Core Insights - Universal Electronics (UEIC) is currently rated 2 (Buy) by Zacks Rank, indicating a positive earnings outlook, while Hayward Holdings, Inc. (HAYW) is rated 3 (Hold) [3] - Value investors assess various traditional metrics to determine if a stock is undervalued, including P/E ratio, P/S ratio, earnings yield, and cash flow per share [4] Valuation Metrics - UEIC has a forward P/E ratio of 12.98, significantly lower than HAYW's forward P/E of 20.06, suggesting that UEIC may be undervalued [5] - The PEG ratio for UEIC is 0.87, indicating a favorable growth outlook compared to HAYW's PEG ratio of 2.85, which suggests higher expected growth relative to its price [5] - UEIC's P/B ratio stands at 0.59, while HAYW's P/B ratio is 2.18, further supporting the notion that UEIC is a more attractive value option [6] - Overall, UEIC has a Value grade of A, while HAYW has a Value grade of C, highlighting UEIC's superior valuation metrics and earnings outlook [6]

Core Viewpoint - Moore Law, PLLC is investigating potential claims against Hayward Holdings, Inc. due to alleged false and misleading statements that have led to a decline in stock value [1][2] Group 1: Allegations Against Hayward Holdings - Hayward Holdings and its management are accused of engaging in a channel-stuffing scheme to artificially inflate short-term sales and earnings [3] - The company allegedly flooded its channel partners with unwanted inventory, significantly exceeding existing consumer demand [3] - This channel-stuffing scheme is said to have cannibalized future sales, impairing Hayward Holdings' ability to sell to its customers [3] - As a result of these actions, the projected financial results for 2022 were deemed unachievable and lacked a reasonable basis in fact [3]

Company Overview - Hayward Holdings, Inc. (HAYW) is currently experiencing significant attention from investors due to high implied volatility in its options market, particularly the Jul 18, 2025 $07.50 Put option [1] - The company holds a Zacks Rank of 4 (Sell) within the Electronics - Miscellaneous Products Industry, which is positioned in the bottom 40% of the Zacks Industry Rank [3] Analyst Sentiment - Over the past 60 days, no analysts have increased their earnings estimates for Hayward Holdings for the current quarter, while two analysts have revised their estimates downward [3] - The Zacks Consensus Estimate for the current quarter has decreased from 24 cents per share to 22 cents per share during this period [3] Market Expectations - The high implied volatility suggests that options traders are anticipating a significant price movement for Hayward Holdings shares, potentially indicating an upcoming event that could lead to a major rally or sell-off [2][4] - Options traders often seek to capitalize on high implied volatility by selling premium, aiming for the underlying stock to not move as much as expected by expiration [4]

Core Viewpoint - Hayward Holdings, Inc. is facing legal scrutiny regarding allegations of misleading investors about sales practices and inventory levels, with a securities fraud lawsuit moving forward against the company and its executives [2][3]. Group 1: Legal Investigation - Schubert Jonckheer & Kolbe LLP is investigating potential legal claims related to Hayward Holdings, urging current shareholders to reach out for more information [1]. - The investigation focuses on whether Hayward's officers and directors engaged in wrongdoing concerning the alleged misleading sales practices [3]. Group 2: Securities Fraud Lawsuit - A U.S. District Court judge has allowed key claims in a securities fraud lawsuit against Hayward Holdings to proceed, which alleges that the company inflated sales figures through "channel stuffing" and pushed excess inventory into the distribution pipeline [2]. - The lawsuit claims that these practices resulted in an undisclosed inventory glut, negatively impacting future sales and leading to a decline in Hayward's stock price when the truth was revealed, causing significant losses for investors [2].

Core Viewpoint - Kuehn Law, PLLC is investigating potential breaches of fiduciary duties by officers and directors of Hayward Holdings, Inc. related to misrepresentation of financial practices and performance [1]. Group 1: Allegations of Misconduct - Insiders at Hayward allegedly engaged in a channel-stuffing scheme to artificially inflate short-term sales and earnings [2]. - The company reportedly flooded channel partners with unwanted inventory, significantly exceeding consumer demand [2]. - This channel-stuffing led to an inventory surplus for partners, necessitating a substantial de-stocking in the latter half of 2022 [2]. - The scheme is said to have cannibalized future sales, adversely affecting Hayward's ability to sell to customers [2]. - A slowdown in demand for pool equipment, combined with excess inventory, resulted in a need for channel partners to reduce their stock levels [2]. - Consequently, projected financial results for 2022 were deemed unachievable and lacked a factual basis [2].

