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HH

Hayward Holdings, Inc. (HAYW)·Q3 2025 Earnings Summary

Executive Summary

  • Hayward delivered a clean beat: revenue $0.244B (+7% y/y) and Primary EPS (adj.) $0.14, both above S&P Global consensus; adjusted EBITDA rose 16% to $59.1M with 170 bps margin expansion to 24.2%. The beat was driven by positive price realization (mid-single digits), resilient aftermarket demand, and tariff mitigation actions . Primary EPS and revenue consensus retrieved from S&P Global*.
  • Management raised FY25 guidance: net sales to $1.095–$1.110B (from $1.070–$1.100B) and adjusted EBITDA to $292–$297M (from $280–$290M); free cash flow guidance increased by ~$20M to ~$170M, citing stronger profitability, capex timing, and inventory improvements .
  • Operational execution: gross margin 51.2% (+150 bps y/y), net leverage reduced to 1.8x (lowest in ~4 years), liquidity $552M; Omni controls logged double-digit growth and AI-enabled customer service resolved ~80% of inbound calls without human intervention .
  • Near-term watch items: Q4 faces tough hurricane comps (no repeat of Q4’24 storm repair demand); tariff environment remains fluid though mitigation (China exposure cut from ~10% to ~3% by year-end) is ahead of plan .

What Went Well and What Went Wrong

What Went Well

  • Positive price and resilient aftermarket drove a revenue and EPS beat; adjusted EBITDA up 16% with margin up 170 bps to 24.2%: “strong execution… resiliency of our aftermarket model… continued traction in our strategic initiatives” .
  • Technology/commercial momentum: Omni controls posted double-digit growth, “nearly twice the overall Hayward growth rate”; AI agents resolved ~80% of customer calls, eliminating hold times .
  • Balance sheet and cash generation: net leverage down to 1.8x; total liquidity $552M including $448M cash/short-term investments and $104M availability; YTD cash from operations $283M .

What Went Wrong

  • Non-recurring litigation expense of $2.8M affected results (captured in “Other” adjustments); SG&A rose 8% y/y to $69.8M with 30 bps deleverage on higher incentive comp and wage inflation .
  • Europe & Rest of World pricing mix: ERW net price declined due to increased mix of discounted early buy shipments; ERW margin benefited from a tariff refund (~100 bps one-time), so some margin lift is non-repeatable .
  • Q4 outlook headwind: lapping prior-year hurricane-driven repair demand; volume expected “slightly down” versus last year absent positive weather extension .

Financial Results

Quarterly trend (sequential; oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$228.841 $299.603 $244.336
Diluted EPS ($USD)$0.06 $0.20 $0.11
Adjusted Diluted EPS ($USD)$0.10 $0.24 $0.14
Gross Margin %49.5% 52.7% 51.2%
Adjusted EBITDA ($USD Millions)$49.102 $88.236 $59.066
Adjusted EBITDA Margin %21.5% 29.5% 24.2%
Net Income ($USD Millions)$14.333 $44.799 $24.028

Q3 2025 vs prior year and vs estimates

MetricQ3 2024Q3 2025 ActualS&P Global Consensus (Q3 2025)
Revenue ($USD Millions)$227.569 $244.336 $231.512*
Primary EPS ($USD) (aligned to adjusted diluted EPS)$0.11 $0.14 $0.12085*
Adjusted EBITDA ($USD Millions)$51.093 $59.066 $53.035*

Values retrieved from S&P Global.*

Segment breakdown (Q3 2025 vs Q3 2024)

Segment MetricQ3 2024Q3 2025
North America Net Sales ($USD Millions)$194.6 (calculated: $208.2 – 7%↑) $208.2
North America Segment Income ($USD Millions)$51.569 $55.387
North America Adjusted Segment Income ($USD Millions)$59.461 $61.721
North America Adjusted Segment Income Margin %30.5% 29.6%
Europe & Rest of World Net Sales ($USD Millions)$32.5 (calculated: $36.1 – 11%↑) $36.1
Europe & Rest of World Segment Income ($USD Millions)$2.475 $6.247
Europe & Rest of World Adjusted Segment Income ($USD Millions)$2.746 $6.688
Europe & Rest of World Adjusted Segment Income Margin %8.4% 18.5%

KPIs (Q3 2025)

KPIQ3 2025
Net Leverage (Net Debt / Adj. EBITDA, x)1.8x
Total Liquidity ($USD Millions)$552
Cash & Cash Equivalents ($USD Millions)$428.684
Short-term Investments ($USD Millions)$19.650
YTD Cash from Operations ($USD Millions)$282.977
Share Repurchase Authorization ($USD Millions, through 2028)$450

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD Billions)FY 2025$1.070–$1.100 $1.095–$1.110 Raised
Adjusted EBITDA ($USD Millions)FY 2025$280–$290 $292–$297 Raised
Free Cash Flow ($USD Millions)FY 2025~$150 (implied prior) ~$170 Raised (+$20M)

