Hayward Holdings, Inc. Q4 FY2025 earnings call

• Hayward delivered strong fourth quarter and full year 2025 results, net sales increased 7% in Q4 and 7% full-year, gross margin expanded, adjusted EBITDA increased. • 2025 was the 100-year anniversary, team executed well across organization. • Focus on strategic priorities: investing in innovation, operational excellence, customer experience. • Launched OmniX automation ecosystem, new products like OmniX-enabled variable speed pumps and gas heaters, expanded variable speed pump line, new ColorLogic LED landscape lights, TracJet pressure cleaner, etc. • Enhanced customer experience with expanded network of Hayward hubs, increased training and support for dealers, scaling up AI-enabled technical service agents. • Commercial and industrial flow control businesses are high-quality, high potential contributors, focusing on expanding margins and exploring broader market opportunities.

North America sales up 8% to $309 million in Q4, gross margin up 80 basis points to 50.1%; full-year North America sales up 7% to $959 million, gross margin up 150 basis points to 49.9%. Europe and Rest of World sales in Q4 held steady at $41 million, gross margin up 590 basis points to 35.8%; full-year Europe and Rest of World sales up 4% to $163 million, gross margin up 230 basis points to 36.7%. Adjusted segment income margin for Europe and Rest of World up 350 basis points in Q4 and 280 basis points full-year. North America represents a significant portion of sales with strong growth and margin expansion, Europe and Rest of World showed recovery in sales and margins.

• Expect continued sales and earnings growth in 2026 with net sales increasing approximately 4% and adjusted diluted EPS increasing approximately 6% to 12%. • Expect free cash flow in the region of $200 million, net interest expense of approximately $45 million, normalized effective tax rate around 24% and increased CapEx of approximately $40 million. • Net sales growth assumed to be from 3% global net price gain and modest volume growth, FX being somewhat neutral.

• Tariffs have been a managed variable, with costs associated with moving out of China, but team has managed to offset and covered exposure in guidance. • Impact of severe weather on equipment replacement and market activity, with rough winter affecting some markets. • Uncertainty around new pool construction and macroeconomic environment affecting overall market conditions.

Q: Talk about source of upside surprise in 4Q and seasonality modeling for 1Q '26, A: Early buy turned out well, higher single digit growth in key markets, normal seasonality with Q1 and Q3 lower, Q2 and Q4 higher.

Q: Impact of severe weather, A: Rough winter with frozen conditions in some markets, little impact on equipment replacement seen yet.

Q: Tariff situation and supply chain realignment, A: Tariffs managed with price increases and operational improvements, reduced dependency on China, covered exposure in guidance.

Q: CapEx spending and investment color, A: CapEx to upgrade U.S. manufacturing footprint, around $40 million in 2026, investing in automation and modernization.

Q: 4% sales growth guidance breakdown, A: Approximately 3% global net price gain and modest volume growth, pricing higher in U.S. than outside.

Q: Dealers backlog and 2027 Early Buy season, A: Cautious optimism among dealers, no clear insight on 2027 yet.

Q: Pool mix and margin impact, A: New construction mix mostly mid- to higher end, equipment margin profile similar, volume leverage expected on margin.

Q: Technology connected pools benefits, A: OmniX provides affordable automation entry point, universal comms allows aftermarket integration, good ratings from voice of customer.

Q: Industrial flow business and growth, A: Spending time understanding industrial flow business, looking to leverage water management expertise into broader markets.

Q: TAM for 4-horsepower pump and pressure cleaner, A: 4-horsepower pump in meaningful segment of pump market, pressure cleaner market around 100,000 units per year in U.S.

Q: Cash flow priorities and adjusted EPS guidance, A: First dollar back into business, second to M&A, opportunistic with share repurchases, anchoring on adjusted diluted EPS as guidance metric.

Q: Inventory levels and channel approach, A: No major difference in inventory approach between large partners, inventory exiting 2025 healthy to serve upcoming season