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Fourth, we continue to strengthen Hayward's position as the premier company in the attractive pool industry. We are seeing positive market reception of our innovative new products and are actively converting target accounts to increase Hayward's dealer base. Finally, we are introducing full year 2023 guidance. Hayward delivered tremendous growth in recent years, building upon a strong installed customer base that we expect will drive aftermarket sales for years to come. Compared to 2019, the last pre-pandemic year, our 2022 net sales and adjusted EBITDA represent increases of 79% and 113%, respectively. Given current global economic conditions and difficult comparisons to this period of extremely strong growth, we now expect sales to reduce in 2023 before resuming a historic mid- to high single-digit growth trajectory.

We see 2023 as a year of continued channel inventory recalibration with our net sales into the channel meaningfully below sell-through. This headwind will partially be offset by the adoption of innovative new products, disciplined price cost management and operational excellence. For the full year 2023, we expect net sales to reduce approximately 18% to 22% and adjusted EBITDA of $265 million to $285 million. Turning now to Slide 5, highlighting the results of the fourth quarter and full year. Net sales in the fourth quarter reduced 27% year-over-year to $259 million, largely due to lower volumes related to channel inventory movements and softer conditions in certain markets, especially Europe and Canada. We are encouraged by continued positive price realization during the quarter, more than offsetting inflation and the success of our innovative new solutions.

Adjusted EBITDA in the fourth quarter was $53 million, with a margin of 20.6%. We realized manufacturing cost savings and the initial SG&A savings under our cost reduction program to support structural margins as production volumes declined. Adjusted EPS in the quarter was $0.11. For the full year 2022, net sales reduced 6% to $1.3 billion with adjusted EBITDA of $368 million, each consistent with our guidance. Despite our reduced net sales into the channel, our primary channel partners delivered record sell-through revenue of Hayward products into the core U.S. market in 2022. Adjusted EBITDA margin was a healthy 28%. Adjusted EPS for the full year was $0.98. Turning now to Slide 6 for a business update. End consumer demand continues to vary significantly by region.

While underlying demand trends are moderating in North America, the sunbelt continues to be an area of relative strength, driven by secular trends related to demographics and outdoor living. We are seeing softer trends in more seasonal markets such as the Northeast U.S. and Canada. Within Europe and Rest of World, we continue to see solid growth in the Middle East and Southeast Asia, whereas conditions are especially challenging in Northern Europe. We estimate that Hayward captured significant market share over the last 3 years. We believe this trend is more structural than transitory. This was most notable in the strategically important U.S. sunbelt region and in critical products on the like controls, variable speed pumps and water sanitization.

Our strengthening IoT digital leadership position is driving the development of connected products within our omni automation ecosystem. The market is responding favorably as we continue to gain traction with dealer additions in our Totally Hayward loyalty program. Turning to price versus cost dynamic. A series of out-of-cycle price increases were required over the last few years to combat inflation and protect the structural margin profile of the business. While we have seen some commodity and freight costs start to ease, total cost inflation remains elevated. As a result, we implemented the previously announced price increase of 4% to 5% at the beginning of January. The pool industry has been very disciplined on price historically, and we expect the recent price increases to hold.

Our channel partners continue to recalibrate the level of Hayward inventory to be appropriately positioned, relative to current market conditions. In the second half of 2022, distributors reduced days on hand as expected after a meaningful inventory build during a period of strong demand and significant supply chain disruption. Based upon channel information, we estimate that our sell-through increased 11% in the U.S. on a full year basis to a record level. However, as I mentioned, we now believe the distribution channel will make additional reductions in 2023 as a result of a softer global economic outlook, lower safety stock requirements due to normalized lead times and higher costs of carrying inventory. We believe the channel will trend towards the low end of historical ranges for inventory days on hand over the course of the year, and we have reflected that in our outlook.

