HAYW — Hayward Holdings, Inc.

Hayward Holdings Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Net Sales: Increased 6% year-over-year to $318 million; 9% growth for the first half of 2026.
• Adjusted Diluted EPS: Rose 8% to $0.26 in Q2; 18% increase for the first half.
• Gross Profit Margin: Declined slightly to 48.7%, but remains near record levels; second highest quarterly gross margin since IPO.
• Adjusted EBITDA: Increased 5% to $93 million; adjusted EBITDA margin at 29.1%.
• Net Leverage: Reduced to 1.5x, the lowest since the IPO in 2021.
• Cash Flow: Generated $172 million in operating cash flow in the first half; free cash flow at $154 million.

2. Strategic Updates and Business Highlights:

• Debt Refinancing: Completed a comprehensive refinancing, extending maturities and reducing interest costs by approximately $6 million annually.
• Innovation Focus: Increased R&D investment, achieving a new product vitality rate of 23%. The OmniX platform is a key driver in the aftermarket segment.
• Customer Engagement: Enhanced dealer support through training centers, with a sixth center opening in Atlanta in Q4.
• Operational Excellence: Implemented cost actions, nearshoring, and dual sourcing to mitigate risks and improve supply chain resilience.

3. Forward Guidance and Outlook:

• Full-Year Guidance: Maintaining expectations for net sales growth of approximately 5% and adjusted diluted EPS growth of 9% to 13%, targeting a range of $0.84 to $0.87.
• Free Cash Flow: Expected to be around $200 million, exceeding 100% of net income.
• CapEx: Projected increase of approximately $40 million to support operational upgrades.

4. Challenges and Points of Concern:

• Geopolitical Impact: Sales in Europe and Rest of World declined 8% due to macroeconomic conditions and geopolitical disruptions, particularly related to the conflicts in Ukraine and the Middle East.
• Inflationary Pressures: Continued inflation in specialty metals, freight, and resin costs has put pressure on margins, although the company is managing these through pricing actions.
• Competitive Landscape: Noted challenges from competitors like Pentair, with potential impacts on market share and pricing dynamics.

5. Notable Q&A Insights:

• Channel Inventory: Management indicated that channel inventory levels are normal and aligned with seasonal patterns, with expectations for a net reduction in inventory as the year progresses.
• Market Share Gains: The company is confident in its ability to maintain and potentially accelerate market share gains through product innovation and improved dealer relationships.
• Price Cost Dynamics: Management expressed confidence in passing along inflation-related price increases while also focusing on internal cost efficiencies to protect margins.
• IEEPA Refunds: The company is in the process of claiming IEEPA refunds, with expectations of $8 million to $10 million, but these are not included in current guidance.

Overall, Hayward Holdings demonstrated strong financial performance in Q2 2026, supported by strategic initiatives and operational efficiencies, while navigating external challenges and maintaining a positive outlook for the remainder of the year.