Hayward Holdings, Inc.

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, this discussion and analysis includes forward-looking statements that reflect our plans, estimates and beliefs and involve risks and uncertainties. As a result of many factors, including those set forth in the section “Special Note Regarding Forward-looking Statements” in this Quarterly Report on Form 10-Q, our actual results may differ materially from those contained in or implied by any forward-looking statements. The results of operations for the three months ended March 29, 2025 are not necessarily indicative of the results for any subsequent periods or the entire fiscal year ending December 31, 2025.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, this discussion and analysis includes forward-looking statements that reflect our plans, estimates and beliefs and involve risks and uncertainties. As a result of many factors, including those set forth in the section “Special Note Regarding Forward-looking Statements” in this Quarterly Report on Form 10-Q, our actual results may differ materially from those contained in or implied by any forward-looking statements. The results of operations for the three and six months ended June 28, 2025 are not necessarily indicative of the results for any subsequent periods or the entire fiscal year ending December 31, 2025.

Previous wording

We have an estimated North American residential pool market share of approximately 33%. We believe that we are well-positioned for future growth. Historically aftermarket sales have represented approximately 80% of net sales and are generally recurring in nature since these products are critical to the ongoing operation of pools given requirements for water quality and sanitization. Our product replacement cycle of approximately 8 to 11 years drives multiple replacement opportunities over the typical life of a pool, creating opportunities to generate aftermarket product sales as pool owners repair, remodel and upgrade their pools. We estimate aftermarket sales based upon feedback from certain representative customers and management’s interpretation of available industry and government data, and not upon our GAAP net sales results.

Current wording

We have an estimated North American residential pool market share of approximately 33%. We believe that we are well-positioned for future growth. We estimate aftermarket sales represent approximately 85% of North American residential pool net sales and are generally recurring in nature since these products are critical to the ongoing operation of pools given requirements for water quality and sanitization. Our product replacement cycle of approximately 8 to 11 years drives multiple replacement opportunities over the typical life of a pool, creating opportunities to generate aftermarket product sales as pool owners repair, remodel and upgrade their pools. We estimate aftermarket sales based upon feedback from certain representative customers and management’s interpretation of available industry and government data, and not upon our GAAP net sales results.

Previous wording

NAM accounted for 82% of total net sales for the three months ended March 29, 2025 and March 30, 2024, and E&RW accounted for 18% of total net sales for the three months ended March 29, 2025 and March 30, 2024.

Current wording

NAM accounted for 85% of total net sales for each of the three months ended June 28, 2025 and June 29, 2024, and E&RW accounted for 15% of total net sales for each of the three months ended June 28, 2025 and June 29, 2024.

Previous wording

Our results of operations for the three months ended March 29, 2025 and the three months ended March 30, 2024 have been affected by the following, among other events, which must be understood to assess the comparability of our period-to-period financial performance and condition.

Current wording

Our results of operations for the three and six months ended June 28, 2025 and the three and six months ended June 29, 2024 have been affected by the following, among other events, which must be understood to assess the comparability of our period-to-period financial performance and condition.

Previous wording

Our fiscal quarters end on the Saturday closest to the calendar quarter end, with the exception of year end which ends on December 31 of each fiscal year. The interim closing date for the first, second and third quarters of 2025 are March 29, June 28, and September 27, compared to the respective March 30, June 29, and September 28, 2024 date. This resulted inthree less working days for the three months ended March 29, 2025 compared to the respective 2024 period. Throughout this discussion we may refer to the three months ended March 29, 2025 and the three months ended March 30, 2024 as the “First Quarter” and “Comparable Quarter,” respectively.

Current wording

Our fiscal quarters end on the Saturday closest to the calendar quarter end, with the exception of year end which ends on December 31 of each fiscal year. The interim closing date for the first, second and third quarters of 2025 are March 29, June 28, and September 27, compared to the respective March 30, June 29, and September 28, 2024 date. This resulted inthree fewer working days for the six months ended June 28, 2025 compared to the respective 2024 period.

