10-K: Hayward Holdings Reports Strong 2025 Growth, Net Income Up 27.7%

Hayward Holdings, Inc. reported a 6.7% increase in net sales to $1.12 billion and a 27.7% rise in net income to $151.6 million for fiscal year 2025, driven by price increases and acquisitions.

Summary

• Net sales increased by 6.7% to $1,122.2 million in Fiscal Year 2025 from $1,051.6 million in Fiscal Year 2024, primarily driven by positive net price and favorable acquisitions.
• Gross profit rose by 10.6% to $538.7 million, with the gross profit margin improving by 170 basis points to 48.0% due to positive net price impact, decreased warranty expenses, and operational efficiencies.
• Operating income increased by 11.7% to $233.3 million, achieving an operating margin of 20.8% in Fiscal Year 2025.
• Net income grew by 27.7% to $151.6 million in Fiscal Year 2025, with the net income margin expanding to 13.5%.
• Adjusted EBITDA increased by 7.9% to $299.3 million, with an adjusted EBITDA margin of 26.7%.
• The North America segment's net sales increased by 7.1% to $959.2 million, while the Europe & Rest of World segment's net sales increased by 4.4% to $163.0 million.
• Selling, general and administrative (SG&A) expense increased by 13.7% to $246.9 million, primarily due to higher incentive compensation, wage inflation, and investments in selling and customer service teams.
• Unrestricted cash and cash equivalents increased by $133.0 million to $329.6 million as of December 31, 2025, reflecting strong operating cash flow and disciplined working capital management.
• A securities class action lawsuit reached a settlement in principle for $19.9 million, with $17.3 million covered by insurance.
• A $5.2 million charge was recorded to cost of sales related to prior-year customs duty drawback claims required to be refunded to U.S. Customs and Border Protection.
• The Board of Directors authorized a new share repurchase program of up to $450.0 million, expiring on July 28, 2028, with $446.1 million remaining available as of December 31, 2025.
• The company changed its accounting principle for warranty costs, reclassifying them from selling, general and administrative expense to cost of sales, applied retrospectively to all periods presented.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong performance, with significant growth in sales and profitability, robust cash generation, and strategic initiatives like share repurchases and product innovation, despite some increases in operating expenses and specific legal/regulatory charges.

Positives

• Net sales increased by 6.7% to $1,122.2 million in Fiscal Year 2025, indicating solid top-line growth.
• Gross profit increased by 10.6% to $538.7 million, with gross profit margin improving by 170 basis points to 48.0%, demonstrating enhanced profitability and operational efficiency.
• Operating income increased by 11.7% to $233.3 million, and net income grew by 27.7% to $151.6 million, reflecting strong bottom-line performance.
• Adjusted EBITDA increased by 7.9% to $299.3 million, with adjusted EBITDA margin at 26.7%, indicating healthy core operational performance.
• Unrestricted cash and cash equivalents increased significantly by $133.0 million to $329.6 million, highlighting robust operating cash flow and improved liquidity.
• The company successfully implemented price increases to offset inflationary and tariff pressures, contributing to net sales growth and margin expansion.
• A new share repurchase program of up to $450.0 million was authorized, signaling confidence in future performance and a commitment to shareholder returns.
• A settlement in principle was reached for the securities class action lawsuit, with a significant portion ($17.3 million of $19.9 million) covered by insurance, reducing potential financial exposure.
• The company was in compliance with all covenants under its Credit Facilities as of December 31, 2025.

Negatives

• Selling, general and administrative (SG&A) expense increased by 13.7% to $246.9 million, primarily due to higher incentive compensation, wage inflation, and investments in selling and customer service teams.
• SG&A as a percentage of net sales increased by 140 basis points to 22.0%, indicating a higher cost structure relative to sales.
• A modest decline in volume of 0.3% was observed in the North America segment's net sales.
• A $5.2 million charge was recorded to cost of sales related to prior-year customs duty drawback claims that were required to be refunded to U.S. Customs and Border Protection.

