SWIM - Earnings call transcript Q1 2021

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Operator

Good morning, everyone, and welcome to the Latham Group Incorporated First Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note, today's event is being recorded. At this time, I'd like to turn the conference call over to Nicole Briguet, Latham's Investor Relations Representative. ahead. go please Ma'am,

Nicole Briguet

Relations Good Rajeski; Call. Welcome issued Earlier which President the press operator. today's website. Fiscal are CFO, call our Latham’s Mark XXXX release, Latham's Investor on available Earnings this CEO, is of morning, you, our to On Scott everyone. and QX earnings portion and Thank morning, we Borseth.

up Following questions. their to remarks, the call we'll open

respect estimates constitute in and and to the subject uncertainties projections, expectations, company forward-looking events our the materially and These company's risks may to forward-looking cause that could statements statements. call, statements differ the on Such actual events statements. this today forecasts, During are views of assumptions, certain with beliefs future that results as based and of described a those reflect number to information. statements from make are current management's

April public expressly as update for For any whether with a the these applicable final or further details forward-looking future otherwise, new by or concerning result on developments prospectus XXXX. law. and uncertainties, as our to except information, offering statements, publicly filed any see obligation required XX, please The initial review risks of SEC disclaims company

will will In be found Scott of in we evaluating call addition, our included calculated over Rajeski. GAAP turn XXXX. the can today's adjusted our income be under I'll and discuss in for call, QX to performance. EBITDA be our useful non-GAAP company press during financial which Reconciliations could Form measures, the now believe in to XX-Q release net earnings

Scott Rajeski

fiberglass pool successful that of experience we Several awareness buying to thank April, I a public supported for the opportunity this reimagine Latham's set to IPO want Thank as to out who company. call in and and take ago, you, and our adoption Nicole. welcome customers morning on the earnings Good pools. We and completed increase a journey to team years late entire first to process.

now we continue company, resources As have path. a greater on to public that and opportunities

more pools about the manufacturer Australia in I'd dive into swimming quarter, we is our Before and and the residential designer, Latham share Zealand. little marketer in-ground of North America, industry. a New and Latham like to largest

glass swimming are market of the category in fiber North leader pool in residential over XX% in-ground product America the pool We with the share.

We transforming we which everything do. unique with our the at industry are the our places of direct-to-homeowner consumer center model,

Our powered of them selection. pool superior strategy them drive our of digital leading process brand technology brand then by through Latham engages the the is and decision-making suite and walk homeowner, that to the

purchase-ready network strong pool go-to-market relationship Latham then homeowner. awareness to are have pool has able the fiberglass conversion dealer And established with the dynamics dealers. very enabled The to America attractive brand the deliver North leads is are our only us pools. strategy and largest direct to in We company drive towards our that with build material underlying to strong growth. continue and the a market

demand outdoor We positioned continued to long-term favorable in by the homeowner investment benefit trends consumer living. are driven from

face the be incredibly segment upfront aesthetics and in not quality and performance, work usage. and benefits the dedicated time concrete, with an especially been challenging what cycle hard the today We commitment less we year chemical premium key last are Latham lifetime to team the costs, easier of our our the Their and fiberglass especially over would uncertain of the the education and over fast-growing easier lower members. this of without along about drive fiberglass life opportunities faster superior including maintenance success. has installation, is excited company as and in

how much to future. ensure employees employees' know and well-being Latham and to our our We are heavily invested mean our they in strive

by honor that excited share a Union. awarded to the Latham XXXX workplaces recently top I'm Albany was So, Times

have to humbled and recognition. this We are received honored

to turn high-level quarter overview a our of now Let's results. first

Our work first in-ground for attainable mission high-quality XXXX pool and hard of our $XX.X from luxury to and our are quarter strong grew in team's making sales to backyard. swimming the X Net dedication a period. $XX.X million to This million results for testament EBITDA a every the in QX representing million million $XXX. by reaching increasing the quarter translated of prior in or million XXXX, increase. first XXXX, to of $XX.X growth, adjusted XXX% from strong year homeowner's $XX.X

strong we strategic consumer results of entire product pillar. first brand Starting with conversion initiatives; the partnership about to enhancing and accelerating Latham's will with two, a by result portfolio; strategic pillars: think our long-term growth be strategy, our four, and demand across leadership our three, As digital driven X material exclusive the fiberglass; our as our our position one, expanding dealers.

