SWIM - Earnings call transcript Q4 2021

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Operator

Good day and welcome to the Latham Group, Inc. Fourth Quarter and Full Year Fiscal 2021 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Nicole Berge, Investor Relations representative. Please go ahead.

Nicole Berge

to and welcome XXXX year and call. earnings you Latham’s full QX fiscal Thank we earnings our issued is morning, remarks. slide this Earlier our our accompanies the can find prepared Relations presentation you that available press Investor portion where of website, also the on which release, On Rajeski CFO, today’s President Borseth. Mark Scott are CEO, Latham’s call and and

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

are and disclaims obligation to company risks information, forward-looking will website company’s estimates, Relations forth whether for fiscal to the materially. and future The and call, its management’s may by events forward-looking respect of statements. views risks any company’s otherwise, as applicable year subject are results our XX-K statements this statements developments on constitute as These a make in required update and information. on today During that forecasts, differ posted statements, a of number earnings law. that the Such reflect with based events except new beliefs Form any factors and of result Such future XXXX. as set cause certain to expressly other could publicly statements release or to Investor projections, are assumptions, expectations, current review be or in provided the company actual

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

Scott Rajeski

that highlights give detailed Latham’s and discuss publicly growth Thank Latham update our and QX will and earnings then guidance. a joining from which growth throughout strategy, This pools on North increasing through and as production progress deliver to to we share Fiberglass our increased supply over in deliver and another our growth XX% our production XX.X% outlook. strong. am on an our continue growth supply XXXX. company. us In well efficiency year overview levels business. fourth growing key our and of of our we sales remain significant a demand we will I to fourth demand traded Nicole. made Good XXXX you EBITDA a review XX.X%. American enhancing capitalize year full XXXX the provide pools for XXXX, also the Mark year us for Thanks, record fiberglass operations XXXX, milestone our resin on quarter morning. sequential was as and on for expected the call. product improving us growth of resin of as during portfolio. strong position it execute Today, market XXXX and initiatives, full of increases for and our leading net results very a to consumer with year enabled and basis continue posted in tremendous consumer end Throughout to I interest XXXX, growth Latham to QX. positions expect adjusted and across with QX financial for pleased a our first QX, quarter, briefly

tools our in continue thanks our conversion our digital to with continue fiberglass, Latham My pool to We cost estimator. concrete to out the model to material build drive pool we direct-to-consumer from and

of in pools. QX, an insulated at price with tuck-in months. in product transaction expanded our a an of ability aluminum-walled attractive from We This pools. our manufacturer demonstrates premium nimble last new a operations the benefit leading completed of in homeowners portfolio for and interest has to adding to team the operating enhance Latham the made they over also very acquisition homeowner late X growing point proud by have attractive Radiant ability on market vinyl-lined our ever-changing addressable progress remained environment. swimming the quality also opportunities our and execute I to am Pools,

especially our We pools. our the resins diversified fiberglass raw in have material used manufacturing supply, in

Our current resin future agreements suppliers and on them. year advance to have dialogues continue supply improved fulfillment with we

We are resin our we to of process also plenty in beyond. sources in the adding of and have growth support ensure XXXX new to

in we as our to XXXX and COO. growth prepare for and supply to and companies share our new our our and capacity capacity throughout have to Stanley the business. Brands, to to as will over beyond. initiatives, drive in Black am United ideal he XX We with Decker lead Bahl, build chain continue expand also welcomed Newell we planned our global we have and we of the at Group. long-term Technology excited that & comes support resin resin Latham experience and Danaher, manufacturing to the chain XXXX talented supply our initiatives Sanjeev our organization add continue position, ongoing to as productivity and procurement believe As capacity is we support we like growth years I lean operations advance Sanjeev candidate

of progress adjusted devotion have All of of enabled optimization strategy, us engine The leader EBITDA the margin commitment We digital and have our with search done success the remain efforts XXXX. employees all achieved sales more our we on in enabled to deeply work our our Diving the market of key not our combined has space. this specifically our initiatives. EBITDA dealers. could our digital without deliver growth in consecutive into growth XXth and year to of expansion these us and net adjusted

search scaling key million remains spend over traffic sessions page for strong our over priority XXXX. views, our We very website awards with in X.X million rankings back have search and paid improved X our and while

page We also This on duration in are consumers more time saw our means times. spending year-over-year growth site.

