Hayward Holdings, Inc. (HAYW)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 was strong and “ahead of expectations,” with Net Sales $327.1M (+17% y/y), gross margin 51.4% (+220 bps y/y), Adjusted EBITDA $98.7M (+30% y/y; 30.2% margin), GAAP diluted EPS $0.25 and adjusted EPS $0.27 .
• 2025 guidance introduced: Net Sales $1.060–$1.100B (+~1% to 5%) and Adjusted EBITDA $280–$290M; management expects 2–3% net price contribution, normal seasonality, and >100% net income → ~$160M cash flow conversion in 2025 .
• North America led with Q4 Net Sales +20% to $286.0M on better in-quarter demand and strong Early Buy; Europe & Rest of World (E&RW) grew +2% but faced margin pressure and discrete inventory items .
• Balance sheet and cash generation improved: FY24 cash from operations $212.1M; net leverage reduced to 2.8x (target 2–3x), supporting continued investment and M&A optionality .

What Went Well and What Went Wrong

• What Went Well

  • Record profitability: gross margin reached 51.4% in Q4 (up 220 bps y/y) and adjusted EBITDA margin was 30.2%; CEO: “We finished the year on a high note…resulting in solid sales and earnings growth, margin expansion and increased cash flow generation” .
  • North America strength and mix: Q4 NAM Net Sales +20% with 12% volume, 4% price, 2% M&A contribution; NAM gross margin hit 54.2% and adjusted segment income margin 36.7% .
  • Cash/Deleveraging: FY24 CFO $212.1M; net debt/Adj. EBITDA improved to 2.8x; liquidity $360M at YE (cash ~$197M + $164M availability) .

• What Went Wrong

  • E&RW margin pressure: Q4 E&RW Net Sales +2% to $41.1M, but segment income -39% on discrete inventory items and FX headwinds; adjusted segment income -35% .
  • Non-GAAP adjustments: purchase accounting fair value inventory step-up added ~$1.6M to COGS in Q4; flood-related costs ~$0.7M at a contract manufacturer; ChlorKing retention expense ~$2.9M in Q4 .
  • Macro/tariffs: management flagged tariff developments; direct Tier-1 import exposure ~10–15% of COGS (85% of North American sales produced in NA), but indicated willingness/ability to price through if needed .

Financial Results

Note: Street consensus figures from S&P Global could not be retrieved due to request limit; thus, beat/miss vs. estimates is unavailable at this time. Management stated Q4 was “ahead of expectations” .

Segment breakdown (sales and profitability)

Selected KPIs and balance sheet items

Guidance Changes

Additional color: 2025 outlook assumes ~2–3% positive net price contribution, normal seasonality (Q1 19–20% of full-year sales), and >100% net income cash conversion ($160M CFO) .

Earnings Call Themes & Trends

Management Commentary

• “We finished the year on a high note with increased shipments for in-quarter demand and robust early buy orders…resulting in solid sales and earnings growth, margin expansion and increased cash flow generation” — Kevin Holleran, CEO .
• “Gross profit margins expanded to record levels…Adjusted diluted EPS increased 35% to $0.27…Adjusted EBITDA margin was a robust 30.2%” — CEO prepared remarks .
• “North America…driven by a 12% increase in volume, 4% positive net price realization and a 2% contribution from the acquisition of ChlorKing…gross profit margin…54.2%” — Eifion Jones, CFO .
• “We expect net sales to increase approximately 1% to 5%…and anticipate full year 2025 adjusted EBITDA of $280 million to $290 million” — CFO .
• “Roughly 85% of North American net sales are produced in North America…the remaining ~15%…Tier 1 imports from China/Europe…we’ve demonstrated the ability…to put price through” — CEO/CFO on tariffs .

Q&A Highlights

• Early Buy and seasonality: Early buy participation higher y/y with proportionally less shipped in Q4 vs. 2023; management expects a “typical” Q1 at ~19–20% of full-year sales and may do less Q1 campaigning given backlog .
• Hurricanes: Noted meaningful in-quarter demand in Florida tied to repairs; Hayward prioritized disaster-relief orders in Q4 .
• Gross margin sustainability: North American margins seen as sustainable with four pillars (productivity, mix shift to tech, operating leverage, price-cost management) .
• International/E&RW: Q4 impacted by discrete inventory items; leadership/footprint changes expected to progressively improve margins (no near-term step change) .
• Tariffs: Direct import exposure ~10–15% of COGS; company prepared to offset via pricing; 85% NA production provides resilience .

Estimates Context

• S&P Global consensus for Q4 2024 (revenue, EPS) could not be retrieved at this time due to an SPGI request limit; therefore, beat/miss vs. Street is unavailable. Management stated Q4 results were “ahead of expectations” .
• Given 2025 guidance (sales +1% to 5%; adjusted EBITDA $280–$290M), Street models may need to calibrate for flattish-to-modest margin progression and 2–3% net price contribution .

Key Takeaways for Investors

• Mix and pricing drove a high-quality Q4 beat with record gross margins and 30%+ adjusted EBITDA margins; watch sustainability into seasonally soft Q1 and full-year 2025 .
• North America momentum (volume + price + ChlorKing) and resilient aftermarket underpin 2025; E&RW is improving but still a watch item given prior discrete inventory/FX headwinds .
• 2025 guide implies modest top-line growth with price-led contribution and disciplined margin stewardship; monitor tariff developments and Hayward’s pricing responses (management prepared) .
• Early Buy strength and backlog support Q1 cadence; management signaled typical Q1 seasonality (~19–20% of annual sales) .
• Balance sheet optionality improved: 2.8x net leverage and ~$360M liquidity at YE; continued strong cash conversion (>100% of net income, ~ $160M planned in 2025) offers flexibility for growth/M&A .
• Non-GAAP adjustments tied to ChlorKing purchase accounting and storm-related costs were modest; underlying operating execution remains the primary driver of margin gains .