Core Viewpoint - Hayward Holdings, Inc. (NYSE:HAYW) is recognized as a promising investment opportunity within the clean energy sector, particularly due to its significant upside potential and strong financial metrics [1][3]. Group 1: Financial Performance - Stifel has reiterated a 'Buy' rating on Hayward Holdings, setting a price target of $18, reflecting confidence in the company's management and performance [2]. - The company has demonstrated resilience by recovering margins despite weak volumes in the post-COVID period, achieving a gross profit margin of 51% [3]. - Hayward maintains a healthy current ratio of 2.84, indicating strong liquidity and financial stability [3]. - Fiscal 2025 revenue and EBITDA estimates are at the high end of guidance, suggesting continued strong performance [3]. - Projections for fiscal 2026 indicate mid-single-digit revenue growth, even in a slower recovery environment for the category [3]. Group 2: Business Overview - Hayward Holdings, Inc. specializes in pool equipment and automation systems, serving markets across North America, Europe, and internationally [4]. - The company is recognized as one of the best clean energy stocks, highlighting its position within the industry [4].

Core Viewpoint - Hayward Holdings, Inc. (HAYW) is currently viewed as a more attractive investment option compared to Garmin (GRMN) for value investors, based on stronger earnings outlook and favorable valuation metrics [3][7]. Valuation Metrics - HAYW has a forward P/E ratio of 22.10, while GRMN has a higher forward P/E of 29.69, indicating HAYW may be undervalued [5]. - The PEG ratio for HAYW is 2.32, compared to GRMN's PEG ratio of 2.66, suggesting HAYW offers better value relative to its expected earnings growth [5]. - HAYW's P/B ratio stands at 2.34, significantly lower than GRMN's P/B ratio of 5.67, further supporting HAYW's valuation attractiveness [6]. Earnings Outlook - HAYW has experienced stronger estimate revision activity, indicating a more favorable earnings outlook compared to GRMN [3][7]. - The Zacks Rank for HAYW is 2 (Buy), while GRMN holds a Zacks Rank of 3 (Hold), reflecting HAYW's superior position in terms of earnings estimates [3]. Value Grades - HAYW has a Value grade of B, while GRMN has a Value grade of D, highlighting the relative undervaluation of HAYW [6].

Core Viewpoint - Schubert Jonckheer & Kolbe LLP is investigating potential legal claims against Hayward Holdings, Inc. regarding misleading sales practices and inventory levels [1][2] Group 1: Legal Investigation - The firm is looking into allegations that Hayward misled investors about its sales practices and inventory levels [1][2] - A U.S. District Court ruling allows a securities fraud lawsuit against Hayward and its executives to proceed [1] - The lawsuit claims that Hayward engaged in "channel stuffing" between October 2021 and July 2022, artificially inflating sales figures [1] Group 2: Impact on Company Performance - The alleged practices led to an undisclosed inventory glut, negatively affecting future sales [1] - Following the revelation of these practices in July 2022, Hayward's stock price fell by 18% [1]

Group 1 - Hayward Holdings, Inc. reported revenue of $299.6 million for the quarter ended June 2025, reflecting a year-over-year increase of 5.4% and an EPS of $0.24 compared to $0.21 a year ago [1] - The reported revenue exceeded the Zacks Consensus Estimate of $287 million by 4.39%, while the EPS surpassed the consensus estimate of $0.22 by 9.09% [1] - The stock has returned +5.7% over the past month, outperforming the Zacks S&P 500 composite's +3.4% change, and currently holds a Zacks Rank 3 (Hold) [3] Group 2 - Net Sales in North America (NAM) amounted to $255.2 million, exceeding the three-analyst average estimate of $242 million, representing a year-over-year change of +5.8% [4] - Net Sales in Europe & Rest of World (E&RW) were reported at $44.4 million, slightly below the average estimate of $45 million, with a year-over-year change of +2.6% [4]

