Hayward Holdings Q1 Results: Strong Execution Amid Tariff Headwinds

Hayward Holdings (HAYW) delivered a robust first-quarter performance, defying market skepticism with earnings and revenue that significantly outpaced expectations. The company’s Q1 2025 results highlighted operational resilience and strategic execution, even as its stock price languishes near multi-year lows. Investors now face a critical question: Can Hayward’s fundamentals justify a rebound, or are lingering macroeconomic risks clouding its path to growth?

A Quarter of Overachievement

Hayward’s Q1 non-GAAP EPS of $0.10 marked a 25% year-over-year increase, exceeding the $0.09 estimate by 17%. Revenue surged to $228.8 million, a 7.7% rise from Q1 2024, easily surpassing consensus estimates of $213.7 million. The outperformance was broad-based, driven by price hikes, volume gains, and contributions from its ChlorKing acquisition. Even adjusted EBITDA hit $49.1 million, a 15% beat over estimates, with margins expanding to 21.5%, a 30-basis-point improvement year-over-year.

Navigating Tariffs and Trade-offs

Hayward’s success hinged on its ability to mitigate the $85 million annual tariff burden. The company has implemented 3% price increases in April 2025, with plans for an additional 4% hike in June, while aggressively restructuring its supply chain. By reducing China-sourced goods to 3% of U.S. COGS by year-end, Hayward aims to offset tariff costs without sacrificing competitiveness.

The launch of its OmniX wireless automation system further underscores its shift toward high-margin products. Targeting the $3.5 million non-automated pool aftermarket, this innovation could expand Hayward’s addressable market beyond new construction—a critical growth lever as housing starts remain sluggish.

The Stock’s Disconnect

Despite the strong results, Hayward’s shares closed at $13.33 on the earnings date, down 11.5% over three months and 2.8% year-to-date. Analysts have been lukewarm, with six negative EPS revisions in the past 90 days. The stock briefly rallied 1.2% post-earnings but quickly retreated, suggesting investors remain cautious about long-term demand and valuation.

A Balanced Outlook

Hayward’s Q1 results are undeniably strong, but its stock’s underperformance reflects broader concerns. The company’s net leverage improved to 2.8x from 4.0x a year earlier, and its cash balance of $181 million provides flexibility. However, free cash flow remains negative (-$11.96 million in Q1), though it improved sharply from -$83 million in Q1 2024.

The company’s full-year revenue guidance of $1.06–1.10 billion aligns with analyst expectations, suggesting no major upside surprises ahead. Meanwhile, its tariff-mitigation plan and innovation efforts position it better than peers for 2025.

Conclusion: Value in the Numbers?

Hayward’s Q1 results underscore its operational discipline and strategic clarity. With EBITDA margins expanding and leverage declining, the company is strengthening its financial foundation. While the stock’s lagging performance may reflect macroeconomic anxieties or sector-specific concerns, the fundamentals—25% EPS growth, 7.7% revenue expansion, and a 21.5% EBITDA margin—suggest Hayward is executing well.

If the company can sustain these trends and deliver on its tariff-mitigation roadmap, Hayward could emerge as a winner in its niche. At a current valuation of roughly 10x forward EBITDA, the stock may offer a compelling entry point for investors willing to bet on Hayward’s long-term strategy. The challenge remains convincing skeptics that its innovations and cost controls can outpace macroeconomic headwinds—a task Hayward has already started to prove.

In short, Hayward’s Q1 results are a reminder that even in a tough environment, disciplined execution can deliver results. Whether the market rewards that effort remains to be seen.