Q4 2025 Hayward Holdings Inc Earnings Call

Only mode.

Later, we will conduct a question and answer session.

During the question and answer session. If you have a question, please press star then 1 on your touchtone phone.

Please note that this conference is being recorded.

I will now turn the call over to Kevin Masa vice president and best relations and fpna Mr. Masa you may begin.

Thank you and good morning, everyone. We issued our fourth quarter and full year 2025 earnings press release this morning, which has been posted to the investor relations section of our website at investor.gov.

There you can also find the earnings slide presentation referenced during this call.

I'm joined.

Sir and Ivan Jones, senior vice, president, and Chief Financial Officer.

Speaker #2: Later, we will conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press star, then 1 on your touchtone phone.

Before we begin, I would like to remind everyone that during this call the company may make certain statements that are considered forward-looking in nature, including Management's, outlook for 2026 and future periods.

Speaker #2: Please note that this conference is being recorded. I will now turn the call over to Kevin Maczka, Vice President, Investor Relations and FP&A. Mr. Maczka, you may begin.

Such statements are subject to a variety of risks and uncertainties including those discussed in our most, recent forms, 10K, and 10, Q filed with the Securities and Exchange Commission that could cause actual results to differ materially.

The company does not undertake any duty to update such forward-looking statements.

During today's call, the company will discuss non-gaap measures.

Speaker #2: Thank you, and good morning, everyone. We issued our fourth quarter and full year 2025 earnings press release this morning, which has been posted to the Investor Relations section of our website at investor.hayward.com.

Reconciliations of historical non-gaap measures discussed on this, call to the comparable. Gaap measures can be found in our earnings release and the appendix to the slide presentation.

Speaker #2: There, you can also find the earnings slide presentation referenced during this call. I'm joined today by Kevin Holleran, President and Chief Executive Officer and Eivian Jones, Senior Vice President and Chief Financial Officer.

All comparisons will be made on a year-over-year basis, unless otherwise indicated

Speaker #2: Before we begin, I would like to remind everyone that during this call, the company may make certain statements that are considered forward-looking in nature, including management's outlook for 2026 and future periods.

Additionally, I'd like to highlight a change in accounting principle. During the fourth quarter 2025, we changed to a preferred presentation of warranty costs, from sgna to cost of sales.

This change has no impact on net sales operating income. Net income or adjusted. Evita

Speaker #2: Such statements are subject to a variety of risks and uncertainties, including those discussed in our most recent forums, 10-K and 10-Q, filed with the Securities and Exchange Commission, that could cause actual results to differ materially.

The change has been applied retrospectively to all periods, presented and affects cost of sales, gross profit and sgna expense.

Speaker #2: The company does not undertake any duty to update such forward-looking statements. During today's call, the company will discuss non-GAAP measures. Reconciliations of historical non-GAAP measures discussed on this call to the comparable GAAP measures can be found in our earnings release and the appendix to the slide presentation.

Tables. Outlining this presentation change or included in our earnings press release and in the appendix to the earnings slide presentation.

I will now turn the call over to Kevin Halloran. Thank you. Kevin, good morning, everyone. It's my pleasure to welcome. All of you to hayward's. Fourth quarter earnings call.

Speaker #2: All comparisons will be made on a year-over-year basis unless otherwise indicated. Additionally, I'd like to highlight a change in accounting principle. During the fourth quarter 2025, we changed to a preferred presentation of warranty costs from SG&A to cost of sales.

I'll begin on slide 4 of our earnings presentation with today's key messages, Heyward delivered, strong fourth quarter and full year, 2025 results, outperforming expectations, and extending our momentum. Our team executed at high level across the organization, translating into sales and earnings growth continued, gross margin expansion, and grow.

Speaker #2: This change has no impact on net sales, operating income, net income, or adjusted EBITDA. The change has been applied retrospectively to all periods presented and affects cost of sales, gross profit, and SG&A expense.

Robust cash flow generation. I'm pleased to report that our net sales increase 7% in the fourth quarter against a very strong prior year comparison.

Speaker #2: Tables outlining this presentation change are included in our earnings press release and in the appendix to the earnings slide presentation. I will now turn the call over to Kevin Holleran.

Gross margin expanded and adjusted ibida increased 4% demonstrating our ability to drive profitability. Even as we continue to invest in the business, our full year performance was strong across all Ethan.

Speaker #3: Thank you, Kevin, and good morning, everyone. It's my pleasure to welcome all of you to Hayward's fourth quarter earnings call. I'll begin on slide 4 of our earnings presentation with today's key messages.

Speaker #3: Hayward delivered strong fourth quarter and full year 2025 results outperforming expectations and extending our momentum. Our team executed at a high level across the organization, translating into sales and earnings growth, continued gross margin expansion, and robust cash flow generation.

Net sales, increased 7% gross, margin achieved, a record, 48%, and adjusted ibida, grew 8%. These results underscore the success of our business development, strategies and the durability of our aftermarket driven model. Cash flow generation was exceptional enabling a further meaningful reduction in net, leverage at 1.9 Times by year end. At the same time we're executing on our strategic priorities.

Speaker #3: I'm pleased to report that our net sales increased 7% in the fourth quarter against a very strong prior-year comparison. Gross margin expanded and adjusted EBITDA increased 4%, demonstrating our ability to drive profitability even as we continue to invest in the business.

We're investing in Innovation, operational excellence and customer experience, while maintaining a strong financial profile. These actions are strengthening our competitive position and supporting long-term value creation.

Speaker #3: Our full-year performance was strong across all key financial metrics, net sales increased 7%, gross margin achieved a record 48%, and adjusted EBITDA grew 8%.

2025 also marked the 100-year anniversary of hayward's, founding in 1925 a remarkable Milestone and testament to our resilience. It was important to us that we honor that Legacy with strong performance in our Centennial year and I'm proud to say we did exactly that as we enter our next Century. We do so with a solid foundation for future growth, and an unwavering commitment to our customers.

Speaker #3: These results underscore the success of our business development strategies and the durability of our aftermarket-driven model. Cash flow generation was exceptional, enabling a further meaningful reduction in net leverage to 1.9 times by year-end.

Speaker #3: At the same time, we're executing on our strategic priorities. We're investing in innovation, operational excellence, and customer experience while maintaining a strong financial profile.

Looking ahead, we enter the new year with confidence, in the strength of our business, and our ability to execute our strategic growth initiatives for the full year. We expect continued sales and earnings growth with net sales, increasing approximately 4% and adjusted diluted EPS increasing, approximately 6 to 12%.

Speaker #3: These actions are strengthening our competitive position and supporting long-term value creation. 2025 also marked the 100-year anniversary of Hayward's founding in 1925, a remarkable milestone and testament to our resilience.

Turning out a slide 5, high high. Letting the results of the fourth quarter and full year, net sales in the fourth quarter increase 7% to 349 million, against a strong prior year, comparison of 17% growth,

Speaker #3: It was important to us that we honor that legacy with strong performance in our centennial year and I'm proud to say we did exactly that.

Ation costs associated with better than expected performance.

Speaker #3: As we enter our next century, we do so with a solid foundation for future growth and an unwavering commitment to our customers. Looking ahead, we enter the new year with confidence in the strength of our business and our ability to execute our strategic growth initiatives.

Adjusted diluted EPS increased 7% to 29 cents.

Speaker #3: For the full year, we expect continued sales and earnings growth, with net sales increasing approximately 4% and adjusted diluted EPS increasing approximately 6% to 12%.

Speaker #3: Turning now to slide 5, highlighting the results of the fourth quarter and full year. Net sales in the fourth quarter increased 7% to 349 million, against a strong prior-year comparison of 17% growth.

For the full year, 2025 net sales increased 7% to 1,122 million and adjusted ibida increased 8% to 299 million each exceeding. Our most recent guidance profitability was strong with gross margin increasing to 48% and adjusted ibida margin, increase in to 26.7%, adjusted diluted EPS increased, 15% to 77 cents. Overall this performance reflects solid growth and margin expansion. Balanced against targeted strategic investments in the business to support long-term value creation.

Speaker #3: Gross profit margins continue to expand, and adjusted EBITDA increased 4%. The adjusted EBITDA margin of 29.4% was reduced largely due to increased variable compensation costs associated with better-than-expected performance.

Speaker #3: Adjusted diluted EPS increased 7% to 29 cents. For the full year 2025, net sales increased 7% to $1,122,00,00, and adjusted EBITDA increased 8% to $299,000,000, each exceeding our most recent guidance.

Speaker #3: Profitability was strong, with gross margin increasing to 48% and adjusted EBITDA margin increasing to 26.7%. Adjusted diluted EPS increased 15% to 77 cents. Overall, this performance reflects solid growth and margin expansion, balanced against targeted strategic investments in the business to support long-term value creation.

