SWIM - Earnings call transcript Q1 2022

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Operator

Good day, and welcome to the Latham Group First Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Nicole Berge, the Company's Investor Relations Representative. Please go ahead.

Nicole Berge

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

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

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

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

Scott Rajeski

earnings our joining Good Thank call. morning. quarter XXXX Thanks, for us Nicole. for you first

and Just a celebrated that in we've our we accomplished ago one-year am that IPO, the time. few of of proud I all anniversary weeks

our delivered and executed strong strategy, constantly the consistently have growth. on We navigating changing environment

to want and and dealers, a thank in ongoing partners, position XXXX I We of investors in have for our entered support. strength, their employees,

educating and was and seeing we homeowner the fiberglass. hearing continues and connecting quarter as first them the the market fiberglass excitement in on on is by season. for across homeowner road the from to country. in encouraged demand with grow. pool late we and head What we're Latham a Further, the dealers peak proposition is are The both awareness for been consumers the We've dealers the the a ownership board early seeing strong of of pool the value is across and of we're into building one strong benefits brand anticipation

homeowner We can in interest the we them to and is pleased our excited learning to continue the flexible center dealer ability just quarter environment. The new and is to new and our during in provide we in high demand many are installation are hands-on filling was our And we quickly demand. pools measures our schedule for up at training education quickly in one to world-class rest the on of training focus this Florida center this is is we now This open. of that that year. a technologically increase The we taking and dealers capacity and welcome successfully help dealers enhance to meet advanced onboard there. continue are

existing Our expanded sources. and we production supply material as resin fiberglass to sources continues new our brought improve our from

QX As last top year last versus sequentially on in a increased came year. sequential and improvement in QX about QX QX North XX% versus American a that XX% production result, of fiberglass

our normalized say that competitive key business. lead other And back continuing in improved towards of charging and many now. fiberglass I'm time a Lead across progress especially, across make to we us of are continue fiberglass for were that to pools on order is to lower focus on all price improve than lead proud We backlog, product ordered models, a the times plants our tracking our at times are categories. we

recruitment We variant related enabled beyond also February. navigate during and to employee in direct labor labor turbocharged In us ground positions. to our QX successfully January the open efforts headwinds meaningfully and term, this filled

Our branding with of competitive have work continue leadership us ability in future engine regional strengthen the from our continues demand initiatives search market. in create to digital an manufacturers remain growth. important to The and subscale drive driver differentiate to optimization we our position and done

sessions strong categories. organic traffic million X.X remains views thousand all traffic several our rankings Our has across page web year-to-date. website our further search in This with also product hundred improved

develop to build continue to we their addition, dreams. empower that pool a homeowners tools In

year-over-year off to successfully We have of made XX% adjusted speaks today us grew efforts the designs disrupt enabling updates global great our branding and our with and to their different is Getting calmer QX our a initiatives further excellence view about to All the a to of year. drive to these was adoption fiberglass. users ability the sales XX% style. digital that fiberglass key product operational approximately tremendous team's to navigating and work growth great while all areas that to of to EBITDA difficulties and of year-over-year. QX the coupled net demonstration supply the look result efforts, execute awareness start chain. the helping what grew And the

a QX. few continues impact based to new to we of challenge each expect which business quarter, Our of short-term

First, supply in material a are this, end, relationships fiberglass ramp import temporary we others into continue challenges. many and of offerings. to supply immune this for fiberglass are QX that this of supply like several chain up To shortage to we return leveraging we we to full the in availability production face expect material goes are of not short-term experiencing during of vendor to our our our QX. environment we unprecedented address that To and unique the early an of

supply for ability productivity supply team our revenue efforts. to our chain has fiberglass supply through quickly in a diversification done as pools, shoring have proven job both We tremendous to up challenges a respond initiatives our

and today's environment. chain our saw breadth relationships of We us XXXX. dealer the believe XXXX and supply Just as throughout supplier difficult strong offering to in will enable we navigate

dealers’ weather unseasonable impact the install in Canada. in Midwest of ability pools Second, Northeast, in April to

gets approach QX, QX As and it and we quickly. months building expect in up we to peak warmer pick installations pool

grateful many on our April, and know, to mitigate there And in efforts the capacity. the at of we none no of injuries. experienced proud impact assets as one the I'm report the of of smallest at Odessa resources you Thankfully, fire in incident. I this quickly team's to were Texas. Lastly, of redeploy lost facilities of am were to time our our employees fiberglass site