downloads continued has enhancements digitally. in resulted our to reality had has virtual XXX,XXX installed includes nearly to enhance XXXX. since app, homeowners This pools over We evolve and and continue ways which reach we the augmented being and XX,XXX dealers now

to expanding to being able future we which we Canada, work in to be on of meet This built drive Kingston, facility capacity broke we U.S. our pool in As fiberglass fiberglass that includes ground installs, share new our January. demand. are

our partnerships We in ongoing exclusive with Latham’s seeing success strategic expanding dealers. are

drive installation continue training And Texas, in to add enabling teach demand to we our excellence their We opportunity dealer especially our to fiberglass similar coaching, the dealers the these scale in on and focused regions. and Florida, sand to to base capitalize Arizona. capacity. Nevada how enhancing We on our penetration, states, see continue to are business them pools more tremendous through business for programs

with one this. the partnership is Spas Pools strategic keys Premier & Our to of

We are drove in XXXX. with really pleased with the exceptional growth we Premier

XXXX. are expand We very this partnership on to to in excited continue

next attractive to is and in demand driven to to be we our exceptional $XXX million trends strong, our and by well to year the be look to X year, million growth we products full large $XXX above like acceleration full secular expect million. market. communities. year We to X-year EBITDA $XXX targets. living outdoor expecting Homeowner suburban net a investments As deliver are to $XXX operate migration In sales for and in we to adjusted XXXX, million of

making is fiberglass. we outperforming pool a where mature to A and financial review years, execute we in XXXX our working of greater together share every means have Mark? well outlook share the Over I seeing runway and continue installed has the below success suppliers to Australia, results key to growth markets swimming strategy is high-quality the our our conversion attainable Fiberglass’ the that several industry. established of for growth. homeowner. in mission XX% market. Latham to to driving and are turn to like strong record currently detail. the fiberglass over long U.S. of a last luxury more of on track will We now a of the and pools dealers look This call our enjoys that forward with Mark for advance in

Mark Borseth

you, and morning Thank good everyone. Scott

XXXX. & First, our quarter that will year-over-year quarter results results first financial XXXX. note compared investment full pickup overview include our All not the XXXX an began booking Pools Spas full in since comparisons year fiscal year and quarter XXXX. of Please I on equity provide fourth are the we QX for to our Premier a and basis in of do fourth

Our GLI acquisition X that for the closed since from results does towards QX we months XXXX. include end XXXX of October

of were year-over-year to QX XXXX month reflect closed Our since towards the results X $XX.X Radiant or quarter sales from acquisition of million full November. of for the million. Net and XX.X% up by $XXX.X that we year end fourth XXXX

covers to by to volume. $XX.X million a to XX.X% our net our X.X% million and year-over-year was increase a million. quarter, product and million, sales increased increase from for for All a three increase the in-ground sales price $X.X million $XX.X for million $XX.X XX.X% pools for lines For of led $X.X swimming $XX.X increase liners

million. in due to fourth QX sales sales by fiberglass And GLI resin stock-based of XXXX the be and We last driven On Scott are sold in net have exclude we of XX.X% entire the part a $XX.X strong sales, fiberglass to about. expense million heard offset lower to QX basis, $X.X quarter growth sales pools of XX.X%. compensation production for profit a million, QX increased would by partially our from year. which non-cash supplies addition for volume talk you increase pleased $X.X QX and of Gross slightly an was or pro by XXXX, increased year-over-year to quarter sales compared forma more if any include Radiant the in was than the

cost compared productivity to sales non-cash gross pool from year. timing partially QX cost factories. our in fiberglass XX.X% leverage fixed due gross margin between the in-ground in Our by and offset year-over-year price sales, expense, Lower improving to was our stock-based quarter and increases difference the last part mix was and away compensation XX.X% in particularly margin inflation, a

from our gross significantly QX. compression improved As expected, year-over-year margin

