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Hayward NYSE: HAYW reported higher second-quarter sales and earnings, citing price realization, stable overall volume and continued demand in its North American installed-base aftermarket business, while maintaining its full-year 2026 outlook.

Net sales increased 6% to $318 million in the second quarter, following 5% growth in the prior-year period. Sales rose 9% in North America, including 7% from price realization and 2% from volume growth, while Europe and Rest of World sales declined 8% amid macroeconomic conditions and geopolitical disruption tied to conflicts in Ukraine and the Middle East.

President and Chief Executive Officer Kevin Holleran said the company’s first-half performance reflected the resilience of its aftermarket-focused business model and execution across its strategic initiatives. For the first half, net sales rose 9%, adjusted EBITDA increased 9%, and adjusted diluted earnings per share increased 18%.

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Second-Quarter Margins and Earnings Gross profit increased 8% to $155 million, while gross margin declined 50 basis points to 48.7%. Senior Vice President and Chief Financial Officer Eifion Jones said the margin pressure was anticipated, reflecting higher specialty-metal, freight and resin costs as well as the timing of surcharges and other mitigation efforts.

Despite the year-over-year decline, Holleran said the quarter produced Hayward’s second-highest quarterly gross margin since becoming a public company. The only higher result was recorded in the second quarter of 2025.

Adjusted EBITDA rose 5% to $93 million, while adjusted EBITDA margin declined 40 basis points year over year to 29.1%. Adjusted diluted EPS increased 8% to $0.26. Jones said Hayward continued to invest in sales and marketing, advanced engineering and customer service during the period.

In North America, net sales reached $278 million. U.S. sales increased 9%, while Canada sales rose 2%, with the Canadian result affected by a weather-related slow start to the season. North American gross margin declined 90 basis points to 50.4% because of inflationary pressures and the timing of mitigation actions.

Europe and Rest of World sales totaled $41 million. Europe sales declined 4%, while Rest of World sales fell 16%, primarily due to disruption from the conflict in the Middle East. However, segment gross margin rose 50 basis points to 37.9%, and adjusted segment income margin was unchanged at 18.1%.

Demand, Inventory and Market Position Holleran said demand remained solid in discretionary product categories including salt chlorine generators, automation and lighting. Commercial pool and industrial flow-control businesses also posted double-digit net sales growth in the first half, he said.

Management said channel inventory levels were consistent with seasonal patterns. Holleran described inventory exiting the second quarter as “very normal” and balanced among the company’s largest channel partners. Jones said the North American channel and primary European markets typically held slightly more than four months of inventory at this point in the year, which was approximately where Hayward stood at the end of June.

The company expects inventories to decline in absolute terms during the third quarter as sales outpace sales into the channel, before channel partners build inventory during the fourth quarter for the following season’s early-buy period. Jones said end-of-year days on hand typically rise as that inventory is pulled into the channel.

Addressing analyst questions about industry competition, Holleran said Hayward believes it has been gaining share over several years. He attributed that view to product innovation, sales and service investments, dealer support, domestic manufacturing, shorter lead times and products designed for replacement and upgrade opportunities.

Hayward said it is expanding its connected-product ecosystem through its OmniX platform and expects to open its sixth Hayward Hub training center in Atlanta during the fourth quarter. The company also said its use of artificial intelligence in customer service has enabled 98% of North American calls to be answered within one second, with 80% resolved without escalation to a live technical-service representative.

Refinancing, Cash Flow and Capital Returns During the quarter, Hayward amended its Term Loan B, extending its maturity to 2033 from 2028 and lowering its spread by 61 basis points. The $960 million loan is expected to reduce annual run-rate interest expense by approximately $6 million, Jones said.

The company also replaced its $425 million asset-based lending revolver, previously due in 2028, with an undrawn $425 million cash-flow revolver maturing in 2031. The new facility provides full availability without a borrowing-base limitation, according to management.

Net leverage fell to 1.5 times at quarter-end from 2.1 times a year earlier, the lowest level since Hayward’s 2021 initial public offering. The company ended the quarter with $483 million in cash equivalents and short-term investments and said total liquidity, including credit-facility availability, exceeded $900 million.

Cash flow from operations was $172 million in the first half, compared with $188 million a year earlier. Free cash flow was $154 million, and the company continues to forecast approximately $200 million of free cash flow for the full year.

Hayward repurchased approximately 4.4 million shares for about $64 million during the first half. Management said its capital-allocation priorities remain organic investment in manufacturing and supply-chain capabilities, strategic acquisitions and opportunistic share repurchases.

Outlook Maintained Hayward reaffirmed its 2026 outlook, forecasting net sales growth of approximately 5% and adjusted diluted EPS growth of approximately 9% to 13%, or $0.84 to $0.87 per share. The outlook assumes net interest expense of about $45 million, a normalized effective tax rate of roughly 24% and capital expenditures of about $40 million.

Jones said Hayward expects full-year gross margins to remain approximately in line with the prior year. Management said it intends to use pricing actions to offset necessary inflation dollar for dollar while relying on productivity, cost-reduction initiatives, nearshoring, dual sourcing and value engineering to preserve structural margins.

About Hayward (NYSE:HAYW)Hayward Holdings, Inc is a leading manufacturer and marketer of residential and commercial swimming pool equipment and related outdoor living products. The company designs, engineers and produces a comprehensive range of products that address water circulation, filtration, heating, sanitation, automation, lighting and cleaning needs for pools and spas. Hayward's offerings include pumps, filters, heaters, salt and chemical sanitization systems, automation controls, lights, robotic cleaners and various accessories that serve both new pool construction and aftermarket renovation markets.

Hayward's product portfolio is organized into several core categories.

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