October 1, 2022 | December 31, 2021 | |||||||||||||
Assets | ||||||||||||||
Current assets | ||||||||||||||
Cash and cash equivalents | $ | 72,907 | $ | 265,796 | ||||||||||
Accounts receivable, net of allowances of $2,872 and $2,003, respectively | 108,543 | 208,112 | ||||||||||||
Inventories, net | 313,379 | 233,449 | ||||||||||||
Prepaid expenses | 16,051 | 12,459 | ||||||||||||
Other current assets | 51,368 | 30,705 | ||||||||||||
Total current assets | 562,248 | 750,521 | ||||||||||||
Property, plant, and equipment, net of accumulated depreciation of $76,600 and $67,366, respectively | 148,428 | 146,754 | ||||||||||||
Goodwill | 927,055 | 924,264 | ||||||||||||
Trademark | 736,000 | 736,000 | ||||||||||||
Customer relationships, net | 236,321 | 242,854 | ||||||||||||
Other intangibles, net | 108,983 | 103,192 | ||||||||||||
Other non-current assets | 111,363 | 74,885 | ||||||||||||
Total assets | $ | 2,830,398 | $ | 2,978,470 | ||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||
Current liabilities | ||||||||||||||
Current portion of the long-term debt | $ | 11,957 | $ | 12,155 | ||||||||||
Accounts payable | 65,354 | 87,445 | ||||||||||||
Accrued expenses and other liabilities | 152,011 | 190,378 | ||||||||||||
Income taxes payable | — | 13,886 | ||||||||||||
Total current liabilities | 229,322 | 303,864 | ||||||||||||
Long-term debt, net | 1,067,002 | 973,124 | ||||||||||||
Deferred tax liabilities, net | 266,290 | 262,378 | ||||||||||||
Other non-current liabilities | 71,523 | 69,591 | ||||||||||||
Total liabilities | 1,634,137 | 1,608,957 | ||||||||||||
Stockholders' equity | ||||||||||||||
Preferred stock, $0.001 par value, 100,000,000 authorized, no shares issued or outstanding as of October 1, 2022 and December 31, 2021 | — | — | ||||||||||||
Common stock $0.001 par value, 750,000,000 authorized; 239,942,927 issued and 211,276,558 outstanding at October 1, 2022; 238,432,216 issued and 233,056,799 outstanding at December 31, 2021 | 240 | 238 | ||||||||||||
Additional paid-in capital | 1,067,148 | 1,058,724 | ||||||||||||
Common stock in treasury; 28,666,369 and 5,375,417 at October 1, 2022 and December 31, 2021, respectively | (357,408) | (14,066) | ||||||||||||
Retained earnings | 484,254 | 320,875 | ||||||||||||
Accumulated other comprehensive income | 2,027 | 3,742 | ||||||||||||
Total stockholders' equity | 1,196,261 | 1,369,513 | ||||||||||||
Total liabilities, redeemable stock, and stockholders' equity | $ | 2,830,398 | $ | 2,978,470 |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | October 1, 2022 | October 2, 2021 | |||||||||||||||||||||||
Net sales | $ | 245,267 | $ | 350,624 | $ | 1,055,169 | $ | 1,049,409 | ||||||||||||||||||
Cost of sales | 137,483 | 188,170 | 567,626 | 559,033 | ||||||||||||||||||||||
Gross profit | 107,784 | 162,454 | 487,543 | 490,376 | ||||||||||||||||||||||
Selling, general, and administrative expense | 50,493 | 68,807 | 188,297 | 207,129 | ||||||||||||||||||||||
Research, development, and engineering expense | 6,142 | 6,370 | 16,411 | 16,187 | ||||||||||||||||||||||
Acquisition and restructuring related expense | 2,288 | 783 | 9,499 | 2,452 | ||||||||||||||||||||||
Amortization of intangible assets | 8,521 | 8,700 | 23,828 | 26,162 | ||||||||||||||||||||||
Operating income | 40,340 | 77,794 | 249,508 | 238,446 | ||||||||||||||||||||||
Interest expense, net | 13,938 | 11,050 | 35,105 | 42,297 | ||||||||||||||||||||||
Loss on debt extinguishment | — | — | — | 9,418 | ||||||||||||||||||||||
Other (income) expense, net | (234) | 2,087 | 3,056 | 4,655 | ||||||||||||||||||||||
Total other expense | 13,704 | 13,137 | 38,161 | 56,370 | ||||||||||||||||||||||
Income from operations before income taxes | 26,636 | 64,657 | 211,347 | 182,076 | ||||||||||||||||||||||
Provision for income taxes | 3,549 | 14,336 | 47,968 | 42,072 | ||||||||||||||||||||||
Net income | $ | 23,087 | $ | 50,321 | $ | 163,379 | $ | 140,004 | ||||||||||||||||||
Earnings per share | ||||||||||||||||||||||||||
Basic | $ | 0.11 | $ | 0.22 | $ | 0.74 | $ | 0.24 | ||||||||||||||||||
Diluted | $ | 0.10 | $ | 0.21 | $ | 0.70 | $ | 0.23 | ||||||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||||||