We continue focusing to our our customer dealer drive in acquisition have digital continue on partners which initiatives, to lead that to outpace expectations. purchase-ready resulted new by our metrics

for searchability X,XXX they to keywords. seeing and Page we a and Latham a estimator that pool to cost our report are dream section interactive to greater consumers immersive pool and new through on unique backyard optimization plan for X our This Plan project. visibility X build pieces, pool provides their new over It new their generate are an just we Also, Your as it. We engine experience section also enables hit ranking estimate users on launched efforts website. our Pool excited search with

is options first all that as scenarios can My have they for the of area dream Latham, on. as log-in their where piece for Another well they may homeowners preferences estimated interactive their backyard, save our and

pools, and in Moving and in pillar. one to continue America market category to in strengthening every We number position We leadership in-ground covers. we our compete on liners portfolio the focus the industry's hold the North of related product and offer second pool pools swimming including position. broadest products, pool

accelerate We benefits to the to Fiberglass earlier by on fiberglass see opportunity trend in pools. education Third, and material the to fiberglass is ability from giving and is homeowners concrete dealers extending on many installation dealers the awareness install to pool and focused key conversion pool year. the presents. season our We significant to later higher-quality remain continue driving growth. with the

on dealers to their opportunities Our and fiberglass. in capacity the within capitalize their investing are business increase

had dealers installing compared In Today, of Australia as New XX% of about in this in-ground early as England starting the for swimming as February fiberglass. residential U.S. fiberglass pool XX% of fact, pools market accounts where year. to are we in-ground fiberglass pools all

We XXXX. of runway we number us that to ahead drive have XX% are a long that very confident and by can

relationships. are committed our and strong Lastly, we maintaining dealer to growing

demonstrating we significant in Latham fact, quarter, brand growing in first new the year, dealers In versus saw increase Grand last the same our power. period exclusive a

the nice start in model has onboarding had very Narellan the launched U.S. first of we a which Additionally, franchising in quarter, new franchisees. the many in the

we supply challenges supply look in due be As inflation. relates it ahead, in both part material caused some to large our shortages in to there is which deep This to and as freeze the Texas, continues headwinds in chain on many of ability tightness and on this transportation the and strong our a earnings the resin-based overall minimal commodities. related ongoing growth. many to impact date, To products, in to our sales deliver supply has had

with which we reflected very Despite we guidance market, has done we and these will XXXX, to and great as about monitor are over optimistic team you. will continue believe are Like price headwinds, is other we productivity. with something a the very also that will companies, tight it Our this, be offset facing in share labor managing alleviated many time. and a job Mark

large and secular our fastest very strong segment, continuing. have growing see we underlying We market living repair in that Outdoor remodel a addressable trend remains business. are the trends and the and reflected

XXXX. demand our a into seeing are dealers future result, strong As

ahead accelerating of are We in XXXX also fiberglass our demand fiscal to the curve. our to and CapEx continue stay investments expansion

multiple position it accelerating across by will that, material pace We strategic across to with take a and our exclusive enhancing products, I Mark our to our the dealers. have of also leverage further fiberglass dive leadership drive brand levers and With financials. growth to our continuing our assets, digital over deeper into conversion turn its Mark? prioritizing platform partnerships to

Mark Borseth

Thank everyone. a fiscal compared the year-over-year of our first that morning, and fiscal outlook XXXX. QX results basis, note all our you, comparisons to be Scott, and reviewing XXXX Today, quarter on for are I'll Please year. full fiscal good

of strategic our occurred quarter both in execution strategy. attributable Spas, our partnerships our consumer increases. not was to our QX portfolio, XXXX. with sales QX exclusive Starting Additionally, the or across of by GLI or and investment from and GLI XXX% demand growth product price to of volumes continued up those million of Pools as million, results. as acquisition expanded we a strong Net results and $XXX.X Latham dealers, QX acquisition do of with quarter include XXXX in demand strong first and consumer order $XX.X continued were primarily to of the our Premier strong benefit

pandemic reflecting the strong reflects In comps sales year, addition, quarter year-over-year the Our we in last If GLI last strength very initial growth. from sales include lighter first would growth the year. amid be XXX%, of headwinds QX organic our