Previous wording

Our business is seasonal, with sales typically higher in the second and fourth quarters. During the second quarter, sales are higher in anticipation of the start of the summer pool season, and in the fourth quarter, we incentivize trade customers to buy and stock in preparation for next year’s pool season under an “Early Buy” program, which features a price discount and extended payment terms. Shipments for the 2024 Early Buy program began in the late third quarter and will continue through approximately the first quarter of 2025. The favorable payment terms extended as part of the Early Buy program generally do not exceed 180 days. We aim to keep our manufacturing plants running at a constant level throughout the year and consequently we typically build inventory in the first and third quarters, and inventory is sold-down in the second and fourth quarters. Our accounts receivable balance increases from September to April as a result of the Early Buy extended terms. Also, because the majority of our sales are to distributors whose inventory of our products may vary, including due to reasons beyond our control, such as end-user demand, supply chain lead times and macroeconomic factors, our revenue may fluctuate from period to period.

Current wording

Our business is seasonal, with sales typically higher in the second and fourth quarters. During the second quarter, sales are higher in anticipation of the start of the summer pool season, and in the fourth quarter, we incentivize trade customers to buy and stock in preparation for next year’s pool season under an “Early Buy” program, which features a price discount and extended payment terms. Shipments for the 2024 Early Buy program began in the late third quarter and continued through approximately the first quarter of 2025. The favorable payment terms extended as part of the Early Buy program generally do not exceed 180 days. We aim to keep our manufacturing plants running at a constant level throughout the year and consequently we typically build inventory in the first and third quarters, and inventory is sold-down in the second and fourth quarters. Our accounts receivable balance increases from September to April as a result of the Early Buy extended terms. Also, because the majority of our sales are to distributors whose inventory of our products may vary, including due to reasons beyond our control, such as end-user demand, supply chain lead times and macroeconomic factors, our revenue may fluctuate from period to period.

Previous wording

The imposition of, and threat of imposition of, tariffs and other trade restrictions by the United States government in 2025, and tariffs announced by foreign governments in response to these actions, have created substantial uncertainty in the global economy. This uncertainty, as well as the direct impact of these tariffs and other trade restrictions, may adversely affect the Company’s business by reducing market demand for the Company’s products, increasing the Company’s supply costs that cannot be passed on to customers and/or adversely affecting the competitiveness of the Company’s products against those of manufacturers not subject to such tariffs and trade restrictions. Geopolitical conflicts around the world have also created substantial uncertainty in the global economy, including as a result of sanctions and penalties imposed in response to these conflicts. In particular, armed conflicts in the Middle East and in Ukraine and Russia have adversely affected market demand in the Middle East and Asia, which has negatively impacted our results in our E&RW segment. See “—Segment—Europe & Rest of World (“E&RW”),” below. Given the nature of our business and global operations, if these or other geopolitical conflicts continue or worsen, our business and results of operations may be adversely affected.

Current wording

The imposition of, and threat of imposition of, tariffs and other trade restrictions by the United States government in 2025, and tariffs and other trade restrictions announced by governments of other nations in response to these actions, have created substantial uncertainty in the global economy. This uncertainty, as well as the direct impact of these tariffs and other trade restrictions, may adversely affect the Company’s business by reducing market demand for the Company’s products, increasing the Company’s supply costs that cannot be passed on to customers and/or adversely affecting the competitiveness of the Company’s products against those of manufacturers not subject to such tariffs and trade restrictions. Geopolitical conflicts around the world have also created substantial uncertainty in the global economy, including as a result of sanctions and penalties imposed in response to these conflicts. In particular, armed conflicts in the Middle East and in Ukraine and Russia have adversely affected market demand in the Middle East and Asia, which has negatively impacted our results in our E&RW segment. See “—Segment—Europe & Rest of World (“E&RW”),” below. Given the nature of our business and global operations, if these or other geopolitical conflicts continue or worsen, our business and results of operations may be adversely affected.