pool year-over-year our we reduce our margin year-over-year last QX saw from compared selling XX.X% basis compensation Excluding QX, XXXX. mid-November, QX. QX general basis public by XXX gross stock-based $XX.X QX driven selling, points results. we non-cash lower was points With In to with company we or our higher XXX in to non-cash expense, resin Combined in expenses $XX.X average $XX.X sales stock-based increased million QX. fiberglass primarily year basis million our of margin and increased as supply, sales to fiberglass was able of XXX compression than administrative of costs. of in QX improved year-over-year to points over compensation XX.X% compression a in in expenses $XX.X million XX.X%, production compared and XX% surcharge margin increase from to This American were North million or increase increase prices, ongoing by gross

$X.X million to $XX.X back XXX down million or XX.X% adjusted net EBITDA, and $X.X due from EBITDA increased SG&A compensation margin to costs or the of in prior calculation quarter other non-cash lower basis of adjusted expense to stock-based Excluding added was primarily sales, $XX.X XX.X%. cost of by in the adjusted points million million incentives. and QX increased year, XX.X% EBITDA the

million Gross and XXXX year-over-year driven margin EBITDA preferences Scott expanded GLI. adjusted across swimming to of associated prices. were increases and all for and to growth product $XX.X headwinds, Volumes As sales our for strong by our strategic or to for year the GLI million liners. by backlog increase market higher our our between growth XXth net covers total demand, we results sold which of XXXX million compared growth inflation expansion. period, Net fiberglass million. XX.X%. $XX.X opened from of homeowner XX.X% dealer supply the $X.X increased to The the of lines increased our marked the across consecutive product in-ground driven the XX.X% not chain adjusted partnerships year within strategic mentioned, largely lines million was Latham’s driven If $XXX.X million, and the for for XXXX, with $XXX.X EBITDA non-cash in the decreased selling growth year cost pro would network, expense XX.X%, net XX.X% of pools, exclude $XXX.X prior include sales for sales. million. XX.X% in Gross year-over-year net and and the compensation products, our came in acquisition sales sales The from for sales by price our increased profit XXXX orders, to balance forma Radiant stock-based have pool $XXX.X and been reprice difference for decisions XX.X% timing margin

basis $XXX.X from XXX to XXXX stock-based EBITDA compensation, XXXX. basis XX.X% year. was non-cash $XX.X from was Excluding gross points down up Adjusted margin XX.X% last EBITDA million million, XX.X% adjusted margin points or and year-over-year and XXX increased in to

sheet. the to Turning balance

cash initiatives. leverage had increased our interest $XX.X quarter extends to cash $XX.X that expense, we of our XXXX, $XX.X Subsequent was was our XX, period XXXX term revolver in X.Xx. prior refinancing $XXX.X in $XX date and activities an December million amount cash million by million. capital of capital spending into with provided our loan million. in And senior million growth. enhances by loan was provides On $XX.X in million revolving expansion increase of into maturity equivalents our financial ratio total working This principal debt capacity As we the totaled million term credit and into our sales a flexibility, XXXX investments secured maturity initial operating borrowing to our line credit to Net date the year-over-year expenditures of secured decrease credit debt $XXX a year principal refinanced million driven support we and February XXXX. and revolving compared Capital of reduces increases net loan XXXX. for term our facility end, an XX, in and a further $XX agreement to facilities. primarily initial capacity in fiberglass senior related The entered of amount versus

share our seasonality a business. I’d turning Now our to to outlook. on like first reminder of the

our Although they typically throughout and use year, summer swimming and remodeling our demand height are peak for repair as products and seasons we of installation pool are see activities. spring pool the the

QX are historically result, during and a our As net QX. sales highest

year, see and half, the second typically of our relatively half split XXXX, the onset first not the This a percentage of half the sales the between second Looking was lockdowns for at pandemic in total from first a half split even the split. we and as shifted sales net year. sales of historical away when the case

historical more saw However, XXXX. to a return in we norms

release XXXX. Investments and achieve the backyard for this saw in our expect in demand the strong. earnings we of outdoor provided living guidance morning, As you in year in our another to growth in robust remain products the

our and and progress to benefit the supply raw initiatives, including continue chain our times. unique to We direct-to-homeowner We’ve resulting made material-related from conversion in fiberglass. material significant drive in headwinds, and strategic improving levels our lead efforts navigating to model production

