Hayward Holdings, Inc. (NYSE:HAYW), a leading global designer and manufacturer of pool and outdoor living technology, reported its financial results for the first quarter of 2024, showcasing the company's resilience and ability to navigate the current market environment.

Financials

In the first quarter of 2024, Hayward reported net sales of $212.6 million, a 1.2% increase from the $210.1 million reported in the same period of the prior year. This modest top-line growth was driven by a combination of modest increases in both net price and volume. Gross profit for the quarter came in at $104.6 million, up from $97.9 million in the prior-year period, representing a 260 basis point expansion in gross profit margin to 49.2%. This strong gross margin performance matched the record level achieved in the fourth quarter of 2023, showcasing the company's operational efficiency and ability to manage costs effectively.

Adjusted EBITDA for the quarter was $45.0 million, up slightly from $44.9 million in the prior-year period, with an adjusted EBITDA margin of 21.2%. Net income for the quarter was $9.8 million, up from $8.4 million in the same period of 2023. On a full-year basis, Hayward reported net income of $80.7 million on revenue of $992.5 million in 2023, with operating cash flow of $184.5 million and free cash flow of $153.5 million.

Segment Performance

Looking at the company's reportable segments, the North America (NAM) segment delivered a strong performance, with net sales increasing 6.6% to $173.4 million, driven by a 5.9% increase in volume and a 0.7% increase in net price. Gross profit margin in the NAM segment expanded 320 basis points year-over-year to 51.8%, reflecting the segment's operational efficiency and pricing discipline. In contrast, the Europe and Rest of World (E&RW) segment experienced a 17.5% decline in net sales to $39.1 million, primarily due to lower volumes, which were impacted by the company's facility consolidation efforts in Europe.

Outlook

Hayward's management team remained confident in the company's long-term growth prospects, maintaining its full-year 2024 guidance. The company expected net sales to increase to a range of $1.01 billion to $1.06 billion, with adjusted EBITDA of $255 million to $275 million. Free cash flow for the full year was anticipated to be approximately $160 million.

Liquidity

The company's balance sheet and liquidity position remained strong, with total liquidity of $463 million at the end of the first quarter, including $116 million in cash and cash equivalents and $347 million in available borrowing capacity under its credit facilities. Subsequent to the quarter-end, Hayward used $123.1 million in cash to voluntarily repay the outstanding balance on its incremental term loan B, further strengthening its financial flexibility and reducing its interest expense.

Recent Developments

Hayward's focus on innovation and new product development continued to be a key driver of its success. During the quarter, the company introduced two new robotic pool cleaners, the R110 and R130 models, which target the in-ground residential market and complement the company's existing TigerShark series. These new offerings showcased Hayward's commitment to providing customers with the latest technology and enhancing the overall pool ownership experience.

The company's geographic diversification also remained a strength, with the North America segment accounting for 82% of total net sales in the first quarter, while the Europe and Rest of World segment contributed the remaining 18%. Hayward's ability to navigate the varying market conditions across its global footprint had been a key differentiator.

Conclusion

Hayward's solid first-quarter performance, maintained full-year guidance, and strategic initiatives demonstrated the company's resilience and ability to navigate the current market environment. With a strong balance sheet, ample liquidity, and a clear vision for the future, Hayward appeared poised to build on its success and drive further growth and shareholder value.