Financial Data and Key Metrics Changes - Net sales increased by 5% to approximately $300 million, driven by a 5% increase in net price realization, a 2% decrease in volume, and a 2% contribution from the Core King acquisition [9][19] - Gross profit margins reached a record 52.7%, with adjusted EBITDA margin increasing to 29.5%, marking the tenth consecutive quarter of year-over-year gross margin expansion [7][12] - Net leverage was significantly reduced to 2.1 times, the lowest level in over three years, providing enhanced financial flexibility [7][23] Business Line Data and Key Metrics Changes - North American net sales increased by 6% to $255 million, driven by a 6% net price realization and a 3% contribution from the Clor King acquisition [20] - In Europe and Rest of World, net sales increased by 3% to $44 million, with a 1% contribution from favorable net pricing and a 3% favorable foreign currency translation [22] Market Data and Key Metrics Changes - End demand improved in June, resulting in customer orders generally aligning with normal seasonal patterns for the quarter [10] - Nondiscretionary aftermarket maintenance demand remained resilient, while discretionary elements of the market faced pressure [10][27] Company Strategy and Development Direction - The company is focused on mitigating tariff impacts and enhancing margins while executing strategic growth plans [8][9] - Investments are being made in advanced engineering and new product development to drive future growth [12][25] - The company aims to increase its presence in high-growth regions and capture market share through targeted sales and marketing strategies [12][102] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic environment and refining guidance for full-year 2025, raising the low end of the net sales guidance range [9][26] - The company expects solid cash flow generation in 2025, with a conversion of greater than 100% of net income [27] - Management remains positive about the long-term growth outlook for the pool industry, particularly in the aftermarket segment [27] Other Important Information - The company has authorized a share repurchase of up to $450 million over three years [25][94] - The effective tax rate was approximately 25% in the second quarter, consistent with guidance [20] Q&A Session Summary Question: Outlook for gross margin in the second half - Management highlighted that the strong Q2 gross margin performance was driven by productivity improvements and product line rationalization, with expectations for continued margin protection despite potential moderation in percentage [32][36] Question: New pool market outlook - Management indicated that the new pool market remains modestly down year-over-year but is showing signs of improvement, with expectations for upward inflection as interest rates and the housing market improve [39][41] Question: Guidance clarification - Management confirmed that the lower net price increase guidance is offset by a stronger volume outlook, particularly in the U.S. market [46][48] Question: SG&A increase explanation - The increase in SG&A as a percentage of sales is due to targeted investments in advanced engineering and customer care, with expectations to leverage SG&A in the future [55][56] Question: Trends in sell-in versus sell-through - Management noted that Q2 saw strong sell-through, particularly in June, with expectations for normal inventory levels as the season progresses [64][66] Question: Repair versus replace dynamic - Management observed an increase in parts sales, indicating a trend towards repairing rather than replacing equipment, which may impact future pricing strategies [66][74]

Financial Data and Key Metrics Changes - Net sales increased by 5% to approximately $300 million, driven by a 5% increase in net price realization, a 2% decrease in volume, and a 2% contribution from the Core King acquisition [7][18] - Gross profit margins reached a record 52.7%, with adjusted EBITDA margin increasing to 29.5%, marking the tenth consecutive quarter of year-over-year gross margin expansion [6][11] - Net leverage was significantly reduced to 2.1 times, the lowest level in over three years, providing enhanced financial flexibility [6][23] Business Line Data and Key Metrics Changes - North American net sales increased by 6% to $255 million, driven by a 6% net price realization and a 3% contribution from the Clor King acquisition [20] - In Europe and Rest of World, net sales increased by 3% to $44 million, with a 1% contribution from favorable net pricing and a 3% favorable foreign currency translation [22] Market Data and Key Metrics Changes - End demand improved in June, resulting in customer orders generally aligning with normal seasonal patterns for the quarter [8] - Nondiscretionary aftermarket maintenance demand remained resilient, while discretionary elements of