Previous wording

The following tables summarize key components of our results of operations for the periods indicated. We derived the consolidated statements of operations for the three months ended March 29, 2025 and March 30, 2024 from our unaudited condensed consolidated financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future. The following table summarizes our results of operations:

Current wording

The following tables summarize key components of our results of operations for the periods indicated. We derived the consolidated statements of operations for the three and six months ended June 28, 2025 and June 29, 2024 from our unaudited condensed consolidated financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future. The following table summarizes our results of operations:

Previous wording

Net sales increased to $228.8 million for the three months ended March 29, 2025 from $212.6 million for the three months ended March 30, 2024, an increase of $16.2 million, or 7.7%. See the segment discussion below for further information.

Current wording

Net sales increased to $299.6 million for the three months ended June 28, 2025 from $284.4 million for the three months ended June 29, 2024, an increase of $15.2 million, or 5.3%. See the segment discussion below for further information.

Previous wording

The net sales increase for the three months ended March 29, 2025 was driven by an increase in volume, the favorable impact from acquisitions and net price, partially offset by the unfavorable impact of foreign currency translation. The growth in volume was driven by the U.S. and Europe and the favorable timing of orders.

Current wording

The net sales increase for the three months ended June 28, 2025 was driven by positive net price to offset inflation and tariffs, the favorable impact from acquisitions and foreign currency translation, partially offset by a decline in volume. The decline in volume was driven by the timing of orders in the 2025 season.

Previous wording

Selling, general, and administrative expense (SG&A) increased to $65.1 million for the three months ended March 29, 2025 from $60.0 million for the three months ended March 30, 2024, an increase of $5.1 million, or 8.5%, primarily due to normalized incentive compensation and investments in our customer care and selling teams.

Current wording

Selling, general, and administrative expense (SG&A) increased to $71.9 million for the three months ended June 28, 2025 from $63.2 million for the three months ended June 29, 2024, an increase of $8.7 million, or 13.8%, primarily due to higher salary costs driven by wage inflation and investments in our selling and customer care teams, and higher incentive compensation, partially offset by decreased warranty costs.

Previous wording

As a percentage of net sales, SG&A increased to 28.5% for the three months ended March 29, 2025 as compared to 28.2% for the three months ended March 30, 2024, an increase of 30 basis points, driven by the factors discussed above.

Current wording

As a percentage of net sales, SG&A increased to 24.0% for the three months ended June 28, 2025 as compared to 22.2% for the three months ended June 29, 2024, an increase of 180 basis points, driven by the factors discussed above.

Previous wording

Research, development, and engineering expense (RD&E) decreased to $6.0 million for the three months ended March 29, 2025 from $6.3 million for the three months ended March 30, 2024, primarily as a result of timing of projects compared to the three months ended March 30, 2024. RD&E spend continues to be focused on new product development and new product quality.

Current wording

Research, development, and engineering expense (RD&E) remained flat at $6.1 million for the three months ended June 28, 2025 compared to the three months ended June 29, 2024. RD&E spend continues to be focused on new product development and new product quality.

Previous wording

As a percentage of net sales, RD&E was 2.6% for the three months ended March 29, 2025, compared to 3.0% for the three months ended March 30, 2024.

Current wording

As a percentage of net sales, RD&E was 2.0% for the three months ended June 28, 2025, compared to 2.2% for the three months ended June 29, 2024.

Previous wording

For the three months ended March 29, 2025, we incurred $1.9 million of acquisition and restructuring related expense as compared to $0.5 million of expense for the three months ended March 30, 2024. The expense in the First Quarter was primarily driven by costs associated with the acquisition of ChlorKing HoldCo, LLC and related entities (“ChlorKing”), including the deferred purchase price treated as compensation cost over the twelve-month service period from the date of acquisition, compared to the Comparable Quarter which was primarily related to severance and other costs associated with the centralization and consolidation of operations in Europe.