Risks

• Business depends on the performance of distributors, builders, buying groups, retailers, and servicers, many of whom also sell competing products.
• Demand for products may be adversely affected by unfavorable economic and business conditions, including interest rates, housing market conditions, inflation, and consumer confidence.
• Operates in markets with high levels of competition from large national/global companies, regional OEMs, lower-cost manufacturers, and new entrants, potentially pressuring profit margins.
• Future success depends on developing, manufacturing, and attaining market adoption of new products and maintaining product quality and reliability, especially with evolving consumer demand for smart home and environmentally friendly technologies.
• Ability to keep pace with rapidly evolving technological developments and standards, including artificial intelligence (AI), and effectively develop and deploy such technologies, poses technical, operational, legal, and reputational risks.
• Results of operations and cash flows may fluctuate from quarter to quarter due to seasonality, weather conditions, and customer inventory levels.
• A loss of, or material cancellation, reduction, or delay in purchases by one or more of largest customers (e.g., Pool Corporation, 33% of net sales) could harm the business.
• Exposure to credit risk on accounts receivable, heightened during periods of weak economic conditions, with a significant portion concentrated among a small number of customers.
• Exposure to political, regulatory, economic, trade, and other risks arising from international operations, including geopolitical conflicts, tariffs, and changes in tax treaties.
• Past growth may not be indicative of future growth, especially as pandemic-related demand trends abate.
• Inability to identify, finance, and complete suitable acquisitions, or unsuccessful integration of completed acquisitions, could consume significant resources and fail to achieve anticipated benefits.
• Negative impacts of litigation and other claims, including intellectual property, product liability or warranty claims, and health and safety matters, including product recalls, could result in substantial costs and reputational harm.
• Future impairment of goodwill and intangible assets, which represented approximately 62% of total assets as of December 31, 2025, could materially affect results of operations.
• Exchange rate fluctuations, cost increases and other inflation, changes in effective tax rate or exposure to additional income tax liabilities could adversely affect financial results.
• Ability to attract, develop, and retain highly qualified personnel, including key members of management, is critical for future success.
• Disruptions in the financial markets could adversely affect access to credit, funding costs, and demand for products.
• Significant disruption or breach of technology infrastructure or that of vendors/third parties, or failure to maintain the security of confidential information, could lead to data loss, business interruption, and legal liabilities.
• Difficulties in operating or implementing new ERP system or human resources information system could adversely affect operations and financial reporting.
• Misuse of technology-enabled products could lead to reduced sales, increased costs, liability claims, or harm to reputation.
• Failure to maintain an effective system of internal controls could impair ability to produce timely and accurate financial statements or comply with regulations.
• Dependence on key suppliers, including single-source and sole-source suppliers, makes the company vulnerable to supply disruptions and cost increases.
• Inability to manage product inventory in an effective and efficient manner could adversely affect profitability.
• Product manufacturing disruptions due to catastrophic or other events beyond control could prevent meeting customer demand or increase costs.
• Tariffs and other trade restrictions, and uncertainties regarding duty reduction and deferral programs, could adversely affect business and financial results.
• The cost of raw materials (metals, resins, liner board) is subject to price volatility, which could increase cost of goods sold and adversely affect margins.
• Compliance with, and potential liabilities under, employment, environmental, health, transportation, safety, and other governmental laws and regulations, which are increasingly stringent and complex.
• Risks related to handling of personal information, including compliance with evolving data privacy laws like CCPA and GDPR, could lead to significant costs and liabilities.
• Employees, commercial partners, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards.
• Violations of anti-corruption laws (FCPA, U.K. Bribery Act) could result in costly investigations and penalties.
• Failure to comply with international trade compliance regulations and changes in U.S. government sanctions could have a material adverse effect.
• Changes in laws, regulations, government policies, or regulatory interpretations could adversely affect business, financial condition, and results of operation.
• Climate change and legal or regulatory responses thereto, and increasing scrutiny from stakeholders on environmental, social, and other sustainability matters, may impact operations and costs.
• Inability to adequately obtain, maintain, and enforce intellectual property and proprietary rights, or accusations of infringement, could harm competitive position.
• Reliance on access to intellectual property owned by third parties, and the terms of licenses, could affect ability to develop and commercialize certain products.
• Claims that employees, consultants, or advisors have wrongfully used or disclosed trade secrets or other proprietary information, or claims asserting ownership of intellectual property, could arise.
• Inability to effectively enforce intellectual property rights in all jurisdictions, as foreign laws may not provide the same level of protection as U.S. laws.
• Indebtedness of $963.5 million could adversely affect financial condition by requiring a substantial portion of cash flows for debt service and increasing vulnerability to adverse economic conditions.
• Inability to generate sufficient cash flow to meet debt service obligations could require refinancing, asset sales, or additional capital.
• Terms of indebtedness restrict current and future operations, limiting flexibility to respond to changes or take certain actions.
• Dependence on distributions and other payments from subsidiaries to fund operations and expenses, which are subject to earnings and contractual restrictions.
• May incur additional debt, increasing leverage risks, and may require additional capital that may not be available on acceptable terms.
• Provisions in certificate of incorporation, bylaws, and Delaware law may deter takeover efforts that stockholders may believe to be beneficial.
• Certificate of incorporation designates specific courts as the exclusive forum for certain claims, which could discourage lawsuits against the company and its directors and officers.
• Future sales of common stock, or the perception that such sales may occur, may depress the market price of common stock.
• The market price of common stock has been, and may continue to be, volatile.
• Capital allocation decisions, including share repurchases, may not enhance stockholder value and could adversely affect liquidity, financial flexibility, and the market price of common stock.