We will result, fiberglass actions have the are of and impact our realizing continue to the a actions narrow in gap pricing and surcharges. on quarter. And demand. price first benefits no inflation the our price Notably, as between had

continues to hold As granite, times versus the upfront fiberglass faster and value installation proposition lower including of and lifetime costs.

premium In to addition, products the we’re homeowners’ delivering beautiful backyard.

in comp benefits limited second XXXX. the the ramp-up expected as the in against volume Our actions availability back availability supply first fiscal well of some growth we of supply continued as in outlook resin XXXX, half production, year-over-year of impacts strong material from first in the driven very variant fiberglass comp and resin realize softer assumes the XXXX, an we in in Omicron half the fiberglass given of the by volumes, volume and raw a half improvement our as of growth softer the period and labor half saw

growth XXXX, XX%, of result, sales to of sales of As for above year to $XXX long-term $XXX net representing million, well year-over-year This EBITDA XX% and targets we XX% $XXX $XXX is representing respectively. a the million growth million, adjusted growth. XX% expect XX% EBITDA full for XX% Adjusted and our to growth. to XX% to XX% year-over-year to net million

of We $XX also to guided $XX to capital million. expenditures million

We products. our fiberglass line panel incremental by in will majority throughout increase well new of invest capacity the as CapEx, driven facility the our Kingston year-over-year investments network to our packaged incremental for steel vinyl in as with pool continue manufacturing capacity in

$XX formal we to common XX% compensation of upon little included around guidance, our to pre-IPO the provide year be goods is Class units. which be color In expense. a stock-based $X approximately we Of in want anticipate would in $XX stock-based stock addition to related also of million, SG&A B million non-cash In of of about conversion expense of million, cost about total compensation to issuance and full sold. the XXXX, currently non-cash million $XX

currently non-cash compensation first full we the about expense. our addition, expect to year XX% of represent half In stock-based

first have an unique to the sales In between provided sales. the outlook net operating environment, and deliver million first net quarter given Lastly, expect XXXX quarter, we also $XXX we for $XXX million.

sales. do for as to half Q&A. net I year we XXXX in before the less of we to opening In half such, Scott? I’ll call With mentioned seasonality to a net as that, return Scott earlier, little expect addition, more to than normal turn XXXX. full it back expect And first sales represent

Scott Rajeski

our XXXX, We attractive we from XXXX. drove Thanks, our and repair and continue to market large trajectory in for expect outdoor demand consumer Mark. growing and We products. and are growth remodel in a strong serve benefiting significant

our position material continues partner thanks direct-to-homeowner to U.S. feel our of to We model, are driving good us a residential conversion dealers, our fiberglass, fiberglass a expand transform share the pool time. to of about which continuing we the and and unique industry over of choice starts for as

We have aesthetics. reputation strong durability the and broadest portfolio and for a of quality, products

Continued and pools, another increase us in robust year for homeowner installation in XXXX. actions position capacity growth supply our well in and interest EBITDA pricing resin adjusted revenue of strong and

give consumer-driven X to disciplined pools, fiberglass us pricing in from capacity concrete and Our XXXX material confidence to to approach the proven our investments X-year cost ability guidance drive conversion to management strategy, targets. also and

line questions. the open now will We for

Operator

Our Barclays. Please [Operator comes ahead. Thank from you. with first Bouley question go Instructions] Matthew

Ashley Kim

all on Hi, quarter, a good top for the nice for on outlook the Ashley Matt and for morning. and ‘XX. good Kim Thanks today. congratulations is at This detail

you any just building with are getting potentially what pricing oil, could my ahead impact or guess to resins more the moves about price be? given strategy just in of the in some I first differently escalators even thinking question, in recent So light the

Scott Rajeski

Yes.