Note: Management also reiterated mid-single digit net price realization in 2025 and announced 2026 U.S. price increases mid-to-high single digits (partly discounted via early buy); not formal line-item guidance but directional price commentary .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
AI/technology initiativesFocus on technology leadership; no AI specifics disclosed; margin progress via operations AI agents resolving ~80% inbound calls; OmniX ecosystem gaining traction; Omni controls double-digit growth Accelerating adoption; customer experience and monetization improving
Supply chain/tariffsAggressive tariff mitigation; record gross margins (52.7% Q2) China sourcing cut from ~10% to ~3% of COGS by year-end; duty clawbacks; positive price actions De-risking supply chain; mitigation ahead of plan
Pricing/macroPositive net price, aftermarket resilience; confirmed FY25 guidance Net price mid-single digits 2025; 2026 pricing mid-to-high single digits in U.S. (early buy discounts apply) Pricing remains above historical norms due to tariffs/inflation
Product performanceSmartPad/Omni positioning; volume timing Controls, lighting, filtration strong; OmniX-enabled VS pump well received Mix shift toward higher-value tech
Regional trendsQ1: NA +8%; ERW +7% NA +7% (U.S. +6%, Canada +21%); ERW +11% (Europe +15%, RoW +6%) Broad-based growth; Canada strength notable
Regulatory/legalLitigation costs present historically $2.8M non-recurring litigation expense in Q3 One-time; insured beyond retention
R&D/operationsR&D ~2–3% of sales; operational efficiencies R&D $7.1M (2.9% of sales); ongoing ERP, automation (Nashville) investments Continued reinvestment
Q4 weather/hurricanesQ4’24 benefited from Helene/Milton repairs Q4’25 expected down y/y on storm lap; early buy participation solid Headwind vs prior year

Management Commentary

  • “Net sales increased 7%… gross profit margin increased 150 bps to 51.2%, and adjusted EBITDA margin increased 170 bps to 24.2%… we’re raising our full-year guidance.” — CEO Kevin Holleran .
  • “Our new AI agents… resolving approximately 80% of [customer service] calls without the need for human intervention.” — CEO Kevin Holleran .
  • “We are lowering direct sourcing from China into the U.S. as a percentage of COGS from ~10% to 3% by year-end… de-risks our supply chain.” — CEO Kevin Holleran .
  • “Free cash flow guidance increased by ~$20M… half attributable to higher EBITDA midpoint… plus capex timing and inventory day reductions.” — CFO Iveyann Jones .
  • “We proudly support the U.S. market with over 90% of products sold in the U.S. built in one of our four U.S. manufacturing facilities… reputation for quality and service means more than just lower price.” — CEO Kevin Holleran .

Q&A Highlights

  • Demand cadence: sales-out strengthened through the quarter, with a “really strong September”; warm weather extended the season; Canada +21%, Europe low-teens, Asia >20% .
  • Early buy: tracking solid; discount off price increase and extended terms; price increases offset tariffs dollar-for-dollar, with internal actions to restore structural margins .
  • Innovation and pricing: OmniX ecosystem aims to automate the installed base via break-fix upgrades; no material trade-off observed between price and volume; tech adoption supporting margins .
  • Private label risk: management emphasized full-line offering, service network, U.S. manufacturing footprint (>90% U.S.-built for U.S. market), and brand loyalty among dealers .
  • Capital allocation: stepped-up capex (~3%+ of revenue over next several years) for automation and ERP; optionality across M&A (residential/commercial pool, flow control) and share repurchases under $450M authorization .
  • Q4 guidance context: hurricane lap headwind; NA early buy modest improvement; ERW early buy shipped more in Q3 so less y/y in Q4; net volumes expected slightly down y/y barring weather extension .
  • Pricing outlook: 2026 U.S. pricing mid-to-high single digits (discounted through early buys), aiming to return to more normal inflationary environment longer term .
  • ERW margins: improved with stabilization in Spain and one-time tariff refund (~100 bps benefit); sequential margin progress should persist even without one-timers .

Estimates Context

MetricActual Q3 2025Consensus Q3 2025Surprise
Revenue ($USD Millions)$244.336 $231.512*Beat
Primary EPS ($USD) (aligned to adjusted diluted EPS)$0.14 $0.12085*Beat
EBITDA ($USD Millions)$55.48*$53.035*Beat

FY25 context: Guidance ($1.095–$1.110B revenue; $292–$297M adj. EBITDA) compares to S&P Global consensus of ~$$1.103B revenue and ~$$294.6M EBITDA, implying modest upward bias to estimates post-raise . FY25 Primary EPS consensus ~0.761*.

Values retrieved from S&P Global.*

Where estimates may adjust: upward revisions to FY25 revenue/EBITDA/Primary EPS likely given the Q3 beat and guidance raise; potential tempering for Q4 volume on hurricane lap noted by management .

Key Takeaways for Investors

  • Beat-and-raise quarter with expanding margins and resilient aftermarket; pricing and Omni-driven mix support profitability — constructive for near-term sentiment .
  • Guidance now brackets S&P FY25 consensus; further estimate upgrades plausible if early buy translates to sustained demand and tariff mitigation continues to outpace headwinds .
  • Watch Q4 comp headwinds (no storm-driven repair tailwind) and weather sensitivity; any season extension could offset management’s slightly down y/y volume expectation .
  • Structural margin actions (supply chain reshoring, automation, ERP) and AI-enabled service provide medium-term earnings durability; monitor capex ramp (~3%+ of revenue) and execution milestones .
  • Commercial pool expansion (ChlorKing cross-sell) and flow control optionality add inorganic levers; valuation-sensitive buybacks under $450M authorization enhance capital return flexibility .
  • Pricing discipline looks intact; 2026 price actions mid-to-high single digits in U.S. (with early buy discounts) should be absorbed by innovation and installed-base value-add, though consumer inflation fatigue warrants monitoring .
  • Risk monitors: tariff policy shifts, private-label competition, litigation one-offs (Q3 $2.8M), and European pricing mix; mitigation plans and U.S. manufacturing footprint remain key offsets .