Hayward Holdings Earnings Call Highlights Growth, Resilience

Hayward Holdings, Inc. ((HAYW)) has held its Q2 earnings call. Read on for the main highlights of the call.

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Hayward Holdings’ latest earnings call struck a confident tone, as management emphasized solid revenue growth, near-record margins and a stronger balance sheet despite inflation and geopolitical headwinds. Executives acknowledged pockets of weakness in Europe and certain international markets, but stressed that mitigation plans, innovation initiatives and lower interest costs should support earnings and cash generation.

Revenue Growth Holds Up in Q2 and First Half

Hayward reported Q2 net sales of $318 million, up 6% year-over-year, with gains powered by pricing and stable to modestly higher volumes. For the first half of fiscal 2026, net sales rose 9%, signaling that demand for the company’s pool equipment and related products remains resilient even as macro conditions grow more challenging.

North America Leads with Robust Sales Momentum

North America remained the clear growth engine, with Q2 net sales climbing 9% to $278 million on 7% price realization and 2% volume growth. For the first half, North American net sales advanced 10%, reflecting 8% pricing and 2% volume, underscoring the strength of the core U.S. market and Hayward’s ability to pass through higher costs.

Profitability Near Record Levels Despite Cost Pressures

Gross profit increased 8% in Q2 to $155 million, and the gross margin of 48.7% was the second-highest since Hayward’s IPO, even though it dipped 50 basis points year-over-year. Adjusted EBITDA grew 5% to $93 million, delivering an adjusted margin of 29.1%, which management framed as evidence that the business model remains highly profitable.

EPS Growth Strong as Management Holds Guidance

Adjusted diluted EPS climbed 8% in Q2 to $0.26 and is up 18% year-to-date, reflecting both revenue growth and disciplined cost control. Management reaffirmed full-year guidance for roughly 5% net sales growth and adjusted diluted EPS of $0.84 to $0.87, implying 9%–13% earnings growth and signaling confidence in the trajectory for the rest of the year.

Deleveraging Strengthens Balance Sheet and Liquidity

The company reduced net leverage to 1.5x, its lowest level since going public and down from 2.1x a year ago, giving it more financial flexibility. Cash, cash equivalents and short-term investments totaled $483 million, and with credit facility availability, total liquidity exceeded $900 million, a cushion that investors typically value in volatile markets.

Refinancing Lowers Interest Costs and Extends Maturities

Hayward amended its Term Loan B to $960 million, extended the maturity to 2033 and cut the spread by 61 basis points, trimming annual interest expense by about $6 million. The company also replaced its prior asset-based loan with a new undrawn $425 million revolver maturing in 2031, moves that coincided with a rating upgrade from Moody’s and a positive outlook from S&P.

Free Cash Flow Fuels Buybacks and Capital Flexibility

Free cash flow reached $154 million in the first half, supported by $172 million in operating cash flow, and management expects roughly $200 million for the full year, exceeding net income. Hayward returned capital to shareholders with about $64 million of share repurchases, buying back 4.4 million shares in the first half while maintaining ample liquidity.

Operational Initiatives and Strategic Investments Advance

Management highlighted rising product vitality, with new offerings accounting for 23% of sales, and continued expansion of the OmniX platform to deepen customer engagement. Around 90% of U.S. products are now manufactured or assembled domestically, and a sixth training hub plus AI-driven customer service that answers 98% of calls within one second are aimed at strengthening the franchise.

International Markets Lag as Europe and ROW Weaken

Europe and Rest of World net sales fell 8% in Q2 to $41 million, with Europe down 4% and Rest of World off 16%, pressured by geopolitical disruptions and softer macro conditions. Management cited the Middle East and other regions as particular trouble spots, but did not suggest that these issues were structural, framing them as cyclical challenges.

Inflation and Supply-Chain Costs Compress Margins

Despite strong profitability, Hayward faced margin pressure from specialty metals, freight and resin inflation, which contributed to a 50 basis point decline in overall gross margin. In North America, gross margin slipped 90 basis points to 50.4%, with management noting that mitigation actions, including pricing and sourcing changes, will take time to fully offset these costs.

Adjusted EBITDA Margin Reflects Investment and Cost Headwinds

Adjusted EBITDA rose to $93 million, but the margin edged down 40 basis points year-over-year to 29.1% as Hayward continued targeted investments in innovation and customer service. Executives framed the margin dip as a trade-off between near-term profitability and longer-term growth, suggesting that spending on strategic initiatives should pay off over time.

Operating Cash Flow Slightly Lower Year-on-Year

Operating cash flow for the first half was $172 million, down modestly from $188 million a year earlier, a decline of $16 million. Management did not portray this as alarming, pointing instead to strong free cash flow and suggesting that working capital and timing effects contributed to the year-over-year change.

IEEPA Refunds Add Complexity but Not to Guidance

Hayward still expects to receive approximately $8 million to $10 million in IEEPA-related refunds, but the process of returning amounts to customers remains complex. Management noted that these potential refunds are not included in current guidance, limiting their impact on investor expectations until the accounting and customer aspects are fully resolved.

Geopolitical and Supply-Chain Shifts Drive Incremental Costs

Ongoing geopolitical conflicts and tariff, commodity and transportation inflation have pushed Hayward to nearshore production, add dual sourcing and restructure parts of its supply chain. While these moves improve resilience, they also introduce incremental costs and operational complexity, which the company is working to offset through pricing, efficiency gains and domestic manufacturing.

Guidance Points to Continued Growth and Cash Generation

Looking ahead, Hayward reiterated its 2026 outlook for about 5% net sales growth and adjusted diluted EPS of $0.84 to $0.87, equating to 9%–13% earnings growth. The company expects free cash flow of around $200 million, net interest expense near $45 million, a normalized tax rate of roughly 24% and higher capital spending of about $40 million, all underpinned by year-to-date gains in sales, EBITDA and EPS.

Hayward’s earnings call painted a picture of a company balancing growth, profitability and investment while navigating inflation and geopolitical uncertainties. With strong North American momentum, a fortified balance sheet, robust free cash flow and maintained guidance, the story appealed to investors seeking stable, cash-generative exposure to the pool and outdoor living market, even as international and cost risks linger.