of net addition GLI. administrative Looking Adjusted by product from XX.X% $XX.X expanded And to roles as by shift a loss growth. to costs, IPO reflecting expenses XXX% at million raw real covers sales in first and partially by to increased increased $XX.X income performance structure. by across was strong quarter incentive to net million of million the expense Price cost our inflation utilization was by to or $XX million $XX.X driven $XX.X half XX.X% accruals, category, start year. increased last sales in-ground Gross acquisition to of Of towards pools related of the portfolio. to in to higher and million, our $XX.X million. the million pools, the mainly of profit by increase, the $XX.X last a or liners balance to to Net $XX.X per and million, strong fixed compared sales. Selling, $XX.X and a $XX.X sales in-ground increases increased driven XXX% million share the margin increased our was by compared million, stock-based headcount of general mix by The customer-facing XX.X% about plan or year-over-year strong support by the XX.X% increases sales adjusted XXX% and cost expansion and quarter Gross materials. margin to to increased EBITDA increased to driven million year. $X.XX to wage EBITDA $X.X XX.X% offset primarily compensation net our year, the sales. of and

turn let's balance to Now sheet. the

had As and nearly our and debt total line of April XXXX, revolving cash million. $XXX million undrawn $XX we of $XX on of equivalents cash credit X, million,

underwriting debt increased of in our commissions we from operating no $X.X inclusive pay our on was public cash With net Subsequent and to exception sold the the million of underwriters' operating million, debt shares completed initial of of million activities to cash and X about XXXX. XX result revolving primarily first net to quarter million debt net offering debt support as which full received facility, of to $XXX.X stock, uses net Our year, to to note year. $XX Please as shares. million We ratio less typically down X.X million $X.X we last increase define total company $XX company were leverage of as times. exercise net other fiberglass offering aggregate it the ratio activities cash. used deducting X.X to after and compared higher Capital shares debt-to-leverage by The outstanding this was that our receivable used The repay times quarter, April to reduced manufacturing net option the expenditures purchase primarily projects driven the common sales. IPO our totaled of million, discounts, the the tied credit end, capacity. proceeds multiple in our levels the proceeds term to costs. of additional $XXX million by pursuant X,

shareholders corporate used from proceeds We the intend of nearly net we capital. and million fund to shares general repurchase remaining stock existing XX.X for requirements, $XXX.X common including also $XX.X million to million, use the to certain working

let's turn guidance. to Now our

million the and to If our to the basis capacity $XXX XX% we growth and of $XXX XX% all to fiberglass fiscal full we XX%. annual of $XXX including to for include million, of from $XX introduced in year would expenditures of of representing of net with in of for between Adjusted EBITDA between increase have sales $XXX initiatives. growth of were primarily points capital to range to XX.X% As million million, EBITDA to sales, to driven adjusted GLI XXXX, XXXX million net XXXX, results XXX projected release, guidance a earnings range be and noted margins expansion XX.X% XX million, $XX sales XX%. by

guidance quarterly during use, months, or more are providing business warm going typically which remodeling allows the is some and QX being today won't We we season. in both our and is forward, of seasonality swimming and QX, installation by fiberglass seasonality the our summer This growth, which While in be historically, months somewhat do pool there business. repair peak and activities. later installation mitigated earlier for

XXXX first the direct pandemic. our Now, as result to of half anomaly typical event, was year growth the bit year, market This a period in the down model, half the of for business. drove strong our second economy with early the an shut in of of the global time a very of combined unique homeowner results the to as

guidance. become half year our more the of comps is in the full year-over-year reflected year result, as second a will and As into difficult, move we our

a be fast-growing benefit margin expect expansion mix and segment. We EBITDA fiberglass shift growth led by our sales towards adjusted will

We which we initiatives. labor supply look counter continued and facing price to headwinds constraints pressures, to increases anticipate also related will with and chain productivity

in continue the enhance support growth to business experience. the buying will We and invest the to resources customer of

select in underlying for addition, fiberglass to manufacturing expected reflective of the a are arriving EBITDA compensation performance a Please associated and costs with meaningful stock-based significant to In in our expenses, business. IPO an our the curve. will note the add-back adjustments, of onetime loss of year accelerating stay are other net guidance ongoing as which capacity demand not income we the lead our are the investments which our noncash adjusted ahead at

reflects expansion you closing strategic Scott Our to back and outlook with the margin homeowners across you pillars Scott, driven backyard remarks. and I'll portfolio, consumer product strong as demand our growth in continued invest revenue by for for turn earlier. growth it the shared