this fiberglass our sites orders. manufacturing capacity ongoing have other to shifted manufacturing production across accommodate the from facility investments which footprint. have additional expansion for our We Thanks to

of to the site for location cleaning service future process and We region. are facility currently the in for in the the interim, distribution in Odessa uses the up evaluating using purposes we the are

and QX production full impact will fiberglass sales year margins, will quickly our to manufacturing to this as Odessa Despite issues, as these the the we near-term enter the Although actions year. ourselves about net building taking facilities. pool we incident impact on shifted anticipate gross and the of other we the have minimal peak we we back half the season position feel success for good are

expanding where in product into capacity dealers growth our across or continue have are installation orders to XXXX their additional and book to our dealers through portfolio our continue crews. see XXXX, We even

ensuring consumer supply pool a drive engine marketing healthy digital Our of them is to installs. more to

of of contain volumes back income the resin our availability will experienced because actions up We volume we half supply growth we ramp in softer the of in a the period of as fiberglass realize second the year the material of XXXX. raw half benefits of challenges

pricing cost on and counter labor. enabled Our impacts raw the have inflation freight us materials, and actions surcharges to of

the does although seem to see the rate We cost be increase continue of to inflation abating.

with growth we addressing product year-over-year levels we our remain growth net to proposition current respond We to focus the and continued health our which industry, adjusted in comfortable Thanks market the to our are year-over-year and prepared of value XX% sales quickly guidance will changes. are implies our XXXX operational in XX% to our And growth. strategy of future on remain offerings strong intact. inflation of any excellence our pricing XX% to to our nimble EBITDA pleased in reiterate fiscal XX% execution

build we the our our demand continue our business expand products to manufacturing further to for for long grows, capacity. continue term and we Looking ahead,

line We panel pleased remains growth. track steel capacity are highly begin Fort new in Wayne that more the automated which production share of to our final to and in our on Indiana, efficient facility also will an in support state-of-the-our to drive a stages the of future a installing I'm for new Kingston process package XXXX. construction manufacturing incremental pools

The the in of outdoor company to direct which pool hiring efforts category at in, backyard remain of remodel only started our the confident new the the the greater remain to program next market dynamics common as also leader priorities up and with large deliver market is The have compete with Kingston over homeowner I'll allocation attractive every investments we we our approved share our authorization Mark? the $XXX Mark who years. confidence an X repurchase shared to capital that, growth. financial by the turn detail. of With of results, in future Directors have call our our Board outsized in We facility. in repair and and stock ability in continue review a relationship in of is with to million outlook pool the the over

Mark Borseth

everyone. Today, morning, review results of first fiscal I'll the discuss for you, quarter year. our and our Thank good for XXXX outlook Scott, the and

of $XX QX note first XXXX, of Price of continue very $XX basis pricing QX benefits million. the period are overview actions. first as XX% year-over-year the represented QX quarter just year-over-year compared results $X addition XX in $XXX increased basis I of is XX% all million of million. increase million was which that points stock-based or the to million. sales all or about a quarter QX profit excluding XX% approximately an mentioned increase non-cash a growth impacted XXXX sales. expense by pools, These offset of of Net outsized compensation $XX increased product fiscal in versus saw the an sales a by compensation sales growth, to year-over-year top stock-based to about XXXX, XX.X% partially recall, increased year-over-year. which non-cash X% last we're and package a results. versus $XX fiberglass to a of XX% full you for on in-ground sales that were which and tough sales increased are of XXX% QX. somewhat growth as of softer on in offset business by This comp. by Volume lines relatively Please XXXX. strong sales, in Net net three our up million the where an Liners pool was distribution was channel. by million part $XX our about year-over-year swimming we margins our for strong led driven in $X.X about sales, First, gross million was of by of quarter grew expanded to QX Gross growth realize grew expense net we increase comparisons year

and to labor earlier Scott to continue materials, inflation offset freight raw actions which pricing as Our on increase. mentioned continues

we've However, at increases of rates quarters. seeing than prior been lower in

Our also levels, average staffing points. year-end and which business. to benefited in the increasing by QX of fiberglass support to and the backlog. supply production to from are our inventory basis QX particularly order priced aided gross building gross XXX prices Thanks through fiberglass as margins margins our business increased which we selling lower work led from sales the improved