we’ve Ashley. So for comments. pricing all the monitor, commodities. the in your outlook good we our flexible inflation lot our to we At that actions to for grow general, and place place, the will in be the ‘XX But key that just not but to oil we’ve I’d got we’ve Look, continue for that given. we surcharges all I in Matt. morning, got Thanks resin, take continue in we say, think point, Thanks to call, we more need filling need thing in is this the can improve a deliver rates. as QX talked margin to with the

Ashley Kim

That’s on to that of just share? grand dealers grand can dealers an from able you Scott. into is anything the specifically, or called helpful. maybe then give? just states on or that Thanks, the seeing improvements of conversion that something growth, area And growth with as as production kind traction kind you And with that of detail more lean out out dealers you of that strategy you’re can there sand harder in any or good

Scott Rajeski

Yes.

more think Ashley. I it’s same, of the

We’re should dealer Pools in clearly relationship That’s see We that just where We more going XX% growing as ‘XX, or the in up well dealers in supply & the as we really strategy. do resin progress across I and the will the exist. production, all expect as Spas installation sand the say, to continues on there Premier better those states to improve. to progress big nice ‘XX we that grand QX. saw the continue has the board. capacity have to state focus resin led More greater

Ashley Kim

here good Thanks, Alright. leave and luck. it I’ll

Scott Rajeski

Thank you.

Mark Borseth

you. Thank

Operator

Please next Susan ahead. go Maklari question Goldman Sachs. Our with comes from

Susan Maklari

everyone. morning, Good you. Thank

Scott Rajeski

Susan. morning, Good

Susan Maklari

just of to shift we all the this feels year. It have on seeing that Scott, underlying hit the wanted the environment for with somewhat could your need like ‘XX you that that some energy numbers. to those – move pricing in place comment order in in are that follow-up, I you prices the

the the cost, just little those give with quarters? on about where maybe if so times price and And of the relates to how could dynamics you more a you next are to couple it coming lead just think that? backlogs through And wondering over color as

Mark Borseth

Marc. it’s Susan, Hi,

just jump a me price. Let on the in little

our into need and as in current there ‘XX we As that and guidance, what’s Scott our got we based on. pricing business head we on we’ve into going baked the believe mentioned, of knowledge our

all out lot there we know, As uncertainty of is a there.

the to implement continue surcharge of Also, fiberglass, decided carefully. very approach we to primary backlog over see need that move the us the in So is that course It things we to flexibility Scott to have monitor of evolve situation business. which – the we the up down gives that we as the reasons it’s the year. as and the one mentioned, on as

we’re year. to where the we obviously, the So now. unfold and take see necessary that, as we monitor good will actions things sitting we we throughout And feel right continue

Susan Maklari

Okay.

to helpful. color, sitting And are of lower to you the I a can color the volumes be sort you’re just now first and That’s the that year those expect of this how half. are. the on I guess, exactly But year? Okay. the about ability ramping you thinking backlogs, bit know half timing give on we then through the and and where you those that mentioned in any back where in of backlogs get and

Mark Borseth

call Again, in QX let’s that point expect it, look currently P&L at the And selling closed in prices that, probably or saw run where XXXX, early late sitting through let’s quarter, pools average the through first of time we we’ve narrow the Yes. our by Susan. all, We to year. that considerably in the Sure, Mark. backlog. price we’ve it’s would to the through Susan. running quarter are all to QX gap, the inflation gap continue say, out lower-priced the as the gotten our that between the fourth and We

in late the of strongly So first half second half ‘XX. more

Susan Maklari

Okay, that’s you. Thank luck. helpful. Good

Mark Borseth

Thank You are welcome. you.