Turning now to slide 6, I'd like to share some strategic accomplishments from the year. 2025 was an important and successful year for Hayward our Centennial year and 1 in which we delivered on our financial commitments. While further strengthening our position as a premier company in the industry, I'm extremely proud of our teams for performance and I want to thank all of our valued customers and vendor partners for their efforts throughout the year. Our aftermarket model focused on serving the large installed base of existing pools with regular equipment, Replacements and upgrades represents roughly 85% of our total sales and continues to prove its resilience. We generated another year of solid growth and profitability through a challenge macroeconomic backdrop, in which new

Speaker #3: Turning now to slide 6, I'd like to share some strategic accomplishments from the year. 2025 was an important and successful year for Hayward. Our centennial year and one in which we delivered on our financial commitments, while further strengthening our position as a premier company in the industry.

Speaker #3: I'm extremely proud of our team's performance, and I want to thank all of our valued customers and vendor partners for their efforts throughout the year.

Speaker #3: Our aftermarket model, focused on serving the large installed base of existing pools with regular equipment replacements and upgrades, represents roughly 85% of our total sales, and continues to prove its resilience.

New pool construction in the US approached post GFC lows from a financial standpoint. We delivered robust growth in sales and double-digit increases in both adjusted. Diluted EPs and free cash flow enabling, a meaningful reduction in net leverage to 1.9 times at the segment. Level, North, America delivered record. Margins Canada continued, its strong performance. And we were very pleased with the performance of core King in the First full year of ownership. Strengthening our position in commercial pool equipment, Europe, and rest of World shows a solid recovery in sales and margins reflecting the benefits of our organizational realignment and operational Focus. As I reflect on the post-pandemic period for the industry. We have now delivered 2 consecutive years of Topline growth aligned with our long-term algorithm

Speaker #3: We generated another year of solid growth and profitability through a challenge macroeconomic backdrop in which new pool construction in the US approached post-GFC lows.

6% in 2024 and 7% in 2025, alongside meaningful margin expansion and balance sheet, delivering

Speaker #3: From a financial standpoint, we delivered robust growth in sales and double-digit increases in both adjusted diluted EPS and free cash flow, enabling a meaningful reduction in net leverage to 1.9 times.

Speaker #3: At the segment level, North America delivered record margins. Canada continued its strong performance, and we were very pleased with the performance of Klorking in the first full year of ownership, strengthening our position in commercial pool equipment.

further Looking Back to Before the pandemic, our 6 year kegger from 2019 to 2025 are approximately 7% for net sales and 10% for adjusted. Evida underscoring. The sustainable organic growth trajectory we believe our business can deliver over time despite some year-to-year variability.

Speaker #3: Europe and rest of the world showed a solid recovery in sales and margins, reflecting the benefits of our organizational realignment and operational focus. As I reflect on the post-pandemic period for the industry, we have now delivered two consecutive years of top-line growth, aligned with our long-term algorithm.

Speaker #3: 6% in 2024 and 7% in 2025, alongside meaningful margin expansion and balance sheet delivering. Further, looking back to before the pandemic, our six-year CAGRs from 2019 to 2025 are approximately 7% for net sales and 10% for adjusted EBITDA, underscoring the sustainable organic growth trajectory we believe our business can deliver over time despite some year-to-year variability.

Beyond our financial results. We executed on key strategic growth initiatives, to further, strengthen the foundation, for hayward's, Next Century of growth. As a technology leader, we increased our disciplined investments in research development and Engineering to support growth and enhancing Innovation. We launched several differentiated products during the year including the introduction of omni X automation ecosystem. I'll discuss this in more detail on the following slide. Hayward has a long-standing culture of operational excellence and continuous Improvement and we demonstrated our capabilities again in 2025. We've successfully mitigated, the impact of tariffs, realigned our supply chain, and continue to de-risk, our sourcing footprint while making strategic investments in Automation and productivity.

Speaker #3: Beyond our financial results, we executed on key strategic growth initiatives to further strengthen the foundation for Hayward's next century of growth. As a technology leader, we increased our disciplined, investments in research, development, and engineering to support growth-enhancing innovation.

Speaker #3: We launched several differentiated products during the year, including the introduction of Omnix Automation Ecosystem. I'll discuss this in more detail on the following slide.

Speaker #3: Hayward has a longstanding culture of operational excellence and continuous improvement, and we demonstrated our capabilities again in 2025. We've successfully mitigated the impact of tariffs, realigned our supply chain, and continued to de-risk our sourcing footprint while making strategic investments in automation and productivity.

We also continue to elevate the customer experience. We recently expanded the network of Hayward, hubs opening 1 in California in the fourth quarter and our fifth Hub is scheduled to open in Florida. Soon, we also increase training and support for dealers and trade professionals after a successful pilot program. We are now scaling up the use of AI enabled, technical service agents to improve efficiency and service quality for our customers. These efforts are supporting successful dealers, conversions, and share games turning out a slide 7. Last year. We first introduced you to Omni X and industry. First automation platform, providing Wireless connectivity and app control for a suite of products without the need for essential controller. This

Speaker #3: We also continue to elevate the customer experience. We recently expanded the network of Hayward hubs, opening one in California in the fourth quarter and our fifth hub is scheduled to open in Florida soon.

Speaker #3: We also increased training and support for dealers and trade professionals. After a successful pilot program, we are now scaling up the use of AI-enabled technical service agents to improve efficiency and service quality for our customers.

Speaker #3: These efforts are supporting successful dealer conversions and share gains. Turning now to slide 7, last year we first introduced you to Omnix, an industry-first automation platform providing wireless connectivity and app control for a suite of products without the need for essential controller.

Speaker #3: This strategy, directly addresses the need of the approximately pools with little or no automation, offering a seamless path to modernization. Today, I'm excited to share another key step in building out the Omnix ecosystem.

Market upgrade options, driving further growth, and giving Pool owners even more ways to enhance and enjoy their pools over time. Additionally, our new Omni X products feature, a common intuitive Universal Display for pumps. This also includes Universal Communications supporting seamless, aftermarket integration with existing non- Hayward automation systems.

Speaker #3: Now, every new Hayward Variable Speed Pump and gas heater is Omnix-enabled. As homeowners replace older equipment, they will get automation as standard. Lowering the barrier of large upfront costs and making aftermarket upgrades more accessible.

On slide 8 innovation in the aftermarket remains core to our strategy, given the large addressable market for efficient connected products. Here we showcase several new products. Each designed to unlock significant, aftermarket upgrade opportunities for Hayward, either by providing access into new product categories, or by broadening compatibility with competitive systems.

Speaker #3: With more Omnix-enabled products on the horizon, our ecosystem will continue to offer robust aftermarket upgrade options, driving further growth and giving pool owners even more ways to enhance and enjoy their pools over time.

Starting on the left hand side of the slide, we've expanded our variable speed pump line with Superior performing Omni X enabled 4 horsepower models for large residential and small commercial pools. This is a key established segment of the pump Market, not previously served by Hayward

Speaker #3: Additionally, our new Omnix products feature a common, intuitive, universal display. For pumps, this also includes universal communications, supporting seamless aftermarket integration with existing non-Hayward automation systems.

Speaker #3: On slide 8, innovation in the aftermarket remains core to our strategy given the large addressable market for efficient, connected products. Here we showcase several new products, each designed to unlock significant aftermarket upgrade opportunities for Hayward, either by providing access into new product categories or by broadening compatibility with competitive systems.

Our new color logic LED landscape lights, allow homeowners to create coordinated, custom color, effects Across The Pool Spa, water features and now they're surrounding landscape. The track Jet pressure cleaner, shares, many of the same performance elements as our successful Trac vac suction cleaner fast cleaning and improved access to hard-to-reach spaces entering the pressure cleaner category, opens up another

Speaker #3: Starting on the left-hand side of the slide, we've expanded our variable speed pump line with superior-performing, Omnix-enabled, four-horsepower models for large residential and small commercial pools.

Speaker #3: This is a key established segment of the pump market, not previously served by Hayward. Our new color logic LED landscape lights allow homeowners to create coordinated, custom color effects across the pool, spa, water features, and now their surrounding landscape.

Segment of the automatic cleaner space for new and replacement installations in Europe. New pumps have been introduced as direct drop-in, replacements for the extensive installed base of competing products, presenting a promising opportunity, to increase market, share, finally, we've also expanded our pool lighting product line. These lights present an excellent, aftermarket alternative, for trade professionals, seeking robust lighting solutions, compatible with non- HMS.

collectively these new products unlock incremental aftermarket opportunities by enabling easier upgrades Replacements and conversions across both Hayward and

Turning now to slide 9.

Speaker #3: The track jet pressure cleaner shares many of the same performance elements as our successful track vac suction cleaner. Fast cleaning and improved access to hard-to-reach spaces.

Speaker #3: Entering the pressure cleaner category opens up another segment of the automatic cleaner space for new and replacement installations. In Europe, new pumps have been introduced as direct drop-in replacements for the extensive installed base of competing products, presenting a promising opportunity to increase market share.

Speaker #3: Finally, we've also expanded our pool lighting product line. These lights present an excellent aftermarket alternative for trade professionals seeking robust lighting solutions compatible with non-Hayward systems.

Speaker #3: Collectively, these new products unlock incremental aftermarket opportunities by enabling easier upgrades, replacements, and conversions across both Hayward and non-Hayward pool pads. Turning now to slide 9.