Basic | 212,905,429 | 231,339,007 | 222,009,824 | 172,820,430 | ||||||||||||||||||||||
Diluted | 222,006,615 | 243,783,501 | 232,131,395 | 185,673,814 |
Hayward Holdings, Inc. Unaudited Condensed Consolidated Statements of Cash Flows (In thousands) | Nine Months Ended | |||||||||||||
October 1, 2022 | October 2, 2021 | |||||||||||||
Cash flows from operating activities | ||||||||||||||
Net income | $ | 163,379 | $ | 140,004 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||||
Depreciation | 13,931 | 14,096 | ||||||||||||
Amortization of intangible assets | 28,437 | 30,903 | ||||||||||||
Amortization of deferred debt issuance fees | 2,312 | 2,771 | ||||||||||||
Stock-based compensation | 5,787 | 13,308 | ||||||||||||
Deferred income taxes | (4,221) | (3,014) | ||||||||||||
Allowance for bad debts | 869 | 584 | ||||||||||||
Loss on debt extinguishment | — | 9,418 | ||||||||||||
Loss on disposal of property, plant and equipment | 5,550 | 3,743 | ||||||||||||
Changes in operating assets and liabilities | ||||||||||||||
Accounts receivable | 96,874 | (9,115) | ||||||||||||
Inventories | (70,469) | (66,027) | ||||||||||||
Other current and non-current assets | (16,902) | (10,699) | ||||||||||||
Accounts payable | (24,472) | 9,671 | ||||||||||||
Accrued expenses and other liabilities | (57,411) | 63,520 | ||||||||||||
Net cash provided by operating activities | 143,664 | 199,163 | ||||||||||||
Cash flows from investing activities | ||||||||||||||
Purchases of property, plant, and equipment | (23,533) | (19,098) | ||||||||||||
Purchases of intangibles | — | (818) | ||||||||||||
Acquisitions, net of cash acquired | (61,337) | — | ||||||||||||
Proceeds from sale of property, plant, and equipment | 4 | 25 | ||||||||||||
Proceeds from settlements of investment currency hedge | — | 719 | ||||||||||||
Net cash used in investing activities | (84,866) | (19,172) | ||||||||||||
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 | (343,319) | (10,530) | ||||||||||||
Cash paid for taxes from share withholdings | (871) | (10,174) | ||||||||||||
Proceeds from issuance of long-term debt | — | 51,659 | ||||||||||||
Debt issuance costs | — | (12,422) | ||||||||||||
Payments of long-term debt | (7,500) | (367,144) | ||||||||||||
Proceeds from revolving credit facility | 150,000 | 68,000 | ||||||||||||
Payments on revolving credit facility | (50,000) | (68,000) | ||||||||||||
Proceeds from issuance of short term debt | 8,119 | — | ||||||||||||
Payments of short term debt | (2,849) | — | ||||||||||||
Other, net | 473 | 522 | ||||||||||||
Net cash (used in) provided by financing activities | (245,947) | 3,187 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (5,740) | (1,505) | ||||||||||||
Change in cash and cash equivalents and restricted cash | (192,889) | 181,673 | ||||||||||||
Cash and cash equivalents and restricted cash, beginning of period | 265,796 | 115,294 | ||||||||||||
Cash and cash equivalents and restricted cash, end of period | $ | 72,907 | $ | 296,967 | ||||||||||
Supplemental disclosures of cash flow information | ||||||||||||||
Cash paid-interest | 32,725 | 53,686 | ||||||||||||
Cash paid-income taxes | 93,503 | 39,242 | ||||||||||||
Equipment financed under finance leases | 1,603 | — |
(Dollars in thousands) | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | October 1, 2022 | October 2, 2021 | |||||||||||||||||||||||
Net income | $ | 23,087 | $ | 50,321 | $ | 163,379 | $ | 140,004 | ||||||||||||||||||
Depreciation | 4,333 | 4,847 | 13,931 | 14,096 | ||||||||||||||||||||||
Amortization | 10,249 | 10,405 | 28,437 | 30,903 | ||||||||||||||||||||||
Interest expense | 13,938 | 11,050 | 35,105 | 42,297 | ||||||||||||||||||||||
Income taxes | 3,549 | 14,336 | 47,968 | 42,072 | ||||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | 9,418 | ||||||||||||||||||||||
EBITDA | 55,156 | 90,959 | 288,820 | 278,790 | ||||||||||||||||||||||
Stock-based compensation (a) | (4) | 484 | 1,248 | 16,383 | ||||||||||||||||||||||
Sponsor management fees (b) | — | — | — | 90 | ||||||||||||||||||||||
Currency exchange items (c) | 52 | 1,149 | 2,776 | 4,379 | ||||||||||||||||||||||
Acquisition and restructuring related expense, net (d) | 2,288 | 783 | 9,499 | 2,452 | ||||||||||||||||||||||
