Kevin Maczka; Vice President, Investor Relations and FP&A; Hayward Holdings Inc
Kevin Holleran; President, Chief Executive Officer, Director; Hayward Holdings Inc
Eifion Jones; Chief Financial Officer, Senior Vice President; Hayward Holdings Inc
Nigel Coe; Analyst; Wolfe Research
Saree Boroditsky; Analyst; Jefferies
Andrew Carter; Analyst; Stifel, Nicolaus & Company, Inc.
Michael Halloran; Analyst; Robert W. Baird & Co. Incorporated
David Tarantino, Jr.; Analyst; KeyBanc Capital Markets
Nick Cash; Analyst; Goldman Sachs
Rafe Jadrosich; Analyst; BofA Global Research
Operator
Welcome to Heywood Holdings Fourth Quarter 2024 earnings call. My name is Christine, and I'll be your operator for today's call. (Operator Instructions) Please note that this conference is being recorded. I will now turn the call over to Kevin Maczka, Vice President, Investor Relations and FP&A. Mr. Maczka, you may begin.
Kevin Maczka
Thank you, and good morning, everyone. We issued a fourth quarter 2024 earnings press release this morning, which has been posted to the Investor Relations section of our website at investor.hayward.com. There, you can also find an earnings slide presentation that we will reference during this call. I'm joined today by Kevin Holleran, our President and Chief Executive Officer, and Eifion Jones, Senior Vice President and Chief Financial Officer.
Before we begin, I would like to remind everyone that during this call, the company may make certain statements that are considered forward-looking in nature, including management's outlook for 2025 in future periods. Such statements are subject to a variety of risks and uncertainties, including those discussed in our most recent Form 10-K and 10-Q filings with the Securities and Exchange Commission that could cause actual results to differ materially. The company does not undertake any duty to us update such forward-looking statements.
Additionally, during today's call, the company will discuss non-GAAP measures. Reconciliations of historical non-GAAP measures discussed on this call to the comparable GAAP measures can be found in our earnings release and the appendix to the slide presentation. All comparisons will be made on a year-over-year basis.
I will now turn the call over to Kevin Holleran.
Kevin Holleran
Thank you, Kevin, and good morning, everyone. It's my pleasure to welcome all of you to a words Fourth Quarter Earnings Call. I'll begin on Slide 4 of our earnings presentation by highlighting a tremendous milestone toward the 100 year anniversary of the Company's founding in 1925.
As we celebrate this achievement, we reflect with it immense pride on our journey from the founding by Irving, Hayward as a tool and die maker to Oscar Davis, acquiring the business in the 1960s and entering the pool market to the global public company.
We are today for a century. We've served our customers with outstanding products and services, and our centennial celebration is a testament to our resilience and passed accomplishments. Our Company has a solid foundation for future growth and value creation. We are extremely excited about the long-term prospects for the pool industry and our ability to execute our growth plans.
Turning now to Slide 5 of our presentation for today. Today's key messages. I'm pleased to report strong fourth quarter results significantly exceeding expectations. We finished the year on a high note with better than anticipated in Q2 for coming 2025 pool season. This resulted in solid sales and earnings growth, margin expansion and increased cash flow generation.
Net sales increased 17% for the quarter and 6% for the year through positive contributions from both volume and price. Gross profit margins expanded to record levels and full year free cash flow increased 22%, exceeding our guidance. Solid profitability and cash flow enabled us to reduce net leverage into our targeted range of two to three times of completing accretive capital deployments for early debt repayment and a strategic acquisition.
As I reflect on 2024, it was a successful year for Hayward. I'm proud of the performance of our team in a challenging global environment, and I'd like to thank all our valued customers and vendor part partners for their efforts during year.
In addition to delivering solid financial results, we further strengthened the senior leadership team and executing key strategic initiatives that position us for pop for profitable growth. Included expanding our customer relationships, advancing our technology leadership position with the introduction of it, native new products and leveraging our operational excellence capabilities. I'll discuss our accomplishments in more detail in a moment.
Moving to 2025, we expect to deliver sales and earnings growth on a full year basis in a continued dynamic operating environment. For the full year 2025, we expect net sales to increase approximately 1% to 5%.
Turning now to slide 6, highlighting the results of the fourth quarter and full year. Net sales in the fourth quarter increased 17% to $327 million, driven by price and double digit increase in volume. By segment. Net sales increased 20% in North America and 2% in Europe and rest of world.
Gross profit margins expanded 220 basis points year-over-year, 170 basis points sequentially to a record 51.4%. Adjusted EBITDA increased 30% in the fourth quarter, and adjusted EBITDA margin was a robust 30.2%. Adjusted diluted EPS increased 35% to $0.27.