Operator

Ryan from Please William Merkel comes ahead. Blair. question go with next Our

Ryan Merkel

Thanks. A for questions couple of me.

bit little my is, backlog? have And mentioned first just this build to all do question Scott, pools So really, your resin enough the Can you you supply. in resin unpack you more. a off, improved

Scott Rajeski

Yes.

really Ryan, morning, supply resin improved So, QX. in good

fiberglass last our which so came actually into to talked in, of year. The new we back the online, or part in the source we’ve in another recently as started new think come week I source the qualified up just versus production XX% of you actually was had the at two in entire weeks our QX QX, numbers of XXXX. if we QX. production And the year And and in biggest facilities. production look

increase outpace that with orders for not we’re online, rate and what to all to expectations existing we in looking we’ve in to little we and as filled say new the continues ramp but as brought And of suppliers, the backlog, far Ryan. ‘XX, several need resin bring just suppliers So deliver work and and the in a our is the to beyond guidance. even bit that, what new I’d

We’re number making Sanjeev in what at Kingston looking we and is the focus in supply conversion with say, diverse drive, agreements just to resin build as when are we need comes a for story. long-term looking more focused on a fiberglass ‘XX conversion and base. that to plant let’s and ‘XX, that have at ‘XX we And we on XX% commitments to Europe, material sure online like continuing importantly, and

that Sanjeev feel to. with more of current team more the think I a good on we on particular we of will it’s driving future that drive So, based aspect resin for us. what are and backlog And really on much on now the focus

Ryan Merkel

it. Got Alright.

half resin that you what will you enough. is to are and have saying? a maybe like sounds it second So, you when point where you this year supply get Is ramp of

Scott Rajeski

see coming will The Yes. another and growth we it’s then online, drawing the – coming supply. I sources are match to XQ. to our continued as XQ. ramping will significantly in That’s line in year QX, will multiple think entire that right out linear vendors what QX nice And continue ramp on. XQ. in we time it in almost throughout a I offshore focused linear think big we ramp would be as through just say online we about will one rates. we a will improvements And continue And we speak have be now will

Ryan Merkel

it. Got

raise for then or you point that that just about some the at those thinking the And because would price And helpful. in remove surcharges how give guide, us them? breakout guide and be are possible you can you even it’s ‘XX the volume Okay.

Mark Borseth

it’s Ryan, Good Mark. Hey morning.

we guide XX%. are we at between As growth the look line year, talking next for and top XX% of

had As you of saw a we in impact XX%. QX, about price

year, to in I the XX% full XXXX. think was for close it

for XXXX throughout here as growth are to a we today, as sit price we of all as it we So, that XXXX. taken we to the of actions our half thinking likely result got in is place mentioned, the relates we And more we gives surcharge see thing to us nice for need is or what we guide. in pricing to that to think stay That up the in in flexibility is XXXX. quickly expected it as pricing have surcharge, XXXX about the respond the the than I come think down our But marketplace. have more we from

it’s So, to use we manage can year. that lever nice a the through

Ryan Merkel

for Thanks the color.

Mark Borseth

Ryan. You’re welcome

Operator

Please Our with from Truist. go comes ahead. Hughes next question Keith

Keith Hughes

Thank you.

part How Just on guidance? to add XXXX or the – Ryan’s acquisition question. much revenue is of the the going to add to

Mark Borseth

to excited acquisition, you hear have super Look, we about the from nice talk about us that Radiant heard Hi. morning are and Keith, you. Good previously.

overall like is super pretty in when parts, which have around XXXX. top that on book $XX And excited business. it’s I the the still acquired are while relatively component we We of order other that, last booked business think revenue, did year, million a mentioned of well they it, about out small for their we

built So, we we XXXX. are the probably into what specifically, not going But out Radiant. hit to for much see break guide growth we have don’t until we to exactly synergy

Keith Hughes

you out, based volume terms year about talked plan pools you do on you Okay. fiberglass think will half, – total of for And be the up half, ‘XX? for laid in on difference the in do think second you the first between in the sales

Mark Borseth

Yes.

volume fiberglass certainly contributor to sales a the will guide the up volume year-over-year will as be I be think goes, and growth.