Other (e) | 2,935 | 4,954 | 11,970 | 13,941 | ||||||||||||||||||||||
Total Adjustments | 5,271 | 7,370 | 25,493 | 37,245 | ||||||||||||||||||||||
Adjusted EBITDA | $ | 60,427 | $ | 98,329 | $ | 314,313 | $ | 316,035 | ||||||||||||||||||
Adjusted EBITDA margin | 24.6 | % | 28.0 | % | 29.8 | % | 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 and nine months ended October 1, 2022 would have been an expense of $1.8 million and $4.7 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 three months ended October 1, 2022 are primarily driven by separation costs associated with a reduction-in-force as well as costs associated with the relocation of the corporate headquarters. Adjustments in the nine months ended October 1, 2022 are primarily driven by transaction costs associated with the acquisition of the Specialty Lighting Business, costs associated with the relocation of the corporate headquarters, and separation costs associated with a reduction-in-force. Adjustments in the three and nine months ended October 2, 2021 are primarily driven by restructuring related costs associated with the exit of a redundant manufacturing and distribution facility and costs associated with the relocation of the corporate headquarters. | |||||||
(e) | Adjustments in the three months ended October 1, 2022 primarily includes the 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. Adjustments in the three months ended October 2, 2021 include a legal settlement and fees, costs related to a fire at our manufacturing and administrative facilities in Yuncos, Spain, and operating losses related to an early-stage product business acquired in 2018 that was phased out. Adjustments in the nine months ended October 1, 2022 include expenses associated with the discontinuation of a product joint development agreement, a 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 costs incurred related to the selling stockholder offering of shares in May 2022, which are reported in SG&A in our unaudited condensed consolidated statements of operations, partially offset by gains resulting from an insurance policy reimbursement related to the fire incident in Yuncos, Spain. Adjustments in the nine months ended October 2, 2021 include a write-off related to the aforementioned fire in Yuncos, Spain, a legal settlement and fees related to patent infringement litigation, expenses incurred in preparation for the IPO and transaction related bonuses, costs related to our debt refinancing, and operating losses related to an early stage product business acquired in 2018 that was phased out. |
(Dollars in thousands) | Last Twelve Months(f) | Fiscal Year | ||||||||||||
October 1, 2022 | December 31, 2021 | |||||||||||||
Net income | $ | 227,100 | $ | 203,725 | ||||||||||
Depreciation | 18,661 | 18,826 | ||||||||||||
Amortization | 36,524 | 38,990 | ||||||||||||
Interest expense | 43,662 | 50,854 | ||||||||||||
Income taxes | 62,312 | 56,416 | ||||||||||||
Loss on extinguishment of debt | — | 9,418 | ||||||||||||
EBITDA | 388,259 | 378,229 | ||||||||||||
Stock-based compensation (a) | 3,884 | 19,019 | ||||||||||||
Sponsor management fees (b) | — | 90 | ||||||||||||
Currency exchange items (c) | 2,882 | 4,485 | ||||||||||||
Acquisition and restructuring related expense, net (d) | 22,077 | 15,030 | ||||||||||||
Other (e) | 2,914 | 4,884 | ||||||||||||
Total Adjustments | 31,757 | 43,508 | ||||||||||||
Adjusted EBITDA | $ | 420,016 | $ | 421,737 | ||||||||||
Adjusted EBITDA margin | 29.8 | % | 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 and nine months ended October 1, 2022 would have been an expense of $1.8 million and $4.7 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 last twelve months ended October 1, 2022 include business restructuring related costs associated with the exit of an early-stage product business acquired in 2018, transaction costs associated with the acquisition of the Specialty Lighting Business, costs associated with the relocation of the corporate headquarters, and separation costs associated with a reduction-in-force. Adjustments in the last twelve months ended December 31, 2021 include business restructuring related costs associated with the exit of an early-stage product business acquired in 2018, severance and relocation costs associated with the relocation of our corporate headquarters, and business restructuring related costs associated with the exit of redundant manufacturing and distribution facilities. | |||||||
