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Investing.com -- S&P Global Ratings revised its outlook on Hayward Holdings Inc. to positive from stable on Monday, while affirming the company’s credit rating.
The rating agency cited Hayward’s operating performance through the first half of fiscal 2025 as meeting expectations, with sales increasing 6.3% year over year through June 28. This growth was primarily driven by pricing and the acquisition of ChlorKing.
Despite soft new and existing home sales, after-market pool equipment demand remained healthy, though primarily for parts rather than larger ticket replacement equipment. First half EBITDA increased 10% year over year, reflecting price-driven gross margin expansion and increased fixed cost absorption.
Hayward’s leverage has now reached the company’s target range, with debt to EBITDA reduced to 2.2x for the 12-months-ended June 30, 2025, down from 2.9x at fiscal-year-end 2024. This improvement came as the company repaid $123 million in debt.
The company obtained a new three-year $450 million share repurchase authorization while reconfirming its 2x-3x debt to EBITDA target. With a cash balance exceeding $200 million and annual free operating cash flow projections of more than $150 million, S&P believes Hayward can continue share repurchases and make bolt-on acquisitions without increasing debt.
Hayward’s resilient aftermarket business, which is largely nondiscretionary, has helped offset sales declines tied to new pool construction. While industry-wide new-build volumes contracted approximately 15% in 2024, Hayward limited its decline to about 5% during the same period through price increases and continued strength in aftermarket revenues.
The company faces a $30 million annualized tariff burden, with $18 million in fiscal 2025, driven by U.S. duties on China-sourced components and finished goods. In response, Hayward implemented a broad-based 3% price increase in April and accelerated its reshoring strategy, decreasing direct sourcing from China to approximately 3% of cost of goods sold by year-end from 10%.
S&P indicated it could raise Hayward’s ratings if the company performs in line with expectations and sustains leverage below 3x into the next summer selling season, while funding share repurchases with internally generated cash flow.
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