Scott Rajeski

Mark. Thanks,

in Our our ability is in confident our to company pool industry amazing team, continue only an the by model industry. am with consumer-centric disrupting supported the the in experienced favor I business

a XX continue margin expansion to EBITDA We years and annual clear sales net have delivered trajectory. this growth consecutive have of adjusted in growth path

the attainable the points. term longer that growth driven our XXX ahead and delivering high-quality making years, XX%, These following: conversion EBITDA our and we net only Looking of cost With we over capacity management. margin growth to about that, value next to X truly our fiberglass, shareholders. surface to executing approach XX% basis investments for deliver operator, adjusted of to the scratching are for on and of compelling questions. improvement by growth and The to material XX% I X our EBITDA our the the disciplined sales XX% price to are of believe please Latham consumer-driven expect strategy strategy, pools line bright. adjusted of open and future is very targets

Operator

your today [Operator Matthew go from Instructions] And Barclays. comes our Bouley with ahead question from Please question. first

Matthew Bouley

results here. and Good quarter morning the on the everyone. on gates Congrats of first the out

-- about and you the deleveraging of adoption. to top sort So, you fiberglass resources a first -- speak boosting mirror. Can around question I in at you. I the little to M&A leg of of that, just digital post come growth Thank thinking efforts, even about you're of the sort Is all your it terms here your in more the next about IPO? CapEx wish of rearview of in the on Scott, guess, goals that IPO the -- your affect pipeline now events how and guess, talked note with plans sort investments? light having list around

Scott Rajeski

Yes.

again morning here this So, talk morning. Good good to Matt. to you

will say, got that along about drive let's we're making to demand to educating the dealers them. we'll to benefits pillar, and and and be of sign demand. believe So with the the base CapEx, capacity strategy we're curve. the same. I the dealers, on the consumer third with continuing the in ahead And that meet we've the to think more digital it's all grand and to to investments our go up it's dealers, continue the installer going staying on of our making, fiberglass, going demand driving sure focused fiberglass We all We're to of invest growth continue the premier

Matthew Bouley

appreciated. Much Perfect.

Second dealer a the strategic to partnerships. actually ask segue. wanted one, good I about

as And comment you Grand recent here think with said around well You at program Is any put significant about, a acceleration their trends you a I think these where installers the you Latham you there. June? of from are broader, the in numbers all made ability could tie maybe strong to top into with could today there labor the a in the terms that if perspective meet demand?

Scott Rajeski

Yeah.

partnership. And with conversion up, progress base great of grand strategic fronts. standpoint the fiberglass dealer versus that we've get growth Pools session to dealers North specific well. with outpacing of but a and expectations signing standing think the use installed America So labor, year dealers of concrete benefit that great again, on great of we're The numbers going the forward, labor Spas going fiberglass, up in expansion Narellan right? & not as with with seeing we're dealer out They on pretty discuss of pool I we're we're forget as extremely a the a We're outpacing relationship, that the dealer. that conversion. on in pool. team, then comparable say, that number those to confident Matt, just we're It's to we're moves ground of about glass simultaneously pace prior let's the fiber done the well. of three We're And number lot a less from converting, Premier that's can not the all there seeing

to that consumers. more So pools for it's actually a benefit installed for make them get to conversion

Matthew Bouley

Great. the guys. you and again Well, questions, for congrats taking thank

Scott Rajeski

Matt. Thanks

Operator

your with our question. from question comes Morgan Please next ahead Stanley. from go And Pokrzywinski Josh

Josh Pokrzywinski

on here. Hey, guys, morning good live being and congrats

Scott Rajeski

Thanks Josh.

Mark Borseth

Josh. Thanks

Josh Pokrzywinski

Great.

don't just process to specifics But feel maybe just dipping folks dealer sign-ups? ground in something that a folks up solid up hitting a signed toe pun we you've gone with should as I'm So is all to on these I over to want well. been are pretty the probably running question, trying that I dealer? seasoning How to, how too that installs imagine, the are progress here. get a water? that's coming follow-up that market given of Yeah, to dealer three ratcheting more or the maybe per pay the last many would for versus on on the attention nine a in report into maybe just months, Is understand intended the get you just have that many backdrop.

