Hayward (NYSE:HAYW) reported fourth-quarter and full-year 2025 results that management said exceeded expectations, driven by sales growth, margin expansion, and strong cash generation. On the company’s earnings call, executives highlighted continued momentum in its aftermarket-focused business model, progress on product innovation initiatives such as OmniX, and further balance sheet de-levering.
Fourth-quarter results: sales up 7% and record gross margin
For the fourth quarter, Hayward posted net sales of $349 million, up 7% year over year against what management described as a strong prior-year comparison. Gross profit increased 10% to $169 million, and gross margin improved 160 basis points to 48.5%, which the company called a record level for the quarter.
Adjusted diluted EPS increased 7% to $0.29. The effective tax rate in the quarter was 9%, down from 14% a year earlier, according to the company.
Full-year 2025: net sales up 7%, Adjusted EBITDA up 8%
For fiscal 2025, Hayward reported net sales of $1.12 billion, up 7%, and Adjusted EBITDA of $299 million, up 8%. Management said both metrics exceeded the company’s most recent guidance. Gross margin rose to 48% for the year, while Adjusted EBITDA margin increased 30 basis points to 26.7%.
Jones said full-year growth was driven largely by pricing, with 5% price gains and a 1% contribution from the ChlorKing acquisition. The company also increased research, development, and engineering spending by 6% to $27 million, while SG&A rose 14% to $247 million, which management linked to higher compensation expenses, sales and customer care investment plans, and the integration of ChlorKing.
Adjusted diluted EPS increased 15% to $0.77, and the effective tax rate for the year was 18%.
Accounting change: warranty costs reclassified
Hayward noted a change in accounting presentation implemented during the fourth quarter of 2025: warranty costs were reclassified from SG&A to cost of sales. Investor Relations said the change had no impact on net sales, operating income, net income, or Adjusted EBITDA, but it did affect reported cost of sales, gross profit, and SG&A expense across periods presented.
Jones added that under the prior presentation method, fourth-quarter gross margin would have been 52.1% and full-year gross margin would have been 51.5%.
Segment performance and channel commentary
In the fourth quarter, North America sales increased 8% to $309 million, which management said was mainly due to price gains. U.S. sales rose 8% and Canada increased 10%. The company also cited “strong in-quarter and early buy demand for 2026.” North America gross margin improved 80 basis points to 50.1%.
Europe and rest of world sales were roughly flat at $41 million. Jones said a 5% foreign exchange tailwind offset lower prices and volume; Europe sales increased 7% while rest of world declined 9%. Gross margin in the segment increased 590 basis points to 35.8%, and adjusted segment income margin rose 350 basis points to 16.3%.
For the full year, North America sales increased 7% to $959 million, including higher pricing and ChlorKing’s contribution, with U.S. and Canada up 7% and 6%, respectively. Europe and rest of world sales rose 4% to $163 million, driven by 2% volume growth and 2% FX gains, and the company cited commercial and operational actions that improved results in the segment.
On channel conditions, CEO Kevin Holleran said the company felt good about year-end inventory levels across its largest channel partners and did not see “shadow inventory.” He added that the company’s 2026 outlook assumes a fairly normal demand environment, with no expectation that new pool construction improves materially, while the aftermarket is expected to remain supportive.
Cash flow, leverage, and 2026 outlook
Hayward said free cash flow increased 20% in 2025, supported by improved profitability and working capital management, helping reduce net leverage to 1.9x by year-end and increasing liquidity by $164 million. Holleran added that free cash flow in 2025 represented nearly 150% of net income, citing profit performance and working capital improvements, particularly in receivables and inventory.
For 2026, the company guided to net sales growth of approximately 4% and introduced adjusted diluted EPS guidance of $0.82 to $0.86. Jones said the company expects free cash flow of around $200 million, exceeding 100% of net income, and outlined assumptions including:
- Net interest expense of approximately $45 million
- A normalized effective tax rate of around 24%
- Capital expenditures of approximately $40 million
In response to a question on the sales growth bridge, management said the outlook assumes approximately 3% global net price gains and “modest” volume growth, with foreign exchange expected to be roughly neutral.
Executives also discussed a step-up in capital spending to modernize and automate Hayward’s U.S. manufacturing footprint and to support supply chain changes, noting that CapEx was just over $30 million in 2025 and is expected to reach about $40 million in 2026.
On capital allocation, management reiterated priorities: reinvestment in the business first, followed by M&A, while remaining opportunistic on share repurchases. The company said it made a $4 million anti-dilutive repurchase in the fourth quarter and referenced a $450 million share repurchase program authorized toward the end of the prior year.
During Q&A, Hayward also provided an update on tariffs and sourcing. Holleran said the company reduced U.S. cost-of-sales exposure to China from about 10% entering 2025 to approximately 3% by year-end, while noting an incremental cost of roughly $5 million to $6 million associated with shifting sourcing. He said the company believed tariff exposure was covered within its guidance and described tariffs as a “managed variable” rather than a structural headwind.
Separately, management discussed product initiatives, including expanding OmniX-enabled offerings so that every new Hayward variable speed pump and gas heater is OmniX-enabled, and introducing new products aimed at aftermarket opportunities, including OmniX-enabled 4 horsepower variable speed pumps and a new pressure cleaner product line.
Hayward also said it was spending more time evaluating its industrial flow control business, which Holleran characterized as roughly a $50 million, “extremely profitable” business with potential to become a larger platform over time, though he said there was nothing specific to announce yet.
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.