For the full year two 24, the net sales increased 6%, $1,052 million, and adjusted EBITDA increased 12% to $277 million, each exceeding our most recent guidance. We delivered strong profitability with gross margins exceeding 50% for the first time. On a full year basis, adjusted EBITDA margin for the full year was 26.4% and adjusted diluted EPS increased 20% to $0.67.
Turning now to slide 7, I'd like to share some perspective on the year. 2024 was a successful year for Hayward. Despite the macro economic challenges faced by the pool industry, we delivered on our financial commitments and strengthen our position as a premier company in the industry, a technology leader.
We increased investment in both R&D and engineering to support our commitment to innovation. We successfully launched several differentiated products during the year. two great examples of new innovations or the micro channel temperature control unit, an industry first single unit product offering the ability to both heat cool water and call it as low as 40 degrees for a cold punch.
Secondly, our proprietary Omni Pro app, a cloud-based productivity tool or trade professionals, enabling real-time remote monitoring and equipment configuration. We're excited by the adoption of these unique products in the marketplace. Hayward has a long-standing culture of operational excellence and continuous improvement.
We demonstrated our capabilities again in 2020 for our manufacturing footprint in Spain, investing in automation and productivity initiatives and expanding gross margins as a testament to our product and operational performance in the value we provide cost summers. Hayward was recognized during the year by the largest global distributor with separate awards for both innovation, leadership and operational excellence.
On the commercial side, we increased investment in customer care, leveraging new technologies and tools to enhance customer experience. We upgraded our customer loyalty program, Graham's rewards trips and partner sarcomas to strengthen and expand our dealer relationships to help grow our respective businesses. We also launched Hayward hub DFW in Texas, a first-of-its-kind Hayward training and support facility for dealers and trade professionals in this important growth market.
During the year, we further strengthened the senior leadership team by appointing for accomplished executives to key positions within the organization. With these additions and expanded capabilities, I'm convinced we have the right leadership talent in place to execute our growth strategies.
These achievements contributed to solid financial performance, including a return to sales growth and continued margin expansion. This enabled us to reduce net leverage while reinvesting the business repaying $123 million of our debt early and completing a strategic acquisition, of course, King advancing our position in the commercial pool market.
Turning now to Slide 8. Following that review of 2024, I'd like to look forward it highlights the Company's strategy to drive compelling growth and shareholder value. At our core, we are a products company. Our product management and engineering roadmaps are designed to deliver innovative, energy-efficient automated solutions to transform the experience of water to increase the enjoyment of full ownership, leveraging best practices and capturing global trends.
Our teams are actively driving innovation and setting the pace for the industry. We are focused on creating customer advocacy for the Hayward brand, strengthen relationships with trade professionals and in turn driving incremental growth. To enable this. Our sales, marketing and technical service teams continue to develop new value added solutions for our trade professionals.
Organizational changes and investment in our commercial teams allow us to further support, train and develop our partners as well as attract new professionals to Hayward. The Cortina acquisition was a key investment in our Commercial Pool product category. We are pleased with its performance and see many additional opportunities to grow this category with focused leadership and new product introductions.
As we integrate co-working into Hayward, we are identifying cross-selling opportunities with our existing Flow Control team. We now have the opportunity to specify UV and chemical water treatment systems. In addition to our core engineered thermal plastic valves into abroad and expanding water industry, we have a proven ability to drive margin expansion from already robust levels. Specifically, our gross profit margin expanded over 600 basis points in the last five years of 15.5% and nearly 400 basis points since 2021.
Despite reduced volumes as the industry normalized after the pandemic, we see the opportunity for further margin upside over the long term, driven by four key pillars of our margin strategy, productivity gains resulting from our operational excellence culture, a higher margin mix of technology products, operating leverage given current low capacity utilization levels and proactive price cost management. Finally, as we've highlighted before, we maintain a disciplined and balanced approach to capital allocation, emphasizing organic growth investments and strategic acquisition opportunities to complement our product offering, geographic footprint and commercial relationships.
In summary, I'm confident we have the rights for and win shareholder returns. And with that, I'd like to turn the call over to Adrian to discuss our financial results in more detail.
Eifion Jones
Thank you, Kevin, and good morning. I'll start on Slide 9. As Kevin stated, we are very pleased with our fourth-quarter financial performance that sales increase and exceeded expectations, delivered outstanding margin expansion and generated better than expected free cash flow.