Scott Rajeski

We like future. I that that one, in Josh. might use the

the numbers, Okay. right, or Without to strategy, existing to day week a a installs them install specific let's to dealer giving eventually to also week one signing ground. new dealers, installs again, but working getting base the in with It's back pool the from, up two the getting grow, built getting five and that week, a say, it's a

and consultants with can with the pool team process camps them are and for they installing get. working to on dealers dealer of boot is holding number sales a So what partnership. perfect the more our more maximize installs business the that train We're to

that with and would of it's So I us. well aspects all going both just for extremely say on fronts,

Josh Pokrzywinski

whether And hear as you transportation, you thinking labor various about things, move see universe of That's maximum the the when So we side just it. them pinch How pain of then here. do we we points, do the margins inflation think of when about year? incremental the on sort or improving? the kind or helpful. it's phasing through material And those things margins points? about reach the should Got across all of some or

Scott Rajeski

Yes.

of we when a stay in and our increases our think margin. about inflation, of pinch the Mark the that talk to price way So kind points, the with Josh, the chain ahead I'll look I'll and address our model inflation marketplace, all the teach you at through of dealers is supply part consumer. little I And the let

think XXX have every industry, mentioned, again, been we're Materials, like or a to think have to chain has a ensure let's in continues material XXX, supply team I the fronts, last have So as we over say, historically. good to through Latham. good battle to done be several need. margins expand over job we for position many months. pools struggle I board there And hired very not that on the continue almost across we the we all our a employees a just really managing but Labor we've

been I nice And to see look, us constraint team. not going for those people great our when to I that's the we'll throughout point. continue just headed, every Latham paid look add us. to think Europe? into rest we're year. It's as And it's the day. continue want team do what – at We bit managing the grow. on do the facilities you is of we let comment where at will a growth you think this overall, That's manage and it not all We and they business, challenges, have a a little to stop Mark, we're to

Mark Borseth

Hey, inflation, with of So of well as And Josh, the you? raw the Yes, guidance. impact to that very we We year. and the that the side our labor It's saw the labor. on as Josh. the would thanks, in reflected quarter, expect throughout results continue seeing as some in – material quarter we we're first pleased start margin How are did expansion Scott. both

can we guidance, talking price, And that. we XX of mentioned, believe we're to XXX and Scott that offset expansion. to productivity through ways continue about margin full basis As points to year find

through So deliver and go the to the year, way as our through able be that we guidance. expect manage would to to we

Josh Pokrzywinski

Appreciate Best of guys. Great. it luck.

Mark Borseth

Thanks, Josh.

Scott Rajeski

Thanks, you. See Josh.

Operator

Please Susan with our GS. comes from ahead And your question question. go next Maklari from

Susan Maklari

congratulations morning. me add everyone. to Thank my you. Good And let

Scott Rajeski

Susan. Thanks,

Susan Maklari

terms up? flowing how move are the are you cost coming remind of around timing the is should we question of about kind pricing. about My building as that of and you're these be Where price you the Yes. last thinking just in costs some terms versus P&L? first Can of thinking on the we us how And just of in through through of question kind pricing? the inflation quarters

Scott Rajeski

Yes.

of through with So which historically. price, increases expand of will to to inflation year continue shown we've announced to we reflected provided. you've the the what margins rest that seen ahead We quarter, and be back us has the and allowed in first the now. again, through here price guidance XXXX, stay three historically We've Susan, the trend what

think So safe that say think color not the you caught price you'll to to phase any in to I behind path them the is will those margin inflation I a continue will quarter at there? compression Mark, And any increases standpoint. see get we in. continue point outperform a from where want to add

Mark Borseth

– Yes. Susan, only imagine, The year, you The would inflationary we outperform I expansion. pressures deliver Scott. more we as only to to be is, said, able thing any thing and add as would differences. certainly margin quarterly well I there some at I look might be the add full expect as timing think But might

Susan Maklari

some us you Okay. have an obviously as on you your that's you update through. couple capacity? of thinking give in And next pretty coming be that And coming online That's Can where meet CapEx should you interesting this growth we that some think then, adding the are plans about helpful. of over quarters? ramping to how about of terms

Scott Rajeski

Yes.

we'll the capacity investments need evaluate efficiency exact quarter. to talked It's all again, expand to But time. So you from did again, the where and what time. regional them facilities, facilities. footprint to those first on And we the footprint when guys expanding existing accelerate versus like continuing increasing about right the in time. we've a There's molds a the equipment, basis, investments equipment, might we the lot expansions different on so over at we them, bring to need of of of over delivery gating continue investments small the in and

accelerate couple we'll here very year next When But quarters. with look I for have think let's on been what's our year-to-date. historically. specifically continue as of the and judicious full approach be we the number spent been say, you'll that at, you again, that to see through guidance CapEx

Susan Maklari

Great. Okay. you. Thank

Scott Rajeski

Thanks, Susan.

Mark Borseth

Thanks, Susan.