I'd like to briefly revisit the strategy where executing the drive growth and value Creation in 2026, and Beyond Heyward is fundamentally. A Growth Company built on a strong and reliable organic growth. Engine complemented by disciplined and organic opportunities on the organic side, our product management and Engineering. Roadmaps are focused on delivering Innovative energy efficient and highly automated solutions that elevate the pool ownership experience. This includes industry-leading technology platforms. Like Omni X positioning us at the Forefront of connected intelligent pool Solutions. We continue to enhance the overall customer experience through investments in sales and marketing programs, additional Hayward hubs, as well as hosting Premier industry events that reinforce our leadership and deepen engagement across

The channel.

Speaker #3: I'd like to briefly revisit the strategy where executing to drive growth and value creation in 2026 and beyond. Hayward is fundamentally a growth company, built on a strong and reliable organic growth engine complemented by disciplined inorganic opportunities.

Our commercial pool and Industrial flow control businesses. Those smaller in scale are high quality, high potential contributors to our portfolio. We are experts in water movement and Treatment Solutions focused on accelerating profitable growth in these attractive. Categories, that scale our core capabilities

Speaker #3: On the organic side, our product management and engineering roadmaps are focused on delivering innovative, energy-efficient, and highly automated solutions that elevate the pool ownership experience.

Speaker #3: This includes industry-leading technology platforms like Omnix, positioning us at the forefront of connected, intelligent pool solutions. We continue to enhance the overall customer experience through investments in sales and marketing programs, additional Hayward hubs, as well as hosting premier industry events that reinforce our leadership and deepen engagement across the channel.

We have a proven track record of expanding margins from already strong levels over the past 6 years. Our gross profit margin has expanded. More than 700 basis points from 41% to 48%. We continue to see long-term margin upside supported by 4 pillars for activity gains a richer mix of higher margin. Technology products, operating leverage from increased capacity utilization and proactive price cost management.

Speaker #3: Our commercial pool and industrial flow control businesses, though smaller in scale, are high-quality, high-potential contributors to our portfolio. We are experts in water movement and treatment solutions, focused on accelerating profitable growth in these attractive categories that scale our core capabilities.

Finally, as we've emphasized, we maintain a balance and discipline approach to Capital allocation prioritizing organic growth Investments while pursuing strategic Acquisitions that. Enhance our product portfolio, expanding our Geographic, reach and strengthening customer relationships in summary. We are confident that our strategy positions Hayward to deliver sustainable profitable growth and compelling shareholder returns in the years ahead.

With that, I'd like to turn the call over to Ivan to discuss our financial results in more detail.

Speaker #3: We have a proven track record of expanding margins from already strong levels. Over the past six years, our gross profit margin has expanded more than 700 basis points, from 41% to 48%.

Speaker #3: We continue to see long-term margin upside supported by four pillars: productivity gains, a richer mix of higher-margin technology products, operating leverage from increased capacity utilization, and proactive price-cost management.

Speaker #3: Finally, as we've emphasized, we maintain a balanced and disciplined approach to capital allocation, prioritizing organic growth investments while pursuing strategic acquisitions that enhance our product portfolio, expanding our geographic reach, and strengthening customer relationships.

Speaker #3: In summary, we are confident that our strategy positions Hayward to deliver sustainable, profitable growth and compelling shareholder returns in the years ahead. With that, I'd like to turn the call over to Ivan to discuss our financial results in more detail.

perfect in that sales, net income or adjusted EA under the prior presentation method, gross profit margin would have been 52.1% for the quarter adjustability but our increased 4%

Speaker #2: Thank you, Kevin, and good morning. Turning to slide 10, we're pleased with our Q4 financial results. Net sales rose 7% to $349 million, against a strong prior comparison of 17% growth.

Speaker #2: Mostly on price gains to offset inflation. Gross profit grew 10% to $169 million. Gross margin improved 160 basis points, year over year, and 70 basis points sequentially, to 48.5%.

Speaker #2: As discussed, we changed warranty accounting, moving costs from SG&A to cost of sales, lowering gross profit and SG&A, but not affecting net sales, net income, or adjusted EBITDA.

to 103 million with a margin of 29.4%. A decrease of 80 basis points year-over-year during the quarter, we incurred increased variable compensation reflecting, strong, annual performance 1-time, legal expenses and further investments into our sales and advanced engineering teams. The effective tax rate was 9% down from 14% adjusted the loop to DPS Rose 7% to 29 cents. Turning to slide 11 for fiscal. 2025, net sales increased 7% to 1.12 billion and we're ahead of expectations growth came from 5% price gains and 1% from 4, King acquisition,

Speaker #2: Under the prior presentation method, gross profit margin would have been 52.1% for the quarter. Adjusted EBITDA increased 4% to $103 million, with a margin of 29.4%, a decrease of 80 basis points year over year.

Speaker #2: During the quarter, we incurred increased variable compensation, reflecting strong annual performance. One-time legal expenses and further investments into our sales and advanced engineering teams.

Gross profit Rose, 11% to 539 million margin was at 170 basis points to a record 48%. Under the prior presentation method, gross margin would have shown 51.5%, we increased research development and Engineering spending by 6% to 27, million sales, General and administrative expenses, grew 14% to 247 million mainly from higher compensation and

Speaker #2: The effective tax rate was 9%, down from 14%. Adjusted diluted EPS rose 7% to 29 cents. Turning to slide 11, for fiscal 2025, net sales increased 7% to $1.12 billion, and we're ahead of expectations.

Speaker #2: Growth came from 5% price gains and 1% from cloaking acquisition. Gross profit rose 11% to $539 million, margin was up 170 basis points to a record 48%.

Speaker #2: Under the prior presentation method, gross margin would have shown 51.5%. We increased research, development, and engineering spending by 6% to $27 million. Sales, general, and administrative expenses grew 14% to $247 million, mainly from higher compensation expenses, the execution of our sales and customer care investment plans, and the integration of Cloaking.

Expenses. The execution of our sales and customer care investment plans. And the integration of clawing adjusted i-bidder is 8% to 299 million and the margin increased 30 basis points to 26.7%. The effective tax rate was 18%, adjusted diluted EPS grew, 15% to 77 cents. Moving to slide 12 for a discussion of a quarter 4, segment results, North America sales were up 8% to 309 million. Mainly from Price gains. Us sales were up 8%. Canada, was up. 10%, we saw a strong in quarter and early by demand for 2026. Gross margin was up, 80 basis points to 50.1% Europe and rest, the World Sales held approximately steady at 41 million 5% FX, gain offset, lower prices, and volume Europe sells up 7,

Speaker #2: Adjusted EBITDA rose 8% to $299 million, and the margin increased 30 basis points to 26.7%. The effective tax rate was 18%. Adjusted diluted EPS grew 15% to 77 cents.

Rest of world, down 9% gross, margin was up. 590% points to 35.8%, adjusted segment income margin up, 350 basis points to 16.3%.

Speaker #2: Moving to slide 12 for a discussion of our Q4 segment results. North America sales were up 8% to $309 million, mainly from price gains.

Speaker #2: US sales were up 8%, Canada was up 10%. We saw strong in-quarter and early buy demand for 2026. Gross margin was up 80 basis points to 50.1%.

Speaker #2: Europe and rest of the world sales held approximately steady at 41 million, 5% FX gain offset lower prices and volume. Europe sales up 7%, rest of world down 9%.

Speaker #2: Gross margin was up 590 basis points to 35.8%, adjusted segment income margin up 350 basis points to 16.3%. On slide 13 for a review of our full-year segment results.

On slide 13 for a review of our full year segment results. North America sales are up 7% to 959 million with 6%, higher pricing and cloaking contribution US and Canada up 7% and 6%. Respectively, we were pleased to see the Canadian performance continue to improve gross. Margin was at 150 basis points to 49.9%. Adjusted segment income margin was consistent with the prior year, a 32.4% Europe. And rest of World Sales were up 4% to 163 million driven by 2% volume and 2% FX gains. Europe up at 5% restored. Up 3%, gross margin was up 230% to 36.7% adjusted segment. Income margin up 280 basis points to 17.4%.

Speaker #2: North America sales are up 7% to $959 million, with 6% higher pricing and cloaking's contribution. US and Canada up 7% and 6% respectively. We were pleased to see the Canadian performance continue to improve.

Commercial and operational actions, improved performance across the segments.

Speaker #2: Gross margin was up 150 basis points to 49.9%, adjusted segment income margin was consistent with the prior year, a 32.4%. Europe and rest of world sales were up 4% to $163 million, driven by 2% volume and 2% FX gains.

Turning to slide 14 for a review of our balance sheet and cash flow. Free cash flow increased 20% as a result of improved profitability and working Capital Management. Reducing that leverage to 1.9 times and increasing liquidity by 164 million or 4.

This, strengthens our ability for continued, organic investment, strategic m&a, opportunity Pursuit Capital return while maintaining disciplined Leverage.

