Hayward Holdings Inc
For the period ended Sep 28, 2024. Filed Oct 29, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 28, 2024 · Filed Oct 29, 2024
HAYW$16.24-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-29; filed 2024-07-30.
0001834622-24-000093
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-28; filed 2024-10-29.
0001834622-24-000131
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 167 previous paragraphs and 173 current paragraphs.
69 unchanged; 78 reworded; 26 added; 19 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 16 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
Geopolitical Events
Current report
Geopolitical conflicts around the world have created substantial uncertainty in the global economy, including as a result of sanctions and penalties imposed in response to these conflicts. In particular, armed conflicts in the Middle East and in Ukraine and Russia have adversely affected market demand in the Middle East and Asia, which has negatively impacted our results in our E&RW segment. See “—Segment—Europe & Rest of World (“E&RW”),” below. Given the nature of our business and global operations, if these or other geopolitical conflicts continue or worsen, our business and results of operations may be adversely affected.
Current report
The net sales increase for the three months ended September 28, 2024 was driven by positive net price including normalized allowances and discounts and the positive impact from acquisitions, partially offset by reduced volumes. The decrease in volume resulted from market declines in the Middle East and Asia and lower new construction and remodel activity in the U.S..
Current report
The net sales increase for the nine months ended September 28, 2024 was driven by positive net price and the positive impact from acquisitions, partially offset by reduced volumes. The decrease in volume resulted from market declines in the Middle East and Asia and lower new construction and remodel activity in the U.S.
Current report
Gross profit increased to $113.1 million for the three months ended September 28, 2024 from $105.4 million for the three months ended September 30, 2023, an increase of $7.7 million, or 7.3%.
Current report
Gross profit margin increased to 49.7% for the three months ended September 28, 2024 compared to 47.8% for the three months ended September 30, 2023, an increase of 190 basis points, driven by operational efficiencies in our manufacturing facilities and net price increases including normalized allowances and discounts, partially offset by a non-cash increase to cost of goods sold resulting from the fair value inventory step-up adjustment recognized as part of the purchase accounting for the acquisition of ChlorKing HoldCo, LLC and related entities ("ChlorKing") and a discrete inventory adjustment in Europe.
Current report
Gross profit increased to $362.8 million for the nine months ended September 28, 2024 from $339.8 million for the nine months ended September 30, 2023, an increase of $23.0 million, or 6.8%.
Current report
Selling, general, and administrative expense (SG&A) increased to $64.5 million for the three months ended September 28, 2024 from $59.5 million for the three months ended September 30, 2023, an increase of $5.0 million, or 8.5%, primarily due to higher salary costs driven by wage inflation and investments in our customer care and selling teams, discrete legal expenses, and increased professional service costs.
Current report
SG&A increased to $187.7 million for the nine months ended September 28, 2024 from $172.1 million for the nine months ended September 30, 2023, an increase of $15.6 million, or 9.1%, driven by higher incentive compensation, higher salary costs driven by wage inflation and investments in our customer care and selling teams, discrete legal expenses, partially offset by decreased warranty costs.
Current report
For the three months ended September 28, 2024, amortization of intangible assets increased by $0.1 million compared to the three months ended September 30, 2023 due to the amortization of the intangible assets acquired as part of the acquisition of ChlorKing.
Current report
Interest expense, net, decreased to $13.2 million for the three months ended September 28, 2024 from $17.4 million for the three months ended September 30, 2023.
Current report
Net income and net income margin
Current report
Net income margin increased to 7.3% for the three months ended September 28, 2024 compared to 5.4% for the three months ended September 30, 2023, an increase of 190 basis points.
Current report
Net income margin increased to 8.8% for the nine months ended September 28, 2024 compared to 7.0% for the nine months ended September 30, 2023, an increase of 180 basis points.
Current report
Adjusted EBITDA margin increased to 22.5% for the three months ended September 28, 2024 compared to 21.4% for the three months ended September 30, 2023, an increase of 110 basis points.
Current report
Net sales increased to $195.0 million for the three months ended September 28, 2024 from $185.1 million for the three months ended September 30, 2023, an increase of $9.9 million, or 5.3%.
Current report
Net sales increased to $609.5 million for the nine months ended September 28, 2024 from $585.1 million for the nine months ended September 30, 2023, an increase of $24.4 million, or 4.2%.