And versus increase out couple will more saw to in that reasons. actions the think the And fiberglass in We of our we scale, as are guiding we know, we to QX, we to in our production continue pan versus in in half then Keith, to half pretty coming prior half tough One, we of first be challenges last the little up also out continue you XX% to Two, than half in QX, year. little a second QX when will as year. the even but production a first half I continues to ramp the in have resin do the get more have had we of year. this second the catching comps in while year-over-year off than bit ‘XX. of due of pools of softer half, easier first half second resin the putting as for bit second a comp volume

Keith Hughes

Okay.

what you described half just with pools. Finally, the first in year of given the fiberglass

We to continue alone just half? some margin on first gross compression mix the in see

Mark Borseth

Yes. variety price reasons, would including that expect the really compression narrowing margin balance gross We in with put QX to in are on board. happy into pleased, for that we We pools. expected, the that Keith, as jump compression would the continue a ‘XX. which QX we QX, of gap to and gross and saw on of expect continued to improvement margin was we versus fiberglass shrink the were We of

Keith Hughes

Okay. Thanks.

Mark Borseth

You’re welcome.

Operator

Bank Our go next comes of Please America. Rafe with Instructions] question from [Operator Jadrosich ahead.

Rafe Jadrosich

question. Thanks taking Hi. for Good morning, my it’s Rafe.

Scott Rajeski

Rafe. Good Hi morning.

Rafe Jadrosich

expanding how support? what CapEx? term CapEx be in we Kingston think after guidance run of talk you that do Sort sales rate big the XXXX facility much capacity the the a capacity will step-up of of about about like expansion. The Can opened? for how has longer does level And you

Scott Rajeski

Yes.

then Mark, maybe back take the take the part Rafe, So first part. I and will

comes when that will when sorry, Kingston through we ramp online, – XXXX. So, Mark,

for a the is CapEx step-up we that flash in number significant So, ‘XX. that

are to plant-by-plant right, strategic that continued just a almost months on to time, of the vehicle up the we burners, And what like mid it. see guns to out a over back you the Canadian vehicles, the with we brand step-up late least whether It’s Latham doing we drive point more facilities been gun, smaller can could related will in story technology molds, invest brand. probably look small of ‘XX. You you we few to add we months Kingston at and fiberglass there. other in it get the into XX us that number Europe. steps many still to the equipment, and in of it result for Narellan conversion where we taking at we gunning really continue you the to? if to look capacity as out And And those capacity. bigger next big want all in we it’s permitted have the do to a take things investments, we that delivery the at front. picture continue evaluate delivery to any color base, XX% that conversion But argue needed XX to is say Mark, to in as to to making since try look, step majority have as facility and hold specialty the This got stay was market equipped

Mark Borseth

are those we step-up grow. look, incremental well $XX were I fiberglass to said that just in about to continues going million just demand the Scott. things Scott as XXXX. add, $XX And continue year, mean of CapEx all to it’s at to No, we think because do look we for for that’s where a our million I quite talked would from guide I this

we the of mention very we the investment. so some But in incremental we also XXXX, for But biggest capacity ‘XX. in getting is are the the the so spend of I continue to there. going and investment. to reason production ready we pool invest is step-up spend are for And that Most of increasing look, our that look, demand CapEx to is jump there incur our want also The business. do Kingston Kingston cause on the are as packaged bringing there. But portion going to start strong, in biggest on

Rafe Jadrosich

utilization really Thank think last And helpful. about I you spoke the quarter, That’s then rate. you.

that I think is as the up compare it terms expectation How guidance was we your long-term Where get of in finish below like expect up do to XX%. in that just to then your what for exit embedded to And run where will you high that XXXX? rate? utilization XXXX? did

Scott Rajeski

Yes.

So as back what resin because kind just the production QX, at improvement if rates. an in think shortage of – and Rafe, ‘XX you we look if let’s of XX% about to anomaly just go

the November December of Some all of and year fiberglass in happened the on front. biggest production weeks

to going number in say, using And based the chart, facilities the to they capacity probably you that are of to, are XXXX, a utilization let’s capacity increase XX% to fiberglass normalized back adds how the online back include any Going XX% in baseline, XX% ‘XX a all and familiar ramps. coming of on does not capacity Kingston capacity XX% with that the talking were as we add.

be to So, numbers. additive those Kingston will

higher investment XXXX. rate XX% get we thinking be capacity run on can into to based that you when XX% So,

Rafe Jadrosich

very clear. Great. That’s Okay. you. Thank

Scott Rajeski

Rafe. Thanks

Operator

comes question ahead. with next Please from Our Chan Baird. go Josh

Josh Chan

on the at do and how But it, normal of shift outlook. post-pandemic Like a and pool bit. congrats trending Scott you trending little X home first overall my there? see the we start to guess hopefully, next, the you to to good question, X use see years I post-pandemic more guess their from do the I sustainability consumers Hi, activities. over how staying years call maybe as demand here industry good behavior phrase can morning quarter Mark, demand

Scott Rajeski

Yes.