Current wording

For the three months ended June 28, 2025, we incurred $1.6 million of acquisition and restructuring-related expense as compared to $0.8 million of expense for the three months ended June 29, 2024. The expense in the three months ended June 28, 2025 was primarily driven by costs associated with the acquisition of ChlorKing HoldCo, LLC and related entities (“ChlorKing”), including the deferred purchase price recognized as compensation cost over the twelve-month service period from the date of acquisition, compared to the three months ended June 29, 2024 which also primarily related to costs associated with the acquisition of ChlorKing.

Previous wording

For the three months ended March 29, 2025, amortization of intangible assets decreased by $0.1 million compared to the three months ended March 30, 2024 due to the amortization pattern of certain intangible asset classes based on the declining balance method.

Current wording

For the three months ended June 28, 2025, amortization of intangible assets decreased by $0.1 million compared to the three months ended June 29, 2024 due to the amortization pattern of certain intangible asset classes based on the declining balance method, partially offset by additional amortization expense associated with intangible assets acquired as part the ChlorKing acquisition.

Previous wording

For the three months ended March 29, 2025, operating income increased $2.7 million due to the aggregated effect of the items described above.

Current wording

For the three and six months ended June 28, 2025, operating income increased $3.4 million and $6.0 million, respectively, due to the aggregated effect of the items described above.

Previous wording

Interest expense, net, decreased to $13.7 million for the three months ended March 29, 2025 from $18.6 million for the three months ended March 30, 2024.

Current wording

Interest expense, net, decreased to $13.7 million for the three months ended June 28, 2025 from $16.8 million for the three months ended June 29, 2024.

Previous wording

Interest expense, net, for the three months ended March 29, 2025 consisted of $14.3 million of interest expense on the outstanding debt and $0.9 million of amortization of deferred financing fees, partially offset by $1.5 million of interest income on cash deposits. The effective interest rate on our borrowings, including the impact of an interest rate hedge, was 6.31% for the three months ended March 29, 2025.

Current wording

Interest expense, net, for the three months ended June 28, 2025 consisted of $15.1 million of interest expense on the outstanding debt and $1.1 million of amortization of deferred financing fees, partially offset by $2.5 million of interest income on cash deposits. The effective interest rate on our borrowings, including the impact of an interest rate hedge, was 6.52% for the three months ended June 28, 2025.

Previous wording

Interest expense, net, for the three months ended March 30, 2024 consisted of $19.1 million of interest expense on the outstanding debt and $1.2 million of amortization of deferred financing fees, partially offset by $1.7 million of interest income on cash deposits. The effective interest rate on our borrowings, including the impact of an interest rate hedge, was 7.28% for the three months ended March 30, 2024.

Current wording

Interest expense, net, for the three months ended June 29, 2024 consisted of $17.3 million of interest expense on the outstanding debt and $1.1 million of amortization of deferred financing fees, partially offset by $1.6 million of interest income on cash deposits. The effective interest rate on our borrowings, including the impact of an interest rate hedge, was 7.16% for the three months ended June 29, 2024.

Previous wording

Interest expense, net, decreased by $4.9 million for the First Quarter compared to the Comparable Quarter, primarily due to reduced debt as a result of the repayment of the Incremental Term Loan B principal balance in April 2024 and lower interest rates.

Current wording

Interest expense, net, decreased by $3.1 million for the three months ended June 28, 2025 compared to the three months ended June 29, 2024, primarily due to lower interest rates, reduced debt as a result of the repayment of the Incremental Term Loan B principal balance in April 2024 and increased interest income on cash deposits.

Previous wording

We incurred income tax expense of $4.3 million for the three months ended March 29, 2025 compared to income tax expense of $3.1 million for the three months ended March 30, 2024, an increase of $1.2 million, or 41.9%.

Current wording

We incurred income tax expense of $14.6 million for the three months ended June 28, 2025. compared to income tax expense of $9.4 million for the three months ended June 29, 2024, an increase of $5.2 million, or 56.3%.