Current report
The net sales increase for the nine months ended September 28, 2024 was driven primarily by increases in price and acquisitions.
Current report
Gross profit increased to $101.9 million for the three months ended September 28, 2024 from $91.5 million for the three months ended September 30, 2023, an increase of $10.4 million, or 11.4%.
Current report
Gross profit margin increased to 52.3% for the three months ended September 28, 2024 from 49.4% for the three months ended September 30, 2023, an increase of 290 basis points. Gross margin increased due to operational efficiencies in our manufacturing facilities and normalized allowances and discounts, partially offset by a non-cash increase to cost of goods sold resulting from the fair value inventory step-up adjustment recognized as part of the purchase accounting for the acquisition of the ChlorKing business.
Current report
Gross profit increased to $319.2 million for the nine months ended September 28, 2024 from $288.9 million for the nine months ended September 30, 2023, an increase of $30.3 million, or 10.5%.
Current report
Adjusted segment income margin increased to 30.5% for the nine months ended September 28, 2024 from 27.7% for the nine months ended September 30, 2023, an increase of 280 basis points.
Current report
Gross profit margin decreased to 37.9% for the nine months ended September 28, 2024 from 39.5% for the nine months ended September 30, 2023, a decrease of 160 basis points, primarily driven by lower operating leverage and unfavorable mix due to the geopolitical conflicts in the Middle East.
Current report
Accounts Receivable Sales
Current report
On July 3, 2024, we entered into a Receivables Purchase Agreement under which we may offer to sell eligible accounts receivable. The agreement is uncommitted and the eligible accounts receivable to be sold under the agreement consist of up to $125 million in accounts receivable generated by sales to specified customers of the Company. The Company will be paid a discounted purchase price for each receivable sold. The discount rate used to determine the purchase price for the subject receivables is based upon an annual interest rate equal to the forward-looking term rate based on the secured overnight financing rate for the period of time between payment to the Company and the due date for the receivable plus a buffer period specific to the obligor, plus a margin applicable to the specified obligor.
Current report
Transactions under this agreement are accounted for as sales of accounts receivable, and the receivables sold are removed from the unaudited condensed consolidated balance sheetsat the time of the sales transaction. For ease of administration, the Company collects customer payments related to the receivables sold and remits those payments to the purchaser. Proceeds received from the sales of accounts receivable are classified as operating cash flows and collections of previously sold accounts receivable not yet submitted to the financial institution are classified as financing cash flows in the unaudited condensed consolidated statements of cash flows. We record the discount in the “Other expense, net” line in the unaudited condensed consolidated statements of operations. During the three months ended September 28, 2024, there were immaterial proceeds from the sale of receivables under the Receivables Purchase Agreement.
Removed paragraphs (19)
Previous report
The volume decline in the three months ended June 29, 2024 was due primarily to market declines in the Middle East and Asia and lower new construction and remodels in the US, partially offset by growth in Europe and Canada.
Previous report
The volume decline in the six months ended June 29, 2024 was driven primarily by market declines in Europe, Middle East and Asia, partially offset by growth in North America from increased Early Buy shipments.
Previous report
Gross profit increased to $145.1 million for the three months ended June 29, 2024 from $136.5 million for the three months ended July 1, 2023, an increase of $8.6 million, or 6.3%.
Previous report
Gross profit margin increased to 51.0% for the three months ended June 29, 2024 compared to 48.1% for the three months ended July 1, 2023, an increase of 290 basis points, driven by operational efficiencies in our manufacturing facilities and net price increases.
Previous report
Gross profit increased to $249.7 million for the six months ended June 29, 2024 from $234.4 million for the six months ended July 1, 2023, an increase of $15.3 million, or 6.5%.
Previous report
Selling, general, and administrative expense (SG&A) increased to $63.2 million for the three months ended June 29, 2024 from $57.7 million for the three months ended July 1, 2023, an increase of $5.5 million, or 9.4%, primarily as a result of increased warranty costs, incentive compensation and selling expenses.
Previous report
SG&A increased to $123.2 million for the six months ended June 29, 2024 from $112.6 million for the six months ended July 1, 2023, an increase of $10.6 million, or 9.4%, driven by higher warranty and administrative costs.
Previous report
Net income
Previous report
Adjusted EBITDA margin increased to 29.0% for the three months ended June 29, 2024 compared to 28.0% for the three months ended July 1, 2023, an increase of 100 basis points.
