Hayward Holdings, Inc. Q1 2025 Filing Summary
Business Context and Reporting Period
Hayward Holdings, Inc. (HAYW) is a global designer and manufacturer of pool and outdoor living technology. This Form 10-Q covers the quarterly period ended March 29, 2025. The company operates through two reportable segments: North America (NAM) and Europe & Rest of World (E&RW). The business is seasonal, with cash flow typically higher in the second and third quarters. The 2025 first quarter included three fewer working days compared to the same period in 2024.
Key Financial Metrics
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| Net Sales | $228.8 million | $212.6 million |
| Gross Profit | $113.4 million | $104.6 million |
| Gross Margin | 49.5% | 49.2% |
| Operating Income | $33.5 million | $30.9 million |
| Net Income | $14.3 million | $9.8 million |
| Diluted EPS | $0.06 | $0.04 |
| Adjusted EBITDA | $49.1 million | $45.0 million |
| Cash and Cash Equivalents | $181.3 million | $115.9 million (end of period) |
| Long-Term Debt (Net) | $950.4 million | $950.6 million |
Liquidity: Unrestricted cash totaled $181.3 million. The ABL Revolving Credit Facility had zero outstanding borrowings with $216.2 million available. The First Lien Term Facility balance was $965.0 million.
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 7.7% year-over-year, driven by volume growth (3.4%), acquisitions (2.6%), and net price (2.5%), partially offset by foreign currency impacts (-0.8%).
- Profitability: Gross margin expanded 30 basis points to 49.5% due to positive net pricing. Net income margin improved 170 basis points to 6.3%.
- Interest Expense: Net interest expense decreased $4.9 million to $13.7 million, primarily due to the repayment of the Incremental Term Loan B in April 2024 and lower interest rates.
- Segment Performance:
- North America: Sales up 7.9% and segment income up 9.3%, driven by the ChlorKing acquisition and volume growth.
- E&RW: Sales up 6.7% but gross margin contracted 260 basis points to 35.0% due to underutilization in European facilities and unfavorable mix.
- Acquisition Costs: Acquisition and restructuring expenses rose to $1.9 million from $0.5 million, largely due to transaction costs for the ChlorKing acquisition.
Outlook, Risks, and Contingencies
Management Commentary: Management highlighted the successful integration of the ChlorKing business and positive order timing. The company continues to focus on working capital initiatives and debt service. No dividends were declared in the quarter.
Risks and Uncertainties:
- Geopolitical & Trade: Ongoing conflicts in the Middle East and Ukraine/Russia are negatively impacting demand in the E&RW segment. Tariffs and trade restrictions create uncertainty regarding supply costs and market demand.
- Seasonality: The "Early Buy" program extends payment terms, increasing accounts receivable balances from September to April.
- Legal Proceedings:
- Wrongful Death Lawsuit: A settlement of $22.0 million has been reached regarding a discontinued product. The company expects full payment by insurance carriers and has recorded a corresponding receivable and liability.
- Securities Class Action: A consolidated class action regarding 2022 financial projections remains pending. The company moved to dismiss the amended complaint in December 2024; briefing was completed in March 2025. No loss estimate can be made at this time.
Investor Verification Checklist
- Verify the status of the $22.0 million wrongful death settlement and confirmation of insurance carrier payment.
- Monitor the outcome of the motion to dismiss in the consolidated securities class action lawsuit.
- Assess the impact of geopolitical conflicts on the E&RW segment's gross margin recovery.
- Review the utilization of the ABL Facility as the "Early Buy" program progresses through the first quarter.
- Confirm the integration progress and revenue contribution of the ChlorKing acquisition in subsequent quarters.