Future Outlook

The company expects continued growth driven by aftermarket sales, innovation in IoT-enabled and energy-efficient products, and strategic expansion efforts. It aims to keep manufacturing plants running consistently throughout the year, building inventory in the first and third quarters and selling down in the second and fourth quarters. The company believes its current cash levels, operating cash flows, and ABL facility availability will be sufficient to finance its working capital requirements, capital expenditures, and debt service over the next 12 months and beyond for core business maintenance, long-term contractual obligations, research and development activities, potential share repurchases, and any potential merger and acquisition activity.

Management Comments

• "We believe that our business can effectively address these opportunities through new product development and scalable sales, marketing, and administration."
• "Staying at the forefront of technological innovation and introducing new product offerings with new features will continue to be critical in growing our market share and revenue."
• "Our aim is to keep our manufacturing plants running at a consistent level throughout the year."
• "We believe that net cash provided by operating activities and availability under the ABL Facility will be adequate to finance our working capital requirements, inclusive of capital expenditures, and debt service over the next 12 months."
• "Our people are fundamental to our long-term business success. We strive to attract, retain, develop and reward our employees by continuously enhancing various employee-focused initiatives while working to achieve and maintain hiring practices that give qualified individuals an equal opportunity to succeed regardless of background."

Industry Context

StockSavvy.ai notes that Hayward Holdings operates in an attractive global pool equipment market characterized by significant aftermarket requirements, innovation-led growth, and a favorable industry structure. The company's strong focus on energy-efficient and IoT-enabled products aligns with broader consumer trends towards smart home technology and sustainability, positioning it well against competitors who may not offer similar advanced features. The industry's reliance on distributors and builders for product prescription highlights the importance of strong channel relationships, a key competitive advantage for Hayward. The observed shift towards e-commerce also indicates a need for continuous adaptation in distribution strategies across the sector.

Comparison to Industry Standards

• Hayward Holdings' aftermarket sales representing approximately 85% of net sales indicate a strong recurring revenue model, which is generally considered a positive characteristic in durable goods industries, offering more stability than new construction-dependent peers.
• The company's gross profit margin of 48.0% in FY2025 suggests strong pricing power and operational efficiency compared to general manufacturing industry averages, which can often be lower.
• The increase in SG&A expenses due to incentive compensation and wage inflation is a common industry trend, reflecting a competitive labor market and the need to retain talent, similar to other companies like Pentair plc or Fluidra S.A. in the pool and spa sector.
• The average payback period of approximately one to two years for variable speed pumps demonstrates a compelling value proposition for consumers, comparable to efficiency claims made by leading appliance or smart home device manufacturers.