(e) | Adjustments in the last twelve months ended October 1, 2022 include expenses associated with the discontinuation of a product joint development agreement, a 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 costs incurred related to the selling stockholder offering of shares in May 2022, which are reported in SG&A in our unaudited condensed consolidated statements of operations, partially offset by gains resulting from an insurance policy reimbursement related to the fire incident in Yuncos, Spain. Adjustments in the twelve months ended December 31, 2021 include net insurance settlement proceeds for property damage loss as well as the consequential business interruption loss amount caused by the fire incident in Yuncos Spain, a legal settlement and related fees, operating losses related to the early stage product business acquired in 2018, debt refinancing expenses, and expenses incurred in preparation with the IPO. | |||||||
(f) | Items for the last twelve months ended October 1, 2022 are calculated by adding the item for the nine months ended October 1, 2022 plus Fiscal Year ended December 31, 2021 and subtracting the item for the nine months ended October 2, 2021. |
(Dollars in thousands) | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | October 1, 2022 | October 2, 2021 | |||||||||||||||||||||||
Net income | $ | 23,087 | $ | 50,321 | $ | 163,379 | $ | 140,004 | ||||||||||||||||||
Tax adjustments (a) | (2,897) | (2,410) | (3,128) | (5,255) | ||||||||||||||||||||||
Other adjustments and amortization: | ||||||||||||||||||||||||||
Stock-based compensation (b) | (4) | 484 | 1,248 | 16,383 | ||||||||||||||||||||||
Sponsor management fees (c) | — | — | — | 90 | ||||||||||||||||||||||
Currency exchange items (d) | 52 | 1,149 | 2,776 | 4,379 | ||||||||||||||||||||||
Acquisition and restructuring related expense, net (e) | 2,288 | 783 | 9,499 | 2,452 | ||||||||||||||||||||||
Other (f) | 2,935 | 4,954 | 11,970 | 13,941 | ||||||||||||||||||||||
EBITDA adjustments | 5,271 | 7,370 | 25,493 | 37,245 | ||||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | 9,418 | ||||||||||||||||||||||
Amortization | 10,249 | 10,405 | 28,437 | 30,903 | ||||||||||||||||||||||
Tax effect(a) | (3,756) | (4,604) | (13,066) | (20,492) | ||||||||||||||||||||||
Pro forma adjustments (g): | ||||||||||||||||||||||||||
Interest savings | — | — | — | 6,443 | ||||||||||||||||||||||
Acquisitions | — | 875 | 2,761 | 3,079 | ||||||||||||||||||||||
Tax effect(a) | — | (227) | (667) | (2,623) | ||||||||||||||||||||||
Adjusted net income | $ | 31,954 | $ | 61,730 | $ | 203,209 | $ | 198,722 | ||||||||||||||||||
Weighted average number of common shares outstanding, basic | 212,905,429 | 231,339,007 | 222,009,824 | 172,820,430 | ||||||||||||||||||||||
Weighted average number of common shares outstanding, diluted | 222,006,615 | 243,783,501 | 232,131,395 | 185,673,814 | ||||||||||||||||||||||
Adjusted basic EPS(h) | $ | 0.15 | $ | 0.27 | 0.92 | 1.15 | ||||||||||||||||||||
Adjusted diluted EPS(h) | $ | 0.14 | $ | 0.25 | 0.88 | 1.07 |
(a) | Tax adjustments for the three and nine months ended October 1, 2022 reflect a normalized tax rate of 24.2% and 24.5% compared to our effective tax rate of 13.3% and 22.7%, respectively. Our effective tax rate for the three and nine months ended October 1, 2022 includes the impact of the revaluation of deferred tax liabilities as a result of state tax law changes and the tax benefit resulting from the exercise of stock options. Tax adjustments for the three and nine months ended October 2, 2021 reflect a normalized tax rate of 25.9% and 25.1% compared to our effective tax rate of 22.2% and 23.1%, respectively. Our effective tax rate for the three and nine months ended October 1, 2022 includes the impact of the release of a valuation allowance on the deferred tax assets and the tax benefit resulting from the exercise of stock options. All non-tax adjustments are effected at the normalized rate. | |||||||