of inventory impacted growth. We by support expect were infrastructure cost stock-based to the XXXX. expense will $XX volume of $XX down levels In ramp as XX.X% increased or in reverse general leverage to $XX selling, or of QX non-cash as balance we million increase fixed XX.X% This about to was driven expenses about future million Gross in come our by this million. administrative sales negative also of and primarily margins million QX, year. $XX benefit from the sales up a through compensation

million increase or the $X Excluding related nice providing the growth versus prior increase with in million the some Of the costs balance year the about business. bottom costs ongoing related about company to XX% line. increased leverage was supporting expense, XX.X% ongoing the public of $X to non-cash SG&A to stock-based compensation

about was non-cash XX.X% QX sales. of million Excluding stock-based SG&A or compensation expense, for $XX

$XX EBITDA increased a XX.X% our net EBITDA of As And basis adjusted to to XXX million by result, XX% sales. or adjusted $XX.X margin points increased million.

balance Turning to sheet. the

of million million last $XX $XX X, our of year. $XX and activities in quarter we seasonally first April As of million. about equivalents debt cash driven total had versus $XXX Net in the cash XXXX, million. of $XX cash revolver on availability used million was of and a operating

of As inflation. inventory supply by inventory. sales driven of in tied well strategic the impact a chain to result of to both was higher increased minimize increasing as a decision increased part receivables as cost levels The interruptions, and by any

leverage quarter last XXXX our repurchase compared $X times expenditures fiberglass million our totaled XXXX. The debt end today, to expansion increase primarily QX of on As touch to about Capital capital same share first the in was at minute capacity a like year. in related result, spending of net fiscal million light ratio a program $X take In X.X to our the the was in less than allocation to quarter I'd capital initiatives. announcement priorities. our of

CapEx and have creation. our as manufacturing over reinvesting means and we business, foremost capacity. to investments is growth a our spend to we significant value business opportunities returns priority first in a our accelerated continued been as the We've see As in increasing drive this time as generate fiberglass

a of acquisitions tuck-in will and selective investments. Second, to accretive and opportunistic we be on history have business we executing development M&A continue

Third, debt. of pay down

We balance low strong have to EBITDA adjusted sheet a leverage. and net debt a

approval to million $XXX Lastly, of share we our next of which repurchase authorized announced over us stock purchase program the to X-year. the up common a

growth balance generation strong organic to continue position business. investments and to us flow sheet enables Our in cash the prioritize

As flexibility would a value share shareholder windows the shares arise. while strategic to opportunity drive well providing We of M&A further program. through expect repurchase repurchase us opportunistically to as as also

turning Now, our outlook. to

$XXX XXXX. representing range of to we the $XXX in saw XX% growth. on million. million, $XX sales to release of representing to guidance to morning, for you outlook And million provided year-over-year $XXX earnings our to of EBITDA As million $XXX XX% Adjusted Net in million million XX% the capital $XX our this growth. expenditures reiterated year-over-year XX%

continue taken supply as deliver XXXX top we sales a team's that of levels to addition, execution we few positioning now demand well are fiberglass. QX, we to X made inflationary sales growth in net plants. XX% our production to XX% challenges our strong pricing strong and sales. our pressures Scott. of actions back turn first represent our With year-over-year We in times and quarter half across Scott? and as Despite to Consumer our year. pools improving another I'll about comparisons. robust strategy strong drive In in expect adoption it lead short-term full-year of to of digital advance progress outlook. we We strategy, continued we believe guidance we and many have at full-year to the confident resulting remain fiberglass confident in And on net as counter our as we've delivered to guidance significant range, remain first net challenges brand positioned the midpoint for result, resin X-year to in necessary awareness of is well of demand and help capture our navigating well us that, a and growth

Scott Rajeski

the every am Thanks, that for us grateful have our Mark. day. and experienced works so progress better make to I proud made team of we all

Our fiber the these impacts awareness remains continue strong conviction our as imagine glass to experience. year great value seeing was pool a we in fiberglass. and to we forward QX success drive of conversion strategy start buying spread proposition education our the positive continued of and look to the

the open line now for will questions. We

Operator

Thank you.

go Instructions] [Operator the Today's begin from Barclays. first now Matthew question-and-answer session. will ahead. comes Bouley with We Please question

Ashley Kim

you is on questions. this Matt taking Hi, today. Ashley for quarter. Congrats strong the on Kim for my Thank