Our 2023 guidance now contemplates an additional reduction in channel inventory days on hand with the first quarter impacted most significantly. We took proactive and responsible actions during the fourth quarter to streamline the organization and optimize the cost structure to support margins. This includes a reduction of variable costs in our manufacturing cost base and supply chain to maintain attractive gross margins in the mid- to high 40s. In addition, we expect to deliver structural SG&A savings of approximately 10% on an annual basis or $25 million to $30 million in 2023. These actions are intended to maintain a high 20s adjusted EBITDA profile. Finally, ESG is very important to Hayward and our shareholders. So I'm pleased to report continued progress on our journey.

In 2022, we developed our ESG strategy and framework, which aligns to products, people, planet and principles and completes our first Scope 1 and 2 emission inventories in partnership with a third-party expert. These results and other reporting metrics are included in our first stand-alone disclosure, the Hayward ESG data sheet, which we published on our website during the year. I would encourage our shareholders to review these new disclosures. Turning now to Slide 7. I'd like to share some perspective on the company's competitive mode that strengthens our market position and drives growth for our shareholders. Starting at the 1:00 position on the pie chart, we have an incredibly strong and trusted brand decades in the making, and we're the largest installed base that comes from having a complete product line across all pool types.

This provides ample opportunity to introduce new technologies into the aftermarket, which is the primary driver of our business at approximately 80% of sales. Next is our strength across multiple channels as we revamped our go-to-market model to drive growth. This included restructuring the sales force and introducing dedicated business development teams focused solely on new customer acquisition. The result has been continued growth in the number of pool builders, remodelers and servicers to our Totally Hayward loyalty program that state their reputation on Hayward products every day in the backyard. We also introduced a unique e-commerce approach that resulted in true multichannel capabilities across distribution, retail and online. Moving around the chart, Hayward is committed to operational excellence and continuous improvement.

And we substantially improved our manufacturing and supply chain capabilities in recent years. We primarily manufactured domestically with approximately 85% of our production in the U.S. We are vertically integrated with shorter supply chains than others. Our facilities are highly automated and agile with the proven ability to flex up and down as appropriate with limited incremental capital. Finally, one of our biggest differentiators is our product and technology leadership, which I will discuss on the following slide. These important elements of Hayward sustainable competitive moat form a strong foundation for profitable growth longer term. Turning to Slide 8. I'd like to provide some additional detail on our industry-leading products and technologies.

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While operational excellence and customer service are ingrained in our culture, at its heart, Hayward as a product company. Recent launches have showcased Hayward's focused new product development strategy. Key product categories have been identified as must-win with the goal of delivering compelling products, capable of attracting both, new customers as well as expanding our total addressable market by driving incremental content into lower technology pools in the installed base. We prioritize investment into these product categories, leveraging in-house core competencies to deliver innovative, patent-protected solutions designed to make pool ownership easier, more affordable and sustainable. They are key to driving growth and market share gains.

A few of these recent introductions are shown here on the slide. Our variable speed and XE pump, DOE-compliant platforms lead the way in energy efficiency and are responsible for our ENERGY STAR Partner of the Year Award. Omni continues to be the IoT automation platform of choice Our effortless and simple use for both, the homeowner and trade professional. HydraPure is a novel 3-in-1 water treatment technology combining UV with Ozone and AOP to provide the safest, purest and clearest water. The new S3 AquaRite builds on our best-in-class salt chlorination platform providing the ability to operate at 1/3 the salt concentration of legacy designs and offering unique control capability. Our LED lighting solutions, pool, spa, water features and now landscape.

Simplicity of installation and control was recently added through the introduction of SmartPower. Finally, the new universal HC heater offers dual fuel capability and combines efficiency and performance in the industry's smallest footprint, easiest to install heater. To summarize, technology leadership is central to our growth strategy, and we are very proud of our recent innovations. We continue to prioritize investments into new product developments to further strengthen our competitive positioning and support our customers with industry-leading products and technologies. With that, I'd now like to turn the call over to Eifion Jones, who will discuss our financial results in more detail.