Hayward (HAYW) FY Conference Summary Company Overview - Hayward is a leading pool equipment OEM specializing in pumps, filters, heaters, and control systems, with approximately 75% of sales tied to the aftermarket [2][4] - The company generates about 95% of its net sales from the pool industry, primarily residential, with 5% from commercial and industrial flow control [4] - North America accounts for about 85% of revenue, while Europe and the rest of the world contribute 15% [5] Financial Performance - Hayward's revenue is just over $1 billion, with a five-year CAGR of 7.5% [5][6] - Gross margins exceeded 50% last year, with an adjusted EBITDA CAGR of 10% over the same period [6] - The company has seen a shift towards 85% of net sales derived from existing pools due to a decline in new construction [7] Market Dynamics - The pool market is characterized by a large installed base, with 5.5 million in-ground pools in the U.S. and nearly 25 million globally, which continues to grow annually [10][11] - The average age of pools is approximately 23 years, indicating a strong aftermarket opportunity for upgrades and modernization [11] - Hayward has pricing power, as equipment costs represent only 10-15% of overall construction costs, allowing for annual price increases to offset inflation [12][13] Strategic Focus - The company emphasizes organic growth, margin expansion, and disciplined capital deployment as key strategic themes [15] - Gross margins have expanded by 600 basis points over the last five years, reaching 50.5% by the end of 2024 [16] - Hayward's strategy includes investing in innovation and technology, with a focus on smart connected products and automation [9][15] Product Innovation - Hayward is focusing on digital conversion, chemical conversion, and energy conversion as pivotal areas for growth [27] - The company has launched several new products, including a heat pump with cooling capabilities, an automation app for consumers, and a new lighting platform [32][33] - The OmniX system allows for retrofitting existing equipment with automation controls, creating a significant revenue opportunity [35] Distribution and Market Strategy - Approximately 75% of Hayward's products are sold through distribution channels, with the remaining 25% through direct sales [37] - The company has initiated "Hayward hubs" in high-volume markets to provide training and support for trade professionals [38] Competitive Advantages - Hayward's competitive advantages include strong brand recognition, a large installed base, and a commitment to sustainability with energy-efficient products [41] - The company has a proven ability to maintain gross margins over 50% due to innovative products and effective supply chain management [42][44] Conclusion - Hayward is well-positioned in the pool equipment industry, leveraging its strong aftermarket model, pricing power, and innovative product offerings to drive growth and shareholder value [41]

Company Performance - Hayward Holdings, Inc. reported quarterly earnings of $0.10 per share, exceeding the Zacks Consensus Estimate of $0.09 per share, and up from $0.08 per share a year ago, representing an earnings surprise of 11.11% [1] - The company posted revenues of $228.84 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 7.44%, compared to year-ago revenues of $212.57 million [2] - Over the last four quarters, Hayward Holdings has consistently surpassed consensus EPS and revenue estimates [2] Stock Performance - Hayward Holdings shares have declined approximately 12.8% since the beginning of the year, while the S&P 500 has decreased by 5.3% [3] - The current Zacks Rank for Hayward Holdings is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.24 on revenues of $298.67 million, and for the current fiscal year, it is $0.72 on revenues of $1.08 billion [7] - The outlook for the Electronics - Miscellaneous Products industry, where Hayward Holdings operates, is currently in the bottom 43% of over 250 Zacks industries, which may impact the stock's performance [8]

Financial Data and Key Metrics Changes - Net sales increased by 8% to $229 million, driven by a 3% increase in both price and organic volume, along with a 3% contribution from the Core King acquisition [8][19] - Gross profit margins rose to 49.5%, an increase of 30 basis points year-over-year, marking the ninth consecutive quarter of gross margin expansion [6][10] - Adjusted EBITDA increased by 9% to $49 million, with adjusted EBITDA margins also increasing by 30 basis points to 21.5% [10][19] - Adjusted diluted EPS increased by 25% to $0.10 [11][19] Business Line Data and Key Metrics Changes - North American net sales increased by 8% to $187 million, driven by 3% net price realization and 2% higher volume [20] - In Europe and Rest of World, net sales increased by 7% to $42 million, benefiting from 1% favorable net pricing and 8% higher volume [22] Market Data and Key Metrics Changes - Sales growth was consistent across both segments, with North America seeing an 8% increase and Europe and Rest of World experiencing a 7% increase [8][19] - The commercial pool business continues to grow organically, benefiting from the integration of the Core King acquisition [9] Company Strategy and Development Direction - The company is focused on mitigating the impact of tariffs and supporting margins while positioning for continued growth [7][12] - The recent launch of the Omni X automation platform aims to unlock the addressable aftermarket of millions of non-automated pools [6][15] - The company confirmed its guidance for full-year 2025, expecting net sales to increase approximately 1% to 5% and adjusted EBITDA of $280 million to $290 million [8][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current economic uncertainty, highlighting the resilience of the business model with over 80% of sales aligned with aftermarket needs [7][29] - The company anticipates pressure on discretionary elements of the market, such as new construction and remodels, due to economic conditions and higher interest rates [9][28] - Management remains optimistic about the long-term growth outlook for the pool industry, particularly in the aftermarket segment [29] Other Important Information - The company is strategically reinvesting in sales and marketing, customer service, and engineering to drive future growth [20] - Total liquidity at the end of the first quarter was $398 million, with no near-term debt maturities [23][24] Q&A Session Summary Question: Can you clarify the impact of tariffs and mitigation actions? - Management indicated an annualized tariff impact of approximately $85 million, primarily from China-based products, and discussed proactive measures to mitigate this impact [33][34][37] Question: How is channel inventory managed? - Management expressed confidence in current inventory levels, stating that they are appropriate for the season and have been recalibrated in prior periods [48][50] Question: What are the trends in consumer behavior post price increases? - Management noted that while there may be some deferral in discretionary spending, the maintenance side of the business remains resilient [70][71] Question: How will increased manufacturing in the U.S. affect margins? - Management stated that bringing more manufacturing to the U.S. will increase utilization rates and potentially enhance margins through automation and variable cost structures [78][81]