Speaker #2: Europe up 5%, rest of world up 3%. Gross margin was up 230 basis points to 36.7%, adjusted segment income margin up 280 basis points to 17.4%.

Speaker #2: Commercial and operational actions improved performance across the segment. Turning to slide 14 for a review of our balance sheet and cash flow. Free cash flow increased 20% as a result of improved profitability, and working capital management.

Moving to slide 15 for Capital. Allocation we balance strategic growth investment with shareholder returns while maintaining prudent leverage as an oem. We prioritize organic investment into our manufacturing. And supply chain footprint followed by strategic m&a. While remaining opportunistic for sharing purchases in the fourth quarter, we made a modest anti-dilutive repurchase of 4 million.

Speaker #2: Reducing net leverage to 1.9 times and increasing liquidity by $164 million, a 46% year-over-year increase. This strengthens our ability for continued organic investment, strategic M&A opportunity pursuit, and capital return, while maintaining disciplined leverage.

Speaker #2: Moving to slide 15, for capital allocation—gaining prudent leverage. As an OEM, we prioritize organic investment into our manufacturing and supply chain footprint, followed by strategic M&A, while remaining opportunistic for share repurchases.

Net sales are expected to increase approximately 4% and we're introducing adjusted diluted EPS. Guidance of 82 cents to 86 cents. We expect free cash flow in the region of 200 million exceeding, 100% of net income, inclusive of modest working capital Improvement, net interest, expense of, approximately 45 million and normalized effective tax rate around 24% and increased capex of approximately 40 million as we continue to focus on upgrading our operational capabilities. We're confident in our ability to execute in the current climate and remain positive. On pool industry growth, given the strength of the aftermarket with that, I'll turn the call back to Kevin

Speaker #2: In the fourth quarter, we made a modest anti-dilutive repurchase of $4 million. Turning to slide 16 to discuss our outlook for 2026, net sales are expected to increase approximately 4%, and we're introducing adjusted diluted EPS guidance of $0.82 to $0.86.

Speaker #2: We expect free cash flow in the region of 200 million, exceeding 100% of net income, inclusive of modest working capital improvement, net interest expense of approximately 45 million, a normalized effective tax rate around 24%, and increased CapEx of approximately 40 million, as we continue to operational capabilities.

Thanks Ivan. I'll pick back up on slide. 17 before closing, I want to thank the team again for their performance Heyward delivered, another strong quarter end year. We've achieved 2 consecutive years of solid growth and 6 year keggers of 7% for net sales and 10% for adjusted ibida underscoring, the strength and resiliency of our model at the same time we deliver the balance sheet to under 2 times. While investing in the business as the macro environment evolves, our unwavering confidence in the fundamentals of our aftermarket focused business and our proven ability to execute positions, Heyward to capitalize on emerging opportunities. And deliver substantial, long-term value for our shareholders. We concluded our first 100 years with

Speaker #2: We're confident in our ability to execute in the current climate, and remain positive on pool industry growth, given the strength of the aftermarket. With that, I'll turn the call back to Kevin.

Momentum. And we're energized by the many opportunities that lie ahead for Hayward with that. We're now ready to open the line for questions.

Speaker #1: Thanks, Ivan. I'll pick back up on slide 17. Before closing, I want to thank the team again for their performance. Hayward delivered another strong quarter and year.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Please limit yourself to 1 question and 1 follow-up.

Speaker #1: We've achieved two consecutive years of solid growth and six-year CAGRs of 7% for net sales, and 10% for adjusted EBITDA, underscoring the strength and resiliency of our model.

You may press star 2 if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys.

Speaker #1: At the same time, we delivered the balance sheet to under two times, while investing in the business. As the macro environment evolves, our unwavering confidence in the fundamentals of our aftermarket-focused business and our proven ability to execute positions Hayward to capitalize on emerging opportunities and deliver substantial long-term value for our shareholders.

And our first question will come from Ryan Merkel with William Blair,

Speaker #1: We concluded our first 100 years with momentum, and we're energized by the many opportunities that lie ahead for Hayward. With that, we're now ready to open the line for questions.

Hey everyone, nice job. This quarter. Um, I want to start with the fourth quarter beat. Can you talk about what the source of the upside surprise was in 4 q? And then, you know, secondarily can we use normal seasonality as we think about modeling, first quarter 26?

Speaker #3: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press *1 on your telephone keypad.

Speaker #3: A confirmation tone will indicate your line is in the question queue. Please limit yourself to one question and one follow-up. You may press *2 if you would like to remove your question from the queue.

Speaker #3: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the * keys. And our first question will come from Ryan Merkle with William Blair.

Morning, Ryan. Uh, I'll turn it over to you to talk about the seasonality. But uh, as for the fourth quarter, there were a lot of positives, and for the full year for that matter, uh, notably uh, early by, uh, it turned out well for us. Uh, we received, uh, incremental orders, uh, year on year and overall, uh, we shipped a lower percentage of those orders in the fourth quarter, uh, because of stronger.

Speaker #4: Hey, everyone. Nice job this quarter. I want to start with the fourth quarter beat. Can you just talk about what the source of the upside surprise was in 4Q, and then secondarily, can we use normal seasonality as we think about modeling first quarter '26?

In quarter, demand, despite comping off, uh, a heavy, uh, prior year due to the weather and the hurricanes in Q4 of 24. Obviously, that would result in carrying over larger order file into a q1 of 2026. You know, I think when you look at how the orders, uh,

Speaker #1: Good morning, Ryan. I'll turn it over to Ivan to talk about the seasonality. But as for the fourth quarter, there were a lot of positives, and for the full year, for that matter.

Speaker #1: Notably, early buy, it turned out well for us. We received incremental orders year on year, and overall, we shipped a lower percentage of those orders in the fourth quarter because of stronger in-quarter demand, despite comping off a heavy prior year due to the weather and the hurricanes in Q4 of '24.

fourth quarter played out, we were pleased to see, um, you know, High single digit or even in the case of Canada low, double digit year-on-year growth with us, uh, update Europe up, 7 and again, Canada. Uh, up 10. So those are, you know, 3 really big markets, important markets for us,

Speaker #1: Obviously, that would result in carrying over a larger order file into Q1 of 2026. I think when you look at how the orders or how the fourth quarter played out, we were pleased to see high single-digit, or even in the case of Canada, low double-digit year-on-year growth, with the US up 8%, Europe up 7%, and again, Canada up 10%.

And then, you know, posting record, uh, gross margin in fourth quarter at 48 and a half percent on the operating performance or things that I think we're real proud of. But, you know, like any year when you close out fourth quarter, it gives you the opportunity to reflect on the full year and with 2025 being our 100 year, uh, something that very few companies get to experience. Its its allowed me to, uh, to step back and, and take some perspective, and overall, I would just say the resilient performance of the organization, uh, is something that I'm really proud of, and I I want to thank all my colleagues for, uh, inside of Hayward. You know, the Market's not giving much right now. Uh, but the team, uh, really did deliver across

Speaker #1: So those are three really big markets, important markets for us. And then posting record gross margin in fourth quarter at 48.5% on the operating performance are things that I think were real proud of.

All major financial and strategic metrics last year as you well know uh new constructions been down 4 consecutive years and it's really been cut in half.

Speaker #1: But like any year, when you close out fourth quarter, it gives you the opportunity to reflect on the full year and with 2025 being our 100-year something that very few companies get to experience, it's allowed me to step back and take some perspective and overall, I would just say the resilient performance of the organization is something that I'm really proud of, and I want to thank all my colleagues for inside of Hayward.

At at 48% is a real highlight?

Speaker #1: The market's not giving much right now, but the team really did deliver across all major financial and strategic metrics last year. As you well know, new construction's been down four consecutive years, and it's really been cut in half from the 2021 high.

Speaker #1: Yet net sales were up 7% last year, and a similar 7% for the six years ending 2025. Delivering record gross margins at 48% is a real highlight.

Adjusted Eva. 10% kegger as I said in the prepared, remarks delivering 300 basis points over that 6 year period and you know I don't want to leave out free cash flow. Um last year it it represented nearly 150% of net income from profit performance and working Capital Improvements around specifically receivables and inventory. So you know, strategically the team's done a great job around Innovation. I spent quite a bit of time in prepared remarks. Talking about some of those great products that are finding their way into the market Investments around sales and service and not to be left out de-risking, the supply chain, uh, all posted positive outcomes for us. So, you know, as I put a bow on 2025 our Centennial, you know, I really think it does affirm hayward's core strengths around discipline, execution,

Speaker #1: Adjusted EBITDA grew at a 10% CAGR, as I said in the prepared remarks, delivering 300 basis points over that six-year period. And I don't want to leave out free cash flow.

Speaker #1: Last year, it represented nearly $150% of net income, from profit performance and working capital improvements around specifically receivables, and inventory. So strategically, the team's done a great job around innovation.

Cycle tested business model that's tied to the installed base and aftermarket demand, as well as implementing a growth strategy. That's delivering results. So a lot to be proud of. Um, and again I I applaud the team for such strong performance around seasonality season out. Yeah, good morning Ryan. Uh, we expect a normal year. I mean, as you know, q1 and Q3 are the lower top and bottom line result periods for us and Q2 and Q4.

