Hayward Q1 Earnings Call Highlights

Hayward NYSE: HAYW reported what management described as an “outstanding” first quarter of fiscal 2026, posting double-digit growth in sales and earnings and prompting the company to raise its full-year outlook. President and CEO Kevin Holleran said results came in “meaningfully ahead of expectations,” supported by pricing execution, positive volume, and continued strength in the company’s largely aftermarket-driven business model.

First-quarter results: sales up 12%, margins expanded

Holleran said net sales rose 12% to $255 million, with growth in both North America and the Europe and Rest of World segment. He highlighted that adjusted EBITDA increased 15% and adjusted diluted EPS rose 30% to $0.13, reflecting operating leverage and cost management even as the company navigated “incremental inflation, tariffs, and targeted investments in innovation, operations, and customer initiatives.”

In the quarter, Hayward’s gross margin expanded 50 basis points to 46.5%, while adjusted EBITDA margin increased 60 basis points to 22.1%. Holleran also pointed to strength in discretionary categories, noting that “automation and heaters outpace[d] core categories in the quarter,” even as the aftermarket remained resilient.

Chief Financial Officer Eifion Jones added that price realization was strong and helped offset inflation, with additional help from volume and foreign exchange. Jones said the majority of net price realization reflected underlying price increases implemented over the last 12 months, including “a specific product category increase in Q1 this year related to specialty metal components inflation.” He said about 2 percentage points of the increase was tied to incentive mix differences across retailer and builder channels.

Segment performance: North America +12%, Europe up, Middle East disruption weighed on Rest of World

Jones said North America net sales increased 12% to $210 million, driven by pricing and volume. Within the region, U.S. sales were up 11% and Canada rose 26%. North America gross margin was flat year over year, as operating leverage offset “incremental tariff and inflationary pressures,” according to Jones.

Europe and Rest of World sales increased 9% to $45 million, which Jones attributed largely to favorable foreign exchange, with “relatively stable price and volume.” Europe sales rose 14%, while Rest of World declined 1%. Jones said the Rest of World result was “impacted by geopolitical disruption in the Middle East related to the ongoing conflict in Iran.”

Margins improved in Europe and Rest of World, with gross margin increasing 230 basis points to 35.8% and adjusted segment income margin rising 280 basis points to 19.4%, driven by “improved operational execution,” Jones said.

Pricing, inflation, and tariffs: targeted actions and a Q2 surcharge

On the call, management discussed how inflation and pricing actions are affecting near-term margins. Jones said Hayward is seeing higher energy-based costs tied to global disruption and “slightly higher specialty metal costs earlier in the year.” He said the company responded with two actions:

• An out-of-cycle price increase in Q1 on the alternative salt sanitization line, expected to start impacting invoices in Q2 and beyond.
• A surcharge of approximately 2.5% implemented early in Q2, expected to begin helping invoices late in the quarter and more fully in Q3 and Q4.

Jones said Hayward still expects full-year gross margins to be comparable to last year’s record, though he cautioned that “rising costs for specialty metals, freight, and resins” are applying modest downward pressure on gross margin, with “some year-over-year compression expected in Q2” before mitigation efforts are fully realized. He also noted the company expects sequential gross margin improvement from Q1 to Q2, but “a little bit more modest than we did last year,” partly because Hayward will lap prior-year price increases.

In response to a question about tariffs, Jones said Hayward evaluated the net impact of changes including “the roll off of IEEPA and then the reinstitution of the Section 122s” and the “Section 232s,” adding that the effect is “no different from what we thought coming into the year” and the company does not see “any further headwind to the year as a consequence of this change in tariff regime.”

On pricing assumptions for 2026, Jones said Hayward now expects pricing for the full year to average about +4%, up from a prior expectation of roughly +3%. He said the 2.5% surcharge is not included in guidance because it is viewed as “temporary but structural” and could be withdrawn.

Channel inventory and demand: management says levels are balanced

Analysts also questioned channel inventory and demand trends. Holleran said weather was “warm and generally dry,” though some East Coast areas saw extremely cold conditions and precipitation. He said the company saw “nice participation and double-digit growth out of most regions,” and pointed to strong results in Canada and nearly 20% growth in commercial.

Regarding early-buy activity and channel inventory, Holleran said Hayward was able to “meter the early buy shipments” between Q4 and Q1 to better stage inventory for the season. He said Hayward monitors channel inventory with partners and feels good about levels exiting Q1, adding that the company’s mid-single-digit net sales outlook assumes “sell-in approximates to the sell-out for the full year.” Holleran also reiterated typical industry seasonality, where sell-in exceeds sell-out in Q4 and Q1, and then sell-out exceeds sell-in in Q2 and Q3.

Asked about demand and potential price elasticity, Holleran said the company has not seen evidence of meaningful pushback, noting that Q1 delivered positive volume “for the first time in several quarters.” He added that Hayward has been encouraged by demand in discretionary products such as lights, salt chlorine generators, and controls, while emphasizing that pricing actions are tactical rather than blanket increases across all SKUs.

Cash flow seasonality, leverage, and updated guidance

Jones described Q1 as a seasonally cash-usage quarter due to extended payment terms tied to early-buy programs. Cash flow used in operations was $151 million in Q1 2026 compared to $6 million a year ago. Jones noted that Q1 2025 benefited from $99 million in net proceeds from the sale of accounts receivable, while no such proceeds occurred in 2026.

Even with seasonal usage, Hayward reduced net leverage to 2.4x from 2.8x a year earlier. Jones said net leverage increased from 1.9x at year-end as expected due to early-buy seasonality, with leverage typically improving in Q2 as receivables are collected. He said the company has liquidity to support organic investment, strategic M&A, and capital returns while maintaining disciplined leverage. Hayward repurchased about $6 million of shares in a “modest anti-dilutive repurchase” during the quarter, Jones said.

Following the quarter, management raised 2026 guidance. Holleran said Hayward now expects net sales to increase approximately 5% for the year. Jones said adjusted diluted EPS is now expected to rise approximately 9% to 13%, with a range of $0.84 to $0.87, up from prior guidance of $0.82 to $0.86. Jones attributed the EPS uplift to the Q1 top-line performance and improving leverage in SG&A, noting that while SG&A increased year over year, it rose less than net sales.

Jones said the outlook assumes free cash flow “in the region of $200 million,” exceeding 100% of net income, and includes modest working capital improvement, net interest expense of about $45 million, a normalized tax rate around 24%, and capital expenditures of roughly $40 million as Hayward invests in operational upgrades.

In closing remarks, Holleran said the company believes it is “far stronger today than it was just five years ago,” citing structural improvements across leadership, innovation, commercial execution, and operations. He also pointed to the company’s aging installed base and technology platforms such as OmniX as positioning Hayward for “consistent growth, expanding profitability, and strong cash flow over time.”

About Hayward NYSE: HAYW

Hayward Holdings, Inc is a leading manufacturer and marketer of residential and commercial swimming pool equipment and related outdoor living products. The company designs, engineers and produces a comprehensive range of products that address water circulation, filtration, heating, sanitation, automation, lighting and cleaning needs for pools and spas. Hayward's offerings include pumps, filters, heaters, salt and chemical sanitization systems, automation controls, lights, robotic cleaners and various accessories that serve both new pool construction and aftermarket renovation markets.

Hayward's product portfolio is organized into several core categories.

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