Looking at the results in more detail, net sales for the fourth quarter increased 17% to 327 million. This was driven by a 12% increase in volume, 4% positive net price realization and a 2% contribution and from the acquisition of coking completed in June. Gross profit in the fourth quarter increased 23% to EUR168 million. Gross profit margin increased 220 basis points year over year and 170 basis points sequentially to a quarterly record of 51.4%.
Adjusted EBITDA was 99 million in the fourth quarter, and adjusted EBITDA margin increased 300 basis points to 30.2%. Effective tax rate was 14% in the fourth quarter compared to 21% in the prior year period. Change was primarily due to timing of discrete items, adjusted diluted EPS and also increased 35% to $0.27.
Turning now to Slide 10 for a review of our full year results. Net sales for the fiscal year 2020 for increased 6% to 1.05 billion exceeded our most recent guidance was driven by 3% positive price realization, 2% higher volume and a 1% contribution from the clocking acquisition.
Gross profit for the full year increased 11% to EUR531 million. Gross profit margin increased to 240 basis points to 50.5%, exceeding 50% of the first time on the full year basis. Strong profit margins enabled us to reinvest in the business.
In 2024, we increased research development and engineering investment by 5% to $26 million to support our commitment to growth and innovation. SG&A expenses for the year end increased 12% to 261 million, driven largely by normalized annual incentive compensation relative to a comparable low result in the prior year, targeted growth investments in selling and customer care and acquired quoting SG&A adjusted EBITDA increased 12% to $277 million, with adjusted EBITDA margin increasing 150 basis points to 26.4%.
Our effective tax rate was 18% in 2024 compared to 20% in 2023. Adjusted diluted EPS increased 20% to $0.67 for the full year 2020. For now, I'll discuss our reportable segment results.
Turning to Slide 11 for a review of our reportable segment results. For the fourth quarter, North American net sales increased 20% to 286 million, driven by 5% net price realization, 13% and higher volume and 2% from the floor acquisition. Net sales increased 20% of US and 23% in Canada.
The robust volume increase in the quarter was driven primarily by strong in-quarter demand, plus increased early by demand for the upcoming 2025 flu season. Gross profit margin increased 310 basis points to a robust 54.2%. Adjusted segment income margin increased 500 basis points to 36.7%.
Turning to Europe and Rest of World, net sales for the quarter increased 2% to $41 million. Net sales benefited from 1% favorable net pricing and 2% higher volumes, partially offset by 1% from Farhan currency translation. Net sales in Europe increased 1% and rest of world increased 2%. Gross profit margin was 31.4% and adjusted segment income margin was 12.8%.
Turning to Slide 12 for a review of our reportable segment results. For the full year, North America net sales increased 9% to 896 million, driven by 4% higher price and volume plus a 1% contribution from talking sales in the US and Canada increased 8% and 16%, respectively. We are encouraged by the improved performance in Canada.
We delivered exceptional profitability with gross profit margins up 310 basis points to 53% and adjusted segment income margin up 360 basis points, so 32.5% in Europe and rest of world. Net sales for the full year reduced 8% to 156 million, with a net price an increase of approximately 1%, offset by 9% lower volumes.
Sales in Europe reduced 1% and rest of world grew to 16%. Gross profit margin was 36.2% and adjusted segment income margin was 14.6%. We took steps throughout 2024 to improve the performance of this segment and are pleased to see signs of improvement in the fourth quarter. We expect our proactive actions, including appointing new senior leadership and simplifying the operating model to result in improved sales and margin trends going forward.
Turning to Slide 13 for a review of the balance sheet. Cash flow highlights. We are very pleased with the balance sheet improvement and a strong cash flow performance during the year. Net debt to adjusted EBITDA improved significantly from 3.7 times at the end of 2023 to 2.8 times at the end of 2024, consistent with our target range of two to three times. Total liquidity at the end of the year was 360 million, including $197 million in cash and equivalents and short-term investments, plus availability under our credit facilities of 164 million.
We have no near-term maturities on our debt that matures in 2028 and the undrawn ABL matures in 2026, a borrowing rate benefits from 600 million of debt currently tied to fixed interest rate swap agreements maturing in 2025 through 2020. A limiting our cash interest rate long term facilities is 6.4% in 2024. Our average interest rate earned on global cash deposits for the year was 5%. Overall, we are pleased with the quality of our balance sheet.
Our business has strong free cash flow generation characteristics driven by high quality earnings, which support continued growth investments. Cash flow from operations for the full year increased 15% to $212 million due to increased EBITDA and working capital management. Full year 2020 full CapEx of 24 million was below the prior year due to project timing. Free cash flow increased 22% to 188 EUR8 million in 2020.
