Financial Data and Key Metrics Changes - Net sales increased by 7% in Q4 2025 to $349 million, with a full year increase of 7% to $1.122 billion, exceeding guidance [5][9][22] - Gross margin reached a record 48%, with Adjusted EBITDA increasing by 4% to $103 million in Q4 and by 8% to $299 million for the full year [6][9][21] - Adjusted diluted EPS rose by 7% to $0.29 in Q4 and by 15% to $0.77 for the full year [8][9][22] Business Line Data and Key Metrics Changes - North America sales increased by 8% to $309 million in Q4, with U.S. sales up 8% and Canada up 10% [12][23] - Europe and rest of world sales remained steady at $41 million, with Europe up 7% and rest of world down 9% [24] - For the full year, North America sales were up 7% to $959 million, while Europe and rest of world sales increased by 4% to $163 million [23][25] Market Data and Key Metrics Changes - The aftermarket model, which represents approximately 85% of total sales, demonstrated resilience despite challenges in new pool construction [10][11] - The company reported strong performance in Canada and a solid recovery in Europe, reflecting operational focus and organizational realignment [11][12] Company Strategy and Development Direction - The company is focused on innovation, operational excellence, and enhancing customer experience while maintaining a strong financial profile [7][12] - Strategic investments in research, development, and engineering are aimed at supporting growth-enhancing innovation, including the launch of the OmniX automation ecosystem [12][15] - The company aims to leverage its expertise in water management to explore growth opportunities in industrial flow control and other markets [92][93] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the business and the ability to execute strategic growth initiatives, expecting continued sales and earnings growth in 2026 [8][27] - The company anticipates a normal seasonal pattern for 2026, with Q1 and Q3 being lower result periods and Q2 and Q4 being higher [36][38] - Management highlighted the importance of the aftermarket and the potential for new products to drive growth, particularly in the context of ongoing economic challenges [39][40] Other Important Information - The company achieved a reduction in net leverage to 1.9x by year-end, enhancing liquidity and capacity for future investments [7][25] - A change in accounting principle regarding warranty costs was noted, which did not impact net sales or operating income [4][21] Q&A Session Summary Question: What was the source of the upside surprise in Q4? - Management noted that early buy orders and strong in-quarter demand contributed to the positive results, despite a challenging prior year comparison [31][32] Question: Can you discuss your assumptions for aftermarket and new pool dynamics? - Management indicated that they expect normal demand for 2026, with no significant improvement in new construction anticipated [38][39] Question: Any impacts from severe weather in the Northeast? - Management acknowledged that the winter has been more severe, but noted minimal impact on equipment replacement demand [44][45] Question: Update on the tariff situation and supply chain realignment? - Management reported a significant reduction in dependency on China and expressed confidence in managing tariff-related costs [48][49] Question: Can you elaborate on increased investments and CapEx? - Management confirmed a step-up in CapEx to upgrade U.S. manufacturing capabilities, with a focus on automation and modernization [53][54] Question: What is the outlook for the industrial flow control business? - Management is exploring growth opportunities in this area, recognizing its potential beyond the pool industry [92][93]

Financial Data and Key Metrics Changes - Net sales increased by 7% in Q4 2025 to $349 million, with a prior year comparison of 17% growth [4][6] - Gross margin expanded to a record 48%, with adjusted EBITDA increasing by 4% to $103 million [4][18] - For the full year 2025, net sales rose 7% to $1.122 billion, and adjusted EBITDA increased 8% to $299 million, exceeding guidance [7][19] - Adjusted diluted EPS grew 15% to $0.77 for the full year [7][20] Business Line Data and Key Metrics Changes - North America sales were up 8% to $309 million, driven mainly by price gains, with gross margin increasing to 50.1% [20][21] - Europe and rest of world sales remained steady at $41 million, with a gross margin increase of 590 basis points to 35.8% [21] - The aftermarket model, which constitutes approximately 85% of total sales, demonstrated resilience despite challenges in new pool construction [8][9] Market Data and Key Metrics Changes - U.S. sales increased by 8%, while Canada saw a 10% rise, indicating strong performance in key markets [20][21] - Europe sales grew by 7%, while the rest of the world experienced a 9% decline, reflecting varied market conditions [21] Company Strategy and Development Direction - The company is focused on innovation, operational excellence, and enhancing customer experience, which are seen as key to long-term value creation [5][10] - Hayward aims to leverage its aftermarket-driven model and expand its product offerings, including the OmniX automation ecosystem [10][12] - The company plans to maintain a balanced approach to capital allocation, prioritizing organic growth investments while pursuing strategic acquisitions [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the business and the ability to execute strategic growth initiatives, expecting net sales to increase approximately 4% in 2026 [6][24] - The company anticipates continued strong performance in the aftermarket, despite challenges in new pool construction [36][37] - Management highlighted the importance of disciplined execution and a cycle-tested business model in navigating the current macroeconomic environment [25][26] Other Important Information - The company achieved a significant reduction in net leverage to 1.9 times by year-end, enhancing its financial flexibility [5][22] - Increased investments in research, development, and engineering were noted, with a focus on product innovation and customer support [10][50] Q&A Session Summary Question: What was the source of the upside surprise in Q4? - Management noted that early buy orders and strong in-quarter demand contributed to the positive results, despite a challenging prior year comparison [28][30] Question: Can you discuss the assumptions for aftermarket and new pool demand? - Management indicated that they expect normal demand levels for 2026, with continued strength in the aftermarket, while new construction remains uncertain [35][36] Question: Any updates on the tariff situation and supply chain realignment? - Management reported a successful reduction in dependency on China and expressed confidence in managing tariff impacts through price increases and operational improvements [46][47] Question: Can you elaborate on the increased CapEx investments? - Management explained that the increased CapEx is aimed at upgrading U.S. manufacturing capabilities and enhancing operational efficiency [51][52] Question: What is the outlook for the 4-horsepower pump and pressure cleaner markets? - Management highlighted the significant market opportunity for these products, estimating that a quarter of all pumps are 3.5 horsepower or larger, which they previously could not serve [94]