the market faced pressure [8][27] Company Strategy and Development Direction - The company is focused on mitigating tariff impacts while supporting margins and fulfilling commitments to shareholders and customers [6][12] - Investments are being made in advanced engineering and new product development to drive future growth, particularly in high-growth regions [11][25] - The company aims to increase its presence in the commercial pool business, which has seen significant growth post-acquisition of Clor King [10][87] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic environment and refined guidance for full-year 2025, expecting net sales to increase approximately 2% to 5% [7][26] - The company anticipates solid cash flow generation in 2025, with a conversion of greater than 100% of net income [27] Other Important Information - The company has authorized a share repurchase of up to $450 million over three years [25][94] - The tariff environment remains uncertain, with an estimated total annualized tariff impact of approximately $30 million [13][14] Q&A Session Summary Question: Outlook for gross margin in the second half - Management highlighted that the strong Q2 gross margin performance was driven by productivity improvements and product line rationalization, with expectations for continued margin protection despite potential percentage moderation [34][37] Question: New pool market outlook - Management expects modestly down pool data for the year but sees potential for improvement as interest rates and the housing market stabilize [39][42] Question: Guidance adjustments and volume outlook - The company adjusted its volume outlook to reflect stronger performance, with expectations for a negative 1% overall on volume [46][48] Question: SG&A increase and future expectations - The increase in SG&A is attributed to targeted investments in engineering and customer care, with a goal to leverage SG&A as a percentage of sales in the medium term [56][57] Question: Trends in sell-in versus sell-through - Management noted that Q2 saw a strong sell-through, with healthy order profiles and expectations for normal inventory levels as the season progresses [63][65] Question: Repair versus replace dynamics - There is a noticeable trend towards repairing equipment rather than replacing it, driven by economic pressures [66][68] Question: M&A pipeline and opportunities - The company has a healthy pipeline of M&A opportunities, focusing on both domestic and international bolt-on acquisitions [88][90]

Core Insights - Hayward Holdings, Inc. reported quarterly earnings of $0.24 per share, exceeding the Zacks Consensus Estimate of $0.22 per share, and showing an increase from $0.21 per share a year ago, resulting in an earnings surprise of +9.09% [1] - The company achieved revenues of $299.6 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 4.39% and increasing from $284.39 million year-over-year [2] - Hayward Holdings has consistently surpassed consensus EPS estimates over the last four quarters [2] Earnings Outlook - The future performance of Hayward Holdings' stock will largely depend on management's commentary during the earnings call and the sustainability of the stock's immediate price movement based on recent earnings and future expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.12 on revenues of $231 million, while the estimate for the current fiscal year is $0.72 on revenues of $1.08 billion [7] Industry Context - The Electronics - Miscellaneous Products industry, to which Hayward Holdings belongs, is currently ranked in the top 33% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Hayward's Q2 2025 net sales reached $299.6 million, a 5% increase year-over-year[11] - The company achieved a record gross profit margin of 52.7% in Q2 2025, up 170 bps year-over-year[8, 11] - Adjusted EBITDA for Q2 2025 was $88.2 million, a 7% increase year-over-year, with an adjusted EBITDA margin of 29.5%, up 50 bps[11] - Adjusted diluted EPS increased by 14% year-over-year to $0.24[11, 19] Segment Performance - North America net sales were $255.2 million, a 5.8% increase year-over-year, with a gross profit margin of 55.1%[22] - Europe & Rest of World net sales were $44.4 million, a 2.7% increase year-over-year, with a gross profit margin of 38.9%[23] Financial Position and Outlook - Net leverage was reduced to 2.1x, the lowest level since Q1 2022[8, 25] - The company has refined its full-year 2025 guidance, raising the lower end of the net sales range to between $1.070 billion and $1.100 billion[8, 35] - Full year free cash flow is expected to be approximately $150 million[35] Tariff Mitigation - The company is mitigating tariff impacts by reducing China direct sourcing into the US from approximately 10% to approximately 3% of COGS by the end of 2025[17] - A 3% price increase was implemented in North America in April as part of tariff mitigation efforts[17]