Operator

Our question. ahead next question with your from Instructions] Wolfe go Research. Bellinger David comes Please [Operator from

David Bellinger

here. nice I lot a but Hey, guys. apologize was Congrats you quarter if here. this talked on earlier, about mentioned pricing a

times raised raise you prices marketplace? pressures today how you power every And prices You what or across there there do date? much can about to elsewhere. Really the Have in pushback done see offset you've mentioned a to has few is ability talk you your been just But historically? pricing any now -- any and category?

Scott Rajeski

on When at price, we've historically. where we a if seeing look inflationary product push price we year we're averaged around it X% So, again, the historically back do line by you increases, trends. go on based

on you're can what's their consumer. percentage-wise. expand varied projects think and that's to and increases that out, third at seen with pricing on And segments. as price project I well. looking And So pipeline the throughout three months a product mid-single-digit the to in a higher likes and we've pass cases, to the varied entire some second particular supply approach, open they're And when line, with we on In to the look, six as we good being through I'd we've visibility product our think it's coming done push bit And but like little or job disciplined and educating year, one look, product dealers given ever they was say, increase, price can increase basis. we nine and margins not consumer the are, leader the industry in the flows increase total I a just a chain. every it's no the a by price it line price

David Bellinger

seen you guidance. of on better quarters reflective through us have those based moved of introduction on outlook of Understood. up also, full expectations and the much QX if everything here the just then of your this how year, Can for the point? previous year remaining my versus the that is internal at date your And to walk -- follow-up the that your results? And you've

Mark Borseth

is, the somewhere see on and pillars will thanks half X.XX guidance the to in tougher we growth The from guidance XX% QX. we go in second The last Yes. the the of Hey, out absolutely expect put the the do We for our of between business expansion. generate range with the saw XX% the That results seeing the comps pandemic is year the impact guidance reflects of X year of initial we're and through year. David, what that that first we and Mark, margin mentioned. The question this early guidance. of Scott as to half that X.XX. some year-on-year

our the is what baked into yes, in quarter. guidance saw So we first

Q –David Bellinger

Thank very Great. much. you

Scott Rajeski

You’re welcome, David.

Operator

question with your next Wojs Baird. Please from from go comes Our Tim question. ahead

Tim Wojs

question add any already of a terms congrats. out shifting result good you Hey installers building. curious, I of consumers for first presumable I'm as lead evidence that are pool extended until in-ground my we're already times those builders? that just fiberglass to the Maybe a lot in gentlemen, let are morning and have just pool me had, seen of And hearing 'XX

Scott Rajeski

Tim, made I'll not he's dealer dealer you if sold give out, who's and you me if later, call to out. a call a a Yes. get a

you put for dealers Hampshire. I out call hear of the they can we're were consumer one bit. actually You in that It's got dealer, dealer dealt New I the who quickly do you. ability that get said, up quite a who And to do with this a called we We in to able and pool -- in our just Maine anecdotally, pool year. a again, premier

doesn't waking you there. meet for flexibility I a lot pool, in in fiberglass saying a about But that place. week So, homeowner pool, pool can there to when saying, want calls pools fiberglass and converting up putting there we to swimming of swimming benefit consumers out get you're ground from just It next more that the The a demand. of the faster. again, a get cycle want when a pool And happen. buying think dealers a to tomorrow lot a is is you to not more is, place the

make of pool, get may You going but the time. planning we're decision over to project a you that start

a They're I fiberglass, rest up. think kind what I I a of can lot now buying in summer that's can people into now. But next are if And from pool summer. a said, X is squeeze through probably they look, heat who of booked a that Saturday. of decision, in squeeze pick This where you seeing to you saying, the of dealers on the starting of XX are the want dealer you're state examples can you weeks pool. is, coming kind I months.

the to us. can about in a a build for benefit constraint pool or to the that's days faster of cycle build versus labor for and X do month or number concrete that's steel And material for ground a franchisees polymer X those concrete think strategy, install that conversion converting trying need, day all pool pool, versus And seeing this the it to makes a Spas think difficult situation number with fiberglass to a that X of the X you and with So subs we're pool. of dealers. month in get to Premier more much with Pools go his that vinyl big whole I of wall just those success, the Paul pools team

Tim Wojs

Okay.

of picture. the the just kind visibility when kind have But there's Okay. has and Very out you today good. industry kind to constraints question you construction are those of to that think then of versus, market And where do so? you XXX,XXX second new pool getting back What gives we I call historically. guess prior averages? it, of pools, of big kind do there the think demand been that And consumer averaged is

