Yahoo Finance Hayward Holdings Inc (HAYW) Q1 Earnings: Misses on Net Income, Matches EPS Estimates
Reported Revenue: $212.6 million, up by 1.2% year-over-year, surpassing estimates of $209.04 million.
Net Income: $9.8 million, up 17% from the previous year, below estimates of $16.97 million.
Diluted EPS: Reported at $0.04, below the estimated $0.08.
Gross Margin: Increased by 260 basis points to 49.2%, indicating improved operational efficiency.
Operating Income: Rose by 11% to $30.9 million, with operating margin expanding by 120 basis points to 14.5%.
Cash Flow: Cash flow from operations showed improvement, reducing cash used by approximately $14 million from the prior year.
Debt Management: Utilized $123.1 million in cash to make voluntary early debt repayments, reducing principal outstanding to zero on the Incremental Term Loan B.
On May 2, 2024, Hayward Holdings Inc (NYSE:HAYW) disclosed its financial results for the first quarter of fiscal year 2024 through its 8-K filing. The company, a prominent player in the pool and outdoor living technology sector, reported a net income of $9.8 million, falling short of the estimated $16.97 million. However, it aligned with the analysts' expectations on earnings per share (EPS), achieving an adjusted diluted EPS of $0.08. Revenue for the quarter stood at $212.6 million, slightly surpassing the forecast of $209.04 million.
Company Overview
Hayward Holdings is a leading manufacturer of energy-efficient swimming pool equipment and pool automation systems. Based in Charlotte, North Carolina, the company employs approximately 2,000 individuals and generated around $1.0 billion in revenue in 2023. Its product portfolio includes pumps, filters, heaters, LED lights, and sanitization products, catering to both residential and commercial markets.
Financial Highlights and Operational Challenges
The company's net sales saw a modest increase of 1% year-over-year, driven by early buy shipments in North America which contributed to a 7% revenue growth in this segment. Despite the challenging economic and interest rate environment, Hayward achieved a gross profit margin expansion of 260 basis points, reaching 49.2%. This improvement was attributed to operational efficiencies in manufacturing operations. However, the Selling, General, and Administrative (SG&A) expenses rose by 9%, primarily due to increased warranty, marketing, and selling costs, which offset some of the gains from operational efficiencies.
Strategic Initiatives and Market Position
Kevin Holleran, President and CEO of Hayward, expressed satisfaction with the company's ability to execute strategic growth initiatives amidst market uncertainties. The company's focus on innovative pool solutions and cost management has been pivotal in maintaining profitability. Furthermore, Hayward's proactive debt management was evidenced by a voluntary early debt repayment, enhancing its financial flexibility.
Detailed Financial Analysis
Operating income for the quarter increased by 11% to $30.9 million, with the operating margin also improving by 120 basis points to 14.5%. Interest expenses decreased slightly due to higher net interest income from interest rate swaps and cash investment balances. The effective tax rate increased significantly to 23.8% due to a decrease in tax benefits from stock compensation, impacting net income growth.
Segment-wise, while North America showed robust growth, the Europe & Rest of World segment faced a 17% decline in net sales and a 39% decrease in segment income, mainly due to delayed shipments following the consolidation of manufacturing operations in Europe.
Outlook and Forward-Looking Statements
Looking forward, Hayward reaffirmed its full-year 2024 guidance, anticipating net sales between $1.010 billion and $1.060 billion and adjusted EBITDA between $255 million and $275 million. The company remains optimistic about its long-term growth and profitability, driven by its technological leadership and strong market positioning in the evolving pool industry.
Hayward's financial stability and strategic market maneuvers provide a mixed yet cautiously optimistic outlook for investors and stakeholders, navigating through economic uncertainties with a focus on innovation and operational excellence.
Investor and Analyst Information
Hayward will hold a conference call to discuss these results further on May 2, 2024, at 9:00 a.m. ET. Interested parties can access the call through the Investor Relations section of Hayward's website or by direct dial-in.
For detailed financial tables and further information, please refer to the original 8-K filing.
Explore the complete 8-K earnings release (here) from Hayward Holdings Inc for further details.
This article first appeared on GuruFocus.