Eifion Jones: Thank you, Kevin, and good morning. I'll start on Slide 9. All comparisons will be made on a year-over-year basis. Net sales for the fourth quarter decreased 27% to $259 million. This was in line with our expectation and primarily driven by a 36% reduction in volume and a 1% unfavorable foreign exchange impact, partially offset by 9% from price realization and 2% contribution from acquisitions. The volume decline during the quarter was primarily driven by distribution channel inventory movements, which were anticipated as we entered the quarter. Gross profit in the fourth quarter was $109.5 million. Gross profit margin declined 466 basis points to 42.3% as continued strong price realization was offset by lower operating leverage on reduced production volumes.

Selling, general and administrative expenses during the fourth quarter were consistent with the prior year period at $60.5 million, representing 23% of net sales. As a reminder, the fourth quarter 2021 benefited from a $5 million favorable nonrecurring item, related to insurance proceeds from a property claim. And we realized approximately $9 million in structural cost savings in the fourth quarter of 2022. Adjusted EBITDA was $53.3 million in the fourth quarter, and adjusted EBITDA margin was 20.6%. Our effective tax rate was 30.2% in the fourth quarter compared to 18.4% in the prior year period. The year-over-year change was primarily due to the timing of discrete items. Adjusted EPS in the quarter was $0.11, fully diluted share count has decreased 25 million shares or approximately 10% of shares outstanding, primarily the result of the share repurchases completed during the first 3 quarters of 2022.

Turning now to Slide 10 for a review of our full year results. Net sales for the fiscal year 2022 decreased 6% to $1.3 billion. This decrease was in line with our guidance and primarily driven by a 20% reduction in volume and 2% unfavorable foreign exchange impact, partially offset by 13% from price realization and a 2% contribution from acquisitions. Gross profit for the full year was $597 million. Gross profit margin declined $135 million basis points to 45.4% as strong price realization to combat inflation was offset by a lower operating leverage on reduced volumes in the second half. We invested $22 million in RD&E and engineering in 2022 to support our commitment to growth and innovation. SG&A expenses for the year declined 7% and to $249 million, driven by lower discretionary and volume-based expenses plus the initial benefits of our cost reduction program.

On a full year basis, SG&A as a percentage of net sales was 19%. Adjusted EBITDA was $367.6 million with an adjusted EBITDA margin of 28% for the full year. Our effective tax rate was 23.4% in '22 compared to 21.7% in 2021. Adjusted EPS was $0.98 for the full year 2022. Now I'll discuss our report with segment results. Beginning on Slide 11. North America net sales for the fourth quarter declined 27% to $216.8 million, driven by 38% lower volumes, partially offset by 9% favorable price impact and 2% contribution from acquisitions. The reduction in volume was largely due to the anticipated rightsizing of channel inventories. Gross profit margin was 43%, and adjusted segment income margin was 21.8%. Turning to Europe and Rest of World. Net sales for the fourth quarter decreased 23% to $42.2 million.

Net sales benefited from a net favorable price increase of approximately 7% but were adversely impacted by a 25% decline in volumes as well as a 5% headwind from unfavorable foreign currency translation. Gross profit margin was 38.8%, and adjusted segment income margin was 19.9%. Turning to Slide 12 for a review of our reportable segment results for the full year. North America net sales declined 5% to $1.1 billion, driven by 21% lower volumes, partially offset by a 15% of favorable price impact and 2% contribution from acquisitions. Gross profit margin was 46.4% and adjusted segment income margin was 30.7%. Turning to Europe and Rest of World. Net sales for the full year decreased 15% to $205.3 million, benefiting from a net favorable pricing increase of approximately 8%, but adversely impacted by a 17% decline in volumes and a 6% headwind from unfavorable foreign currency translation.

Gross profit margin was 40% and adjusted segment income margin was 23.6%. Turning to Slide 13 for a review of our balance sheet and cash flow highlights. We ended 2022 with total liquidity at $268 million including the cash and cash equivalent balance of $56 million and availability under our undrawn credit facilities of $212 million. Net debt to full year 2022 adjusted EBITDA was 2.9x. We will not make an excess cash flow payment in '23, given our credit agreements permit deductions for CapEx, share repurchases and M&A activities. Cash flow from operations was a use of $28 million in the fourth quarter, reflecting an increase in accounts receivable driven by early by order terms. Cash flow from operations was $116 million for the full year.

