10-Q: Hayward Holdings Reports Q1 2025 Results: Sales and Adjusted EBITDA Increase

Hayward Holdings, a global designer and manufacturer of pool and outdoor living technology, announced increased net sales and adjusted EBITDA for the first quarter of 2025 compared to the same period in 2024.

Summary

• Hayward Holdings, Inc. reported its financial results for the quarter ended March 29, 2025.
• Net sales increased by 7.7% to $228.8 million, driven by volume growth, acquisitions, and price increases.
• Gross profit increased by 8.4% to $113.4 million, with a gross profit margin of 49.5%.
• Selling, general, and administrative expenses increased by 8.5% to $65.1 million.
• Research, development, and engineering expenses decreased slightly to $6.0 million.
• Operating income increased to $33.5 million.
• Net income increased to $14.3 million, or $0.06 per diluted share.
• Adjusted EBITDA increased by 9.0% to $49.1 million, with an adjusted EBITDA margin of 21.5%.
• The company's North America segment saw a 7.9% increase in net sales, while the Europe & Rest of World segment experienced a 6.7% increase.
• The company had $181.3 million in cash and cash equivalents as of March 29, 2025.
• The company entered into a Rule 10b5-1 Trading Plan that provides that Mr. Holleran, acting through a broker, may sell up to an aggregate of 624,000 shares of our common stock.
• The company entered into a Rule 10b5-1 Trading Plan that provides that Mr. Jones, acting through a broker, may sell up to an aggregate of 100,000 shares of our common stock.

Sentiment

Score: 7

Explanation: The report indicates positive growth in net sales and adjusted EBITDA, suggesting a healthy financial performance. However, increased SG&A expenses and ongoing litigation introduce some uncertainty.

Positives

• Net sales increased by 7.7% year-over-year, indicating strong demand for the company's products.
• Adjusted EBITDA increased by 9.0% year-over-year, demonstrating improved profitability.
• Gross profit margin increased, reflecting better cost management and pricing strategies.
• Both the North America and Europe & Rest of World segments experienced sales growth.
• The company maintains a solid liquidity position with $181.3 million in cash and cash equivalents.
• The company entered into a Receivables Purchase Agreement under which it may offer to sell eligible accounts receivable up to $125 million.

Negatives

• Selling, general, and administrative expenses increased by 8.5%, potentially offsetting some of the gains in profitability.
• The Europe & Rest of World segment experienced a decrease in gross profit margin, driven by underutilization in our Europe manufacturing facilities and unfavorable mix, partially offset by higher net price.

Risks

• The company's business is seasonal, which can lead to fluctuations in cash flow.
• Tariffs, trade restrictions, and geopolitical events could adversely affect the company's business.
• The company is involved in litigation, including a securities class action and a shareholder derivative lawsuit.
• The company relies on its relationships with distributors, builders, buying groups, retailers, e-tailers and servicers who sell our products to pool owners.
• The company's ability to develop, manufacture and effectively and profitably market and sell its new planned and future products.
• The company's ability to maintain favorable relationships with suppliers and manage disruptions to our global supply chain and the availability of raw materials.

Future Outlook

The company believes that net cash provided by operating activities and availability under the ABL Facility will be adequate to finance working capital requirements, capital expenditures, and debt service over the next 12 months.

Industry Context

The pool industry has attractive market characteristics, including significant aftermarket requirements, innovation-led growth opportunities, and a favorable industry structure.

Comparison to Industry Standards

• The company estimates aftermarket sales based upon feedback from certain representative customers and managements interpretation of available industry and government data, and not upon our GAAP net sales results.
• The company has an estimated North American residential pool market share of approximately 33%.

Legal Proceedings

• On August 2, 2023, a securities class action complaint was filed in the United States District Court for the District of New Jersey against the Company and certain of our current directors and officers (Kevin Holleran and Eifion Jones) and MSD Partners and CCMP Capital Advisors, LP on behalf of a putative class of stockholders who acquired shares of our common stock between March 2, 2022 and July 27, 2022.
• On November 27, 2023, a shareholder derivative lawsuit was filed in the United States District Court for the District of New Jersey against current and past officers and directors of the Company captioned Heicklen v. Holleran, et al., 2:23-cv-22649 (D.N.J.) (the Derivative Action).

Related Party Transactions

• During the three months ended March 29, 2025 and March 30, 2024, the Company did not incur any significant related-party transactions.

Stakeholder Impact

• The company focuses on increasing cash flow, solidifying the liquidity position through working capital initiatives, and paying our debt obligations, while continuing to fund business growth initiatives and return of capital to shareholders.

Key Dates

Keywords

Hayward Holdings, financial results, net sales, adjusted EBITDA, pool equipment, outdoor living, Q1 2025, EBITDA, segments, profitability