Speaker #1: not. But at the end of the day, we still remain a very light CapEx business, even at these slightly increased levels. So it's not going to be a large consumer of cash, and as we made in our prepared step forward in the operational capabilities of our US footprint.

Of the hiring result, periods. Gross, margins. Uh, we expect a modestly expand in 2026 with a greater gains. I would say in the second half.

Based on the cumulative effects of the operational improvements will deliver in the year. So a normal seasonal year with q1 and Q3 being lower 22, Q4 being higher.

Got it. All right, well, thanks for all that color. That's great. And then just a quick follow-up on the, on the guide. Can you just talk about your assumptions for aftermarket new pool? And if there's any channel Dynamics, we need to think about, uh, that would be helpful. Thanks.

Yeah, from a channel standpoint. I don't think there's anything really to note there, we felt good. Uh, about a year ending inventory levels from a days on handstand point across our largest, uh, Channel Partners. Uh

You know, no Shadow inventory, uh, from what we can tell. And I just think that we've all gotten uh, much better about managing those inventory levels coming through the co experience, uh, a few years back, you know? As for as for demand, uh, that's informing. Uh, the guide. Um, I would say it's, you know, fairly

Fairly normal demand for what we've seen in, in, in 2025.

You know, we're not calling for new construction. Um, to necessarily get get better. Uh, I don't think that would be prudent. Uh, at this point with what we see and we continue to see the aftermarket or we expect the aftermarket to continue to perform uh, particularly with some of the new products that we're bringing that uh that I think in can offer solutions to the aftermarket for upgrade uh and automating their pad.

Great. Thanks for that. Best of luck this year.

Thanks Ryan.

Our next question comes from Rob, wartimer with melia's research.

Rob.

Since we don't have a response, we'll go next to Jeff Hammond with KeyBank.

Sorry we'll go to Nigel, Co with Wolfe research.

Oh okay, the phone back to Nigel here. Okay, that's good. Uh, good morning guys. Um many just just going back to the 1q. Um comment just wondering if there's any obviously we've had some pretty severe weather uh in the Northeast and uh you know, the children and and and and the South as well. So um any impacts to note there and maybe good or bad impacts to know to

And just want to confirm Kevin you you mentioned that uh there's a bit more um waiting on the early buy program in 1 Q, the 4q this year.

It's been a rough winter. Um, you know, I would say, several weeks ago, there were some um, some frozen conditions in some markets that aren't accustomed to that by and large. The team is seeing very little in terms of equipment replacement. Coming from that.

Uh, I don't think a great deal of work, uh, is done this time of year in the north beast, but a very little, will be done, uh, until this uh, uh, a storm passes. Um, so it's, you know, I would say overall the uh, the winter has been more severe through the first 2 months.

Uh, of 2026 than what we have seen in uh, in Prior years.

Okay. Thanks Kevin. Um, and then maybe just a quick update on the, um, uh, table situation. That is obviously being some changes, uh, ongoing. Um, and then just brings up the speed on the supply chain, uh, realignment as well.

Sure. Uh, good morning Nigel uh, I mean, look, Terrace in 25. It was the challenging year. I think, at this point we are declaring Victory on that specific battle but obviously a new year potentially new challenges. Uh, what I would say though, before I get into the fullness of the answer here is we have to call out just how extremely proud Kevin, and I are of the entire Heywood team on the, on the way they handled, I'd say tariffs in 2025. It took the entire team to deliver success here. A lot of moving.

The pieces, and we declared Victory with a record Rose margin at the end of 2025. But getting back to the question look, we've demonstrated we can manage uh

Offsetting tariffs with price increases and then aggressively focusing on operational improvements. You know, we have reduced our dependency uh on China uh from 10% entered to approximately 3% by the end of the year, in terms of us cost of sale exposure to China. Um,

It comes with a cost. You know we we we do recognize that uh moving out of China comes with an incremental cost is probably costing us incrementally, 5 to 6 million or about 1 and a half percent pricing cost, increase in cost to sales. Um we're still digesting I would say the recent scotus ruling and

And the response from the president. Uh, but uh,

based on initial view of how tariffs are looking from those comments, we believe we've covered the exposure, uh, in our guidance and don't see any additional threats and puts and takes by country. But we believe on a net basis. We're fully covered within the the guidance that will be given. I think what we've demonstrated Nigel is Paris have become for us. A managed variable and not a year-by-year structural headwind. We we we can deal with it.

Um we previously mentioned how we're handling our Chinese operation, we'll downsize that facility folks that are listening to this call that are a great team and will recalibrate that facility for service our rest of the world business.

Great. Thanks guys.

And as a reminder, that is star 1, if you would like to ask a question, we'll go next to my calerin with beard.

Hey, good morning guys. It's pesan for. Mike. Wanted to talk a little bit about the increase in Investments here. Obviously a notable step up in capex. You talked about the increase investment in rdne talked about the increase investment in customer success and operations. Um, maybe just give us a little bit more color whereas the spending going particularly on the capex side. It's a it's a pretty notable job. Um and then any color you can give on the um raised Investments that you, you're spending broadly at the centralized level.

Yeah, let let me take. Uh, let me take the capex and then turn it over to Kevin. We've communicated peso the last couple of years that were likely to step up campex investment program. Historically, it's been 2 to 3% of Revenue. We've communicated. We have ambition to upgrade our us manufacturing footprint. And we're doing that. We're we're doing it sequentially, uh, around the 3 sites that we have, we took a step.

32026 in how we communicate success around what we're doing here. But at the end of the day, we still remain a very light capex business even at these slightly increased levels. So it's not going to be a large consumer of cash. And as we made in our prepared, remarks cash flow for 2026 is still going to be about 100% on net income, approximately 200 million. So it's not a a large consumption of cashier but it's a great step forward in the operational capabilities of our us footprint.

as for the Investments has, uh,

uh, yeah, we've really been consciously investing, uh, back into the business, I'd say, over the last couple of 18 months or so specifically around a few key areas.

Around R&D and then around the customer experience, sales and marketing. We we think it's the right decision to invest in the downturn. So we're better positioned to benefit when the, uh, when the market, uh, recovers as for early indications, um, in terms of, uh, feedback and and Payback

you know, you saw in the prepared remarks

Uh, a long list of of new products that are hitting the market that are, that are really uh, Innovation breakthroughs as well as specifically targeting.

The established.

Here. But at the end of the day, we still remain a very light capex business even at these slightly increased levels. So it's not going to be a large consumer of cash. And as we made in our prepared remarks, cash flow for 2026 is still going to be about 100% of net income, approximately $200 million. So it's not a large consumption of cash here, but it's a great step forward in the operational capabilities of our US corporate.

Aftermarket out there. Some of these are new category entrance for us. A 4 horsepower is not a product that we participated in. Uh, so that's kind of Blue Sky opportunity for us. And we've really been out of the pressure cleaner market for some time as well. On top of that though, more drop in replacement for, uh, for competitive product in the aftermarket, uh, you know, is all the results of that, uh, investment as for the front end. Um, you know, we have some great feedback, uh, coming out of the field around some dealer conversions, uh, around, uh, product training. You heard me talk in the prepared remarks about the, uh, the establishment of the hubs which are fit for purpose training centers, uh, in large markets. Uh, you know, so we believe that this is Ari reinforcing our Innovation reputation. And it's uh it's it's it's having uh the service trade out there.

Best trained to uh, to handle Hayward product and install Hayward product into the marketplace.

Great. That's super helpful and then just following up on the new product. Um, you know, where do we stand from a Vitality index perspective? Um, where are we looking to go? And then how does the

Making of omniax and automation standard impact, the ASP of the product portfolio.

Yeah, because I I'll touch on the vitality and you know, we continue to to make improvements there. Uh

As we mentioned, in our prepared remarks, we have a lot of good new products on the Slate that will contribute to revenue and profitability in 2026 and it will Elevate up uh Vitality index year-over-year. You know, we remain focused on investing, we've stepped our, our DNA uh investment protocol inside the income statement, as well as on the balance sheet, supporting our facilities with the necessary assets to get after some of these new uh product platforms. So we're we're very encouraged now at the momentum that we're gaining in terms of uh products that have been introduced in the last 3 years, which are in our Revenue profile for 2026.

You know, as for Omni X and how it plays into a fully connected, uh, pad out there. You know, we believe that that, uh, majority of new builds will continue to go with a fully wired, fully connected, you know, with an omni control panel installed at that time, you know, but I think that Omni X also plays to the affordability concern out there that if someone wants to still have an automated pad at time of new build that they can do that, um, you know, a bit a bit more affordably than maybe the full fully connected product, uh, uh, uh, uh, pad out there. So, um, you know, we love bringing new products into this ecosystem and bringing automation to the what we estimate to be about 3 and a half million, uh, in ground pools in the US that don't have any form of of um, of connectivity or automation to it. And that's an enormous uh, Tam.

Expansion opportunity, uh, for us and for the whole industry to bring automation.

