Hayward (HAYW) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales rose 3.3% year-over-year to $227.6 million, driven by positive pricing, acquisitions, and operational efficiencies, partially offset by lower volumes.

• Gross profit margin expanded by 190 basis points to 49.7%, with net income up 40% to $16.5 million and net leverage reduced to 2.8x from 3.9x year-over-year.

• Adjusted EBITDA increased 8.2% to $51.1 million (22.5% margin), and adjusted diluted EPS grew 22% to $0.11.

• Strong cash flow generation, with year-to-date cash from operations up 27% to $275.8 million and free cash flow up 34% to $258 million.

• ChlorKing acquisition completed, contributing positively to sales, margin, and commercial pool market presence.

Financial highlights

• Q3 net sales: $227.6 million (+3.3% YoY); gross profit: $113.1 million (+7.3%); gross margin: 49.7% (+190 bps); net income: $16.5 million (net margin 7.3%, up 190 bps).

• Adjusted EBITDA: $51.1 million (+8.2% YoY); margin: 22.5% (+110 bps); operating income: $33.4 million (+16% YoY); operating margin: 14.7%.

• Cash and cash equivalents at quarter-end: $274.2 million; total liquidity: $388 million.

• Net debt to adjusted EBITDA improved to 2.8x; long-term debt at quarter-end: $959.9 million.

• Interest expense, net, decreased 24% to $13.2 million; effective interest rate on borrowings: 6.78%.

Outlook and guidance

• FY2024 net sales expected between $1.020 billion and $1.040 billion, up 3%–5%; adjusted EBITDA guidance raised to $260–$270 million, up 5%–9%.

• Free cash flow for 2024 anticipated at approximately $160 million, expected to exceed 100% of net income.

• Net interest expense projected at $63 million; CapEx at $25 million; effective tax rate at 25% for the remainder of the year.

• Management confident in long-term profitable growth, citing technology leadership and robust cash flow.

• Outlook reflects resilient aftermarket, margin expansion, and ongoing macroeconomic and geopolitical uncertainties.