So, QX coming strong. the just pretty margin with in

else these kind volume is of XQ there implies guidance. this loss with mostly looking step full-year call through leverage cadence. that the of the in levels to a rest or of out we Should from I the think anything think at down

Mark Borseth

question. Ashley. EBITDA the from full bottom-line don't quarter. a with thanks happen morning, to year is, EBITDA good our and lot and you results, hear A Good for but quarter We mentioned as first you context Nice quarterly your there in Very growth us top nice margin. things some pleased provide very our expansion. of for guidance, margin in both

debt. our way have some deliver see probably ability that that. in know to our we very through go margin, as don't look the back in challenges We our inventories, I that year we strong was we think balance a and build also QX QX. nice We pickup guidance had down gross and get at go our from We about as the inventory of we'll few work as of a through. very going and full-year We repeating we're feel but some the short-term through year the to good worked which

Ashley Kim

think things question, investor and to sir. conversion dealers’ about keep second right. continue downturn investing of after of how you order what additions for That's in you my material new marketing new All Understood. would to driving do capacity dollars just helpful, people, going kind kind then like it through

Scott Rajeski

So, Ashley, good morning again.

if there was sheet We lot a business. a had of we've generate very So I cash think strong a flow. healthy but balance downturn,

of to fiberglass will the versus Total concrete do upfront penetration one product pool. lower that what we ownership. We cost that a and things invest of magic with the a cost could lower continue driving with of story

the we We liner -- all well. Make demand demands pretty generate to partners lead generation standpoint, pretty have just we will and remind a of ours, recurring drive we business push good from our also everyone, as of and construction a dealers. full of engine to cover our to a revenue with lot did which new segments believe continue dealer sure the the

as backyard. to invest and long-term and would down out the front in of in thesis phenomenal believe the consumers continue their want trends this demand, stay the industry So, to in is capacity. invest hunker out secular We our continue are there we to to want we

to out be need what to pool forefront we stay in there. leading do the do brand will the to We

Ashley Kim

I'll there. Thanks, leave Mark. Thanks, it Scott.

Scott Rajeski

You’re welcome. Thanks, Ashley.

Mark Borseth

Thanks, Ashley.

Operator

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

Susan Maklari

Thank you, first question everyone. is… Good My morning.

Scott Rajeski

morning. Good

Susan Maklari

a Thank side pressures any on the roll year. we My guess, context that just I abate. you mentioned should the thinking of to of inflation question and first somewhat Yes. you. how things. bit through can you that on give magnitude are more is, that how you about know context those seeing little I be the

Mark Borseth

it’s Yes, from hear to you. morning, Mark. hi, Susan, good Nice

it mentioned, seems we increasing gone. be do than seen. is to not As to It previously see increase. We its rates inflation we've continuing

we're are nimble expecting of and the benefits pricing of I staying dynamic reflected first is I pricing and some as of sit very about actions then the going our gross other today that to see taken. continuing feel quarter. think and of closely. We in good the we and adjusting forward. we to of we Susan, ahead really continue. continue our monitor was we've other inflation situation it side We're be will that that monitor to here think that side those very to that to we need of in realizing is and curve the it the here actions the margin It as continue we'll very we to some

Susan Maklari

just color. Okay, sort shifted are are the willingness When talk concerned different sort in the up environment. about year? cross backdrop we've macro hearing then what about any obviously recently you to of pools, come a overall as coming into on consumers' All wins that are concerned guess, there and rate dealers about to has little concern dealers rising a interest really there and ground. more the bit. I today What following lot your that's a and through. the And on helpful consumers, spend of these been has inflationary of you

Scott Rajeski

A out well. really dealers. term, I are us. for with the pool seen we've for XXXX the the back slowdown view level the at early in as few demand not consumer been quite think is out the a And short folks recently Many chatting actually medium Susan, general into lot our are say a and of installs. and in dealers XXXX with been out through booking we've I'll we've our there dealers talk booked So, announced, new

dealers in have also Now, the country capacity, ground they there still year. have we can of the this get pools where that is pockets

crews, continuing we and lead up there. maybe for We're dealers. to dealers our generation see demand the plenty to have engine there's We That's make we where may keep are sure out who add cranking of beliefs our a on that demand based slowdown.

story, it not increase. if think I favorability everything But this cost which think help to with interest we pool years. many the cautious watch feel general, and as it decisions made we will buying over or rates strong drive I that's with look one can it of in conversion be The project. do months less need and