Previous report
(a) Total segment income, adjusted segment income and adjusted segment income margin are non-GAAP measures. See“—Non-GAAP Reconciliation.”
Previous report
Net sales increased to $241.1 million for the three months ended June 29, 2024 from $237.4 million for the three months ended July 1, 2023, an increase of $3.7 million, or 1.6%.
Previous report
Net sales increased to $414.5 million for the six months ended June 29, 2024 from $400.1 million for the six months ended July 1, 2023, an increase of $14.4 million, or 3.6%.
Previous report
This increase for the six months ended June 29, 2024 was driven by increases in both volume and price. The volume growth resulted from increased Early Buy shipments compared to the prior-year period.
Previous report
Gross profit increased to $127.4 million for the three months ended June 29, 2024 from $118.4 million for the three months ended July 1, 2023, an increase of $9.0 million, or 7.6%.
Previous report
Gross profit increased to $217.3 million for the six months ended June 29, 2024 from $197.5 million for the six months ended July 1, 2023, an increase of $19.8 million, or 10.1%.
Previous report
Adjusted segment income margin increased to 33.7% for the three months ended June 29, 2024 from 32.4% for the three months ended July 1, 2023, an increase of 130 basis points.
Previous report
Gross profit margin increased to 40.8% for the three months ended June 29, 2024 from 39.1% for the three months ended July 1, 2023, an increase of 170 basis points, primarily driven by net price increases and improved operational efficiencies.
Previous report
Segment income decreased to $14.3 million for the six months ended June 29, 2024 from $19.2 million for the six months ended July 1, 2023, a decrease of $4.9 million, or 25.5%. This was driven by the factors discussed above.
Previous report
Following is a reconciliation from income from operations before income taxes to total segment income and adjusted segment income for the three and six months ended June 29, 2024 and July 1, 2023:
Reworded paragraphs (78)
Previous wording
You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, this discussion and analysis includes forward-looking statements that reflect our plans, estimates and beliefs and involve risks and uncertainties. As a result of many factors, including those set forth in the section “Special Note Regarding Forward-looking Statements” in this Quarterly Report on Form 10-Q, our actual results may differ materially from those contained in or implied by any forward-looking statements. The results of operations for the three and six months ended June 29, 2024 are not necessarily indicative of the results for any subsequent periods or the entire fiscal year ending December 31, 2024.
Current wording
You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, this discussion and analysis includes forward-looking statements that reflect our plans, estimates and beliefs and involve risks and uncertainties. As a result of many factors, including those set forth in the section “Special Note Regarding Forward-looking Statements” in this Quarterly Report on Form 10-Q, our actual results may differ materially from those contained in or implied by any forward-looking statements. The results of operations for the three and nine months ended September 28, 2024 are not necessarily indicative of the results for any subsequent periods or the entire fiscal year ending December 31, 2024.
Previous wording
NAM accounted for 85% and 84% of total net sales for the three months ended June 29, 2024 and July 1, 2023, respectively, and E&RW accounted for 15% and 16% of total net sales for the three months ended June 29, 2024 and July 1, 2023, respectively.
Current wording
NAM accounted for 86% and 84% of total net sales for the three months ended September 28, 2024 and September 30, 2023, respectively, and E&RW accounted for 14% and 16% of total net sales for the three months ended September 28, 2024 and September 30, 2023, respectively.
Previous wording
NAM accounted for 83% and 81% of total net sales for thesix months ended June 29, 2024 and July 1, 2023, respectively, and E&RW accounted for 17% and 19% of total net sales for thesix months ended June 29, 2024 and July 1, 2023, respectively.
Current wording
NAM accounted for 84% and 82% of total net sales for thenine months ended September 28, 2024 and September 30, 2023, respectively, and E&RW accounted for 16% and 18% of total net sales for thenine months ended September 28, 2024 and September 30, 2023, respectively.
Previous wording
Our results of operations for the three and six months ended June 29, 2024 and the three and six months ended July 1, 2023 have been affected by the following, among other events, which must be understood to assess the comparability of our period-to-period financial performance and condition.
Current wording
Our results of operations for the three and nine months ended September 28, 2024 and the three and nine months ended September 30, 2023 have been affected by the following, among other events, which must be understood to assess the comparability of our period-to-period financial performance and condition.