Scott Rajeski

that because demand existing XX there's installation if a stack, pool then probably There's one. on one. you highest you consumer demand one else I can homes about side capability satisfaction back the out of easier make the a that's buying Yes. have that's out the landscaping think not number that pools, ton kitchen there, more demand When swimming US at you the the And a the million look it's have anything pretty levels, homes, I'll interest those and car. capacity. to in much for focus look purchase, today do at the in a swimming remodel, backyard redo,

pools over building, We'll a a to by in We're year. the equate are pools how then significant to that has heavily year. for to XXX,XXX in back to, years the been year XX,XXX So consumer X.Xx, will and Migration convert time next that areas next hot five R&R the a swimming urban accelerate. long over demand it's And a pool like demand housing years. and the to market. discount of generate high more at the XX million when likely five X.X look XX%, that to many last people homes through buy a spend continued and very million the XXX,XXX backyard fact interest strong you it probably backyard has investment would in installs what target this from suburbs the pool in

dealers benefits So demand matter fiberglass, around educating home swimming a the there Pool it’s up out a Latham make Narellan down dealer network just why it's to purchase and then the pool, that were Spa a standing not path dealers and grand of them of pool, decision. best dealers, the the with why & that fiberglass having and our issue, our leading Premier

Tim Wojs

Okay.

back congrats queue. and you hop Good in I great. luck to Okay, guys.

Scott Rajeski

you. Great. Thank

Mark Borseth

you. Thank

Operator

Zener comes question. question Markets. your next Our ahead from Please KeyBanc Capital Ken from go with

Ken Zener

morning, Good everybody.

Mark Borseth

Hi, Ken.

Scott Rajeski

Ken morning Good

Ken Zener

to over points want go just I a here. of different couple

forum of clients, broader this out as us lots to that come these those conversations as I want have use well questions with ones quarterly So up. some to flesh and of

your with obviously, growth, plants. many different you So capacity, have high this

you looks just So to basically what pools, talk can example going answer. quarter focusing but you not versus plan capacity, looks sales I you you're Scott. little your a of pools? But plant, if a Just would, one the in up, like like? smooth in-ground us adding a you give running out had doing in-ground you're for network on what that, there can know context where more what give us in an specifically it's stressed doubling

Scott Rajeski

Yeah.

one and say, I to easy probably I our that I'll share pool. one with own think let's and dealers They give quite a from example want one the model we Latham Ken, to It's model, Fiji. bit. struggle consumers particular favorite time-to-time. the So a my it's go the

because a on high-demand a want that with out coming in just in they a have and going It's two model. model to, so mold. -- two-week next, specific typical the to say, gone it's be months through facility. they just that of plan not So time may particular let's I'm Fiji The lead

and out. want I'm sold So a will say, it they'll call homeowner and

is another do we capacity facility, thousand mold, mold back So Fiji investment, which get another and weeks. hundred time dollar now an we lead x-dollar several add can let's investment. into just do? put what We a We'll our will that two down to

plant-by-plant So with. things model-by-model, those we're working It's very the a situation. are tactical

office Another to a example more some -- in the We would this in pools facilities. add need few trucks with deliver dealt afternoon and yesterday be to here. we

So the and pools big it's car adding because matter rig, a of trailer, of a we to ship have out a there. demand a a facility being able more pilot week five that

the are types do, we'll it's constraints. those So not major and things of

can I of permitting And think, Panama, have network, really our to our those capacity and the model. Fiji switching quicker. a entire good shape our very a get that throughout fiberglass similar applies a have of It's that one-off steel because it a homeowner vinyl right plenty pool and that and it's job done just they We from plants, all plant, pool dealers, polymer particular wants molder our the sometimes now to plant. size

Ken Zener

Very good.

intertwined built how about – Can trends talk in Obviously, with second one which advantage you is could about because bit. regional footprint, opposed obviously, you? largest talk demand necessarily competitors' up perhaps, a the we acquisitions they to that the occurring think an if have capacity for do, your little some national the the with capital added as past. which competitors was regional Second, how new purchase. is through would regional how about plant you from a But own talk don't and or behavior dynamics could you

Scott Rajeski

Yes.