(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 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 and nine months ended October 1, 2022 would have been an expense of $1.8 million and $4.7 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 three months ended October 1, 2022 are primarily driven by separation costs associated with a reduction-in-force as well as costs associated with the relocation of the corporate headquarters. Adjustments in the nine months ended October 1, 2022 are primarily driven by transaction costs associated with the acquisition of the Specialty Lighting Business, costs associated with the relocation of the corporate headquarters, and separation costs associated with a reduction-in-force. Adjustments in the three and nine months ended October 2, 2021 are primarily driven by restructuring related costs associated with the exit of a redundant manufacturing and distribution facility and costs associated with the relocation of the corporate headquarters. | |||||||
(f) | Adjustments in the three months ended October 1, 2022 primarily includes the 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. Adjustments in the three months ended October 2, 2021 include a legal settlement and fees, costs related to a fire at our manufacturing and administrative facilities in Yuncos, Spain, and operating losses related to an early-stage product business acquired in 2018 that was phased out. Adjustments in the nine months ended October 1, 2022 include expenses associated with the discontinuation of a product joint development agreement, a 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 costs incurred related to the selling stockholder offering of shares in May 2022, which are reported in SG&A in our unaudited condensed consolidated statements of operations, partially offset by gains resulting from an insurance policy reimbursement related to the fire incident in Yuncos, Spain. Adjustments in the nine months ended October 2, 2021 include a write-off related to the aforementioned fire in Yuncos, Spain, a legal settlement and fees related to patent infringement litigation, expenses incurred in preparation for the IPO and transaction related bonuses, costs related to our debt refinancing, and operating losses related to an early stage product business acquired in 2018 that was phased out. | |||||||
(g) | The adjustments for the nine months ended October 1, 2022 represent pro-forma adjustments related to the acquisition of the Specialty Lighting Business and the adjustments for the three and nine months ended October 2, 2021 represent pro-forma 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. | |||||||
(h) | For the nine months ended October 2, 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 US 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 $0.58 and $0.54 per share, respectively. |
(Dollars in thousands) | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | |||||||||||||||||||||||||||||||||||||
Total | NAM | E&RW | Total | NAM | E&RW | |||||||||||||||||||||||||||||||||
Net sales | $ | 245,267 | $ | 203,674 | $ | 41,593 | $ | 350,624 | $ | 298,236 | $ | 52,388 | ||||||||||||||||||||||||||
Gross profit | $ | 107,784 | $ | 91,850 | $ | 15,934 | $ | 162,454 | $ | 141,655 | $ | 20,799 | ||||||||||||||||||||||||||
Gross profit margin % (a) | 43.9 | % | 45.1 | % | 38.3 | % | 46.3 | % | 47.5 | % | 39.7 | % | ||||||||||||||||||||||||||
Segment income | $ | 57,493 | $ | 48,704 | $ | 8,789 | $ | 102,502 | $ | 91,920 | $ | 10,582 | ||||||||||||||||||||||||||
Segment income margin % | 23.4 | % | 23.9 | % | 21.1 | % | 29.2 | % | 30.8 | % | 20.2 | % | ||||||||||||||||||||||||||
Depreciation | 4,049 | 3,853 | 196 | 4,428 | 4,253 | 175 | ||||||||||||||||||||||||||||||||
Amortization | 1,728 | 1,728 | — | 1,705 | 1,705 | — | ||||||||||||||||||||||||||||||||
Stock-based compensation | (276) | (284) | 8 | (92) | (126) | 34 | ||||||||||||||||||||||||||||||||
Other (b) | 2,516 | 2,878 | (362) | 957 | 568 | 389 | ||||||||||||||||||||||||||||||||
Total adjustments | 8,017 | 8,175 | (158) | 6,998 | 6,400 | 598 | ||||||||||||||||||||||||||||||||