For Turning now to capital allocation on Slide 14. As Kevin discussed, we maintain a disciplined financial policy and take a balanced approach, emphasizing strategic investments and shareholder returns while maintaining prudent financial leverage. We continue to pursue additional acquisition opportunities through our own augment our organic growth in addition to opportunistic share repurchases.
Turning now to Slide 15 for the outlook. We are introducing 2025 guidance, reflecting sales and earnings growth, driven by solid execution across the organization, positive price realization and continued technology 25 with expects net sales to increase approximately 1%, so 5% to 1.06 to EUR1.1 billion is the outlook reflects modest volume growth in non discretionary aftermarket maintenance with modest reductions in the more discretionary elements of the market, new construction and remodel and upgrade.
We expect a positive net price contribution of approximately the 2% to 3% based on prior pricing announcements for the year. This does not include any new pricing actions that may become necessary as a consequence of the evolving tariff environment. We continue to evaluate the situation and we'll respond with appropriate supply chain and pricing actions as needed.
Our business is seasonal. We expect normal seasonal strength in the second and fourth quarters. With the quarterly cadence generally consistent with the prior year, we anticipate full year 2025 adjusted EBITDA of 280 to EUR290 million. We also expect solid cash flow generation again in 2025, with the conversion of greater than one 100% of net income of approximately 160 million.
We are confident in our ability to successfully execute in dynamic environments and remain very positive about the long-term growth outlook, the pool industry, particularly the strength of the aftermarket. But with that, I'll now turn the call back to Kevin.
Kevin Holleran
Thanks, Ivan. Picked back up on Slide 16. Before we close, let me reiterate how proud and thankful I am for the team's performance throughout 2024 and a strong finish to a successful year with a fourth quarter that exceeded expectations.
For the year, we returned to sales growth, delivering impressive margin expansion and strong cash cash flow, allowing us to fund our growth strategies. Looking forward, we expect continued sales and earnings growth in 2025 and are extremely excited about our longer-term prospects.
We will be celebrating our 100 year anniversary throughout the year. I'm confident 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.
Operator
(Operator Instructions) Nigel Coe, Wolfe Research.
Nigel Coe
Good morning, everyone, and congratulations on the on the anniversary 100th anniversary exposure. The question. So I just wanted to kind of maybe just digging a bit deeper on the 13% volume growth in North America this quarter.
You talked about strong core demand, but also strong early buy. So just wondering if there's any way you can maybe the fact that strengthen the advice from the kind of in quarter. Is there any impact on 1Q that we should consider on the back end of the strength we saw in 4Q?
Eifion Jones
Yes, good morning, Angela. It was a good quarter. No maximum in overall, as you mentioned, we were up volumetrically 13%. It is fair to say that we had a good quarter demand period in Q4. Early buy orders and shipments were up year-over-year.
But it's really important to understand that the ship proportionately less of our Early Buy was 24, but we did in 2023 net pricing a little bit stronger Q2. So that in-season demand that has a positive impact of holiday on the price. Fx was a little bit better than expectations, which obviously positively affects translate the Darlington all back to Canada.
I think it's probably appropriate say cautions consequently due to price for stronger because of that in-season demand, cash flow, a stronger enabling strengthening of the balance sheet throughout the quarter. It does set up obviously a bit of a stronger backlog coming into 2025 for the early buy components.
But I would remind you that, you know, we continue to evaluate the environment as we step into 2025. And as we mentioned in our prepared remarks before, we expect Q1 to be very similar structurally to the prior.
Kevin Holleran
Nigel example. Nigel, I'd just add that in Q4, there was some, you know, these aren't the circumstances that the identity of necessarily look or but there was some volume related to the hurricane activity in Q4 that had some impact on the on a stronger quarter demand that I've just just just touched upon a I would just like to pause for a moment and beyond Q4 to just put a finer point on some of the things on the achievements of delivered throughout the year, specifically on the on the commercial side, invest more in R&D and receiving some industry accolades while also delivering some high value products, new products to our our pool owners.
We did invest in sales and marketing to drive growth and some underpenetrated regions. We opened our first Hayward hub. I hope that's the first of many and Dallas-Fort Worth market launched it on the Pro app. And the core King acquisition is a fantastic business, presenting some nice cross-selling opportunities financially, all of that, as I said in my prepared remarks, drove net sales up 6% to nine in North America, adjusted EBITDA of 12% growth in free cash flow of 22%.
So gross margins, which I'm sure will talk about further here in the Q&A, delivering a record north of 50% in oh is really something to be to be proud of. So from a five year standpoints, there's sometimes gets gets overlooked.
But in over the last five now we've delivered 7.5% kegger on net sales, including 10% in the US or 11% with commercial pool on an adjusted EBITDA. That same peer period of 10% growth. So again, it was a it was a goods was a great quarter, a strong year and over the past five on some nice growth on numbers to be proud of.
