Hayward's Balance Sheet Reset: Refinancing, Share Gains, and a Steady Hand on Price
Q2 2026 shows a company past the tariff shock, with leverage at a record low and an AI-assisted service engine driving share.
HAYW · Earnings Call · 2026-07-29
A Strong Quarter, a Cleaner Balance Sheet
Hayward Holdings delivered a solid second quarter, with net sales up 6% to $318 million, gross margin near record levels, and a refinancing that dropped interest expense by $6 million annually. The more meaningful story is the balance sheet: net leverage fell to 1.5x, the lowest since IPO, while the company accelerated share repurchases. This is a name that has quietly transformed from tariff victim to supply-chain protagonist.
A Refinancing and a Return of Capital
The quarter's headline action was the comprehensive debt refinancing. As CEO Kevin Holleran put it, the company extended maturities and reduced cost of capital by approximately $6 million on a full-year basis. “we completed a comprehensive debt refinancing, extending our maturities, reducing our cost of capital by approximately $6 million on a full year basis” — Kevin Holleran, Chief Executive Officer · 2026-07-29 The new Term Loan B matures in 2033 with a 61 basis point lower spread, and the ABL revolver was replaced with a more flexible cash flow revolver. Moody's upgraded the corporate family rating; S&P affirmed with a positive outlook. The result: refinancing is a genuinely new theme on the keyword board, and it's a positive one. Cash flow from operations was $172 million in the first half, and the company is guiding to ~$200 million of free cash flow for the year. This is being deployed into share repurchases—$64 million in the first half—and organic investment.
Share Gains, Made Stickier by AI
Management has been talking about share gains for several quarters, but the confidence is higher now. Kevin Holleran: "we feel good about our share gains. We think that it's been over a longer period of time, perhaps than was seen by the market."
we feel good about our share gains. We think that it's been over a longer period of time, perhaps than was seen by the market.
The gains are attributed to product innovation (OmniX platform, 4-hp pumps), deeper dealer relationships, and a more reliable supply chain with shorter lead times. Notably, the company is using AI in customer service—98% of North American calls answered within one second by an AI agent, 80% resolved without escalation. That's an efficiency gain that supports margin even as price increases are deliberately tempered. This is a AI agent use case that goes beyond the typical.
Price, Cost, and the IEEPA Refund
The gross margin story is one of careful management. Q2 gross margin was 48.7%, down 50bps yoy but the second-highest ever as a public company. The company faced inflation in specialty metals, freight, and resin, and responded with a surcharge. Eifion Jones noted that by the end of Q2, they were "all caught up now on that particular inflationary pressure." “we're all caught up now on that particular inflationary pressure.” — Eifion Jones, Chief Financial Officer · 2026-07-29 They expect to hold full-year gross margins near last year's record. A fresh element is the IEEPA refunds. Eifion indicated a line of sight to $8-10 million of refunds, which they plan to return to customers. “our line of sight is to approximately $8 million to $10 million worth of refunds” — Eifion Jones, Chief Financial Officer · 2026-07-29 This is consistent with the global refunds theme appearing in the market trajectory.
Guidance and the Forward View
Management maintained full-year guidance: net sales up ~5%, adjusted diluted EPS up 9-13%. They see stable volume, with North America driving growth. The prior quarter's commentary had already signaled a cautious optimism on volumes; this quarter they confirmed it. From the prior call (Q1 2026), Kevin noted: "the mid-single-digit net sales guide assumes sell-in approximates to the sell-out for the full year." “the mid-single-digit net sales guide assumes sell-in approximates to the sell-out for the full year” — Kevin Holleran, Chief Executive Officer · 2026-04-29 And from Q4 2025, Eifion declared victory on the tariff battle: "tariffs in '25, it was a challenging year... we are declaring victory on that specific battle." “tariffs in '25, it was a challenging year... we are declaring victory on that specific battle” — Eifion Jones, Chief Financial Officer · 2026-02-25 The channel inventory is described as "very normal" with 4+ months in the channel, aligning with seasonal patterns. The company's installed base aftermarket model provides resilience, and with Total Revenue growing 12% in Q1 and 6% in Q2, the trajectory is solid.
Durability of the Story
What's changed is the balance sheet strength and the demonstrated ability to gain share while managing costs. The net leverage at 1.5x gives flexibility for M&A and further repurchases. The company is investing in automation and nearshoring, and its U.S. manufacturing centers produce ~90% of domestic sales. This is a competitive advantage in a tariff-uncertain world. The IEEPA refund theme is new and ties to a broader market narrative. The refinancing keyword is also fresh. These are not boilerplate; they represent real strategic actions. The stock is up 1.4% over the last 90 days, roughly flat, but the fundamentals are improving. This is a name to watch.