Let’s try post-pandemic.

We in are just places. different

Mark Borseth

I enthusiasm. like the

you thank that. for So,

Scott Rajeski

Demand Australia well the stay strategy, is sits, of and as on really of dealer. if in the level for marketing the awareness the growth the phenomenal importantly, market know it’s seeing. strong. as is refocusing to European business benefits homeowner have educating think you continues the story and where market about more but the resonating been the benefits all our we consumer, showing And we XX%. And consumer That pools fiberglass direct all at to the on

rate. ‘XX to pool So, no growth X% if top is for with is what’s our historical of matter little terms in see a to we starts what growth X% at a demand grow new dealers to there. a strong, much drive market Xx or That The continues happens, going make demand there. faster bit slows in conversion extremely

back when we XXX,XXX working into the U.S. many peak in country. the double triple with We of the look not booked capacity step is if and the new in And from it back those of being dealers. pools look, at ‘XX. to starts of to in pool thing XXXX areas was one kind out are Orders still are a in far are cry

my So, swimming one XX of to back U.S. million of the And today. pool favorite not a a numbers. in go homes, existing runway. I lot there’s have homes will do

backyards lot looking to So, pool them. a have into there a is still Latham put of

really So, I on the we Covers is business performing segment. auto just adoption well. go to also Again, cover feel about want strong the to demand look, is front. that’s of And resonate the really to that that that’s in back will extremely product And continue that a known. homeowner we level as starting see not growth of awareness category. the I at story And the well. think nice

Josh Chan

closer. Thanks close color. That’s conversion getting guess fiberglass really into I for And from that, is perspective, dovetailing encouraging – the XXXX that.

And so that rate ‘XX? how of can what out confident for industry that And in it mean if does that XX% of to the are laid Thanks. growth year? next penetration you does, get your you terms sort that

Scott Rajeski

Yes.

to XX% the if ‘XX, guidance in get trend number think I continuing starts that of anticipation you are. with pool that’s we the look at provided growth to where ‘XX on and that the try for to

– ‘XX since do capacity years resin how X we or of doing years. a at away, out in need year now we fiberglass double that’s work right where and we in the on we think and are we And the ‘XX suppliers. be Kingston. of benchmark I looking X the reset kind with really next are do what at the ‘XX in the to business It’s looking is are

and still we feel hit that we confident pretty number. can So, comfortable

be on starts getting here data few the in months. PK a pool will We

We to still business will sit that outlook for we resonates. extremely through story we strong the but continue the fiberglass analytics, are this can double down, and conversion go believe

Josh Chan

quarter again. the for Thanks color great. That’s and congrats the on

Scott Rajeski

Thanks Josh.

Operator

to question-and-answer conference like the our over concludes I to any would turn closing Scott Rajeski for back remarks. session. This

Scott Rajeski

you. Yes. Thank

few So, us. call go as there morning, a on the out just said, back all fronts remains the points I all globe across on consumer kind just this for categories of demand product for to key strong to extremely

Our XXXX. move resin to will continue supply has and improve greatly through as improved we

time to continued morning, We Kingston. and want more partners all guys the this I Again, great excited I out great demand that’s going I our was capacity am very to your thank we all just tough and exceptional year. that’s add to in in challenges, important a today all ‘XX have importantly, a to And just about you. and that curve stay big continue great, deliver to for the many, you growth I of day have support, front and out your want in safe expectations thank hope laid really Thank today. the XXXX. results. Despite decision are investment to many you and for team us ‘XX just dealers of

Operator

for today’s The has concluded. now Thank conference you attending presentation.

may You disconnect. now

Latham (SWIM) 10 Mar 222021 Q4 Earnings call transcript