Nigel Coe
Yes, no question. Thanks, Kevin. Both will come back to the hurricane impact, probably a little bit in the Q&A, but I did want to touch on tariffs because they've got some new headlines on the well, you have got some having some type of path in early March, China, Mexico and Canada. Just wondering if you could just maybe remind us on where your inputs versus.
Kevin Holleran
I think there's a bit of China, but no Mexico. So I just missed the very basis on where we stand today. Yes, let me touch on that. So I guess first thing I would say is roughly 85% of North American net sales are produced in North America. The remaining call it 15% would be cost of goods sourced either directly from a facility that we operate.
But in China or some products out of us, good understanding from a cost of goods standpoint there it's a little harder to get our arms around completely would be Tier two and Tier three, um, um, supply components, our supply chain team is working diligently, you know, to really get some clarity around that. I know something came across this morning just before we went live on the call that we have it fully digested yet.
But as for China, there was 10% that took effect February 4. We know exactly what that and what that impact is from a from a Tier one from our which he finished goods on in terms of finished goods out of that facility, Mexico and Canada, Mexico is really more of a Tier two or Tier three on that that we have some clarity on and continue to get more and more focused on that.
So we don't believe at this point that there's much impact will start with Canada. Our understanding is some of the reciprocal tariffs that have been in the news. We don't believe at this point pool equipment a little will be impacted by that, Nigel. And then in the steel and aluminum cans, I think more to be determined there, but we don't think that that's sizable impact to our business either.
I would right at their IT. Yes, I would just add modules. You know, based on everything that we're learning, we've demonstrated the ability in periods past input price through were fully prepared to react with the price increase to tackle any identified tariff cost impacts to protect. Regarding profitability. We put out.
Nigel Coe
Great. Thanks, guys. Good luck either.
Operator
Saree Boroditsky, Jefferies.
Saree Boroditsky
So Odyssey accident year with strong margin performance, and it looks like guidance implies about flat EBITDA margin for share. Could just talk about how you're thinking about gross margin performance and by the puts and takes, including our outlook.
Eifion Jones
Good morning. What I would say, look, you had a great performance in 2024 of the gross margin line and that eight adjusted EBITDA lines, you know, respectively grow gross margin at 240 basis points of adjusted. You've got 150 basis points, a little bit better than that. It's only affected when we look down the runway into 2025.
And as Bill talked guidance and expectations around here, I think it's really important to look at it from a two year stack basis. So at the midpoint of 2025 to 2 year stack for us, it is pretty good. In overall, conversion were above 40% sales to adjusted EBITDA margin conversions, adjusted EBITDA growth rates of 7%.
We've always talked about growth, not being linear will make some great progress with invest, make some progress, but I think you have to look at it over the medium term. It will really out of both the conversion rates and the margin growth are we experiencing 24, and we're taking a bit of a pragmatic approach around 25 at this particular point.
Saree Boroditsky
That's how Funny you probably have some color on the resilient nondiscretionary aftermarket, maybe recurring new and remodeled. Just quantify how you're thinking about those markets and given our volume in that guidance?
Kevin Holleran
Yes. So as we look at kind of the and break down the net sales, again, greater than 80% of our revenue is derived from the aftermarket, meaning product that goes on a pool or to a pool that is already have built our. So we would say of that of that 80 plus percent, that's in the aftermarket.
There is a percentage of that that really goes to remodels and and larger scale renovations that, along with the the public to mid to high 10s of our revenue derived from new construction at this point continues to be under pressure. We feel primarily through interest rate of elevated interest rates up.
But again, you know something something north of 60% of our overall revenue we would say is is very resilient nondiscretionary. It's a very reliable as we look in our coming out of 2024. That's really what we saw in the full year 24. And at this point, based upon permit data that we keep a very close eye on, continue to be under pressure.
We think at least for the first half of 2025, that'll that'll stay under pressure kind of flattish to slightly down is what we see high in that non discretionary elements of our of our business. Sorry, cancer, colorectal cancer.
Operator
Andrew Carter, Stifel.
Andrew Carter
Good morning. I guess I'll circle back. Can you just kind of the morning the initial guidance, I guess the two year basis than two year, this is kind of just right kind of down the pike in terms of expectations. But if you look back at kind of the kind of take us through kind of 2024 ASG. and A. was reset higher warranty expense, also incentives underline.
So obviously, that's fully built for next year. There's a lot of puts and takes in the gross margin performance, including a one-time or here in the fourth quarter plus Europe. So just kind of help us understand why the flow through just is it stronger next year? Is it just steps of SCA are expecting from gross margin pressures? You got the tariffs and there is a cross currency from Canada. Does any extra healthier? Thanks.
