Hayward Holdings (HAYW) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Our business depends on the performance of distributors, builders, buying groups, retailers and servicers
2. 02The demand for our swimming pool equipment products may be adversely affected by unfavorable economic and business conditions
3. 03We operate in markets with high levels of competition, which may result in pressure on our profit margins and limit our ability to maintain or increase the market share of our products
4. 04Our future success depends on developing, manufacturing and attaining market adoption of new products. Even if we attain significant market acceptance of our planned or future products, the commercial success of these products is not guaranteed
5. 05Our results of operations and cash flows may fluctuate from quarter to quarter for many reasons, including seasonality and weather conditions
6. 06A loss of, or material cancellation, reduction or delay in purchases by, one or more of our largest customers could harm our business
7. 07We are exposed to credit risk on our accounts receivable and this risk is heightened during periods when economic conditions worsen
8. 08We are exposed to political, regulatory, economic, trade and other risks that arise from our international business operations, including the risks associated with geopolitical conflicts
9. 09Past growth may not be indicative of future growth
10. 10We may not be able to identify, finance and complete suitable acquisitions, and any completed acquisitions may be unsuccessful or consume significant resources
11. 11We may be negatively impacted by litigation and other claims, including intellectual property, product liability or warranty claims, and health and safety concerns, including product recalls
12. 12We have significant goodwill and intangible assets and future impairment of our goodwill and intangible assets could have a material adverse effect on our results of operations
13. 13Exchange rate fluctuations could adversely affect our financial condition, results of operations and cash flows
14. 14Changes in our effective tax rate or exposure to additional income tax liabilities could adversely affect our financial results
15. 15We may experience cost and other inflation
16. 16We depend on our ability to attract, develop, and retain highly qualified personnel, including key members of management
17. 17we are unable to attract and retain high-quality executives or key personnel in the future, our business may be adversely affected
18. 18Disruptions in the financial markets could adversely affect us, our customers, consumers and suppliers by increasing funding costs or reducing the availability of credit
19. 19We may encounter difficulties in operating or implementing a new ERP system and human resources information system, which may adversely affect our operations and financial reporting
20. 20Misuse of our technology-enabled products could lead to reduced sales, increased costs, liability claims or harm to our reputation
21. 21As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and the rules and regulations and the listing standards of the NYSE

Risks Related to the Manufacturing, Supply and Distribution of Our Products

1. 22We depend on suppliers, including single-source suppliers and, in a few cases, sole-source suppliers, to consistently supply us with components for our products, and any failure to procure such components could have a material adverse effect on our business, product inventories, sales and profit margins
2. 23If we or our customers do not manage product inventory in an effective and efficient manner, it could adversely affect profitability
3. 24Product manufacturing disruptions, including as a result of catastrophic and other events beyond our control, could cause us to be unable to meet customer demands or increase our costs
4. 25Tariffs and other trade restrictions could adversely affect our business and financial results, and we may not be able to raise prices sufficiently to offset increased costs caused by any such tariffs
5. 26The cost of raw materials could increase our cost of goods sold and cause our results of operations and financial condition to suffer

Risks Related to Government Regulation

1. 27The nature of our business subjects us to compliance with, and liabilities under, employment, environmental, health, transportation, safety, and other governmental regulations
2. 28Our handling of personal information could give rise to significant costs and liabilities, including as a result of governmental regulation, which may have a material adverse effect on our reputation, business, financial condition and results of operations
3. 29Our employees, commercial partners, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
4. 30Our failure to satisfy international trade compliance regulations, and changes in U.S. government sanctions, could have a material adverse effect on us
5. 31Climate change and legal or regulatory responses thereto may have an adverse impact on our business and results of operations
6. 32There is increasing scrutiny from stakeholders on environmental, social, and other sustainability matters

Risks Related to Intellectual Property Matters

1. 33If we fail to successfully enforce our intellectual property rights or register new patents, our competitive position could suffer, which could have a material adverse effect on our business, financial condition, results of operations and cash flows
2. 34If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest, and third parties could assert trademark infringement claims against us
3. 35We rely on access to intellectual property owned by third parties, so our rights to develop and commercialize certain products are subject to the terms and conditions of licenses granted to us by others
4. 36We may be subject to claims that our employees, consultants, or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property
5. 37We may not be able to effectively enforce our intellectual property rights throughout the world

Risks Related to Our Indebtedness

1. 38Our indebtedness could adversely affect our financial condition
2. 39month. As of December 31, 2024, we had no outstanding borrowings under our ABL Facility and approximately $163.4 million of undrawn lines of credit available under the ABL Facility
3. 40Servicing our debt requires a significant amount of cash. Our ability to generate sufficient cash depends on numerous factors beyond our control, and we may be unable to generate sufficient cash flow to service our debt obligations
4. 41The terms of our indebtedness restrict our current and future operations, particularly our ability to respond to change or to take certain actions
5. 42Because our operations are conducted through our subsidiaries, we are dependent on the receipt of distributions and dividends or other payments from our subsidiaries for cash to fund our operations and expenses, including to make future dividend payments, if any
6. 43Despite our debt, we may still be able to incur significantly more debt, which would increase the risks described herein. We may also require additional capital, which may not be available on acceptable terms, if at all

Risks Related to our Corporate Structure

1. 44Provisions in our charter documents and Delaware law may deter takeover efforts that stockholders may believe to be beneficial to stockholder value
2. 45Our certificate of incorporation, as currently amended, designates specific courts as the sole and exclusive forum for certain claims or causes of action that may be brought by our stockholders, which could discourage lawsuits against us and our directors and officers

Risks Related to Ownership of our Common Stock

1. 46Future sales of our common stock, or the perception in the public markets that these sales may occur, may depress the price of common stock
2. 47In the future, we may issue additional shares of our common stock. Issuing additional shares of our common stock or other equity securities or securities convertible into equity may dilute the economic and voting rights of our existing stockholders and reduce the market price of our common stock
3. 48The price of our common stock has been, and may in the future be, volatile and your investment in our common stock could suffer a decline in value