We're were lot demand will we for We where to to of before our long-term the industry. to sit off And that us room good think the there's leads peak and feel continue of run projections still drive I in we where the dealers. a of with well and here general. really we still

Susan Maklari

on up quickly. following just that And really Yes.

the made down early is that even all think backlog? ’XX. should comment deposits and put secure then that's what we You pools exactly the through their year you've all those about into this got people How indicating? that how have the that the, or Are on parts backlogs way of

Scott Rajeski

seen pool we for a But was don't, any trajectory to consumer down again, right, we the not putting think various, homeowner a significant in is extent, it's for take Look change the from at at of we've if industry of it. it homeowner they're pool to flip X% it for next for that we buying in we varies see the and But are deposit just level power waiting right, can the decision. to some. cancellation, XX%. that cancellations, times or year it the a in I of really don't couple there of cancellations us least any this there level

consumers It's it. the family they've not to once walk getting to and importantly tell adding that pool. kid from in the tough cash decision away children, they I more away the the walk from once deposit that a unlikely to to think going made they're be

were pretty We And this crank So board. the driving strong stress to that. the lead I again, the talk solid can't we the power worry and think one it's across the about and that it. into We've of that off in up backyard home at the don't homes right ability in SCO a worry pool. don't about invest it where demand. folks existence all. now space. replacing are don't how We out that many there, outdoor have something Homes out about else of wanting their swimming in lifestyle

Susan Maklari

all Okay, you. Thank with helpful very That's right. Good color. everything. luck

Scott Rajeski

you. Thank

Operator

And your next question go Pokrzywinski Stanley. Josh today from Morgan with is Please ahead.

Josh Pokrzywinski

guys. morning, Good

Scott Rajeski

morning, Good Josh.

Josh Pokrzywinski

couple guess of is to you has yes, fiberglass may us of trying just GAAP Well, price to what what could start so might all-in just, of consumer first the questions GLI that here. looks we're a refresh the of I the kind where relative coming you pandemic for just versus sort maybe the on think be where of looked a over where at like a in inflation just kind pool like pool are time. see versus and on

Mark Borseth

it specific dollar think question, without or giving Yes. level fiberglass say get Because and gone, concrete region to amounts. I'll I good high Good, varies versus right. Josh, region

I I but think just consumer we versus at The It's GAAP in in have that this range could to X an think I'm of resonates is that from because out still by backyard throw XX%. hold ticket pricing overall call the standpoint. XX%, concrete exactly consumer strong. we the GAAP data average let's last the X the advantage pool still say I've years maintain seen. you level it's price the not, it rain for has a I'll that same XX% the in average But over just number still to up there the us. still again thesis gone XX%

the it maybe well price one the where great We're pool driven is didn't really conversion I We're the little this product. a more continue seeing look, And higher We to being success tool the to great homeowner us pay on plays still a acquisition there. ticket rating want nice there. lower price. really think where for see bit a entry-level

with fiber we the still the through have which sit and advantage, all that full that up product for premium product We is glass, the the level today. we offering entry us but powerful where very way pool maintain from

Josh Pokrzywinski

strategy guys That's down best know had one to been dealers it. to that of of then growth of able your on helpful. you X sort the sort of you has the Got more have past dealers be volume more. that dealers here, bringing versus years. you But kind getting over around And of would even sales to more I break much seen per attribute sell if the that how kind of to dealer

Scott Rajeski

Yes.

Over the it's our XX.X past of rights. probably data, X

there. We remember, challenges with one to some you If there. really drop dealer best to the through you as product. to were I of off out we dealers year had not than on go rather last better want the the We, our we and that move back Right. make of focused supporting bigger Right. sure they supply of

advantage with the core use doesn't slowdown going I capacity the new we've us And and dealers. it on dealer has from is think incremental That we something mean our stopped existing signing it's bring new up always now. our come dealers, big we're revenue majority to of base. driving thesis that's probably the a of I say, think lever our to So to at do would I what

Florida, about new we the talked down training actually I opened center think we X there up in down weeks. were

Board camps, go of talking extremely through all down next entire an boot point we stand as at all for facility. at It up, team the out year. done that we'll be we're for is work meeting sold there. So that has our impressed some and of get our I'm The

Now in product full coming well fiber array install packaging them be the how those boot to going who've teach dealers as glass pools are to some to into liners dealers new auto camps the We the us pipeline for as covered went did were comment we training. to or like hands-on X last boot for new the brought who in on that camp not past. to us with camp years able we the X virtual boot training worldwide been bringing

dealers So flow a the in the to pools we've industry whole. and you, ground we're the out camps rest in creation with continue in tells the sold get existing boot through fact those of healthy of got, we're that year to to more drive good that the pipeline the capacity the new for

Josh Pokrzywinski

Perfect. Appreciate it.