Previous wording

The decrease in the Company’s effective tax rate from 23.8% for the three months ended March 30, 2024 to 23.3% for the three months ended March 29, 2025 was primarily due to a reduction in the foreign rate differential.

Current wording

The increase in the Company’s effective tax rate from 19.9% for the three months ended June 29, 2024 to 24.6% for the three months ended June 28, 2025 was primarily due to return-to-provision adjustments during the prior-year period.

Previous wording

As a result of the foregoing, net income increased $4.5 million for the three months ended March 29, 2025.

Current wording

As a result of the foregoing, net income increased $7.2 million and $11.7 million, respectively, for the three and six months ended June 28, 2025.

Previous wording

Adjusted EBITDA increased to $49.1 million for the three months ended March 29, 2025 from $45.0 million for the three months ended March 30, 2024, an increase of $4.1 million, or 9.0%, driven primarily by increased net sales and higher gross profit, partially offset by an increase in SG&A expense.

Current wording

Adjusted EBITDA increased to $88.2 million for the three months ended June 28, 2025 from $82.6 million for the three months ended June 29, 2024, an increase of $5.6 million, or 6.8%, driven primarily by increased net sales and higher gross profit, partially offset by an increase in SG&A expense.

Previous wording

Adjusted segment income margin increased to 16.6% for the three months ended March 29, 2025 from 16.1% for the three months ended March 30, 2024, an increase of 50 basis points.

Current wording

Adjusted EBITDA margin increased to 29.5% for the three months ended June 28, 2025 compared to 29.0% for the three months ended June 29, 2024, an increase of 50 basis points.

Previous wording

The net sales increase for the three months ended March 29, 2025 was driven by the acquisition and successful integration of the ChlorKing business, positive net price and volume growth due to the timing of orders in the 2025 season.

Current wording

The net sales increase for the three months ended June 28, 2025 was driven by positive net price to offset inflation and tariffs, and the acquisition and successful integration of the ChlorKing business, partially offset by a decline in volume due to the timing of orders in the 2025 season.

Previous wording

Gross profit margin increased to 52.8% for the three months ended March 29, 2025 from 51.8% for the three months ended March 30, 2024, an increase of 100 basis points. Gross margin increased due to positive net price.

Current wording

Gross profit margin increased to 54.1% for the six months ended June 28, 2025 from 52.4% for the six months ended June 29, 2024, an increase of 170 basis points. Gross margin increased due to positive net price impact and operational efficiencies in our manufacturing facilities.

Previous wording

Segment income increased to $43.5 million for the three months ended March 29, 2025 from $39.7 million for the three months ended March 30, 2024, an increase of $3.8 million, or 9.3%. This was primarily driven by an increase in sales and gross profit as discussed above, partially offset by an increase in SG&A due to normalized incentive compensation.

Current wording

Segment income increased to $83.4 million for the three months ended June 28, 2025 from $75.3 million for the three months ended June 29, 2024, an increase of $8.1 million, or 10.7%. This was primarily driven by an increase in net sales and gross profit as discussed above, partially offset by an increase in SG&A due to higher salary costs driven by wage inflation and investments in our selling and customer care teams, and higher incentive compensation, partially offset by decreased warranty costs.

Previous wording

Segment income margin increased to 23.2% for the three months ended March 29, 2025 from 22.9% for the three months ended March 30, 2024, an increase of 30 basis points. The increase was driven by the same factors discussed above in segment income.

Current wording

Segment income margin increased to 32.7% for the three months ended June 28, 2025 from 31.2% for the three months ended June 29, 2024, an increase of 150 basis points. The increase was driven by the same factors discussed above in segment income.

Previous wording

Adjusted segment income increased to $50.7 million for the three months ended March 29, 2025 from $45.3 million for the three months ended March 30, 2024, an increase of $5.4 million, or 11.8%. This was driven by the increase in segment income as discussed above, after adjusting for the non-cash and specified costs discussed below in “— Non-GAAP Reconciliation.”

