What Hayward (HAYW) Said on Its Q3 Earnings Call

Key Points

• Hayward delivered solid Q3 growth, with net sales up 6% to $260 million and adjusted EPS up 29% to $0.18, driven by pricing and higher volumes. Management raised its full-year outlook to 5%–6% sales growth and 12%–14% adjusted EPS growth.
• North America remained the primary growth engine, with sales up 9% and U.S. sales up 10%; the Early Buy program for the 2027 season is tracking ahead of last year. The company’s aftermarket exposure, with more than 85% of sales tied to the installed pool base, helped offset modest new-construction conditions.
• Profitability and balance-sheet metrics improved: adjusted EBITDA margin expanded to 24.8%, leverage fell to its lowest level since the 2021 IPO, and Hayward repurchased approximately $115 million of shares year to date. Europe sales were temporarily pressured by shipment timing, but delayed shipments were recognized in Q4.

Hayward NYSE: HAYW reported third-quarter 2026 net sales growth of 6% to $260 million, supported by price realization and higher volumes, while adjusted diluted earnings per share increased 29% to $0.18.

President and Chief Executive Officer Kevin Holleran said the company’s results reflected the resilience of its aftermarket-driven business model, with more than 85% of sales tied to the installed base of pools rather than new construction. Hayward also raised its full-year outlook, now expecting net sales growth of approximately 5% to 6% and adjusted diluted EPS growth of 12% to 14%.

North America Drives Growth

North American sales increased 9% to $226 million in the quarter, including 7% price realization and 2% volume growth. U.S. sales rose 10%, while Canadian sales declined 9% following double-digit growth in the first half, which management attributed to customer concerns about evolving U.S.-Canada tariff policies.

Holleran said Hayward’s primary U.S. channel partners reported strong third-quarter sales growth, with momentum building during the period. He said channel inventories remained balanced, even as some customers reduced days on hand through the season.

“Our partners tell us that they are pleased with Hayward inventory levels and the velocity that they see with our product on their balance sheet,” Holleran said during the question-and-answer session.

He added that Hayward’s Early Buy program for the 2027 pool season was progressing ahead of the prior year in North America. The program had not yet concluded as of the end of the third quarter, with some Canadian orders still pending. Holleran said Early Buy purchases historically represent roughly 30% of annual customer purchases.

Chief Financial Officer Eifion Jones said the current Early Buy program includes a mid-single-digit gross price increase before discounts and is expected to generate low-single-digit volume growth once completed. He noted that pricing in the program is lower than the prior year’s increase, while discounts are broadly similar.

Margins Expand Despite Inflation

Consolidated gross margin expanded 10 basis points in the third quarter, as a greater mix of North American sales offset modest margin declines in the company’s operating segments. Adjusted EBITDA rose 9% to $65 million, while adjusted EBITDA margin increased 60 basis points to 24.8%.

Jones said pricing and productivity gains helped offset higher costs for specialty metals, resins, freight and other inputs. Research, development and engineering spending increased 21% as Hayward continued investing in new products and advanced engineering capabilities. Selling, general and administrative expenses declined 3%, reflecting cost management and the absence of a non-recurring prior-year expense.

For the full year, management expects inflation to be in the mid- to slightly above mid-single-digit range, net of supply-chain recalibration efforts. Jones said Hayward implemented a price increase late in the third quarter that began affecting invoices near the end of the period and is expected to help address fourth-quarter cost pressures.

Management expects full-year gross margin to remain near 48%, in line with the company’s record level in the prior year. Jones said fourth-quarter margins will reflect a different sales mix, with a greater proportion of discounted Early Buy orders and fewer full-price in-season orders than in the prior-year period.

Europe Sales Decline on Shipment Timing

Europe and rest-of-world sales declined 6% to $34 million in the third quarter. European sales fell 18%, largely because initial shipments from Hayward’s Wuxi, China, facility to Europe took longer than expected, shifting the recognition of certain sales into the fourth quarter. Those shipments have since been recognized, according to the company.

Rest-of-world sales increased 6% during the quarter. Jones said Europe and rest-of-world sales were down only 1% when including the timing of the delayed in-transit shipment.

Hayward is repurposing its Wuxi facility to serve a greater share of European and rest-of-world demand after reshoring U.S.-focused production. Jones said the China facility provides a cost advantage and could add to the European business’s margin profile over time, though management was not prepared to quantify that benefit.

The company also said it opened its sixth Hayward Hub customer training center in Atlanta. The location is its first commercial aquatics hub and includes both commercial and residential pool products.

Cash Flow, Buybacks and Outlook

Hayward ended the quarter with $475 million in cash equivalents and short-term investments, while total liquidity, including available credit capacity, was approximately $900 million. Net leverage remained at 1.5 times, matching the second-quarter level and marking the company’s lowest leverage ratio since its 2021 initial public offering.

Year-to-date cash flow from operations was $225 million, compared with $283 million a year earlier. The decline reflected higher working capital from the timing of customer orders and additional inventory intended to support a larger Early Buy program. Free cash flow totaled $196 million through the first nine months after $29 million in capital expenditures.

The company repurchased approximately $115 million of shares year to date and had $331 million remaining under its $450 million repurchase authorization at quarter-end. Jones said Hayward’s capital allocation priorities remain organic investment, strategic acquisitions and opportunistic share repurchases.

For the fourth quarter, Hayward’s updated annual outlook implies net sales ranging from flat to up 3%, Jones said. The company expects positive low- to mid-single-digit pricing, while volume remains the principal variable in the range. Management said its outlook assumes that unusually strong late-season orders recorded in the prior-year fourth quarter will not necessarily recur.

Holleran said U.S. pool permitting remains modestly lower year over year and that the macroeconomic environment has not improved enough to support a more optimistic view of new pool construction. Still, he said the company expects its installed-base exposure, dealer conversions and product initiatives to support continued growth.

He added that equipment installed during the late-2020 COVID-era pool construction surge is now moving out of warranty, and Hayward expects related replacement demand to begin emerging over the next year or more.

About Hayward (NYSE:HAYW)

Hayward Holdings, Inc designs, manufactures and markets equipment and technologies used in residential and commercial swimming pools. Its product portfolio includes pumps, filters, heaters, heat pumps, automatic pool cleaners, lighting, sanitization systems, water features and pool-control and automation solutions.

The company sells products under the Hayward brand and serves pool owners, builders, retailers, distributors and service professionals. Its equipment is used in both new pool construction and the replacement and renovation market, with an emphasis on energy efficiency, water quality and connected pool-management technologies.

Hayward traces its roots to 1925 and has developed into a global pool-equipment supplier.

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