Operator

Please next Ryan Merkel William have Blair. with [Operator question ahead. The go is Instructions] we from

Ryan Merkel

thanks for guys, Hey taking the questions.

Scott Rajeski

Good morning, Ryan.

Ryan Merkel

So, for bleed from you my these XQ, the headwinds sort then that recovery quantify you XQ and in is most to do of of the X that XQ. related, EBITDA the or some the recovery also first you called of issues question from out us or sales Can help impact just either outlook. see on into

Mark Borseth

question. was a chain you. of in through of Hey, But Ryan. from term some and and seeing up second that when the It's month QX, QX challenges tough happy it's with which our things, quarter. strong very hear the QX will very working it we so and the be April incident have year. the short those which impact Scott, for of really We X the minimal then by way believe the couple unfortunate Thanks of Coming the to full there, in as off or did are mention Thanks. on posting challenges pleased Mark, we're nice injured QX that kicked of end experienced today. fire, supply we that believe we're we about you our through on very nobody of a whether nature. will that think really we that kind weather we face in top

we've those third, impact a at think things, short-term looked of probably end can we for as as the a and of those you in that at think day, about again the I QX. those split

and half full color that to our in of for we mid-point strong be to going of think We As we're that XX% it's a QX going see the QX XX% here year. some to around with we're first in what combined very providing split. that guidance result

things going we for So together, two half. those you the land put there we're think first to

balance call I I this of the we volumes the about the pretty the first we performance see expect in would half. our had as year in to for coming in For of year. in the unfortunately, strong year, the half volume then last challenge is year, with We of half this year, we on tough throughout the in a talked us half off there, year. the the picking up when didn't Ryan last thought availability And think we second really comment softer resin thing have significantly first second QX

half. we're the So comps coming some on in up second softer

second pick expect this which we're to gets very to the year, volumes in stand to year So, us the half up by today. we'd then full of see outlook that happy

Ryan Merkel

for really that. helpful, Thanks Mark. That's

Mark Borseth

welcome. You're

Ryan Merkel

question the of taking For back a perform been second this I've Scott, about all how a maybe might consumer. in lot my business about worry your over questions Scott, to downturn. to

a if how helpful of three but maybe discuss downturn sale be I a decrementals if specific, to think it So, a look what see each see think segments might decline? margins you looking your consumer anything you about then could I'm like a even perform range if product we or could would also, for and not it. way

Scott Rajeski

Yes, Brian. I'll model this also answer for to together you one. quick financial put a

Mark Borseth

[Indiscernible].

Scott Rajeski

so business different understand four created we've High-level, three, I is ago, think everyone we years is just the XX were that ago, for from where five important years thing ago. years the here to

we're the So, overall the terms of of as as business regional Australia-New variability better-positioned Zealand. cost now the product how offering we the in created, I have and business offering well we in structure the that think run have, we diversity also the down of we've in the much

better been. we're we've than So, ever positioned a lot

you and business. the healthy repair growing product us that market for very think categories, different always segment of a replacement is the about If

new really you without that you go If line you pool very swimming a cover, want a need a can't long. new and or

pool You want your operational.

business as get pool don't might anything, If uptick, see are things to my tough. really downturn an you kind that's where I'm making going So, 'Hey, people are any it see the decision, redone. we of typically goes.

lower category, be right point to pool, and cost Let's other product versus pools the at of total we upfront home.' to pool which the stuck cost say is in-ground of going gate I'm So segment. we of competitive cost the price fiberglass advantage ownership. the the I have out have the think Again, a concrete and packaged those of

think continue as let's the if fiberglass think would accelerate. liner grab the or slow pool, such been concrete really other say point of that and category gap, a is we've a is stages out, vinyl can of to power starts, down, I efficiency in again, component would believe it growth we one to your and long-term what share so was or from category, If early, driving see arguably, year the why, pool against I And Ryan, even to critical of we're cover our say and flattened lot slight offering. our think thesis the breadth talking of three The and or And public, about from team we growth the a there that variability come that's containment, pool would that that's a the post we just the such out pullback, Latham. in So, the we cost board margins of of all have our penetration a we the to from what's through, contingency, the potentially great early confidence to we grow. any All offer down, single could our a team, the about of been how Other be pretty and there. testament the much period, than at years I the the a pull scenario in over and cost we the we've that, many recession weather have got this let's across strength deep of the should challenges of triggers where the but pretty across that again, this from can thrown three-year here brand that's be programs think we of business has we able of how could board and if team at a result out I dealers is us last to on XX% And performed back top-line operating and every penetration XX% think And to that over doomsday continue the the model that ours. you we since safety. we switching healthy is have push became maintain products. our scenario last on really and scenario algorithm we cover product. margins auto to drive

