On October 29, 2024, Hayward Holdings Inc (HAYW, Financial) released its 8-K filing detailing the financial results for the third quarter of fiscal year 2024. Hayward Holdings, a leading manufacturer of energy-efficient swimming pool equipment and pool automation systems, reported a notable increase in both net sales and net income, surpassing analyst estimates.
Company Overview
Headquartered in Charlotte, North Carolina, Hayward Holdings Inc (HAYW, Financial) is renowned for its comprehensive range of pool equipment, including pumps, filters, heaters, LED lights, and sanitization systems. The company employs approximately 2,000 full-time staff and generated around $1.0 billion in revenue in 2023.
Performance and Challenges
For the third quarter of fiscal 2024, Hayward Holdings reported a 3% year-over-year increase in net sales to $227.6 million, exceeding the analyst estimate of $223.88 million. Net income surged by 40% to $16.5 million, with diluted earnings per share (EPS) rising to $0.07, aligning with analyst expectations. The company's performance is significant as it reflects resilience in a challenging market environment, marked by reduced volumes due to market declines in the Middle East and Asia, and lower new construction and remodel activity in the U.S.
Financial Achievements
Hayward Holdings' financial achievements are crucial for its position in the industrial products sector. The company reported an 8% increase in adjusted EBITDA to $51.1 million, highlighting operational efficiency and effective cost management. The adjusted EBITDA margin expanded by 110 basis points to 22.5%, underscoring the company's ability to leverage its operational strengths.
Key Financial Metrics
Hayward Holdings' gross profit increased by 7% to $113.1 million, with a gross profit margin of 49.7%, up 190 basis points from the previous year. This improvement was driven by operational efficiencies and net price increases. However, selling, general, and administrative expenses rose by 9% to $64.5 million, primarily due to higher salary costs and increased professional service expenses.
Segment Performance
In North America, net sales grew by 5% to $195.0 million, driven by positive net price impacts and acquisitions, despite a decline in U.S. volumes. Segment income increased by 29% to $51.6 million. Conversely, the Europe & Rest of World segment saw a 7% decrease in net sales to $32.6 million, primarily due to market declines in the Middle East and Asia.
Balance Sheet and Cash Flow
As of September 28, 2024, Hayward Holdings had cash and cash equivalents of $274.2 million, with $114.3 million available for future borrowings. Year-to-date cash flow from operations increased by 27% to $275.8 million, reflecting improved working capital management and higher net income.
Analysis and Outlook
Hayward Holdings' strong third-quarter performance, characterized by revenue and income growth, positions the company well for continued success. The integration of ChlorKing and advancements in connected pool solutions are expected to drive future growth. The company has updated its 2024 outlook to reflect modestly improved sales and profitability, projecting net sales of $1.020 billion to $1.040 billion and adjusted EBITDA of $260 million to $270 million.
“I am pleased to report third quarter results consistent with expectations,” said Kevin Holleran, Hayward’s President and Chief Executive Officer. “We delivered sales and earnings growth, strong gross profit margin expansion, and increased cash flow. This performance enabled us to reduce net leverage into our targeted range.”
For more detailed insights and analysis, visit the full earnings report on the SEC website.
Explore the complete 8-K earnings release (here) from Hayward Holdings Inc for further details.