Eifion Jones
Again, you know, I would say, Andy, we're taking a pragmatic approach in other margin results in 2024 were better than expected. How we got asked quite a bit evolving lean operational initiatives in the second half of last year, we plan to improve both those. We also were able to realize a little bit earlier synergy benefits into the quoting acquisition on the gross margin line. So all of these these fees are in a great, great results. Accumulating in 2024.
If you look at it from a two year stack basis, where we're ending in 2020, obviously exactly where we as an internal management team here are expected to be a little bit accelerated into the 2024 period. Again out ask you to look at the two year stack basis from the end of 23 to the midpoint of our estimated guidance for 25.
I look at the growth rates, both of the gross phosphide adjusted EBITDA of the flow through of sales, conversion to EBITDA, all within our expectations, we are making investments into the business. You're right to point out in 24, we made investments in cash G&A, particularly in some insight into business, the customer experience side of the business marketing initiatives.
Obviously, we also acquired SG&A as a consequence of the clocking acquisition, and that will run rate for years throughout 2025 results as well. Well, you know, I have talked about publicly before focusing SG&A down in the low 20s. We were at 25% with corporate expenses in 2024 were expected to come down in 25. Miragen individually, we had great success in 24.
Good, good Martinez guy in 25 in terms of the implicit growth mode engine growth, please look at it from a two year stack basis, exactly how we expect these two years to play out in terms of gross margin improvement and conversion rates to adjusted EBITDA.
Andrew Carter
Understood. And then getting on the working capital came in well ahead of your expectations this year, plus next year's pretty strong with Starcom unmasked, but it's the working capital headwinds kind of de minimus.
Almost kind of what's that coming from kind of continuing to improve the working capital here, surprises like a kind of I know that there's there's there's an operational side, you're taking some safety stock, but anything about kind of how lean your inventory is? And just kind of outlook for just how working capital can translate?
Eifion Jones
Hi, thanks. At the start of free cash flow conversion, Sanofi model. Okay. No, absolutely. Look at you know, we had a very focused initiatives, several focused initiatives around working capital improvement, and we evaluate working capital on the metric of cash conversion.
And we still expect improvement in reducing our cash conversion cycle, which is now off our days plus our inventory days minus our accounts payable days in terms of our inventory days. And we expect down eight full days from the end of 23 to the end of 2020.
For again, a lot of focus around inventory to make sure we have the right parts of the right time in the right place. You've heard me say that before we have several discrete. These initiatives are callout sku rationalization initiative, which is enabling successful inventory reductions of.
But I also call out our net accounts receivable accounts payable days also took a meaningful reduction year over year. We reduced over 11 days in terms of that, that metric. So, you know, we continue to see good cash use for working capital initiatives. Again, we think in 25, we've got more work to do and more results to achieve here.
And the team is very much focused on a shout-out to the collective hay with team here and appreciation of what they achieved in the 20 or working capital reductions. I'll just point out, Andrew, that while doing all of that, we really take very seriously our ability to supply the market and be able to get product reasonable lead times to our to our commitments.
So wall while continuing to work on driving working capital down. The overall mission is to continue to be a supplier of choice and hopefully continue winning some of these operational excellence accolades from our from our channel partners.
Andrew Carter
Thanks. I'll pass it on.
Operator
Mike Halloran, Baird.
Michael Halloran
Good morning, everyone. On. So just clarifying combination, you made, I think in response to an earlier question on the seasonality impact of the pre-buy. I think you mentioned that the pre-buy take rate was lower in 2014 was 23.
Kevin Holleran
So just could you clarify what we mean by that and then related set-top boxes than that, the cadence seeing of how pre-buy is and work through in the front half of the year, relatively normal versus history? Is that the thought process, assuming things are relatively stable from a demand volume perspective? From an early buys standpoint, we were we were pleased with the participation that we saw from our from our channel partners.
There. It was incrementally higher year on year. And as I think I've mentioned in the first response was that from a percentage standpoint, we are we shipped less of that in 2024 than we did in 2023. So that presents us with the luxury of having a slightly larger backlog starting the new year.
But as you know, in and never do, we have our order file that covers the entire quarter. And as we're as we're moving into into March, we're all looking for a warming trend. You know, across all of us are our markets.
So what else what else can we answer for you on the early buy and how that that seasonality plays out? Again, Q1, we're expecting normal seasonality. We don't we don't guide quarterly, as you know, Mike, but we do one by is I just wanted to say softer quarters as sales.