[Q2 2025 Earnings Release](index=1&type=section&id=Hayward%20Holdings%20Reports%20Second%20Quarter%20Fiscal%20Year%202025%20Financial%20Results%20and%20Refines%202025%20Guidance) [Second Quarter Fiscal 2025 Highlights](index=1&type=section&id=SECOND%20QUARTER%20FISCAL%202025%20SUMMARY) Hayward reported strong second-quarter results for fiscal year 2025, characterized by a 5% increase in year-over-year net sales, record gross profit margins of 52.7%, and a 19% rise in net income, while also improving its balance sheet by reducing net leverage to 2.1x Q2 2025 Key Financial Metrics (YoY) | Metric | Q2 2025 | Change (YoY) | | :--- | :--- | :--- | | Net Sales | $299.6 million | +5% | | Net Income | $44.8 million | +19% | | Adjusted EBITDA* | $88.2 million | +7% | | Diluted EPS | $0.20 | +18% | | Adjusted Diluted EPS* | $0.24 | +14% | - CEO Kevin Holleran attributed the strong performance to growth across all geographic segments and successful execution of tariff mitigation plans, which contributed to **impressive margin expansion** and **enhanced financial flexibility**[2](index=2&type=chunk) - The company achieved a **record gross profit margin of 52.7%** and reduced its **net leverage to 2.1x**, the lowest in over three years[2](index=2&type=chunk) [Consolidated Financial Results](index=1&type=section&id=SECOND%20QUARTER%20FISCAL%202025%20CONSOLIDATED%20RESULTS) For the second quarter of 2025, net sales grew 5% to $299.6 million, driven by favorable pricing, acquisitions, and foreign currency effects, which offset a decline in volume, while gross profit increased 9% to $157.8 million with a 170 basis point margin expansion to 52.7%, despite a 14% rise in SG&A expenses leading to a slight 10 basis point contraction in the operating margin to 23.8%, and net income saw a significant 19% increase to $44.8 million Q2 2025 Consolidated Statement of Operations (in thousands) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $299,603 | $284,393 | +5.3% | | Gross Profit | $157,839 | $145,087 | +8.8% | | Gross Margin | 52.7% | 51.0% | +170 bps | | SG&A Expense | $71,893 | $63,155 | +13.8% | | Operating Income | $71,383 | $68,025 | +5.0% | | Operating Margin | 23.8% | 23.9% | -10 bps | | Net Income | $44,799 | $37,581 | +19.2% | - The increase in net sales was driven by positive net pricing to offset inflation and tariffs, the favorable impact from acquisitions, and foreign currency translation, which were partially offset by a decline in volume[3](index=3&type=chunk) - Interest expense **decreased by 19% to $13.7 million**, primarily due to lower interest rates and reduced debt following a repayment in April 2024[7](index=7&type=chunk) [Segment Performance](index=2&type=section&id=SECOND%20QUARTER%20FISCAL%202025%20SEGMENT%20RESULTS) The North America segment reported a 6% increase in net sales to $255.2 million, driven by pricing and the ChlorKing acquisition, leading to a 10% rise in adjusted segment income, while the Europe & Rest of World segment saw a 3% sales increase to $44.4 million, mainly from favorable currency and pricing, but its adjusted segment income declined by 6% Q2 2025 Segment Results (in millions) | Segment | Net Sales | Change (YoY) | Adjusted Segment Income* | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | North America | $255.2 | +6% | $89.1 | +10% | | Europe & Rest of World | $44.4 | +3% | $8.0 | -6% | - North America's sales growth was driven by positive net price and the acquisition of the ChlorKing business, partially offset by a volume decline due to the timing of orders[11](index=11&type=chunk) - Europe & Rest of World's sales increase was primarily due to favorable foreign currency translation and positive net price, offset by lower sales volume[13](index=13&type=chunk) [Balance Sheet and Cash Flow](index=2&type=section&id=BALANCE%20SHEET%20AND%20CASH%20FLOW) As of June 28, 2025, Hayward held $365.1 million in cash and cash equivalents, and for the first six months of the year, cash flow