Adjusted segment income | $ | 65,510 | $ | 56,879 | $ | 8,631 | $ | 109,500 | $ | 98,320 | $ | 11,180 | ||||||||||||||||||||||||||
Adjusted segment income margin % | 26.7 | % | 27.9 | % | 20.8 | % | 31.2 | % | 33.0 | % | 21.3 | % | ||||||||||||||||||||||||||
Expenses not allocated to segments | ||||||||||||||||||||||||||||||||||||||
Corporate expense, net | $ | 6,344 | $ | 15,225 | ||||||||||||||||||||||||||||||||||
Acquisition and restructuring related expense | 2,288 | 783 | ||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 8,521 | 8,700 | ||||||||||||||||||||||||||||||||||||
Operating income | $ | 40,340 | $ | 77,794 |
(a) | Excluding the 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, adjusted gross profit margin was 45.0%, an increase of 108 basis points, for the three months ended October 1, 2022. For NAM, excluding the impact of the purchase accounting adjustment, adjusted gross profit margin was 46.4%, an increase of 128 basis points, for the three months ended October 1, 2022 | |||||||
(b) | The three months ended October 1, 2022 for NAM includes a 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 three months ended October 2, 2021 includes operating losses which relate to an early stage product business acquired in 2018 that was phased out in 2021. | |||||||
The three months ended October 1, 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 three months ended October 2, 2021 represents the impact of a fire at our manufacturing and administrative facilities in Yuncos, Spain. |
(Dollars in thousands) | Nine Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | |||||||||||||||||||||||||||||||||||||
Total | NAM | E&RW | Total | NAM | E&RW | |||||||||||||||||||||||||||||||||
Net sales | $ | 1,055,169 | $ | 892,050 | $ | 163,119 | $ | 1,049,409 | $ | 863,276 | $ | 186,133 | ||||||||||||||||||||||||||
Gross profit | $ | 487,543 | $ | 421,725 | $ | 65,818 | $ | 490,376 | $ | 416,753 | $ | 73,623 | ||||||||||||||||||||||||||
Gross profit margin % | 46.2 | % | 47.3 | % | 40.3 | % | 46.7 | % | 48.3 | % | 39.6 | % | ||||||||||||||||||||||||||
Segment income | $ | 306,844 | $ | 267,854 | $ | 38,990 | $ | 304,848 | $ | 267,020 | $ | 37,828 | ||||||||||||||||||||||||||
Segment income margin % | 29.1 | % | 30.0 | % | 23.9 | % | 29.0 | % | 30.9 | % | 20.3 | % | ||||||||||||||||||||||||||
Depreciation | 13,006 | 12,435 | 571 | 13,496 | 12,653 | 843 | ||||||||||||||||||||||||||||||||
Amortization | 4,609 | 4,609 | — | 4,740 | 4,740 | — | ||||||||||||||||||||||||||||||||
Stock-based compensation | 183 | 72 | 111 | 7,904 | 7,318 | 586 | ||||||||||||||||||||||||||||||||
Other (a) | 8,966 | 8,616 | 350 | 6,991 | 1,551 | 5,440 | ||||||||||||||||||||||||||||||||
Total adjustments | 26,764 | 25,732 | 1,032 | 33,131 | 26,262 | 6,869 | ||||||||||||||||||||||||||||||||
Adjusted segment income (a) | $ | 333,608 | $ | 293,586 | $ | 40,022 | $ | 337,979 | $ | 293,282 | $ | 44,697 | ||||||||||||||||||||||||||
Adjusted segment income margin % (a) | 31.6 | % | 32.9 | % | 24.5 | % | 32.2 | % | 34.0 | % | 24.0 | % | ||||||||||||||||||||||||||
Expenses not allocated to segments | ||||||||||||||||||||||||||||||||||||||
Corporate expense, net | $ | 24,009 | $ | 37,788 | ||||||||||||||||||||||||||||||||||
Acquisition and restructuring related expense | 9,499 | 2,452 | ||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 23,828 | 26,162 | ||||||||||||||||||||||||||||||||||||
Operating income | $ | 249,508 | $ | 238,446 |
(a) | The nine months ended October 1, 2022 for NAM includes expenses associated with the discontinuation of a product joint development agreement and a 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 nine months ended October 2, 2021 include operating losses which relate to an early stage product business acquired in 2018 that was phased out in 2021. | |||||||
The nine months ended October 1, 2022 for E&RW includes bad debt reserves related to certain customers impacted by the conflict in Russia and Ukraine partially offset by subsequent collections. The nine months ended October 2, 2021 represents the impact of a fire at our manufacturing and administrative facilities in Yuncos, Spain. |