HAYW

Hayward's FY2025 numbers tell a clean operating-leverage story on top of a still-soft pool aftermarket: revenue +6.7% to $1.12B, but gross margin expanded 170bps to 48.0% and operating margin 90bps to 20.8%, driving net income +27.7% to $152M and diluted EPS +25.9% to $0.68. The MD&A is explicit that the 6.7% top-line is 5.4% price + 1.1% from the ChlorKing acquisition + 0.2% FX, with volume flat — so the bull case rests on pricing power and mix, not unit demand recovery. Margin gains came from 'positive net price, decreased warranty expenses and operational efficiencies,' partially offset by 'higher net tariffs and inflation,' which is exactly the dynamic management has been pitching.

The balance sheet is materially better than it looks at first glance. Long-term debt edged down to $960M while cash jumped 67.7% to $330M, and interest expense fell 19.1% to $50.3M thanks to 'lower interest rates, reduced debt as a result of the repayment of the Incremental Term Loan B principal balance in April 2024 and increased interest income.' Operating cash flow grew 20.7% to $256M against just $28.7M of capex — that's ~$227M of free cash on a $3.42B market cap (~6.6% FCF yield), well above the 23.2x earnings multiple would suggest. Liabilities/equity of 0.98x and current ratio ~2.9x are comfortable.