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HH

Hayward Holdings, Inc. (HAYW)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a revenue and EPS beat with net sales at $299.6M and adjusted diluted EPS at $0.24, supported by record gross margin of 52.7% and adjusted EBITDA margin of 29.5% .
  • Versus S&P Global consensus, HAYW beat Primary EPS ($0.24 vs $0.226) and revenue ($299.6M vs $291.2M); 8 EPS estimates and 9 revenue estimates underpinned consensus, suggesting positive estimate revisions pressure* .
  • FY25 guidance refined: net sales range raised at the low end to $1.070B–$1.100B (from $1.060B–$1.100B); adjusted EBITDA maintained at $280M–$290M .
  • Board authorized a new $450M share repurchase program (expires July 2028), adding a capital return catalyst alongside deleveraging to 2.1x net debt/Adj. EBITDA .

What Went Well and What Went Wrong

  • What Went Well
    • Record gross margin of 52.7% with 10th consecutive YoY expansion; management credited pricing, tariff mitigation, and operational efficiencies. “We delivered record gross profit margins of 52.7% and solid cash flow through aggressive execution of our tariff mitigation plans” — CEO Kevin Holleran .
    • Revenue and EPS beat vs consensus; adjusted EBITDA rose 7% YoY to $88.2M, margin +50 bps to 29.5% .
    • Liquidity and leverage improved: cash $365.1M, revolver availability ~$163.3M; net leverage reduced to 2.1x, “lowest level in over three years,” enhancing flexibility .
  • What Went Wrong
    • SG&A up 14% YoY to $71.9M (24.0% of sales, +180 bps); investments in engineering and customer care pressured opex density near-term .
    • E&RW segment income declined 8% YoY (adjusted -6%) despite modest sales growth; volumes and FX were headwinds .
    • Discretionary remodel/new pool demand remains tempered; parts mix indicates “repair versus replace” behavior, potentially limiting near-term pricing realization on full equipment swaps .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Net Sales ($USD Millions)$327.1 $228.8 $299.6
Gross Profit ($USD Millions)$168.0 $113.4 $157.8
Gross Margin %51.4% 49.5% 52.7%
Operating Income ($USD Millions)$76.5 $33.5 $71.4
Operating Margin %23.4% 14.6% 23.8%
Net Income ($USD Millions)$54.7 $14.3 $44.8
Net Income Margin %16.7% 6.3% 15.0%
Diluted EPS ($)$0.25 $0.06 $0.20
Adjusted Diluted EPS ($)$0.27 $0.10 $0.24
Adjusted EBITDA ($USD Millions)$98.7 $49.1 $88.2
Adjusted EBITDA Margin %30.2% 21.5% 29.5%

Comparison vs Consensus (S&P Global):

MetricConsensus EstimateActual (Q2 2025)Surprise
Primary EPS ($)0.2263*0.24 +0.0137, +6.0%*
Revenue ($USD Millions)291.2*299.6 +8.4, +2.9%*
EPS Estimates (#)8*——*
Revenue Estimates (#)9*——*

Values marked with * retrieved from S&P Global.

Segment Breakdown

Segment MetricQ4 2024Q1 2025Q2 2025
North America Net Sales ($M)$286.0 $187.1 $255.2
E&RW Net Sales ($M)$41.1 $41.8 $44.4
North America Segment Income ($M)$95.1 $43.5 $83.4
E&RW Segment Income ($M)$4.8 $6.5 $7.6
North America Adjusted Segment Income ($M)$104.9 $50.7 $89.1
E&RW Adjusted Segment Income ($M)$5.3 $7.0 $8.0

KPIs and Operating Items

KPIQ4 2024Q1 2025Q2 2025
SG&A ($M)$73.3 (22% of sales) $65.1 (28.5%) $71.9 (24.0%)
R&D ($M)$6.9 $6.0 $6.1
Interest Expense, net ($M)$13.6 $13.7 $13.7
Effective Tax Rate (%)13.7% 23.3% 24.6%
Cash & Equivalents ($M)$196.6 $181.3 $365.1
Cash from Ops ($M)$212.1 (FY) $(5.9) (Q1) $188.4 (1H)
Net Leverage (Net Debt/Adj. EBITDA, x)—2.8x (end Q1) 2.1x (Q2)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY 2025$1.060B–$1.100B $1.070B–$1.100B Raised low end (+$10M)
Adjusted EBITDAFY 2025$280M–$290M $280M–$290M Maintained
Net Price ContributionFY 20255%–6% (prior view) ≥4% (partial-year benefit) Lowered
Share Repurchase Authorization3 years (to Jul-2028)Prior authorization expiredUp to $450M New program

