Hayward (HAYW) - 2025 Q2 - Quarterly Results

Q2 2025 Earnings Release Second Quarter Fiscal 2025 Highlights 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] - 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] Consolidated Financial Results 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] - 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] Segment Performance 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] - 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] Balance Sheet and Cash Flow 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 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] - The aftermarket business, which is a key area of resilience and growth, represents approximately 85% of the company's net sales[16] Appendix: Non-GAAP 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] 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 |