Our house in is less than it is in Q2 and Q3. So we're calling in again for Q1 to be on that seasonal, a normality, somewhere in the 20% range of what our about our full year net sales guide would be. I would I would add, Mike, that no, I just had one less typically what we get into Q1, which is seasonally the lowest quarter of the year.
We do some campaigning, and that's been a legacy construct of how we approach a Q1 with a, as Kevin said, the luxury of a slightly larger backlog coming into the quarter due to less shipment of buying 2012 and prior year may not do as much campaigning in Q1 as normal.
But overall, I would just guide you to a very typical Q1 as a percentage of overall sales, which typically 19% to 20% for yourselves.
Michael Halloran
Great. That was super helpful. And then second one, if you know, I know the housing starts are at the bottom or sort of the new pools of new construction. Is that a bottom here?
If you look at the take rate on the housing start side of the things or the attachment rate of pools on new homes, do you see any noticeable differences you work through the year? Probably a little bit too short of the sample size, but curious if you're seeing a relatively typical percentage of new homes with pools or if you seen any disassociation versus history, given the mix of the health sciences moving a little bit lower right now?
Kevin Holleran
Yes. As as you know, Mike, there's been a high correlation historically between single-family home starts and new pool construction even more. So when it staggered one, one year of, I would say that attach rates as as we look back on 2020 for, of course, we don't know that yet that final new construction number.
But assuming it's in that 60,000 range, we would have seen some that attach rate is become less in 2020 for what we're starting to do more work on. And I think this became more clear to us from a from a from a from a BI. standpoint, another big driver of new construction is not just single-family home starts, but existing home turnover.
And as you know, of that was at much lower levels in 20 as much as this with that, with that lower number of new tools being built last year as anything.
Michael Halloran
That's helpful. I really appreciate it. Thanks, Al.
Operator
Jeff Hammond, KeyBanc.
David Tarantino, Jr.
Hey, good morning, guys. This is David Turner only one for Jeff. Money on budget. Just to follow up on the quarter demand commentary, you could give us some color on what you think sell-through trends look like and what was driving at. Is it mostly the repair benefits from recent hurricanes? Any color there would be helpful. On?
Kevin Holleran
Yes, I do think that hurricane had some had some benefits from a large channel partner had indicated just last week that that in quarter growth in the Florida market was that was meaningful, which which I believe does point to some of the repair activity that occurred in Q4 in that market.
Specifically. So yes, so I would say hurricane activity did have an impact for us in terms of shipments. We prioritize our order inflow on that. That was that was paid to that region in Q4 was highest priority of shipment for us.
So we were looking to support the homeowners and the rebuild and repair activities in the impacted areas. Dave.
David Tarantino, Jr.
Okay, thank you. And then could you give us your thoughts on the margins in international moving into 2025, maybe size the impact of the inventory noise and what gives you the confidence that that goes away? And then maybe just give us some color on what do you think kind of longer term margin entitlement is here with margins off the peak?
Eifion Jones
Yes. I'll take out one, Dave. Good morning again. Yes, look, we have some compression in Europe, the Rest of World margins in 20, both some discrete inventory items in both Q3 and Q4, which were one-time events, which won't repeat that one material as I'm not going to be a big needle mover overall for the full year type margin. But the big impacts screen those particular quarters, we are looking at margin growth year over year in Europe and rest of world at the gross profit homes.
As Kevin mentioned in some of his remarks, we have a target two years, some initiatives in our consequential to leadership change, consolidation of manufacturing footprints. Focus on the on the product line was selling at a particular region and looking at bill of materials cost structures there. So quite a lot of activity. I don't think we're going to see a step change in margin in 25, but it will grow.
We do have ambition to close the gap between aggressively closed the gap between Europe and rest of world, but as customer structural differences of markets, which are in one that I make it in our opinion and equating margin structure to the North American market. But the rock projects underway to progressively, we closed the progress.
We close the gap, excluding fuel and fuel in some ways, a 2024 was really kind of a transitional year for our Europe rest of world business. Some of the things that I've just touched on, some you were undertaken and we're still yet to see full benefit from with some leadership changes at bench strength.
We do have they have an ex-pat in the lead supply chain role. I think you're aware, David, that we consolidated facilities one out of the greater Madrid area into a sale, validated location in Barcelona. There were some fits and starts through the through the year. There, we are we altered the Chief Engineering role to be a global role, which is going to drive some nice new product introduction in the region there.
And then just ongoing operating model simplifications. In addition to that, that footprint that I just mentioned, it was a back office standardization of consolidating some G&A are into a single location. And we exited one underperforming business, which presented a little bit of top line headwind in 2024.