Previous wording
Our fiscal quarters end on the Saturday closest to the calendar quarter end, with the exception of year end which ends on December 31 of each fiscal year. The interim closing date for the first, second and third quarters of 2024 are March 30, June 29, and September 28, compared to the respective April 1, July 1, and September 30, 2023 date. This resulted inone fewer working day in the three months ended June 29, 2024 compared to the respective 2023 period. Throughout this discussion we may refer to the three months ended June 29, 2024 and the three months ended July 1, 2023 as the “Second Quarter” and “Comparable Quarter,” respectively.
Current wording
Our fiscal quarters end on the Saturday closest to the calendar quarter end, with the exception of year end which ends on December 31 of each fiscal year. The interim closing date for the first, second and third quarters of 2024 are March 30, June 29, and September 28, compared to the respective April 1, July 1, and September 30, 2023 date. This resulted inno difference in working days for the three and nine months ended September 28, 2024 compared to the respective 2023 periods. Throughout this discussion we may refer to the three months ended September 28, 2024 and the three months ended September 30, 2023 as the “Third Quarter” and “Comparable Quarter,” respectively.
Previous wording
Our business is seasonal, with sales typically higher in the second and fourth quarters. During the second quarter, sales are higher in anticipation of the start of the summer pool season, and in the fourth quarter, we incentivize trade customers to buy and stock in preparation for next year’s pool season under an “Early Buy” program, which features a price discount and extended payment terms. Shipments for the 2023 Early Buy program began in the late third quarter and continued through approximately the first quarter of 2024. The favorable payment terms extended as part of the Early Buy program generally do not exceed 180 days. We aim to keep our manufacturing plants running at a constant level throughout the year and consequently we typically build inventory in the first and third quarters, and inventory is sold-down in the second and fourth quarters. Our accounts receivable balance increases from September to April as a result of the Early Buy extended terms. Also, because the majority of our sales are to distributors whose inventory of our products may vary, including due to reasons beyond our control, such as end-user demand, supply chain lead times and macroeconomic factors, our revenue may fluctuate from period to period.
Current wording
Our business is seasonal, with sales typically higher in the second and fourth quarters. During the second quarter, sales are higher in anticipation of the start of the summer pool season, and in the fourth quarter, we incentivize trade customers to buy and stock in preparation for next year’s pool season under an “Early Buy” program, which features a price discount and extended payment terms. Shipments for the 2024 Early Buy program began in the late third quarter and will continue through approximately the first quarter of 2025. The favorable payment terms extended as part of the Early Buy program generally do not exceed 180 days. We aim to keep our manufacturing plants running at a constant level throughout the year and consequently we typically build inventory in the first and third quarters, and inventory is sold-down in the second and fourth quarters. Our accounts receivable balance increases from September to April as a result of the Early Buy extended terms. Also, because the majority of our sales are to distributors whose inventory of our products may vary, including due to reasons beyond our control, such as end-user demand, supply chain lead times and macroeconomic factors, our revenue may fluctuate from period to period.
Previous wording
We consider a variety of financial and operating measures in assessing the performance of our business. The key GAAP measures we use are net sales, gross profit and gross profit margin, selling, general, and administrative expense (“SG&A”), research, development, and engineering expense (“RD&E”), operating income and operating income margin. The key non-GAAP measures we use are EBITDA, adjusted EBITDA, adjusted EBITDA margin, total segment income, adjusted segment income, and adjusted segment income margin.
Current wording
We consider a variety of financial and operating measures in assessing the performance of our business. The key GAAP measures we use are net sales, gross profit and gross profit margin, selling, general, and administrative expense (“SG&A”), research, development, and engineering expense (“RD&E”), operating income and operating income margin. The key non-GAAP measures we use are EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted segment income, and adjusted segment income margin.
Previous wording
The following tables summarize key components of our results of operations for the periods indicated. We derived the consolidated statements of operations for the three and six months ended June 29, 2024 and July 1, 2023 from our unaudited condensed consolidated financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future. The following table summarizes our results of operations:
Current wording
The following tables summarize key components of our results of operations for the periods indicated. We derived the consolidated statements of operations for the three and nine months ended September 28, 2024 and September 30, 2023 from our unaudited condensed consolidated financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future. The following table summarizes our results of operations:
Previous wording
Net sales increased to $284.4 million for the three months ended June 29, 2024 from $283.5 million for the three months ended July 1, 2023, an increase of $0.9 million, or 0.3%. See the segment discussion below for further information.
