HAYW Q3 Deep Dive: Margin Expansion, Product Adoption, and Tariff Mitigation Drive Guidance Raise

Pool equipment and automation systems manufacturer Hayward Holdings (NYSE:HAYW) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 7.4% year on year to $244.3 million. The company’s full-year revenue guidance of $1.10 billion at the midpoint came in 1.1% above analysts’ estimates. Its non-GAAP profit of $0.14 per share was 15.8% above analysts’ consensus estimates.

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StockStory’s Take

Hayward’s third quarter results drew a significantly positive response from the market, reflecting outperformance driven by margin expansion and resilient aftermarket demand. Management credited the quarter’s growth to disciplined cost management, robust operational efficiencies, and continued adoption of its technology solutions, particularly in automation and controls. CEO Kevin Holleran highlighted the company’s ability to offset tariff headwinds and emphasized that “the strength and stability of our aftermarket model” underpinned performance, as aftermarket maintenance demand remained resilient. Additionally, strong dealer engagement and a solid finish to the pool season supported higher sales volumes across North America and international markets.

Looking ahead, Hayward’s updated guidance is supported by ongoing investments in new product development, supply chain automation, and broader adoption of technology solutions like the OmniX automation platform. Management expects value-based pricing initiatives and continued tariff mitigation actions to sustain margin improvements. CFO Eifion Jones noted that increased free cash flow guidance reflects improved profitability and disciplined capital allocation, while Holleran emphasized, “We are confident in our ability to successfully execute in a dynamic environment and remain very positive about the long-term growth outlook for the pool industry, particularly the strength of the aftermarket.”

Key Insights from Management’s Remarks

Management attributed the quarter’s results to sustained aftermarket strength, technology adoption, and successful execution of tariff mitigation and operational initiatives.

• Aftermarket demand resilience: Approximately 85% of Hayward’s sales are tied to aftermarket needs, with management citing strong, nondiscretionary maintenance demand and stable channel inventory levels as key contributors to quarterly performance.
• Technology solution adoption: Homeowners increasingly opted for automation and control products, with double-digit growth in the Omni controls category—nearly twice the company’s overall growth rate. The OmniX automation platform rollout is drawing favorable dealer responses and expected to expand into new categories.
• Tariff mitigation progress: Hayward continued to execute on its plan to reduce direct sourcing from China, aiming to lower exposure from 10% to 3% of cost of goods sold by year-end. Management highlighted operational adjustments and value-based pricing as means to offset tariff-related cost increases.
• Operational efficiency gains: The company delivered margin expansion through cost management, automation investments in manufacturing (notably at its Nashville facility), and SKU rationalization. Europe and Rest of World margins benefited from stabilization efforts and a one-time cumulative tariff refund.
• Balanced international growth: North America sales increased 7%, with notable strength in Canada (up over 20%), while Europe and Rest of World delivered 11% growth, aided by higher volumes and improved supply chain capabilities.

Drivers of Future Performance

Hayward’s guidance for the next quarter and year is driven by product innovation, continued margin initiatives, and disciplined capital allocation, balanced by uncertainty in tariffs and demand trends.

• Product pipeline and technology: Management expects new automation and control products—including further rollouts of the OmniX platform—to drive replacement cycle demand and increase average equipment value per pool pad. Investments in advanced engineering and AI-powered customer service tools are designed to reinforce Hayward’s technology leadership and support aftermarket growth.
• Margin and tariff management: Ongoing tariff mitigation, supply chain automation, and value-based pricing strategies are intended to preserve or expand margins in the face of potential new tariffs or inflation. The company has committed to reducing China sourcing exposure, and CFO Eifion Jones indicated these efforts are progressing ahead of plan, with cost benefits supporting guidance.
• Balanced capital deployment: Hayward plans to increase capital expenditures into automation and supply chain initiatives, while maintaining flexibility for opportunistic M&A and share repurchases. Free cash flow improvements are expected, with priorities balanced between organic investment and returning capital to shareholders.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will closely monitor (1) adoption rates and dealer feedback for new OmniX-enabled automation products, (2) the pace and effectiveness of Hayward’s supply chain realignment and tariff mitigation initiatives, and (3) continued margin improvement, particularly in international markets following operational changes. Progress on M&A and capital allocation strategies will also be important indicators of Hayward’s execution.

Hayward currently trades at $17.44, up from $15.36 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).

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