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]

Financial Performance - Net sales increased by 8% year-over-year to $228.8 million for Q1 FY 2025, driven by volume growth and favorable pricing [3] - Gross profit rose by 8% to $113.4 million, with a gross profit margin of 49.5%, an increase of 30 basis points [4] - Net income surged by 46% to $14.3 million, expanding the net income margin by 170 basis points to 6.3% [10] - Adjusted EBITDA increased by 9% to $49.1 million, with an adjusted EBITDA margin of 21.5%, up 30 basis points [10] - SG&A expenses rose by 9% to $65.1 million, representing 28.5% of net sales, an increase of 30 basis points from the prior year [5] - Adjusted net income for the three months ended March 29, 2025, was $22.1 million, compared to $16.6 million for the same period in 2024, reflecting a year-over-year increase of 33.5% [38] - The company reported a net income of $14.3 million for the three months ended March 29, 2025, up from $9.8 million in the prior year, representing a 45.4% increase [38] - Adjusted diluted EPS for the three months ended March 29, 2025, was $0.10, compared to $0.08 for the same period in 2024, indicating a 25% increase [38] Segment Performance - North America segment net sales grew by 8% to $187.1 million, aided by the acquisition of ChlorKing [11] - Europe & Rest of World segment net sales increased by 7% to $41.8 million, primarily due to volume growth [12] - Segment income for North America was $43.5 million for the three months ended March 29, 2025, compared to $39.7 million for the same period in 2024, showing an increase of 4.5% [42] - Adjusted segment income margin for North America was 27.1% for the three months ended March 29, 2025, compared to 26.1% for the same period in 2024 [42] Guidance and Future Outlook - Hayward confirms full year 2025 guidance, expecting net sales of approximately $1.060 billion to $1.100 billion and Adjusted EBITDA of $280 million to $290 million [14] - The company continues to leverage its competitive advantages in the pool industry, focusing on technology adoption and market expansion [15] Balance Sheet and Cash Flow - Cash and cash equivalents decreased to $181,333,000 as of March 29, 2025, down from $196,589,000 at the end of 2024 [29] - Total assets as of March 29, 2025, were $2,984,597,000, slightly down from $2,990,624,000 at the end of 2024 [27] - Total liabilities decreased to $1,545,218,000 as of March 29, 2025, from $1,566,977,000 at the end of 2024 [27] Acquisition and Restructuring Costs - The company incurred $1,926,000 in acquisition and restructuring-related expenses during the three months ended March 29, 2025 [28] - The company incurred $3.2 million in compensation expenses related to the retention of key employees from the ChlorKing acquisition, part of a total $6.3 million retention payment [37] - Adjustments for the last twelve months ended March 29, 2025, included a $3.3 million increase in cost of goods sold due to fair value inventory step-up from the ChlorKing acquisition [37] - The company recognized $1.7 million in transaction and integration costs associated with the ChlorKing acquisition for the three months ended March 29, 2025 [40] - The company reported $1.1 million in transaction and integration costs related to the ChlorKing acquisition for the year ended December 31, 2024 [37] Interest and Tax - Interest expense decreased by 27% to $13.7 million, attributed to reduced debt and lower interest rates [7] - The effective tax rate for the three months ended March 29, 2025, was 23.3%, reflecting tax benefits from stock compensation [38]

The market expects Hayward Holdings, Inc. (HAYW) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended March 2025. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to b ...

Investors interested in Electronics - Miscellaneous Products stocks are likely familiar with Hayward Holdings, Inc. (HAYW) and Rockwell Automation (ROK) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores ...

Core Insights - Investors in the Electronics - Miscellaneous Products sector should consider Hayward Holdings, Inc. (HAYW) and Teradyne (TER) for potential value opportunities [1] Valuation Metrics - HAYW has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while TER has a Zacks Rank of 5 (Strong Sell) [3] - HAYW's forward P/E ratio is 18.73, compared to TER's forward P/E of 24.46, suggesting HAYW is more attractively priced [5] - HAYW has a PEG ratio of 2.19, while TER's PEG ratio is 3.66, indicating HAYW's expected EPS growth is more favorable [5] - HAYW's P/B ratio is 2.07, significantly lower than TER's P/B of 4.77, further supporting HAYW's valuation advantage [6] - HAYW has a Value grade of B, while TER has a Value grade of F, highlighting HAYW's stronger valuation metrics [6] Conclusion - Given the stronger estimate revision activity and more attractive valuation metrics, HAYW is positioned as the superior option for value investors compared to TER [7]

Approximately three years ago, in February 2022, I wrote a bullish article about Hayward Holdings (NYSE: HAYW ). For those not familiar with the firm, it operates in the swimming pool industry. Specifically, it produces and sells poolCrude Value Insights offers you an investing service and community focused on oil and natural gas. We focus on cash flow and the companies that generate it, leading to value and growth prospects with real potential.Subscribers get to use a 50+ stock model account, in-depth cash ...