Current wording
Net sales increased to $227.6 million for the three months ended September 28, 2024 from $220.3 million for the three months ended September 30, 2023, an increase of $7.3 million, or 3.3%. See the segment discussion below for further information.
Previous wording
Net sales increased to $497.0 million for the six months ended June 29, 2024 from $493.7 million for the six months ended July 1, 2023, an increase of $3.3 million, or 0.7%. See the segment discussion below for further information.
Current wording
Net sales increased to $724.5 million for the nine months ended September 28, 2024 from $714.0 million for the nine months ended September 30, 2023, an increase of $10.5 million, or 1.5%. See the segment discussion below for further information.
Previous wording
The net sales increase for the three and six months ended June 29, 2024 was driven by an increase in net price, partially offset by a decline in volume.
Current wording
The net sales increase for the three and nine months ended September 28, 2024 was driven by an increase in net price and the favorable impact from acquisitions, partially offset by a decline in volume.
Previous wording
Gross profit margin increased to 50.2% for the six months ended June 29, 2024 compared to 47.5% for the six months ended July 1, 2023, an increase of 270 basis points, primarily due to operational efficiencies, net price increases and management of our manufacturing costs.
Current wording
Gross profit margin increased to 50.1% for the nine months ended September 28, 2024 compared to 47.6% for the nine months ended September 30, 2023, an increase of 250 basis points, primarily due to operational efficiencies, net price increases and management of our manufacturing costs.
Previous wording
As a percentage of net sales, SG&A increased to 22.2% for the three months ended June 29, 2024 as compared to 20.4% for the three months ended July 1, 2023, an increase of 180 basis points, driven by the factors discussed above.
Current wording
As a percentage of net sales, SG&A increased to 28.3% for the three months ended September 28, 2024 as compared to 27.0% for the three months ended September 30, 2023, an increase of 130 basis points, driven by the factors discussed above.
Previous wording
As a percentage of net sales, SG&A increased to 24.8% for the six months ended June 29, 2024 as compared to 22.8% for six months ended July 1, 2023, an increase of 200 basis points, due to the factors discussed above.
Current wording
As a percentage of net sales, SG&A increased to 25.9% for the nine months ended September 28, 2024 as compared to 24.1% for nine months ended September 30, 2023, an increase of 180 basis points, due to the factors discussed above.
Previous wording
Research, development, and engineering expense (RD&E) decreased to $6.1 million for the three months ended June 29, 2024 from $6.9 million for the three months ended July 1, 2023, primarily as a result of timing of certain projects that were ongoing in the three months ended July 1, 2023 as compared to the three months ended June 29, 2024.
Current wording
Research, development, and engineering expense (RD&E) increased to $6.4 million for the three months ended September 28, 2024 from $6.2 million for the three months ended September 30, 2023, primarily as a result of timing of projects compared to the three months ended September 30, 2023. RD&E spend continues to be focused on new product development.
Previous wording
As a percentage of net sales, RD&E was 2.2% for the three months ended June 29, 2024 compared to 2.4% for the three months ended July 1, 2023, a decrease of 20 basis points.
Current wording
As a percentage of net sales, RD&E was 2.8% for the three months ended September 28, 2024, which was unchanged compared to 2.8% for the three months ended September 30, 2023.
Previous wording
RD&E decreased to $12.4 million for the six months ended June 29, 2024 compared with $12.9 million for the six months ended July 1, 2023. The decrease is mainly due to the timing of certain projects that occurred in the Comparable Quarter as discussed above. As a percentage of net sales, RD&E was 2.5% for the six months ended June 29, 2024 compared to 2.6% for the six months ended July 1, 2023, a decrease of 10 basis points.
Current wording
RD&E remained relatively consistent at $18.9 million for the nine months ended September 28, 2024 compared with $19.0 million for the nine months ended September 30, 2023. As a percentage of net sales, RD&E was 2.6% for the nine months ended September 28, 2024 compared to 2.7% for the nine months ended September 30, 2023, a decrease of 10 basis points.