So we're not sitting still or not. We're not we're not done. We're not pleased necessarily with the overall net sales or the margin performance in 2024, and that's going to progressively get better moving forward.
David Tarantino, Jr.
Okay, great.
Operator
Brian Lee, Goldman Sachs.
Nick Cash
Good morning, everyone. This is Nick on for Brian. Has their holiday. Nick, I just wanted to follow-up on just a little bit on the SKU rationalization. In the last quarter, you mentioned retiring some lower attacker with new products. Would you be able to give any more color on if this is more so you ask the rest of world?
Or can you quantify at all if this is now or how much of a headwind this could possibly be to top line and 25 or potential margin tailwinds as well as also this ongoing? Or is this more first half versus second half? Or just how do we think about that? Thank you.
Eifion Jones
Yes, certainly not expected to be a headwind to top line we're doing is very much to improve the quality of our infrastructure inside the income statement and continue to have a more agile and lean working capital position of particularly obviously in inventory, we were into the program SKU rationalization. We've been in it now for about 18 months than the two years.
We've made initial progress. We're looking at all aspects of our SKU structures, both of the finished good level and the raw material level. We continue to focus on moving out legacy finished good products promoting obviously the more kind of technology-based products again with no with no negative implication to the top line. We obviously have to keep some legacy products for warranty purposes.
When we get raw materials, a long tail of structures continually look to be rationalized, provide more common platforms. We're looking at that across the globe in all of our manufacturing facilities or can we do to our common raw materials will continue to have come up with platforms. All of those initiatives are in play. There will be accretive both the course of time through the gross margin, but tough.
But given specific guidance around how we interface 20 product, other than to say that this is, you know, this is an initiative that's in play and will be accretive over the course of on. Hopefully, it's the top line as we promote more technology based platforms, infill goods as well as opening up the margin as we get away from legacy golden tail and with structures pause.
Nick Cash
And thank you, that's it for me. Appreciate it.
Operator
Rafe Jadrosich, Bank of America.
Rafe Jadrosich
Hi, good morning, and I'll ask a few questions on on the 2025, our guidance assumptions. Can you just give a little more color on what's assumed for North America versus international? Also? What's the M&A carryover that that we should expect for 25?
And then is there any channel assumption changes? Or should we think it's that volume growth is all sell through? Or is there any restocking or destocking included there?
Kevin Holleran
In terms of core King, there's about 1% are in our favor in our guide carryover. That was that was closed right at the end of June 2024. So half year will carry over.
In terms of channel inventory, we would say that as we work with our channel partners are after having some additional or some modest reductions in their inventory positions in 2020 for what we're hearing back is that they're pleased with the parent level levels days on hand. And we are not expecting really any anything one way or the other in our in our guide from a from a channel inventory perspective in 2025 breadth.
As for segments of the cutover, yes. I mean, the way up again, that's right span of overall over 2% to 3%. I suspect aside the pricing dynamic, North America will be higher than in Europe and rest of world. And the FX implication, which is a minus 1% overall to, hey, what will be a little bit more weight negatively towards Europe and rest of world. So when you think about bit of guidance, overall headwind at 3%, I'd say higher in North America and lower rest-of-world bike, roughly single digit movements between the two.
Rafe Jadrosich
That's really helpful. And just on, can you remind us what are your how long your warranty typically last on? And then when you had a really strong volume in 2021, 2022 are recovering to the point now where a lot of products are starting to come off warranty. And there is a release the opportunity that would either benefit you in the 25 or maybe even as we go into 2020.
Kevin Holleran
There's a difference that I would say, our three, three years when products sold through the trade and then some of our W. three product line, which skews specific for offer omnichannel or for online sales rate that. So that's really more of a one year warranty period content skews.
So yes, with a three year, I think we're starting to move through that standard three-year warranty period. Some of the product that was placed in our call in late 2020 when the pandemic really started impacting market volume. So we would expect that to that to start to come due in the coming years.
Rafe Jadrosich
Very helpful. Thank you.
Operator
Excellent. Thank you, Mr. Moller. And we have no further questions at this time. I'd like to turn the floor back over to you for closing comments.
Kevin Holleran
Great. Thanks, Kristine. In closing, I'd like to sincerely thank all our dedicated employees and valued partners around the world. Your hard work, passion and unwavering commitment are the driving force behind our success.
We've built a strong foundation for growth and value creation in our first 100 years. I couldn't be more cited about the opportunities that lie ahead.
Please contact our team if you have any follow-up questions, and we look forward to talking to you again on the first quarter earnings call. Thank you for your interest in Hayward. Christine, you may now end the call.
Operator
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful ball.