Current wording

Adjusted segment income increased to $89.1 million for the three months ended June 28, 2025 from $81.3 million for the three months ended June 29, 2024, an increase of $7.8 million, or 9.6%. This was driven by the increase in segment income as discussed above, after adjusting for the non-cash and specified costs discussed below in “— Non-GAAP Reconciliation.”

Previous wording

The increase for the three months ended March 29, 2025 in net sales was primarily due to volume growth and positive net price, partially offset by the unfavorable impact of foreign currency translation. The increase in volume is due to improved operational performance compared to the prior-year period.

Current wording

The net sales increase for the three months ended June 28, 2025 was primarily due to the favorable impact of foreign currency translation and positive net price, partially offset by a decline in volume. The decline in volume is due to the timing of orders during the 2024 season.

Previous wording

Gross profit decreased to $14.6 million for the three months ended March 29, 2025 from $14.7 million for the three months ended March 30, 2024, a decrease of $0.1 million, or 0.4%.

Current wording

Gross profit decreased to $17.3 million for the three months ended June 28, 2025 from $17.7 million for the three months ended June 29, 2024, a decrease of $0.4 million, or 2.1%.

Previous wording

Gross profit margin decreased to 35.0% for the three months ended March 29, 2025 from 37.6% for the three months ended March 30, 2024, a decrease of 260 basis points, primarily driven by underutilization in our Europe manufacturing facilities and unfavorable mix, partially offset by higher net price.

Current wording

Gross profit margin decreased to 38.9% for the three months ended June 28, 2025 from 40.8% for the three months ended June 29, 2024, a decrease of 190 basis points, primarily driven by unfavorable mix and higher manufacturing costs, partially offset by higher net price.

Previous wording

Segment income margin increased by 30 basis points from 15.4% for the three months ended March 30, 2024 to 15.7% for the three months ended March 29, 2025, resulting from higher net sales.

Current wording

Segment income margin decreased by 210 basis points from 19.2% for the three months ended June 29, 2024 to 17.1% for the three months ended June 28, 2025, resulting from a decrease in gross profit.

Previous wording

Adjusted segment income increased to $7.0 million for the three months ended March 29, 2025 from $6.3 million for the three months ended March 30, 2024, an increase of $0.7 million or 10.3%. This was primarily driven by the increased sales after adjusting for the non-cash and specified costs described in “—Non-GAAP Reconciliation” below.

Current wording

Adjusted segment income decreased to $8.0 million for the three months ended June 28, 2025 from $8.6 million for the three months ended June 29, 2024, a decrease of $0.6 million or 6.1%. This was primarily driven by the decrease in gross profit after adjusting for the non-cash and specified costs described in “—Non-GAAP Reconciliation” below.

Previous wording

Following is a reconciliation from net income to adjusted EBITDA and adjusted EBITDA margin for the three months ended March 29, 2025 and March 30, 2024:

Current wording

Following is a reconciliation from net income to adjusted EBITDA and adjusted EBITDA margin for the three and six months ended June 28, 2025 and June 29, 2024:

Previous wording

Following is a reconciliation from segment income to adjusted segment income for NAM for the three months ended March 29, 2025 and March 30, 2024 (dollars in thousands):

Current wording

Following is a reconciliation from segment income to adjusted segment income for NAM for the three and six months ended June 28, 2025 and June 29, 2024 (dollars in thousands):

Previous wording

Following is a reconciliation from segment income to adjusted segment income for E&RW for the three months ended March 29, 2025 and March 30, 2024 (dollars in thousands):

Current wording

Following is a reconciliation from segment income to adjusted segment income for E&RW for the three and six months ended June 28, 2025 and June 29, 2024 (dollars in thousands):

Previous wording

Unrestricted cash and cash equivalents totaled $181.3 million as of March 29, 2025, which is a decrease of $15.3 million from $196.6 million at December 31, 2024.

Current wording

Unrestricted cash and cash equivalents totaled $365.1 million as of June 28, 2025, which is an increase of $168.5 million from $196.6 million at December 31, 2024.