Previous wording
For the three months ended June 29, 2024, we incurred $0.8 million of acquisition and restructuring related expense as compared to $1.3 million of expense for the three months ended July 1, 2023. The expense in the Second Quarter was primarily driven by costs associated with the acquisition of ChlorKing HoldCo, LLC and related entities (“ChlorKing”), compared to the Comparable Quarter which was primarily related to severance and employee benefit costs as part of the enterprise cost reduction program initiated in 2022, acquisition integration costs, and costs associated with the relocation of the corporate headquarters from New Jersey to North Carolina.
Current wording
For the three months ended September 28, 2024, we incurred $1.1 million of acquisition and restructuring related expense as compared to $3.3 million of expense for the three months ended September 30, 2023. The expense in the Third Quarter was primarily driven by costs associated with the acquisition of the ChlorKing business, compared to the Comparable Quarter which was primarily related to severance and retention costs associated with the centralization and consolidation of operations in Europe, along with the relocation of the corporate headquarters from New Jersey to North Carolina.
Previous wording
For the six months ended June 29, 2024, we incurred $1.3 million of acquisition and restructuring related expense as compared to $2.9 million of expense for the six months ended July 1, 2023. The six months ended June 29, 2024 primarily included costs associated with the centralization and consolidation of operations in Europe and costs related to the acquisition of the ChlorKing business. The acquisition and restructuring related expenses in the six months ended July 1, 2023 primarily related to severance and employee benefit costs as part of the enterprise cost reduction program initiated in 2022, as well as acquisition integration costs.
Current wording
For the nine months ended September 28, 2024, we incurred $2.5 million of acquisition and restructuring related expense as compared to $6.2 million of expense for the nine months ended September 30, 2023. The nine months ended September 28, 2024 primarily included costs associated with the centralization and consolidation of operations in Europe and costs related to the acquisition of the ChlorKing business. The acquisition and restructuring related expenses in the nine months ended September 30, 2023 primarily included severance and employee benefit costs as part of the corporate headquarters relocation and costs associated with the centralization and consolidation of operations in Europe.
Previous wording
For the three and six months ended June 29, 2024, amortization of intangible assets decreased by $0.7 million and $1.4 million, respectively, compared to the three and six months ended July 1, 2023, respectively, due to the amortization pattern of certain intangible asset classes based on the declining balance method.
Current wording
For the nine months ended September 28, 2024, amortization of intangible assets decreased $1.4 million compared to the nine months ended September 30, 2023 due to the amortization pattern of certain intangible asset classes based on the declining balance method.
Previous wording
For the three and six months ended June 29, 2024, operating income increased $5.1 million and $8.1 million, respectively, due to the aggregated effect of the items described above.
Current wording
For the three and nine months ended September 28, 2024, operating income increased $4.5 million and $12.6 million, respectively, due to the aggregated effect of the items described above.
Previous wording
Interest expense, net, for the three months ended June 29, 2024 consisted of $17.3 million of interest expense on the outstanding debt and $1.1 million of amortization of deferred financing fees, partially offset by $1.6 million of interest income on cash deposits. The effective interest rate on our borrowings, including the impact of an interest rate hedge, was 7.16% for the three months ended June 29, 2024.
Current wording
Interest expense, net, for the three months ended September 28, 2024 consisted of $15.9 million of interest expense on the outstanding debt and $1.0 million of amortization of deferred financing fees, partially offset by $3.7 million of interest income on cash deposits. The effective interest rate on our borrowings, including the impact of an interest rate hedge, was 6.78% for the three months ended September 28, 2024.
Previous wording
Interest expense, net, for the three months ended July 1, 2023 consisted of $18.9 million of interest expense on the outstanding debt and $1.1 million of amortization of deferred financing fees, partially offset by $0.9 million of interest income on cash deposits. The effective interest rate on our borrowings, including the impact of an interest rate hedge, was 7.01% for the three months ended July 1, 2023.
Current wording
Interest expense, net, for the three months ended September 30, 2023 consisted of $19.2 million of interest expense on the outstanding debt and $1.2 million of amortization of deferred financing fees, partially offset by $3.0 million of interest income on cash deposits. The effective interest rate on our borrowings, including the impact of an interest rate hedge, was 7.34% for the three months ended September 30, 2023.
Previous wording
Interest expense, net, decreased by $2.3 million for the Second Quarter compared to the Comparable Quarter, primarily due to the repayment of the Incremental Term Loan B principal balance in April 2024 and higher interest income on cash investment balances.
