recognized as part of the purchase accounting for the Specialty Lighting Business, and other immaterial items. Adjustments in the year ended December 31, 2021 for NAM include non-recurring severance expenses, retention bonuses, legal fees, and the operating losses of approximately $4.0 million related to an early-stage product line acquired in 2018 that was phased out in 2021. | |||||||
Adjustments in the year ended December 31, 2022 for E&RW include $0.2 million bad debt reserves related to certain customers impacted by the conflict in Russia and Ukraine partially offset by subsequent collections. Adjustments in the year ended December 31, 2021 for E&RW include $5.4 million of costs related to a fire at our manufacturing and administrative facilities in Yuncos Spain incurred in the second quarter of 2021 that were offset by the insurance proceeds received in the fourth quarter of 2021. |