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Pool equipment and automation systems manufacturer Hayward Holdings (NYSE:HAYW) reported results in line with analysts' expectations in Q2 CY2024, with revenue flat year on year at $284.4 million. The company's outlook for the full year was also close to analysts' estimates with revenue guided to $1.03 billion at the midpoint. It made a non-GAAP profit of $0.21 per share, improving from its profit of $0.19 per share in the same quarter last year.
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Hayward (HAYW) Q2 CY2024 Highlights:
- Revenue: $284.4 million vs analyst estimates of $284.4 million (small beat)
- EPS (non-GAAP): $0.21 vs analyst estimates of $0.20 (5.1% beat)
- The company dropped its revenue guidance for the full year but raised full year EBITDA guidance
- EBITDA Guidance for the full year is $262.5 million at the midpoint, above analyst estimates of $258.9 million
- Gross Margin (GAAP): 51%, up from 48.1% in the same quarter last year
- Free Cash Flow of $282.3 million is up from -$83.14 million in the previous quarter
- Market Capitalization: $2.90 billion
Credited with introducing the first variable-speed pool pump, Hayward (NYSE:HAYW) makes residential and commercial pool equipment and accessories.
Home Construction MaterialsTraditionally, home construction materials companies have built economic moats with expertise in specialized areas, brand recognition, and strong relationships with contractors. More recently, advances to address labor availability and job site productivity have spurred innovation that is driving incremental demand. However, these companies are at the whim of residential construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. Additionally, the costs of raw materials can be driven by a myriad of worldwide factors and greatly influence the profitability of home construction materials companies.
Sales GrowthReviewing a company's long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one tends to sustain growth for years. Thankfully, Hayward's 8% annualized revenue growth over the last five years was decent. This shows it was successful in expanding, a useful starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Hayward's recent history marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 18.9% over the last two years.
This quarter, Hayward's $284.4 million of revenue was flat year on year and in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 5% over the next 12 months, an acceleration from this quarter.
Operating Margin Hayward has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 19.5%. This result isn't surprising as its high gross margin gives it a favorable starting point.
Analyzing the trend in its profitability, Hayward's annual operating margin rose by 4.1 percentage points over the last five years, showing its efficiency has improved.
In Q2, Hayward generated an operating profit margin of 23.9%, up 1.7 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.
Key Takeaways from Hayward's Q2 Results It was good to see Hayward beat analysts' EPS expectations this quarter. We were also glad its full-year EBITDA guidance exceeded Wall Street's estimates. Zooming out, we think this was a decent quarter, showing the company is staying on target. The stock traded up 1.9% to $13.75 immediately after reporting.
