Investing in Potential
Hayward’s CEO, Kevin Holleran, shares his thoughts on the company’s recent IPO, the impact of the pandemic on the industry, and the future of both. While the past year has been a time of extreme challenges, he sees a path forward that is overflowing with potential from unprecedented demand for new construction and an enduringly strong aftermarket.
Few people in the industry have had a chance to meet Hayward’s CEO Kevin Holleran, through no fault of his own. After taking the reigns of the manufacturing giant just 18 months ago, little did he or anyone know what 2020 had in store. With industry trade shows cancelled as a result of the pandemic, Holleran has yet to circulate among industry members outside of his own company and its investors.
Nevertheless, he has enthusiastically stepped into his role leading the company into what he believes is a future rich with growth potential. On March 12, Hayward held an IPO, going public on the New York Stock Exchange; a major event for any company, and one defined by optimism.
WaterShapes spoke with Holleran on thatday about the IPO, his thoughts on the state of the industry, and where things look to be going in what everyone hopes is the beginning of the post-COVID era.
WaterShapes
Congratulations on the IPO, this must be an exciting day.
Holleran
It is a very exciting day, a great achievement for everyone at Hayward, past and present. We’re proud to welcome all these new investors to the Hayward family, but this is really only the beginning of a new chapter. Going forward, we’ll be able to fund more ambitious growth that will enable us to expand the ways we serve the industry. This was really my ambition when I joined the company back in 2019. It’s very special to help bring this company to the next phase.
WaterShapes
What factors go into deciding when to have an IPO?
Holleran
Once we decided the IPO was the best way to move forward, we adopted a very aggressive timeline. I applaud the team behind me, who worked tirelessly over the holidays to get to market as quickly as we could. It was a frenzied pace, but it really wasn’t about timing in terms of the market. It was more a matter of, now that we’ve determined this is the best direction, let’s get there asap.
I see it as the best pathway to the next phase. It generates the proceeds we’ll need to trim up our debt position and really give our leadership team the flexibility to engage in some aggressive expansion. Clearly our industry is starving for growth. I’m not talking so much about expanding production capability, although that is part of it, but more about expanding organic and inorganic activities, M&A activities to expand the company under the great Hayward brand. We’re running down those parallel paths and we felt this was the best way to do it.
WaterShapes
What’s it like leading a company through an IPO?
Holleran
It’s a dream to be able to do this, especially with this company that has a 95-year history of leadership and innovation. It’s exciting to build out the different product lines for inground pools, above ground and commercial. It’s such a great company and such a great industry with so many positive trends and growth opportunities. Yes, it’s a very exciting time to be leading what I believe is the best company in our wonderful industry.
I’ve always worked for publicly traded companies and had never been in this position before. It’s like stepping into the coliseum, I mean, this [NYSE] is the “Cathedral of Capitalism.”
WaterShapes
How will this impact your dealers?
Holleran
My hope is that we will become an even better supplier to them. We’re very, very proud of the partnerships we’ve built with our customers, those people who stake their reputations with our brand, day-in, day-out. My commitment is to improve, to round out our product offerings and to further develop the resources we provide so they can be better at their jobs.
These are relationships we cherish, and by no means take for granted. We know we have great competitors out there who would like to convert them. We know we have to continue to up our game to maintain that loyalty and to attract new people to our company and our products.
WaterShapes
This must be an extraordinary time to be leading Hayward. What do you think about where we are now as an industry?
Holleran
The pandemic has clearly made for some winners and losers. Unfortunately, there are industries that have been negatively impacted. Clearly ours has been a winner. What I’ve pointed out to investors, and analysts before that, is that COVID brought a lot of attention to our industry and underscored consumer trends that were already in place before the pandemic. We know that people want to spend more time at home, to be with their family, to extend their home to the outdoors, and they want more amenities.
WaterShapes
Do you think the demand will continue in the post-COVID era?
Holleran
There’s a lot of questions about the so-called “covid bubble”. I don’t think there’s a bubble, but there has been more attention placed on the benefits of our industry’s products. Certainly not everyone who wanted to a build a pool was able to over the last year and they’re not going to forget that they wanted a pool.
I think there’s tremendous runway ahead. The secular trends of de-urbanization, migration to warmer climates, millennials leaving the city and buying their first homes, or trading up in the housing market, and valuing outdoor activities. I believe this generation coming into the workplace and the housing market, much more so than my generation, values the kind of active and healthy lifestyle you can have when you own a pool.
We’re the centerpiece of that outdoor investment. When you think of the decking, outdoor kitchens, landscaping, irrigation equipment, lighting and other features, they’re all a complement to the body of water.
Owning a pool is exciting! Now you can exercise and have a great time with family and friends in a safe and healthy environment. I think COVID has only brought more attention to something that was already happening before the virus hit.
WaterShapes
On another front, manufacturers are preparing for the upcoming Department of Energy changes for making and rating pumps. How does that factor into your plans?
Holleran
It’s a great change and we’re completely behind it. Variable-speed technology gives the homeowner so much more flexibility, cost savings and it’s so far superior from an environmental and energy efficiency standpoint. We do still have a very competitive line of single-speed pumps, some of which won’t be compliant, although some will. But we’re very excited about our line up of variable speed pumps and we’re elated about the Energy Star most-efficient rating the DOE bestowed up on us.
We know that variable-speed pumps are more expensive, but they generate such a fast return on investment, we feel this will be good for pool owners. It’s a very compelling payback story, particularly on the West Coast; especially in California where the cost for kilowatt hour is the highest in the country.
We’re looking forward to this transition.
WaterShapes
What impact has the situation in Texas with so many damaged pools placed on the manufacturing sector?
Holleran
That’s a very unfortunate situation, especially with the shortages we’ve all experienced during the pandemic. Any thought that there would be excess inventory in the pipeline any time soon is probably not realistic because those products are going to be absorbed very, very quickly, at least for the time being.
WaterShapes
Do you have parting comments for our readers?
Holleran
I’ll close by saying something that really came across during the “road show” with potential investors. There was certainly a strong appreciation for the strength of the outdoor living market, but I don’t think there was the same level of awareness about the strength of the aftermarket that really drives much of our industry.
While we always want to see growth in the numbers of new pools being installed, our fortunes are really tied to all of those existing pools that need replacement, upgrading and remodeling. That was a bit of an awakening for some people in the investment community. While that doesn’t take away all the concern about cyclicality of the market, the strength of the aftermarket and those millions of pools people are enjoying brings positive attention to our industry.
Kevin Holleran is president and chief executive officer of Hayward Holdings, Inc. (“Hayward”). With nearly 30 years of experience in commercial and management positions across industrial-focused end markets, Holleran also sits on Hayward’s board of directors. Prior to joining Hayward in 2019, Holleran served as President & CEO of the $4 billion Industrial Segment within Textron, which is comprised of Textron Specialized Vehicles, a leading global manufacturer of purpose-built vehicles and equipment for a variety of commercial and recreational applications across a number of brands. Prior to his time at Textron, Holleran held several management positions at Ingersoll Rand and Terex Corporation across the sales, marketing, and product management functions. Holleran holds an MBA from Wake Forest University and an undergraduate degree from Cornell University.