Great, thanks. I'll pass it on.

And moving next to Brian Lee with Goldman Sachs.

Hey, guys, this is Tyler besan for Brian, thanks for taking our questions. Um, just first on your 4%, sales, growth guidance for the year, you know, how much of that is predicated on a return to positive, volume growth versus continued price increases.

Yeah, I mean, we we've we've assumed in terms of guidance approximately 3%, global net price gain year-over-year and uh modest uh volume growth. The pricing will be a little bit higher inside the United States and outside the United States where we see more modest pricing increases. As you know, we don't realize all the price given discounts, but plus 3%, price of modest volume growth year on year with FX uh, being somewhat neutral.

Super helpful, and while you guys expanded gross margins, uh, in the quarter, uh, adjusted even in margins declined, a bit. And you partially attributed that to, you know, targeted, strategic growth Investments. It should be expected these Investments to persist throughout 26. And then, I also noticed you didn't provide any ibida guidance for the year or you plan to provide that later in the year or directionally. Are you expecting either to increase year-over-year?

Let let me address the first part of thought. Let me just almost the entirety of the question. Inside Q4 the majority of the dilution to uh the margin on adjusted debit are was attributable to high variable compensation for both management bonus and sales incentives. Following, you know, a great close to the year. You know, we beat Topline, we beat bottom line and we beat our balance sheet targets the full year. So this higher variable compensation, I would say, diluted margins in the queue by approximately 130, uh, basis points. Um, that won't necessarily repeat as we step into the year Target to reset. Uh, and there are variable compensation, uh, is reset. Uh, also in the course, we recorded cost associated with the settlement of sudden litigation. Uh, and then as you mentioned, we uh, have continued to invest, uh, in our research development and then

Engineering and our sales um uh Team infrastructure. And we do expect to leverage that uh cost space uh in uh in 20206. Um

Super helpful and while you guys expanded gross margins, uh, in the quarter uh just an even and margins declined a bit and you partially attributed that to your targeted, strategic growth Investments. It should be expected these Investments to persist throughout 26. And then, I also noticed you didn't provide any ibida guidance for the year or you plan to provide that later in the year or directionally. Are you expecting either to increase year-over-year?

To the first part of all. Let me just almost the entirety of the question. Inside Q4 the majority of the dilution to uh,

I would say in terms of the guidance, you know, we have matured here as as an organization and we do believe the adjusted delivered EPS metric is a more complete and accountable measure for us. But I, I do want to be clear, you know, we've we've guided, uh, adjusted diluted EPS up to 6 to 12, uh, at the midpoint 9% growth. It is squarely driven on operational, performance. We're not assuming any material changes in the capital structure, uh, it's about execution efficiency and margin delivery. Inside the income statement, the aggregation of depreciation, interest expense and tax inevitable dollars is fairly comparable year over year with uh, with 2025 appreciation is higher given, we're investing in our facilities interest expenses lower, given the accretion of cash, onto the balance sheet at the interest earnings on that, on our tax charged on the business. In Dollar Wise will be high, but the effective tax rate will be lower.

Super helpful. Thank you.

moving on to S boards, ski with Jeffree

The margin on adjusted debits are was attributable to higher variable compensation for both management burners and sales incentives. Following, you know, a great close to the year. You know, we beat Topline, we beat bottom line and we beat our balance sheet targets the full year. So this higher variable compensation, I would say, diluted margins in the queue by approximately 130, uh, basis points. Um, that won't necessarily repeat as we step into the year Target to reset. Uh, and therefore variable compensation, uh, is reset. Uh, also in the course, we recorded cost associated with the settlement of certain litigation. Uh, and then as you mentioned, we uh, have continued to invest uh, in our research development and engineering and our sales um uh Team infrastructure. And we do expect to leverage that uh cost space uh in uh in 2020.

6. Um,

Uh, good morning. Uh, this is James on for, uh, sorry. Uh, I got dropped out in the call. So sorry if this has been already asked, but can you kind of update us on what you're hearing from dealers out there? Like how much bad plug do they hold? And what do they tell you about kind of all devices and for 2027 since 1 of your contributors

Just kind of talked about like no recovery into 2027 as well. So kind of just wanted to hear your thoughts on it.

I would say in terms of the guidance, you know, we have matured here as as an organization and we do believe the adjusted deleted, EPS metric is a more complete and accountable measure for us. But I do want to be clear, you know, we've we've guided, uh, adjusted diluted EPS up to 6 to 12, uh, at the midpoint 9% growth. It is squarely driven on operational, performance. We're not assuming any material changes in the capital

Structure, uh, it's about execution efficiency and margin delivery. Inside the income statement, the aggregation of depreciation, interest expense intact. Inevitable dollars is fairly comparable year-over-year with, uh, with 2025 appreciation is higher given we're investing in our facilities, interest expense is lower given the accretion of cash onto the balance sheet and the interest earnings on that. Our tax charged on the business otherwise would be higher, but the effective tax rate will be lower.

Super helpful. Thank you.

Moving on to S boards, ski with Jeff.

Any any step level uh change from year, ending 25 into 2026. Uh, but in terms of leads uh it was, it was prompting some general cautious optimism heading into uh, 2026. I wasn't quite clear on the question around 2027 or

Yeah, it was more. So, like, what what does like your discussion with like dealers? Tell you about potential, like, 2027 all the way by students, but like, I, I think you kind of answered it. So,

Uh, good morning. Uh, this is James on for us. Uh sorry. Uh I got dropped out during the call. So sorry if this has been already asked, but can you kind of update us on what you're hearing from dealers out there? Like how much bad laws do they hold? And what do they tell you about kind of Alibi season for 2027 since 1 of your exhibitors can talk about like no recovery into 2027 as well. So kind of just wanting to hear your thoughts on it.

Yeah, I'm not sure that I would have, uh, I would have good insight into, uh, 2027. Uh, at this point with so much of 2026 yet to, uh, yet to play out.

Um, you know, we—in the first quarter—we do have a lot of interactions with dealers. Uh, regional trade shows, the big one in Atlantic City. Uh, there are several dealer, uh, buying group shows, some of the distributors have retail summits, etc. I would say that there's

Right. Right, right. Yeah. Thanks for the caller and I I guess on the full mix here, uh, can you kind of provide what higher end versus lower end full? Mix is currently looking like versus like historical average and if lower end toll comes back in 2026 or 2027, it's just we expect some pressure on margins or good volume incremental like off that. That

around 2027 or

Yeah, it was more. So, like, what what does like your discussion with like dealers? Tell you about potential, like, 2027 all devices, but but I, I think it kind of answered it, so,

I would say in general, in terms of new construction, um, you know, the whole industry is pretty aligned with the fact that call it, uh, you know, the 60,000 I'm rounding up from what the current estimates are in terms of using ground, uh, construction. That the makeup of that, uh, of that of, of that build count last year was largely kind of mid to higher end and that's been the case for a few years. As we see with the ticket value of those, um, of those uh built, you know, we would we would like to think that with some economic macro Improvement. Um, that more of that entry level pool, uh would would become a part of the mix.

Yeah, I'm not sure that I would have, uh, I would have good insight into, uh, 2027. Uh, at this point, with so much of 2026 yet to, uh, yet to play out.

Um, you know, I I would say content, um, from our perspective might be a bit less. But in terms of margin, you know, I would say the the uh, the equipment that goes on that on that entry-level pool has a similar margin profile uh, to the higher end. So I wouldn't I wouldn't assume that that would throw off margin pressure. When that segment of the new build Market uh rebounds

Right, right. Yeah, thank you for the caller and I I guess on the full mix here. Uh, can you kind of provide what's higher end versus lower end? Full. Mix is currently looking like versus like historical average and if lower end toll comes back in 2026 or 2027, should we expect some pressure on margins or good volume incremental like off that? That

Yeah, I just add to that. I mean, most of our products have similar, structural gross margins. Uh, and then with the additional volume if and when this business does return, um,

We'd expect to get leveraged across the fixed cost base within the business, but within the factories, and AC the installed sgna base.

Great. Thanks for taking the question.

Sure.

We'll take our next question from Rob, wartimer with melas.

Hey, good morning. Sorry about before our phones went down. I'm not sure why. Um,

I would say in general, in terms of new construction, um, you know, the whole industry is pretty aligned with the fact that call it uh, you know, the 60,000 I'm rounding up from what the current estimates are in terms of using ground, uh, construction. That the makeup of that, uh, of that of that build count last year was largely kind of mid to higher end and that's been the case for a few years as we see with the ticket value of those, um, of those

Uh, build. You know, we would we would like to think that with some economic macro Improvement um that more of that entry level pool uh would would become a part of the mix.

Good morning. So questions, just a little bit on on technology, connected pools benefits and so on. So was there anything in technology development and competitive front in your own data that, you know, made this a good moment to invest a little bit more, um, and, and Omni accent specific and then more generally, could you just talk obviously as a consumer, the benefits to having, you know, automated pools are great, but maybe just recap, you know, differences between a fully wired, fully connected, automated pool and what, you know what, maybe on the X to do, and what benefits that it has for you. Thank you.

