Key Points
Hayward's focus on aftermarket sales is insulating its business from a downturn in pool construction.
Demand is rising for energy-efficient automation technology.
Shares of Hayward Holdings (NYSE:HAYW) climbed on Wednesday after the pool equipment maker reported a steep rise in profits.
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A smart, aftermarket-focused strategy
Hayward's net sales grew 6% year over year to $260 million in its fiscal third quarter, which ended on Sept. 26.
The water management specialist designs and manufactures a range of energy‑efficient pool equipment, such as filters, heaters, and sanitizers. Its Internet of Things (IoT)-enabled SmartPad platform allows homeowners to easily automate this equipment.
Hayward caters to the aftermarket, which makes it less exposed to new-home construction and, by extension, to the current downturn in the U.S. housing market.
Hayward's more defensive business model allows it to benefit as the installed base of pools grows over time and owners adopt more outdoor living technology.
All told, Hayward's adjusted net income rose 23% to $39 million, bolstered by price increases that helped to offset inflation and tariff-related costs.
Better still, the company's adjusted earnings per share, boosted by stock buybacks, surged 29% to $0.18.
The two main drivers of Hayward's growth are set to persist
Hayward now sees its full-year net sales rising by 5%-6% in 2026. Management also projects adjusted earnings per share to climb by 12%-14% to $0.86-$0.88.
"The strength and quality of our financial results underscore two defining advantages of our business: a large and growing installed base that generates recurring aftermarket demand, and a technology adoption curve that continues to expand the addressable opportunity for connected, automated, and energy-efficient pool solutions," CEO Kevin Holleran said during a conference call with analysts.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.