Current wording
Interest expense, net, decreased by $4.2 million for the Third Quarter compared to the Comparable Quarter, primarily due to the repayment of the Incremental Term Loan B principal balance in April 2024 and higher interest income on cash investment balances.
Previous wording
For the six months ended June 29, 2024, interest expense, net, decreased to $35.4 million from $38.5 million for the six months ended July 1, 2023.
Current wording
For the nine months ended September 28, 2024, interest expense, net, decreased to $48.6 million from $55.9 million for the nine months ended September 30, 2023.
Previous wording
Interest expense, net, for the six months ended June 29, 2024 consisted of $36.4 million of interest on the outstanding debt and $2.3 million of amortization of deferred financing fees, partially offset by $3.3 million of interest income. The effective interest rate on our borrowings, including the impact of an interest rate hedge, was 7.25% for the six months ended June 29, 2024.
Current wording
Interest expense, net, for the nine months ended September 28, 2024 consisted of $52.3 million of interest on the outstanding debt and $3.2 million of amortization of deferred financing fees, partially offset by $6.9 million of interest income. The effective interest rate on our borrowings, including the impact of an interest rate hedge, was 7.00% for the nine months ended September 28, 2024.
Previous wording
Interest expense, net, for the six months ended July 1, 2023 consisted of $37.4 million of interest on the outstanding debt and $2.2 million of amortization of deferred financing fees, partially offset by $1.1 million of interest income. The effective interest rate on our borrowings, including the impact of an interest rate hedge, was 6.86% for the six months ended July 1, 2023.
Current wording
Interest expense, net, for the nine months ended September 30, 2023 consisted of $56.5 million of interest on the outstanding debt and $3.5 million of amortization of deferred financing fees, partially offset by $4.1 million of interest income. The effective interest rate on our borrowings, including the impact of an interest rate hedge, was 7.02% for the nine months ended September 30, 2023.
Previous wording
Interest expense, net, decreased by $3.1 million for the six months ended June 29, 2024 compared to the prior year period primarily due to the repayment of the Incremental Term Loan B principal balance and interest income on cash investment balances.
Current wording
Interest expense, net, decreased by $7.3 million for the nine months ended September 28, 2024 compared to the prior year period primarily due to the repayment of the Incremental Term Loan B principal balance and interest income on cash investment balances.
Previous wording
The $4.9 million loss on extinguishment of debt for the three and six months ended June 29, 2024 was incurred as a result of the voluntary repayment of the Incremental Term Loan B principal balance in April 2024. There was no loss on extinguishment of debt for the three and six months ended July 1, 2023.
Current wording
The $4.9 million loss on extinguishment of debt for the nine months ended September 28, 2024 was incurred as a result of the voluntary repayment of the Incremental Term Loan B principal balance in April 2024. There was no loss on extinguishment of debt for the three and nine months ended September 30, 2023.
Previous wording
We incurred income tax expense of $9.4 million for the three months ended June 29, 2024 compared to an income tax expense of $13.8 million for the three months ended July 1, 2023, a decrease of $4.4 million, or 32.0%.
Current wording
We incurred income tax expense of $4.4 million for the three months ended September 28, 2024 compared to an income tax benefit of $2.3 million for the three months ended September 30, 2023, an increase of $6.7 million, or 295.3%.
Previous wording
The decrease in the Company’s effective tax rate from 31.9% for the three months ended July 1, 2023 to 19.9% for the three months ended June 29, 2024 was primarily due to the change to the Company’s permanent reinvestment assertion for one jurisdiction during the Comparable Quarter and a return-to-provision adjustment in the Second Quarter.
Current wording
The increase in the Company’s effective tax rate from (23.7)% for the three months ended September 30, 2023 to 21.1% for the three months ended September 28, 2024 was primarily due to the exercise of stock options, the release of the valuation allowance against foreign tax credit carryovers and return-to-provision adjustments during the Comparable Quarter.
Previous wording
We incurred income tax expense of $12.4 million for the six months ended June 29, 2024 compared to an income tax expense of $14.6 million for the six months ended July 1, 2023, a decrease of $2.2 million, or 14.9%.
Current wording
We incurred income tax expense of $16.8 million for the nine months ended September 28, 2024 compared to income tax expense of $12.3 million for the nine months ended September 30, 2023, an increase of $4.5 million, or 36.4%.