Um, you know, I I would say content, um, from our perspective might be a bit less, but in terms of margin, you know, I would say the the uh the equipment that goes on that on that entry-level pool has a similar margin profile uh to the higher ends. So I wouldn't I wouldn't assume that that would throw off margin pressure. When that segment of the new build Market uh rebounds

Yeah, I just add that to that. I mean, most of our products have similar structural growth margins, uh, and then with the additional volume if and when this business does return, um,

Yeah, sure. Um, you, you know I mean we we're very proud of the uh, of the ratings uh, that that are on these systems receives online. And I think that's really reinforced from, uh, voice of customer that we get back. Uh, you know, we do believe, I think, as an industry in in total, we have identified this upgrading and automation.

We'd expect to get leverage across the fixed cost space within the business, both within the factories and across the installed SG&A base,

Great. Thanks for taking the question.

Sure.

We'll take our next question from Rob, wartimer with Melius.

Hey, good morning. Sorry about before—our phones went dead, I'm not sure why. Um, good morning. So, question is just a little bit on technology, connected pools, benefits, and so on. So, was there anything in technology development and competitive front in your own data that, you know, made this a good moment to invest a little bit more, um, and—and I'm the access specific.

And then more generally, could you just talk obviously as a consumer, the benefits to having, you know, automated pools are great, but maybe just recap, you know, differences between a fully wired, fully connected, automated pool and what, you know what, maybe on the X to do and what benefits that has for you. Thank you.

Across the, the equipment that is, that is on that, uh, that pad. So, um, there was a second part of your question, which, uh, I

Yeah, sure. Uh, you know, I mean, we we're very proud of the, uh, of the ratings, uh, that that our Omni system receives online. And I think that's really reinforced from, uh, voice of customer that we get back. Uh, you know, we do believe, I think, as an industry in in total, we have identified this upgrading and automating of the installed base as a, as an opportunity.

If you could remind me the second part of the question, I think you touched on it. What was there? Anything that made this the right moment for investment and then just in general you know what the benefits to you are because consumers see huge benefits, you get maybe more pull through more share more, more dealer engagement. I'm just just looking for a general overview of how you benefit from that technology. Thanks, yeah. Yeah. I really do think this is an opportunity to, to, to upgrade that aftermarket. Um, and I think the way that that we've positioned the, uh, the universal comes, uh, capability in our variable speed pump, really broaden the, uh, the funnel that it, uh, that it doesn't just have to be a Hayward pad. Um, that could take on that variable speed pump, uh, in the future that it's that. It's a more wide open uh uh, aftermarket opportunity for us. So, we're going to continue talking in future earnings calls about additional products.

Um, that's uh, that's available and, you know, we really felt it's time for us to, to give the marketplace, uh, more tangible opportunities, more affordable opportunities, uh, to do that and really doing it at 1 piece at a time as natural break, fix occurs through the natural course of of enjoying your pool. Uh, I think that's a great entry, uh uh, point to get in and bring automation, you know, frankly having you know, up until very recently, we had a single variable speed pump, which is now, the funnel has broadened robbed with all variable speed pumps. Now, having the Omni X capability and that Universal comes, which I spoke about which allows you to try

That we'll be bringing the Omni X capability that you can again build piece at a time. Uh, build out the network or the, uh, or the ecosystem to have full-fledged automation, uh, in a, in a pool that may be 10 years, uh, old or older.

Thank you.

And moving on to Jeff Hammond with keybanc capital markets.

Hey, good morning guys, disconnected as well. Um,

I noticed in your Investments, you know internal and external you mentioned kind of industrial flow which is a small piece of your business and just

it's not a, not a business you talk about much but just wondering, you know, how you're leaning in on that and and should we expect some external growth Focus their

It's a great question, uh, and I'm glad you picked up on it because it's a business that we're spending a lot more time, understanding what it can become.

Uh, we spent a lot of time in 2025, you know? Um,

Market consumers. See, huge benefits. You get maybe more pull through more share more, more dealer engagement. I'm just just looking for a general overview of how you benefit from that technology. Thanks, yeah. Yeah. I really do think this is an opportunity to, to, to upgrade that aftermarket. Um, and I think the way that that we've positioned the, uh, the universal comms, uh, capability in our variable speed pump, really broadened the uh, the funnel that it uh, that it doesn't just have to be a Hayward pad. Um, that could take on that variable speed pump uh, in the future that it's that. It's a more wide open. Uh, uh,

Aftermarket opportunity for us. So we're going to continue talking in future earnings calls about additional products.

That will be bringing the Omni X capability that you can again build piece at a time. Uh, build out the network or the, uh, or the ecosystem to have full-fledged automation, uh, in a, in a pool that may be 10 years, uh, old or older.

Thank you.

And moving on to Jeff Hammond with KeyBanc Capital Markets.

You know, understanding how that could, how that could grow when we look at it, broadly, uh, Jeff, we see ourselves as experts in water management, whether it's filtration whether it's filtering, treating, uh, Etc. And, you know, for our first 100 years, we've really focused that capability, you know, around residential and commercial pools. And we are, we are trying to determine how that could be leveraged potentially into some other uh, end markets. Nothing, you know, really to debut. Uh,

Hey, good morning guys, disconnected as well. Um,

at this point but uh, it is getting more of more of the leadership teams time and we're seeing if, if this

I I noticed in your Investments, you know, internal and external you mentioned kind of industrial flow which is a small piece of your business and just it's not a not a business you talk about much but just wondering, you know, how you're leaning in on that and and should we expect some external growth Focus their

It's a great question, uh, and I'm glad you picked up on it because it's a business that we're spending a lot more time, understanding what it can become.

You know, call it roughly 50 million dollar business that's extremely profitable, by the way. Um, can become something bigger and more important. Obviously, you know, broader flow control fluid management, you know, operates in much larger Tams um than the pool industry. So those are the things that have that have that have grabbed our attention and uh, and that we're spending time determining, um,

We spent a lot of time in 2025, you know? Um,

Can it be a bigger platform inside of our business?

Great great. And then just back on the the the 4 horsepower pump and the pressure cleaner. Can you just talk about the The Tam for those markets? And what you think entitlement is in terms of kind of market share once you've immature in those spaces,

You know, understanding how that could—how that could grow when we look at it broadly, uh, Jeff, we see ourselves as experts in water management, whether it's filtration, whether it's filtering, treating, uh, etc. And, you know, for our first 100 years, we've really focused that capability, you know, around residential and commercial pools. And we are—we're trying to determine how that could be leveraged potentially into some other...

Yeah, I mean we have uh I'll keep our Ambitions maybe to myself but I will identify what we believe the uh um those Tams to be uh, not necessarily in dollars. But in the 4 horsepower range, We Believe somewhere around a quarter of all pumps are 3 and a half, horsepower or larger.

Uh and markets nothing, you know, really to debut uh, at this point. But uh, it is getting more of more of the leadership teams time and we're seeing if, if this

A 100,000 units per year. Um, that's about a fifty million dollar. I'm using round numbers here, Jeff but it's a, it's an opportunity that we don't have in either of these 2 product categories.

Um, any any real volume in our current, uh, financials. So that's what has me. So excited.

For us, we brought great performing product to the marketplace, uh, and now it's now it's our, our job to get it promoted, uh, and educate the marketplace on some of the features and benefits of these new, uh, new products that we've introduced.

Okay, appreciate it. Thanks.

and moving next to Andrew, Carter, with stifle

Hey, thank you morning. I wanted to ask first off, just to confirm your adjusted EPS guidance. For the year does not include any sharing purchase

And also, our math suggests, your leverage will drop into the low 1 in 20 in 2026. Is that correct? Well, I guess, could you refresh? But could you remind us of kind of your cash flow priority?

Beyond.

Um, organic investment.

Yeah, uh, good morning, Andrew. Uh, yeah, absolutely. I adjusted the loot to the EPS guidance of 6 to 12 does not contemplate, any material change in the capital structure of the business. Uh, this is about execution of operating performance of the business. Topline growth of 4%, modest gross margin expansion. Further sgna leverage, good operating profitability growth in the business. Um,

In terms of the second part of your question. The, uh, yeah. Well, look, the signaling that we're putting out here with 200 million dollars worth of cash flow in the year will

The balance sheet right now. Kevin, as we mentioned throughout the call, uh, opportunities that exist, uh, inside m&a, um, nothing imminent, there will continue to update you as we go through the year. We've got a little bit higher, capex. Uh, but yeah, we're delivering the balance sheet into a really healthy position absent. Any other deployment,

And then the very last part of the question, Andrew.

Uh, I think oh, I know what it was. It was about the, uh, priorities for cash flow Beyond

Kevin Holleran: operating profitability growth in the business. In terms of the second part of your question, Well, look, the signaling that we're putting out here with $200 million worth of cash flow in the year. The balance sheet right now. Kevin's been mentioning throughout the call, opportunities that exist inside M&A. Nothing imminent there. We'll continue to update you as we go through the year with a little bit higher CapEx. We're delivering the balance sheet into a really healthy position, absent any other deployment. The very last part of the question, Andrew?