No explicit guidance provided for OpEx, OI&E, tax rate, or dividends in Q2 materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Technology/Automation (OmniX)“Introduced several innovative new products” (Q4) ; focus on tech leadership (Q1) OmniX automation highlighted; dealer response positive; more categories launching Building adoption, expanding portfolio
Tariffs & MitigationTariff risk flagged (Q4) ; FY25 guidance contemplated tariffs (Q1) China incremental tariff reduced to 30%; pricing actions (3%) offset; sourcing shift from ~10% to ~3% of COGS by YE; expect full offset Mitigation progressing; risk downshift vs April levels
Supply Chain/ReshoringOps efficiencies driving margin (Q4) ; improved operational performance (Q1) Manufacturing diversification to NA; incremental COGS impact < $10M; >90% NA needs produced/sourced in NA by YE Structural de-risking; automation investments
Regional TrendsE&RW segment income down in Q4, discrete inventory issues E&RW sequential margin improvement; RoW up 16%; Europe down 4% Sequential recovery in E&RW
Market Demand (New/Remodel)Early buy strength (Q4) ; volume aided by timing (Q1) New pool permits mid-single-digit decline but improving; “near trough” levels; parts mix up as repair vs replace persists Gradual stabilization; discretionary still pressured
Commercial Pool BusinessAcquisition-driven capabilities (Q4) Commercial sales roughly doubled YoY; aiming for double-digit mix share longer-term Structural growth, share capture
Capital AllocationDeleveraging to target range (Q4) ; within 2.8x in Q1 Net leverage 2.1x; $450M repurchase authorization; disciplined M&A pipeline Balance sheet strength enabling returns/M&A

Management Commentary

  • “Net sales increased 5% year-over-year with growth across both the North America and Europe and Rest of World segments. We delivered record gross profit margins of 52.7%…net leverage declined to 2.1x” — CEO Kevin Holleran .
  • “We estimate a total annualized tariff impact of approximately $30 million with a partial year impact in 2025 of approximately $18 million…we expect to fully offset the current tariff-related cost increases” — CEO .
  • “Adjusted EBITDA…increased 50 basis points to 29.5%. We are investing in advanced engineering and new product development…increasing investments in Customer Care” — CEO/CFO prepared remarks .

Q&A Highlights

  • Gross margin outlook: Q2 record margin; second-half percentage may moderate due to price up/gross profit dollars protected; operational mitigation to reopen margin in 2026, still FY25 YoY gross margin up .
  • New pool market: “Near trough” counts; permits mid-single-digit decline but improving; potential inflection as rates/housing normalize .
  • Price vs volume guidance: Net price view lowered to ~4% from 5%–6%; volume outlook improved (still slightly negative), reflecting moderated second price increase post tariff reduction .
  • Repair vs replace: Parts revenue has risen over several quarters, consistent with repair behavior in aftermarket (e.g., pump motor/wet end) .
  • Reshoring economics: Full reorientation away from China adds < $10M to COGS (<1% of sales); >90% NA needs to be produced/sourced in NA by YE; margin recovery expected via automation/ops .
  • Commercial momentum & M&A: Commercial sales ~doubled YoY; targeting teens % mix longer-term; active bolt-on pipeline; $450M share repurchase approved .

Estimates Context

  • HAYW beat S&P Global consensus on Primary EPS and revenue; EPS actual $0.24 vs $0.226, revenue $299.6M vs $291.2M, supported by margin execution and tariff mitigation* .
  • With low-end revenue guidance raised and sequential E&RW margin improvements, Street revenue and margin estimates may need upward revision; SG&A investments temper near-term operating leverage but support medium-term growth .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat: Strong price-cost execution and operations drove a clean top-line and EPS beat; record gross margin and rising adjusted EBITDA margin support valuation resilience .
  • Guidance confidence: Low-end FY25 revenue guidance raised while EBITDA held; implies confidence in price realization and aftermarket resiliency despite discretionary softness .
  • Structural de-risking: Tariff exposure reduced and supply chain reshored with limited cost impact (<1% of sales), positioning margins for continued improvement through automation .
  • Commercial growth vector: ChlorKing integration and targeted investment are expanding the commercial business, raising mix potential and margin durability .
  • Capital returns optionality: Net leverage at 2.1x and $450M repurchase authorization create buyback flexibility while funding organic and bolt-on M&A .
  • Near-term watch items: SG&A density (24% of sales) as investments ramp; repair vs replace dynamic; discretionary upgrade/new pool demand remains rate-sensitive .
  • Trading implications: Positive estimate revisions and capital return catalyst could support shares; monitor tariff policy updates and sell-through trends for sustainability of margin prints .