Hayward Holdings, Inc. ((HAYW)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Hayward Holdings, Inc. recently held its earnings call, presenting a generally positive outlook for the company. The call highlighted strong revenue and EBITDA growth, successful margin expansion, and an increase in full-year guidance. The company has shown robust execution in technology adoption and tariff mitigation, although it faces challenges related to weather event comparisons, new pool construction costs, and increased competition. Despite these hurdles, the positive aspects of the company’s performance significantly outweigh the negatives.
Strong Revenue and EBITDA Growth
Hayward Holdings reported a notable increase in net sales, which rose by 7% to $244 million. This growth was driven by a 5% increase in net pricing and a 2% increase in volume. The company’s adjusted EBITDA saw a substantial rise of 16% to $59 million, with an adjusted EBITDA margin increase of 170 basis points to 24.2%.
Margin Expansion and Financial Flexibility
The company achieved a gross profit margin increase of 150 basis points to 51.2%. Strong cash flow generation has enabled Hayward to reduce its net leverage to 1.8x, marking the lowest level in nearly four years. This reduction provides the company with enhanced financial flexibility.
Increased Full-Year Guidance
Hayward Holdings raised its full-year guidance, forecasting net sales to increase by 4% to 5.5% and adjusted EBITDA to rise by 5% to 7%, with a target range of $292 million to $297 million.
Technology Adoption and Product Innovation
The company reported double-digit growth in its omni controls product category, nearly twice the overall growth rate. Hayward continues to invest in advanced engineering and product development, driving innovation in its product offerings.
Successful Tariff Mitigation Efforts
Hayward has aggressively executed its tariff mitigation plans, successfully reducing direct sourcing from China from 10% to 3% by year-end. This strategic move has helped the company navigate tariff-related challenges effectively.
Impact of Weather Events on Previous Year Comparisons
The fourth quarter of the previous year benefited from two major hurricanes, a boost not expected to repeat this year. This presents a headwind for the current year’s fourth quarter comparisons.
Challenges in New Pool Construction
New pool construction remains costly, with entry-level consumers hesitant due to higher interest rates and costs. This has impacted the company’s growth in this segment.
Pressure from Private Label and Offshore Competitors
Hayward faces increasing competition from lower-priced offshore competitors, driven by inflation and tariffs. Despite this, the company remains confident in its value proposition.
Forward-Looking Guidance
During the earnings call, Hayward Holdings provided an optimistic outlook, raising its full-year guidance based on strong performance and strategic initiatives. The company anticipates full-year net sales growth of 4% to 5.5% and expects adjusted EBITDA to rise by 5% to 7%, reaching $292 million to $297 million. These results are supported by successful tariff mitigation strategies and strong aftermarket demand.
In summary, Hayward Holdings’ earnings call reflected a positive sentiment with strong financial performance and strategic advancements. While challenges such as weather event comparisons and increased competition persist, the company’s robust growth in revenue and EBITDA, along with its successful margin expansion and financial flexibility, underscore a promising outlook for the future.