Kevin Holleran: operating profitability growth in the business. In terms of the second part of your question, Well, look, the signaling that we're putting out here with $200 million worth of cash flow in the year. The balance sheet right now. Kevin's been mentioning throughout the call, opportunities that exist inside M&A. Nothing imminent there. We'll continue to update you as we go through the year with a little bit higher CapEx. We're delivering the balance sheet into a really healthy position, absent any other deployment. The very last part of the question, Andrew?

Yeah, so look, I mean Capital allocation remains as we've previously communicated, we're always going to put first dollar back into the business in terms of upgrading our facilities through capex and making sure that they're well-maintained. Second dollar will go to to m&a Opportunities. And uh, you know, with the balance sheet in the position, it is right now. Uh, we feel, we feel good. We have a lot of optionality. And as Kevin mentioned, you know, we've we've, we've done really good here with the commercial business. We'll continue to look at tack on opportunities in pool, and we're beginning to to look a little bit into the flow control space, where we see very credible large cams that align with our core competency. So a lot of great optionality when it comes to m&a and then we remain opportunistic around, Cherry purchases, you know, we uh, reinstituted a 450 million share purchase program, uh, toward the end of last year, we've

Executed a little bit of that. In Q4, in terms of anti-dilutive sharing purchases, uh,

[Analyst]: I know what it was. It was about the priorities for cash flow beyond organic investment.

[Analyst]: I know what it was. It was about the priorities for cash flow beyond organic investment.

Kevin Holleran: Yeah. Look, I mean, capital allocation remains as we previously communicated. We're always gonna put first dollar back into the business in terms of upgrading our facilities through CapEx and making sure that they're well-maintained. Second dollar will go to M&A opportunities. You know, with the balance sheet in the position it is right now, we feel good. We have a lot of optionality. As Kevin mentioned, you know, we've done really good here with the commercial business. We'll continue to look at tack-on opportunities in pool, and we're beginning to look a little bit into the flow control space, where we see very credible large TAMs that align with our core competency. A lot of great optionality when it comes to M&A. Then we remain opportunistic around share repurchases.

Kevin Holleran: Yeah. Look, I mean, capital allocation remains as we previously communicated. We're always gonna put first dollar back into the business in terms of upgrading our facilities through CapEx and making sure that they're well-maintained. Second dollar will go to M&A opportunities. You know, with the balance sheet in the position it is right now, we feel good. We have a lot of optionality. As Kevin mentioned, you know, we've done really good here with the commercial business. We'll continue to look at tack-on opportunities in pool, and we're beginning to look a little bit into the flow control space, where we see very credible large TAMs that align with our core competency. A lot of great optionality when it comes to M&A. Then we remain opportunistic around share repurchases.

And, you know, again, we remain opportunistic that. But first of all, we'll be back into the business, second dollar to to m&a. And and while I'm on this topic, I just want to come back and reaffirm to Tyler look adjusted. He with that is an important metric for us and we will continue to report a just to be with our as we step through the year. But we're anchoring on adjusted diluted EPS. As our guidance metric will be believed that holds us to a higher standard as an organization. But we will continue to report adjustability with our inside our earnings materials. As we step through the year,

Thank you. Second question, uh, for your 10K. There's a pretty mid notable shipment difference between your top 2 customers. Some of that be market share, but I guess I would ask in terms of inventory levels. Are there is there a big difference in approach? And I guess would you also kind of comment overall, where, uh, Channel inventory levels are?

Are today.

Kevin Holleran: You know, we reinstituted a $450 million share repurchase program toward the end of last year. We've executed a little bit of that in Q4 in terms of anti-dilutive share repurchases. You know, again, we remain opportunistic there. First dollar will be back into the business, second dollar to M&A. While I'm on this topic, I just wanna come back and reaffirm to Tyler, look, adjusted EBITDA is an important metric for us, and we will continue to report adjusted EBITDA as we step through the year, but we're anchoring on adjusted diluted EPS as our guidance metric. We believe that holds us to a higher standard as an organization, but we will continue to report adjusted EBITDA inside our earnings materials as we step through the year.

Kevin Holleran: You know, we reinstituted a $450 million share repurchase program toward the end of last year. We've executed a little bit of that in Q4 in terms of anti-dilutive share repurchases. You know, again, we remain opportunistic there. First dollar will be back into the business, second dollar to M&A. While I'm on this topic, I just wanna come back and reaffirm to Tyler, look, adjusted EBITDA is an important metric for us, and we will continue to report adjusted EBITDA as we step through the year, but we're anchoring on adjusted diluted EPS as our guidance metric. We believe that holds us to a higher standard as an organization, but we will continue to report adjusted EBITDA inside our earnings materials as we step through the year.

Question, broadening it to uh, more uh, distribution and channel partners that we get, uh, data from. We would say that we feel, uh, that our inventory. Exiting 2025 is in a very, uh, healthy spot to be able to, uh, to serve the upcoming season. Andrew, uh, I did just want to Circle back because a colleague here pointed out to me when I was answering. Jeff, Hammond's question around the 4 horsepower. I think I said all pumps installed, what I meant to say was all, variable speed pumps because there's still a number of single speed pumps out there. Uh, that I wanted to make sure I clarified on. So thanks for. Thanks for that.

Great. I'll pass it on. Thank you.

[Analyst]: Thank you. Second question. Per your 10-K, there's a pretty mid notable shipment difference between your top two customers, some of that being market share. I guess I would ask in terms of inventory levels, is there a big difference in approach? I guess, could you also kind of comment overall where channel inventory levels are today? Thanks.

[Analyst]: Thank you. Second question. Per your 10-K, there's a pretty mid notable shipment difference between your top two customers, some of that being market share. I guess I would ask in terms of inventory levels, is there a big difference in approach? I guess, could you also kind of comment overall where channel inventory levels are today? Thanks.

Thanks. Thanks.

And that's now concludes our question and answer session. I would like to turn the floor back over to Kevin Halloran for closing comments.

Kevin Holleran: I would say we don't see any major difference in terms of inventory approach between the two large partners that you're referring to. The second part of the question, broadening it to more distribution and channel partners that we get data from, we would say that we feel that our inventory exiting 2025 is in a very healthy spot to be able to serve the upcoming season, Andrew. I did just want to circle back because a colleague here pointed out to me when I was answering Jeff Hammond's question around the four horsepower. I think I said all pumps installed. What I meant to say was all variable-speed pumps, because there's still a number of single-speed pumps out there that I wanted to make sure I clarified on.

Kevin Holleran: I would say we don't see any major difference in terms of inventory approach between the two large partners that you're referring to. The second part of the question, broadening it to more distribution and channel partners that we get data from, we would say that we feel that our inventory exiting 2025 is in a very healthy spot to be able to serve the upcoming season, Andrew. I did just want to circle back because a colleague here pointed out to me when I was answering Jeff Hammond's question around the four horsepower. I think I said all pumps installed. What I meant to say was all variable-speed pumps, because there's still a number of single-speed pumps out there that I wanted to make sure I clarified on.

Thanks Carrie. I want to thank all our employees and partners around the world, your dedication and hard work. Have been essential, not just in, closing out a strong year, but in helping us conclude hayward's. First hundred years with real momentum. We're excited for what's ahead. As we begin our next Century. If you have any follow-up questions, please reach out to our team. We appreciate your continued interest in Hayward to look forward to speaking with you again, on our next earnings, call Terry. You may now and the call.

Thank you, ladies and gentlemen, thank you for your participation. This does conclude today's teleconference, you may disconnect your lines and have a wonderful day.

Kevin Holleran: Thanks for that.

Kevin Holleran: Thanks for that.

[Analyst]: Great. I'll pass it on. Thank you.

[Analyst]: Great. I'll pass it on. Thank you.

Kevin Holleran: Thanks, Andrew.

Kevin Holleran: Thanks, Andrew.

Kevin Holleran: Thanks.

Kevin Holleran: Thanks.

Operator: This now concludes our question and answer session. I would like to turn the floor back over to Kevin Holleran for closing comments.

Operator: This now concludes our question and answer session. I would like to turn the floor back over to Kevin Holleran for closing comments.

Kevin Holleran: Thanks, Carrie. I wanna thank all our employees and partners around the world. Your dedication and hard work have been essential, not just in closing out a strong year, but in helping us conclude Hayward's first 100 years with real momentum. We're excited for what's ahead as we begin our next century. If you have any follow-up questions, please reach out to our team. We appreciate your continued interest in Hayward and look forward to speaking with you again on our next earnings call. Carrie, you may now end the call.

Kevin Holleran: Thanks, Carrie. I wanna thank all our employees and partners around the world. Your dedication and hard work have been essential, not just in closing out a strong year, but in helping us conclude Hayward's first 100 years with real momentum. We're excited for what's ahead as we begin our next century. If you have any follow-up questions, please reach out to our team. We appreciate your continued interest in Hayward and look forward to speaking with you again on our next earnings call. Carrie, you may now end the call.

Operator: Thank you. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

Operator: Thank you. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.