Financial Data and Key Metrics Changes - Net sales increased by 8% to $229 million, driven by a 3% increase in both price and organic volume, along with a 3% contribution from the Core King acquisition [7][19] - Gross profit margins rose to 49.5%, an increase of 30 basis points, marking the ninth consecutive quarter of year-over-year gross margin expansion [5][10] - Adjusted EBITDA increased by 9% to $49 million, with adjusted EBITDA margins also increasing by 30 basis points to 21.5% [10][19] - Adjusted diluted EPS increased by 25% to $0.10 [11] Business Line Data and Key Metrics Changes - North American net sales increased by 8% to $187 million, driven by 3% net price realization and 2% higher volume [20] - In Europe and Rest of World, net sales increased by 7% to $42 million, benefiting from 1% favorable net pricing and 8% higher volume [22] Market Data and Key Metrics Changes - Sales growth was consistent across both segments, with North America net sales increasing by 8% and Europe and Rest of World by 7% [8] - Trends improved in March, aligning with normal seasonal demand as the peak pool season approached [9] Company Strategy and Development Direction - The company is focused on mitigating tariff impacts while supporting margins and positioning for growth, with over 80% of sales aligned with aftermarket needs [6] - The recent launch of the Omni X platform aims to provide wireless IoT connectivity and control for non-automated pools, representing a significant growth opportunity [5][16] - The company confirmed its guidance for 2025, expecting net sales to increase approximately 1% to 5% and adjusted EBITDA of $280 million to $290 million [7][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the increasing economic uncertainty but expressed confidence in the resilience of the business model, particularly in the aftermarket segment [9][28] - The company anticipates pressure on discretionary elements of the market, such as new construction and remodels, due to economic conditions and higher interest rates [9][28] - Management remains optimistic about long-term growth in the pool industry, especially in the aftermarket segment [29] Other Important Information - The company is taking proactive measures to reduce reliance on China for sourcing, aiming to decrease direct sourcing from approximately 10% to 3% by year-end [12][13] - Total liquidity at the end of the first quarter was $398 million, with no near-term debt maturities [23] Q&A Session Summary Question: Clarification on tariffs and mitigation actions - Management discussed the estimated annualized tariff impact of approximately $85 million, primarily from China, and outlined steps to increase domestic manufacturing to mitigate this impact [34][35] Question: Channel inventory levels and demand impact - Management expressed confidence in current channel inventory levels, stating they are appropriate for the season and have been recalibrated in prior periods [49][51] Question: Trends in consumer behavior and pricing actions - Management noted that while there has been some deferral in discretionary spending, the maintenance side of the business remains resilient [53][72] Question: Insights on OmniX sales and automation adoption - Early trends with OmniX have been encouraging, and the platform is expected to provide a cost-effective solution for homeowners looking to automate their pools [75][76] Question: Manufacturing utilization and cost levers - Management indicated that bringing more manufacturing to the U.S. will increase utilization rates and provide opportunities for margin improvement through automation [80][83]

Financial Performance - Net sales for Q1 2025 reached $228.8 million, an increase of 8% year-over-year[8, 10] - Gross profit margin increased by 30 bps year-over-year to 49.5%[10] - Adjusted EBITDA for Q1 2025 was $49.1 million, up 9% year-over-year[10] - Adjusted diluted EPS increased by 25% year-over-year to $0.10[10] Tariff Impact and Mitigation - The company estimates an annualized tariff impact of approximately $85 million, with $30 million expected for FY'25[15] - Mitigation plans include reducing China direct sourcing to the US from ~10% to ~3% of COGS by year-end 2025[13] - Implemented a 3% price increase in North America effective April and 4% effective June[15] Strategic Initiatives - Launched OmniX, an innovative wireless solution targeting the aftermarket with a total addressable market (TAM) of ~3.5 million non-automated pools in the US[16, 18] - Net leverage is at 2.8x during a seasonally low cash collection period[8] Financial Outlook - The company confirms full-year 2025 guidance with net sales projected between $1.060 billion and $1.100 billion[8, 39] - Adjusted EBITDA is expected to be between $280 million and $290 million[39] - Free cash flow is projected to be approximately $150 million, exceeding 100% of net income[39]