Working capital use in 2022 was comparably higher, primarily related for the higher safety stock positions we took in certain raw materials and finished goods. Inventories peaked at the end of the second quarter 2022 and declined by $29 million or 9% in the second half. CapEx is $6 million in the fourth quarter was consistent with the prior year period. For the full year, CapEx of $30 million compared to $26 million in 2021 as we continue to invest in highly efficient automation into our production facilities. Free cash flow was $86 million for the full year 2022. The business has strong free cash flow generation characteristics, driven by high-quality earnings, which support our growth investments. Turning now to capital allocation on Slide 14.

We will maintain a disciplined financial policy. Our capital allocation priorities will be balanced, emphasizing strategic growth investments and shareholder returns while we maintain prudent financial leverage. We also remain an acquisitive company, having successfully integrated 4 acquired companies in the last 18 months, which contributed 2% to sales growth in the full year 2022. Finally, strong free cash flow generation supports opportunistic return of cash to shareholders. We deployed $343 million to repurchase 23 million shares in 2022. Entering '23, we had $400 million remaining on the existing $450 million 3-year share repurchase authorization. Turning now to Slide 15 for the main trends supporting our outlook. We remain very positive about the long-term health and growth profile of the pool industry, particularly the strength of the aftermarket.

With that said, for the full year 2023, the company anticipates a decrease in consolidated net sales of 18% to 22%. This outlook reflects resiliency in the North American nondiscretionary aftermarket and reductions of approximately 20% to 25% in new construction and discretionary model and upgrades. Whereas in Europe and Rest of the World, we expect reductions more in line with 25% as geopolitical circumstances negatively impact consumer sentiment in that region. These decreases will be partially offset by a 4% to 5% net sales contributions from price increases initiated at the beginning of the year. Included in our guidance is an additional reduction of channel inventory as a consequence of the reduced consumer demand in 2023, a reversion to normal supply chains and a higher cost of capital.

We expect our channel partners to adopt a lean inventory position, given these dynamics and moved to the lower end of their desired days-on-hand targets. We expect to revert towards more normal seasonality in 2023. However, we expect channel inventory rightsizing the impact the first quarter most significantly with net sales trending below the typical seasonality in this first quarter. We expect gross profit margin to increase in 2023 due to incremental positive price realization and executed productivity initiatives. We anticipate full year '23 adjusted EBITDA in the range of $265 million to $285 million. We are on track to deliver the targeted SG&A cost savings of $25 million to $30 million in '23 or an incremental $16 million to $21 million after achieving approximately $9 million in 2022.

These savings will be partially offset by increasing wage inflation and variable compensation. We also expect a strong improvement in free cash flow in '23 as we reduce our own inventory levels. This should result in more typical free cash flow conversion of greater than 100% of net income with free cash flow exceeding $150 million. Finally, we expect interest expense of approximately $78 million, reflecting increase in interest rates and borrowing levels. We also expect a modestly higher effective tax rate of approximately 25% and CapEx spending consistent with the prior year at $25 million to $30 million as we continue to support the business and invest for growth. We are confident in our ability to successfully execute in this dynamic environment and remain very positive about the long-term growth outlook.

And with that, I'll now turn the call back to Kevin.

Kevin Holleran: Thanks, Eifion. I'll pick back up on Slide 16. Before we close, let me reiterate the key takeaways from today's presentation. We delivered fourth quarter results that were consistent with our expectations. We are controlling what we can control, optimizing our manufacturing base and taking proactive steps to realign our cost structure to current conditions while positioning for future growth. Our agile manufacturing capabilities provide a significant competitive advantage as we flex production as appropriate to satisfy demand and maintain margins. We continue to position Hayward as a premier company in the attractive pool industry as we innovate and support our customers with best-in-class award-winning products and technologies.

Finally, our 2023 outlook reflects continued near-term headwinds related to macroeconomic conditions and channel destock, but I have every confidence that we have the right strategy and talent in place to drive compelling financial results and shareholder value creation. With that, we're now ready to open the line for questions. It appears that we're having a technical difficulty. If everyone could just stand by, we'll be right back to the Q&A session momentarily.

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