Ryan Merkel

Scott. helpful. Thanks, Really

Operator

And ahead. comes Woods question with the go Tom today Please, Baird. next from

Thomas Wood

morning. good guys, Hey

Scott Rajeski

morning. Good

Mark Borseth

morning. Good

Thomas Wood

on side. just the Maybe demand

pool kind seen level perspective guess think the households cohort income of that's higher pun buyer pools in incoming change household. there any lower -- with there, example, orders? you you you the for kind I for kind are of intended So income buyer from less new kind about orders or of the As have in income seeing pool of more orders and out from

the with cohort of the on new what kind level orders. wondering like Just looks income mix

Scott Rajeski

which there is into be -- with that couple of Good detail point the few don't of to price our I see out to at level. The it premium the pools But sold buying by average an time picked builds share some of income a level, but higher we and and there. question. the let's average not of continues strength have data up install again folks as But our out into where say, key is consumers level question could watch, slowdown income I dealers back increase the that who double really an XX%, seen down I there the and the moved has way the spent point an of lower level that in We the I invest XX% portfolio, pool the price up the a net all in the pool backyard some up of interesting look, and to a from going worth they've that breadth yards. or move the the significantly price willing for points equity really higher the of we point indicator can XXXX. up what price you again, a level demand is homeowners couple said anecdotal in backyard a our their it starts But and dealers with think have one have dealers. been that to pool is points is at to point a we've seen with general, there's

got a to make vinyl you sure to we if some would even of the someone to fiberglass pool we backyard. just did maybe a still So, wall in for slowdown, pool pool shift a aluminum the lay and see pools one

Thomas Wood

side guess of of Okay. Midwest-Northeastern April filter the rest business kind does I I of way just guess for in just to how Just your And to much is kind any on in is the of season? there perspective. then, think slower about the Canada? weather a for the start how

Scott Rajeski

start in was of over we're got pool the business wettest record it's couple fight months the and in. that part probably the U.S. the season you've season of XXXX industry, is to whether always just the slow and times really on in XXXX, or just year the the season. to a there a through And said and every we're to entering back spring peak pool here I've just building Right? Look,

season. happening the to areas off get slow which you for Day, let's into, push build barbecue. middle Day that the There say the trying July be to is got X in Then are to whole August-September you of to of come there's seems the the here first you a a pool Memorial for in in As party, country. then lot if many up of big make May, runway June Memorial folks get start,

So we don't it. about worry

dealers. a to of do our the that those They a here have liners in there for catch working Saturday to I and and the magic they up, to think that's start get Sunday pools might in homeowner. but

long XXXX-XXXX, think fiberglass because and to really I product it deeper the a pools season. we confidence up pushing that's won't than are at out products two that look into where slow months winter types start of So, the hurt continue that installed about us Christmas, the don't happened that worry I you the what gives term there, for right can keep which into other be just think us

Thomas Wood

the lot, a rest on of year. guys. good. luck Good Okay, Thanks the

Scott Rajeski

you To well. as

Operator

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

Keith Hughes

what Yes, dealers shelves on quote time say, can delivery ago? you now of of for What backlog. two most I fiberglass was, it months six your guess in questions. versus terms first

Scott Rajeski

we're open backlog, what the where Keith. of a really I'll where crew, your now if your weeks. it region-dependent pool is I sit. in to good -- tomorrow. many say used lead open I'll to it it again, dealer normal backlogs, regions right could backed thing, two if those to could parts went if slot answer through, you several dealers dealer some pool in you, I Other that's through particular call we've a and it's a we quote We wanted XXXX. and and in we're worked an there's the where the shoring this key where the places, capacity, have where model really consumer, would sit the healthier are ship It's it One, country say, sold ways. had local you a slot couple position the had had dealer that had use in would to of into out locations. still particular I a be kind out where several, of region months in times or still what places, and we're

for really getting business, back the position to of board in-ground for it's the think still of their not in done call pools service that been across the I of channel. product, WD good around rest dealers team, So, stocking regions is liners, the and business, get country. again in -- the across it's vinyl our us, walk the extended And the it's we're there. industry the we've tremendous components fiberglass the out, the in, consumer. little quickly the dynamic back those to they the world-class would really of leading higher covers, a job can just But levels I a need a many what turn