from operations was $188.4 million, a decrease from $209.8 million in the prior-year period, mainly due to less cash generated from working capital Key Balance Sheet Items (in thousands) | Account | June 28, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $365,051 | $196,589 | | Total current assets | $830,656 | $766,969 | | Total assets | $3,037,076 | $2,990,624 | | Total liabilities | $1,538,678 | $1,566,977 | | Total stockholders' equity | $1,498,398 | $1,423,647 | Six Months Ended Cash Flow Summary (in thousands) | Cash Flow Activity | June 28, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $188,362 | $209,839 | | Net cash used in investing activities | ($13,582) | ($48,025) | | Net cash used in financing activities | ($8,052) | ($123,607) | | Change in cash and cash equivalents | $168,462 | $36,959 | [Outlook and Strategy](index=2&type=section&id=OUTLOOK) Hayward has refined its full-year 2025 guidance, raising the lower end of its net sales forecast while maintaining its Adjusted EBITDA target, remaining confident in its long-term growth driven by favorable industry trends and its strong position in the aftermarket, which constitutes approximately 85% of its net sales Full Year 2025 Guidance | Metric | FY 2025 Guidance | Change vs FY 2024 | | :--- | :--- | :--- | | Net Sales | $1.070B - $1.100B | +2% to +5% | | Adjusted EBITDA* | $280M - $290M | +1% to +5% | - The company benefits from favorable secular trends including sunbelt migration, outdoor living, and technology adoption[16](index=16&type=chunk) - The aftermarket business, which is a key area of resilience and growth, represents **approximately 85%** of the company's net sales[16](index=16&type=chunk) [Appendix: Non-GAAP Reconciliations](index=4&type=section&id=Reconciliations) This section provides detailed reconciliations of GAAP financial measures to their non-GAAP counterparts, such as Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS, which management uses to provide additional insight into underlying business trends by excluding items not indicative of core operating performance - The company provides non-GAAP measures to help analysts and investors analyze performance across reporting periods on a consistent basis by excluding items it does not believe are indicative of its core operating performance[26](index=26&type=chunk) Q2 2025 Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Amount | | :--- | :--- | | **Net income** | **$44,799** | | Depreciation & Amortization | $13,885 | | Interest expense, net | $13,650 | | Income taxes | $14,640 | | EBITDA | $86,974 | | Other Adjustments | $1,262 | | **Adjusted EBITDA** | **$88,236** | Q2 2025 Reconciliation of Net Income to Adjusted Net Income (in thousands) | Line Item | Amount | | :--- | :--- | | **Net income** | **$44,799** | | Amortization | $8,631 | | Other adjustments | $1,262 | | Tax effect of adjustments | ($2,438) | | Other tax adjustments | ($9) | | **Adjusted net income** | **$52,245** |

Core Insights - Alithya Group Inc. has successfully implemented Microsoft Dynamics 365 Finance and Supply Chain Management in France and Spain for Hayward Holdings, marking a significant step in Hayward's global standardization efforts [1][2]. Group 1: Company Initiatives - Hayward Holdings aims to standardize its operations on a single technology platform to normalize manufacturing and distribution processes globally while enhancing customer experience [2]. - The implementation in Europe is part of a broader strategy that includes a rollout in North America, allowing Hayward to leverage data insights for improved decision-making and operational efficiency [3]. Group 2: Partnership and Collaboration - Alithya's team collaborated closely with Hayward to ensure successful adoption of the new system among employees across Europe, highlighting the importance of organizational change management and training [4]. - The partnership with Hayward signifies Alithya's capability in delivering digital transformation services to international brands [4]. Group 3: Company Profiles - Hayward Holdings, Inc. is recognized as a leading global designer and manufacturer of pool and outdoor living technology, focusing on energy-efficient and sustainable solutions [4]. - Alithya positions itself as a trusted advisor in strategic consulting and digital transformation, leveraging AI and advanced technologies to help clients modernize processes and unlock new opportunities [5].