Florida, I fiberglass. that Those that's you Arizona, regionally, region seeing related the great I than all But state, And in. Vegas, another. faster dealers fiberglass. convert think the attacking concrete strength success story, play the think right? material That's could across where in that's we're to territory area Las we're board can't state. Nevada, growing seeing I argue heavy conversion every from Stand we in that to the again, with concrete and highlight Texas, California, we're are to one

entire territories. they and overall, leverage they shorter I year. across summer we're look market think not in really a lose an seeing week, that all up conversion building seeing well following really, Narellan nice color and investment as growth think of have with we're when I the another pretty evenly But benefit in season can in seeing type pool So just their actually general, and phenomenal summer success But franchisees growing really growth rates Canadian glass a classic We're the we're can think up the of usually, the US. the there, fiberglass. pool dealers And there. is versus I in for as homeowner think it's the great there, Canadian an a they pool for you

territory strong if So in broad-based even I trends every really Zealand, nice down and strength across we're Canada, overall. New mean it's I down I the region in concept. there seeing Australia, board. look growth think And same the

Ken Zener

which include some talked maybe guys say, or I know do versus cetera, could about, around like things, America, the let's US international, you just clarify international North comfortable get doing you Australia, America other Canada, would of what's just context I Zealand, perfect. feel versus, but et you to New That's one right, and sales that? North

Scott Rajeski

this in ballpark, Yes. I S-X think I the mean, well. as was Ken,

our XX%. look later. of you as way. of XX% you If number revenue. Zealand, that at And It's around can Canada, follow-up total around international specific New we the it's it Australia, with Think for

Ken Zener

Great. And this. is my last question

those create fiberglass, weather might construction time, because for more non-seasonal the use cetera? weather You markets cetera. benefit et there only about cetera, cracking, of quicker et tiles a not of install, the Is something there on higher the et on propensity of cracking, only because is Canada, but to with more touched temperature the that northern can from differentials, tiles it markets but impact the – but because not

Scott Rajeski

general, it's of the I'd performance type don't better the and aligner. other Look, to than a XX cold a XX fiberglass I in type cost, another it, concrete specifically outperform pool forget say, to that are to life own to I know cycle lower years, I set it It's board fiberglass it, you're want crack, of Fiberglass, every goals make build a any to weather to a to The it climate. across in It's pool, to ever cost, XX-year is own total of replacement climate. line have to had it pool. refinish you're pool to concrete XX% to that than refurbished. ground, that any pool, pool going applies you're total a a would vinyl It do it easiest type pool With in great. there. right. any need anything will the place, out will vinyl Ken. benefits outperform lower pool, you XX% Once a I have and upfront to going And maintain to the have one, right? to eight say, were like concrete do liner you and your a that going you pool, going you're again. just but

Ken Zener

gentlemen. Thank you,

Scott Rajeski

Thanks, Ken.

Mark Borseth

Ken. welcome, You’re

Operator

Truist. Please go and ahead And next gentlemen, our question. ladies from Keith with comes from Hughes your question

Keith Hughes

parity gets to the in mute there. the by quarter think on get was the back in end look of pacing announced, Will question to you you'll Sorry, the second my you half? sort second back would be quarter I that extend of the material on the helpful. Any with quarter? raw guess I do inflation price the increases that and in that's coming

Mark Borseth

Hey, you? are Keith, How it’s Mark.

Keith Hughes

are you? How

Mark Borseth

Good from you. to hear

can And we in margin of of or first inflation, taken. quarter, But that do guidance look look, baked for we the very through we managing stay that. for have we some ahead to that based can labor the mention to price year. to we of we to will closely. the the already and at started that the year first need ahead both situation the the to And to extent price the into continue year, that, our share Keith, I through we actions during and stay able balance would we've is continue in the the as We material productivity your inflation on raw you, expect we're deliver monitoring we and where expansion, more pricing inflation from quarter. thanks expectation take question. to of see So the were on the What with believe, impact

Keith Hughes

Okay. you. Thank

Mark Borseth

welcome. You’re

Operator

gentlemen, will question-and-answer we for any that, Rajeski back closing session. to like remarks. Scott and today's ladies to And turn I'd the floor over conclude with

Scott Rajeski

Yes. Thank you.

this everyone call. morning earnings would us hey, for So, to first Latham's for I like joining thank

As testament day. heard, you team's the strong a every results, is are just to and we delivering hard work dedication which each and

for have strategy earnings and on both growth pool to as call. great a another forward We as over homeowners of time, today have update great the of to brand business our that will choice the deliver a your XQ providing drive We continue and fiberglass material conversion and time Again, thank look day. we for dealers. you

Operator

do Ladies conclude and today’s we'll that, thank gentlemen, conference We with you call. attending. for

may You now disconnect lines. your

Latham (SWIM) 3 Jun 212021 Q1 Earnings call transcript