Hayward Holdings (HAYW) Q2 FY26 earnings call: guidance and Q&A

Asked for an estimate of sellout to customers, how it varies by customer, and current/projected days of inventory in the channel compared to pre-COVID levels, especially in light of competitor news.

Management stated channel inventory was very normal and balanced at the end of Q2, consistent with seasonal patterns. Q2 was a big sellout quarter, with expected net reductions in Q3. They noted improved information sharing with channel partners and that reliable supply chains negate the need for increased stocking. Days of inventory in the channel are typically just over 4 months' worth at this time of year, with expectations for it to climb in Q4 for early buy.

“overall, we feel really balanced with our inventory in the channel ending Q2, I would call it very normal. As expected, Q2 is a big sellout quarter for us. traditionally the biggest net reduction in inventory after the channel builds inventory in Q4 and Q1 get ready for the season.”

asked by Andrew Carter · answered by Kevin Holleran

Inquired about Hayward benefiting from competitor dislocation, specifically regarding customer share loss due to 80/20 implementation and like-for-like replacement opportunities.

Kevin Holleran affirmed consistent share gains over a longer period, now more apparent. He highlighted a multi-pronged strategy including investments in RD&E for product innovation (like-for-like, automation, filling product gaps), commercial excellence (brand building, field organization, dealer support), and a reliable supply chain with shorter lead times and domestic manufacturing. He expressed confidence in continuing this positive trajectory.

“I'd say our team is executing a playbook. We've had basically to grow greater than market has been a consistent theme in the organization since I joined in 2019. And I think it's multipro. I think we're playing offense and that the investments that we've made around SG&A and RD&E are paying off from a product and innovation standpoint, it's a steady pipeline of products that touch a number of different themes, Jeff, whether it's like-for-like replacement or bringing automation and upgrade to the established installed base or filling in some product gaps that we may have had historically like a horsepower or bringing some products to market that can drop in on some competitive products.”

asked by Jeffrey Hammond · answered by Kevin Holleran

Asked about the expected gross margin trend into Q3 and Q4, how price-cost issues are being managed, and how price is translating.

Eifion Jones explained that Q2 gross margin was better than expected despite inflation. They reacted to inflation with a surcharge, which was fully caught up by Q2 end. For the balance of the year, they expect Q3 margins to decrease due to lower leverage, then increase in Q4 with more volume leverage. They aim to maintain full-year gross margins approximately in line with last year's record levels through activities and pricing actions.

“At the end of Q2, we would say we're all caught up now on that particular inflationary pressure. As we look into the balance of the year, normally receive margins decrease in Q3 as it's a lower leverage period for us. And then in Q4, margins will come back up again as we get more leverage from volume in that particular quarter.”

asked by Jeffrey Hammond · answered by Eifion Jones

Inquired about the company's ability to continue leveraging price, potential channel pushback, and the magnitude of price increases heading into next year.

Kevin Holleran stated confidence in passing along inflationary impacts dollar-for-dollar. He noted they are currently contemplating inflationary assumptions for the early buy program for next year. The company is also focusing on internal cost-out and productivity projects to protect structural margins, aiming to limit price increases to only those necessary to cover costs.

“I feel confident in our ability to continue to pass along at least dollar for dollar, what those impacts are. We are all hoping for a little bit more muted inflationary environment going forward. but we are confident that we can pass dollar for dollar.”

asked by Brian Lee · answered by Kevin Holleran

Followed up on market share gains, asking how the company plans to maintain and potentially accelerate them, and what levers are available to keep them sticky.

Kevin Holleran emphasized the durability and stickiness of their share gains, attributing them to the commercial operations team's efforts in telling the Hayward story, product innovation driven by dealer feedback, and a focus on helping dealers succeed. He highlighted the multi-pronged approach across commercial, supply chain, and product innovation, expressing an expectation to continue the positive trajectory.

“I think they're very durable, very sticky. These share gains have been won by our commercial operations team doing a better job of telling the Hayward story. We've been focused on this industry for decades, and we're bringing great products that resonate that are dealer-driven things that they're telling us that they would like to improve.”

asked by Brian Lee · answered by Kevin Holleran

Asked if any IEEPA refunds benefited Q2 or are embedded in guidance, and the company's expectations.

Eifion Jones stated they are still in the process of receiving IEEPA refunds, with the first tranche now in. They are evaluating the most appropriate way to return these to customers, which is their ambition despite complexity. The aggregate refunds are less than $10 million, approximately $8 million to $10 million. No benefit is embedded in current guidance, and an update will be provided at the end of Q3.

“No, at this particular point, we're still in the process of substantially receiving IEEPA refunds as we stepped into the, I think the first tranche of IEEPA refunds are now in. Currently, we're evaluating what's the most appropriate way to return to customer. That will be our ambition, there's complexity to that.”

asked by Rafe Jadrosich · answered by Eifion Jones

Asked about industry sellout in Q2, and if full-year end market expectations for new construction, R&R, and international have changed since Q1.

Kevin Holleran suggested the best proxy for Q2 sellout was a large distributor reporting +3% in equipment. Hayward's sales out through largest trade partners were 'a bit better than that,' and traditional distribution saw 'even a bit better.' Eifion Jones added that Q1 sellout was mid-single digits. They reiterated that Q2 and Q3 typically see sellout exceed sell-in, leading to decreasing absolute inventories, with days on hand increasing in Q4 as inventory climbs for the early buy season.

“I think the best proxy for what sellout was in the second quarter rate would be the largest distributor that reported last week, who I believe reported plus 3 in the equipment category over second quarter. We -- across our largest trade partners, Hayward sales out was a bit better than that. And actually traditional distribution saw even a bit better than that of Hayward product.”

asked by Rafe Jadrosich · answered by Kevin Holleran