Hayward Holdings — Third Quarter Fiscal 2026 Earnings Summary

Financial Performance:

• Net sales increased 6% year-over-year to $260.1 million for the quarter; year-to-date sales rose 8%.
• Net income increased 35% year-over-year to $32.4 million; net income margin expanded 270 basis points to 12.5%.
• Adjusted EBITDA increased 9% year-over-year to $64.5 million; adjusted EBITDA margin expanded 60 basis points to 24.8%.
• Diluted earnings per share (EPS) increased 36% year-over-year to $0.15; adjusted diluted EPS increased 29% year-over-year to $0.18.
• Gross profit increased 7% to $124.7 million; gross profit margin increased 10 basis points to 47.9%.
• Operating income increased 22% to $50.2 million; operating income margin increased 250 basis points to 19.3%.
• SG&A decreased 3% to $59.4 million; as a percentage of net sales, SG&A fell 220 basis points to 22.9%.
• RD&E increased 21% to $8.6 million; as a percentage of net sales, RD&E rose 40 basis points to 3.3%.
• Interest expense, net, decreased 30% to $7.9 million.
• Net cash provided by operating activities for the nine months ended September 26, 2026, decreased $57.5 million to $225.5 million compared to the prior year period.
• Net leverage was 1.5x as of September 26, 2026, the lowest level since the 2021 IPO.

Guidance and Future Outlook:

• Full-year 2026 net sales guidance increased to a 5% to 6% increase from Fiscal Year 2025 (prior guidance was approximately 5%).
• Full-year 2026 adjusted diluted EPS guidance increased to $0.86 to $0.88, representing a 12% to 14% increase from Fiscal Year 2025 (prior guidance was $0.84 to $0.87).
• Management cites favorable secular demand trends including sunbelt migration, outdoor living growth, and technology adoption.
• The installed base of pools continues to increase, providing ongoing aftermarket growth opportunities.
• Early buy program orders for the 2027 pool season are ahead of the prior year in North America.

Business Segments and Product Lines:

• North America (NAM): Net sales rose 9% to $226.4 million; segment income increased 12% to $61.8 million; adjusted segment income increased 11% to $68.8 million. Growth driven by favorable net pricing and higher volumes.
• Europe & Rest of World (E&RW): Net sales declined 6% to $33.8 million; segment income decreased 8% to $5.7 million; adjusted segment income decreased 4% to $6.4 million. Decline attributed to lower volume from geopolitical conflicts in the Middle East and modest price decreases.
• SmartPad™ pool equipment products continue to see increasing adoption in new construction and the aftermarket, which represents approximately 85% of North America residential pool net sales.
• RD&E spend increased due to new product development, performance improvements, and investment in specialized engineering talent.

Market and Competitive Landscape:

• Primary U.S. channel partners reported strong demand for Hayward products and continued market share gains.
• Channel inventories are described as balanced.
• The company operates in markets with high levels of competition.
• The company leverages competitive advantages in technology leadership, operational excellence, strong brand, and multi-channel capabilities.

Risks and Challenges:

• Inflationary pressures slightly exceeded the benefits of pricing initiatives in both segments.
• Geopolitical conflicts in the Middle East negatively impacted volume in the E&RW segment.
• Operating cash flow decreased due to timing of cash collections, inventory purchases, and higher payments for accrued customer rebates and incentive plans.
• Significant risks include dependence on distributors and retailers, economic conditions, product adoption, technological changes, litigation, international operations, exchange rates, and supply chain disruptions.

Management Commentary and Tone:

• CEO Kevin Holleran described the quarter as "solid," reflecting "disciplined execution" and the resilience of the installed base aftermarket model.
• Management expressed confidence in continued execution and long-term profitable growth.
• The company maintained net leverage at 1.5x while increasing capital returns through share repurchases.
• Management highlighted the success of price realization in offsetting inflation and tariffs.

Other Key Points:

• The company increased capital returns through share repurchases during the quarter.
• A $1.8 million loss on debt extinguishment was incurred in June 2026 related to credit agreement refinancing, and a $0.2 million loss occurred in February 2026 from voluntary debt repayment.
• Non-recurring litigation expense of $2.8 million from the prior year period was absent in the current quarter, contributing to lower SG&A.
• Restructuring actions in E&RW incurred costs of $0.8 million for the nine months ended September 26, 2026, and $0.5 million in termination benefits for NAM teams.
• The company holds $422.3 million available for future borrowings under its revolving credit facilities.
• Cash and cash equivalents were $236.3 million, and short-term investments were $239.2 million as of September 26, 2026.