Management Changes

Corporate Governance

Legal Proceedings

• A securities class action lawsuit, consolidated from two separate complaints (City of Southfield Fire and Police Retirement System vs. Hayward Holdings, Inc., et al. and Erie County Employees Retirement System vs. Hayward Holdings, Inc., et al.), was filed alleging violations of Sections 10(b) and 20(a) of the Exchange Act for materially false or misleading statements regarding inventory, growth, demand trends, and financial projections for 2022.
• The Court initially dismissed the consolidated complaint on October 2, 2024, but granted leave to amend; an amended complaint was filed on November 1, 2024, adding additional defendants.
• On June 4, 2025, the Court granted in part and denied in part a motion to dismiss and ordered the parties to mediation.
• A settlement in principle was reached on November 20, 2025, subject to Court approval, with a loss contingency of $19.9 million recorded, of which $17.3 million is covered by insurance receivables.
• Three shareholder derivative lawsuits (Heicklen v. Holleran, et al., Hertzog v. Holleran, et al., and Roberta Tackett, Aqua Palace, LLC and Jennifer Roberts vs. Hayward Holdings, Inc., et. al.) were filed between November 2023 and November 2025, alleging breaches of fiduciary duties, aiding and abetting, unjust enrichment, corporate waste, insider trading, and Exchange Act violations.
• The Heicklen and Hertzog Actions are currently stayed, and the defendants' time to respond in the Tackett Action has not yet commenced; the company is unable to estimate a reasonably possible financial loss for these derivative actions.
• A wrongful death lawsuit related to a discontinued product was settled for $22.0 million on December 11, 2024, with the payment entirely covered by the company's insurance carriers.

Stakeholder Impact

• Shareholders: Positive impact from increased net income, improved margins, and the authorization of a $450.0 million share repurchase program. Potential dilution from future equity issuances and stock price volatility remain risks.
• Employees: The company emphasizes attracting, developing, and retaining highly qualified personnel through various initiatives, competitive compensation, mandatory cybersecurity training, and an open feedback culture.
• Customers: Benefit from a broad portfolio of innovative, energy-efficient, and IoT-enabled products. Risks include potential adverse effects from economic downturns, intense competition, and changes in customer ordering patterns.
• Suppliers: The company maintains longstanding relationships with a stable supplier base. Risks include dependence on single-source suppliers, commodity price volatility, and potential supply chain disruptions.
• Creditors: The company's indebtedness of $963.5 million as of December 31, 2025, is managed with compliance to all covenants, and strong operating cash flow and liquidity support debt service obligations.

Next Steps

• Continue to pursue attractive product and global geographic market opportunities to grow presence in new markets or markets with less penetration.
• Develop and bring to market innovative and technologically advanced products, particularly IoT-enabled and energy-efficient solutions, to meet evolving consumer demand.
• Manage inventory levels to keep manufacturing plants running consistently throughout the year, building inventory in the first and third quarters and selling down in the second and fourth quarters.
• Receive payments for 2025 Early Buy program shipments during the second quarter of Fiscal Year 2026.
• Address identified security vulnerabilities based on known and anticipated risks and continue to enhance cybersecurity posture.
• Continue the implementation and integration of the new ERP system and human resources information system.
• Monitor and comply with evolving data privacy and security laws and regulations across all jurisdictions.
• Potentially pursue acquisitions to opportunistically add product offerings or increase geographic footprint.
• Repurchase shares under the authorized $450.0 million program, which expires on July 28, 2028.
• Seek Court approval for the settlement in principle of the securities class action lawsuit.
• Continue to assess obligations regarding customs duty drawback claims.

Key Dates

Recommendation

Hayward Holdings demonstrated robust financial performance in Fiscal Year 2025, with significant increases in net sales, gross profit, operating income, and net income. The expansion of gross and net income margins, coupled with strong operating cash flow and a substantial increase in cash and cash equivalents, indicates healthy underlying business fundamentals and effective management. The authorization of a $450.0 million share repurchase program signals confidence in future performance and a commitment to returning value to shareholders. While risks such as competition, economic conditions, and ongoing litigation exist, the company's focus on innovation, aftermarket sales, and operational efficiencies positions it for continued growth. The settlement in principle of the securities class action also removes a significant overhang. These factors collectively suggest a positive outlook for the stock.

Keywords

Pool Equipment, Outdoor Living, Industrial Flow Control, SEC Filing, 10-K, Financial Results, Hayward Holdings, HAYW, Aftermarket Sales, IoT, Energy Efficiency, Smart Home Technology, Corporate Governance, Risk Factors, Share Repurchase, Litigation, Supply Chain, Tariffs, Sustainability, North America, Europe & Rest of World