Keith Hughes

play in the role quarter? Okay. did And acquisition a

Mark Borseth

Keith, it's Mark.

is and remind with radiant grew it's around performing. book million in with just don't full we that the $XXX now. a We million, So, goes, somewhere rating performance, last of small to which were have that and as as they nicely pretty sales product specifically as I I a the very $XX our in-ground we are everybody, right order million pleased total up and quarter. is break business, I'd It's range $XXX think disclosed category, year part also far -- relatively that pleased we're the way out think as business in pool

real expecting really significant XXXX going more seeing probably be we before growth not we're any year. that. to It's So, synergies this start

Keith Hughes

Okay, thank you.

Mark Borseth

Keith. welcome, are You

Operator

Please, next our from Zener go gentlemen, and comes with question ladies Ken KeyBanc. ahead. And

Ken Zener

everybody. morning, Good

Mark Borseth

Hello, Ken.

Scott Rajeski

Hey, Ken.

Ken Zener

concerns. Well, around cyclical see relatively with I us of patience on market all and questions public most new its a to side the these can

So, QX obviously our and for that world vein, at called year, the out headwinds. least guidance the on held the that's And better margin just did good. of in kind within gross

understand Just here. cadence trying to the

You Mark, to inventory [ph]? benefit of talked an quantify about that lift the in QX. you would care

Mark Borseth

had some nice Yes. In things look, the we on quarter, margin. first going the in gross

continue seeing come realize benefit XXX continue actions, our We we we going that inventory increase, pricing mentioned of to stay that down. to we're the out inventory quarter. we're points levels was And to year as look, a ASPs of in benefits ahead the The basis back give inflation. over

Ken Zener

hard mean, better, how think component that perhaps about you cost generally it? about absorption, was that that lift? point fixed largest the of I could And get we Okay. think Is should speaking, I XXX -- assets basis

Scott Rajeski

overhead end the that think absorbed do the our we inventory and We you about negative our out demand gave sheet. increase do the help being invest some want to to made our continue see sitting want leverage, stay forward. we which is support we address and some here balance the some sure think way because us in year demand as capability, going to business, fixed manufacturing the cost to of inventory that I overhead make since into of we've decisions levels the of No, to ahead can

the other little is absolute So, to the of overhead forward is going leverage it's build; a us different negative the inventory quarter. of in really our bit size the two benefit give things: the one

Ken Zener

that increasing baseline Interesting. versus And XQ. it be that about, last a that expect? there what headwinds is in saw more And inventory XQ Or ex., talked then to kind XQ, of obviously, QX QX, is pressure assume reasonable might just as given what adjusted little there we we build? some costs year, in you seasonality might that the

operating not have sense I'm we there. clear sure on the So cadence a

Mark Borseth

we The short that term about supply worked impact in top to to think The the the was more as line our chain we took more challenges think Scott that come challenge and top and an revenue look at QX. nature. issue, challenges I we Yes, mentioned. potential those tend in as has right QX a In April in event. through clean out a issue bit with which weather line of as thing the QX, same

will first there the color incur impacts will about that second impact well I second in a to XX%, is dollars part impacts still for how probably of the guide few the the bit, have incremental think quarter top quarter, as some think on have We'll at see fire, line the the in one as we maybe the cost the right? a Ken, our XX% half timeline. as of that

Operator

the back conclude Scott will this for I conference over does Ladies to session. and his closing question-and-answer gentlemen, Rajeski handle remarks. this

Scott Rajeski

Hey, you, lot. year joining everyone a next call. this great Thank all. really day, for great a us speaking morning. Have would day, you and Ken, thanks. look another We're for on Thanks I excited Great forward to to everyone. all

Operator

those sir. on thank all, presentation. everyone joining Well, you, you for today’s Thank Thank conference you, call.

You have wonderful may disconnect your a day. large and

Latham (SWIM) 15 May 222022 Q1 Earnings call transcript