Previous wording
The decrease in the Company’s effective tax rate from 27.8% for the six months ended July 1, 2023 to 20.8% for the six months ended June 29, 2024 was primarily due to the change to the Company’s permanent reinvestment assertion for one jurisdiction during the Comparable Quarter and a return-to-provision adjustment in the Second Quarter, partially offset by a decrease in excess tax benefit from stock compensation.
Current wording
The increase in the Company’s effective tax rate from 19.9% for the nine months ended September 30, 2023 to 20.9% for the nine months ended September 28, 2024 was primarily due to a decrease in excess tax benefit from stock compensation and the release of the valuation allowance against foreign tax credit carryovers in the prior year period, partially offset with the change to the Company's permanent reinvestment assertion for one jurisdiction in the prior-year period.
Previous wording
As a result of the foregoing, net income increased $8.1 million and $9.6 million for the three and six months ended June 29, 2024, respectively.
Current wording
As a result of the foregoing, net income increased $4.7 million and $14.3 million for the three and nine months ended September 28, 2024, respectively.
Previous wording
Adjusted EBITDA increased to $82.6 million for the three months ended June 29, 2024 from $79.5 million for the three months ended July 1, 2023, an increase of $3.1 million, or 3.9%, driven primarily by increased net sales and higher gross profit, partially offset by an increase in SG&A expense.
Current wording
Adjusted EBITDA increased to $51.1 million for the three months ended September 28, 2024 from $47.2 million for the three months ended September 30, 2023, an increase of $3.9 million, or 8.2%, driven primarily by increased net sales and higher gross profit, partially offset by an increase in SG&A expense.
Previous wording
Adjusted EBITDA increased to $127.7 million for the six months ended June 29, 2024 from $124.4 million for the six months ended July 1, 2023, an increase of $3.3 million or 2.6%, driven primarily by increased net sales and higher gross profit, partially offset by an increase in SG&A expense.
Current wording
Adjusted EBITDA increased to $178.7 million for the nine months ended September 28, 2024 from $171.6 million for the nine months ended September 30, 2023, an increase of $7.1 million or 4.2%, driven primarily by increased net sales and higher gross profit, partially offset by an increase in SG&A expense.
Previous wording
Adjusted EBITDA margin increased to 25.7% for the six months ended June 29, 2024 compared to 25.2% for the six months ended July 1, 2023, an increase of 50 basis points, due to the factors described above.
Current wording
Adjusted EBITDA margin increased to 24.7% for the nine months ended September 28, 2024 compared to 24.0% for the nine months ended September 30, 2023, an increase of 70 basis points, due to the factors described above.
Previous wording
The increase for the three months ended June 29, 2024 was driven by net price improvement and volume growth in Canada, partially offset by a modest decline in volume in the US due to lower new construction and remodels.
Current wording
The net sales increase for the three months ended September 28, 2024 was driven by positive net price including normalized allowances and discounts, the positive impact from acquisitions and volume growth in Canada, partially offset by a decline in volume in the US due to lower new construction and remodels.
Previous wording
Gross profit margin increased to 52.4% for the six months ended June 29, 2024 from 49.4% for the six months ended July 1, 2023, an increase of 300 basis points. Gross margin increased due to operational efficiencies in our manufacturing facilities and net price increases.
Current wording
Gross profit margin increased to 52.4% for the nine months ended September 28, 2024 from 49.4% for the nine months ended September 30, 2023, an increase of 300 basis points. Gross margin increased due to operational efficiencies in our manufacturing facilities and net price increases including normalized allowances and discounts, partially offset by a non-cash increase to cost of goods sold resulting from the fair value inventory step-up adjustment recognized as part of the purchase accounting for the acquisition of the ChlorKing business.
Previous wording
Segment income increased to $75.3 million for the three months ended June 29, 2024 from $71.0 million for the three months ended July 1, 2023, an increase of $4.3 million, or 6.2%. This was primarily driven by an increase in sales and gross profit as discussed above.
Current wording
Segment income increased to $51.6 million for the three months ended September 28, 2024 from $40.1 million for the three months ended September 30, 2023, an increase of $11.5 million, or 28.6%. This was primarily driven by an increase in sales and gross profit as discussed above.
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Previous report — wording carried elsewhere
Gross profit margin increased to 52.9% for the three months ended June 29, 2024 from 49.9% for the three months ended July 1, 2023, an increase of 300 basis points. Gross margin increased due to operational efficiencies in our manufacturing facilities and net price increases.