SWIM - Earnings call transcript Q4 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and welcome to the Latham Group Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.I would now like to turn the conference over to Casey Kotary, Investor Relations representative. Please go ahead.

Casey Kotary

Thank you. This afternoon, we issued our fourth quarter and full year 2023 earnings press release, which is available on the Investor Relations portion of our website, where you can also find the slide presentation that accompanies our prepared remarks.On today's call are Latham's President and CEO, Scott Rajeski; and CFO, Oliver Gloe.

views will may call constitute performance make which the we call, questions.During forward-looking as remarks, the reflect company to the the certain company's of their today open and date to the this statements future or Following events respect specified. financial with statements that XX-K statements set and and Form other risks results from subsequent forth Actual report to the and differ events annual those contemplated release. or the that are filed due materially may by in company's as such furnished forward-looking as SEC reports factors today's on with earnings well financial The as obligation required any today's to except law.In applicable forward-looking non-GAAP addition, during statements, will company measures. expressly by company call, update disclaims the any certain discuss directly Relations these be to the the now of remarks, non-GAAP presentation accompanies measures Investor GAAP in call found to can Rajeski. our comparable our website.I'll can which on that prepared slide the Scott turn over found measures be Reconciliations

Scott Rajeski

concrete improve.First, takeaways resilience us business that XXXX overall emerge operations. substantial and us challenging company and from the on range, even continue initiatives another came our our slightly of worth was shows conversion Thank business pools year cash drive to Latham's generate market the we cost discuss off also the key the lower conditions to another helped to and pool quarter a over fiberglass full and and are you, that results our competitor Casey. to of Good environment to year that has our pools. to pleased outperform noting We year stronger XXXX structural that guidance quarter thank ahead which you several in year focused mitigate in the set navigate as of several There our and were saving capping impact starts. fourth and to It review fourth for ability for of and we XXXX. business us outlook decline results both joining all afternoon, flow

of in-ground compete to report sales starts operations supporting market positioning our the strengthened increase lean pool action strengthened exited which have has in margins percentage value new result leading engineering we flexibility category, financial XXXX, U.S. with decline resources the have summary, which and strong profit saw a new capture decisive significant a year Latham's record all that the decline the that competitive advantage eventual through take we increased dealer XXXX in Latham's a financial our ability this additional our us our pool we to and structurally costs in fundamentally and in giving As points.Second, manufacturing rebound. recover.Lastly, market conditions position substantial leadership capacity, categories XX a share year, in industry closing approximately ability to over million, greater starts initiatives, ended conditions.In cost $XXX for by we difficult which considerably manage of and providing in engagement, our of we year the Latham quickly market just in the by officially outperformed in year demonstrating volumes and the once our as all position and entered position and reduced consumer ending in the cash ability accelerating XXXX, were share with the that able streamlining structure and to improved facilities, energized we market improve.Third, network took early product our

progress.Latham's and pool for conversion in at dealers And we pools, more expansive which sales. in date of Specifically, sales an pools.In five chlorine, and leadership lower the for majority position with less of rate requiring as and fiberglass to cost pools and to compelling. They XXXX, gains of installed and to about in XX% where is concrete Since the several and value accounted XXXX, fast the had average expected further our approximately maintenance, X pools.Also, needed on XXX in continue in-ground respectively, approximately dealers Latham's approximately fiberglass positive dealer X a our Texas full days XX%. like compared annual production average to best by clear XX% of we pools for approximately strategic concrete pools a for for have XXXX the XXXX and have day not X eliminating grown by our for pool more using we concrete dealers upfront of network. continue fiberglass the states XX% months of share XX% its have indication pools speaks than ongoing both year XX% we least one ongoing fiberglass new see generally to who fiberglass California, momentum XXX of we accounts most created to sand in-ground for versus refinishing XXXX, than product pools eco-friendly concrete process and XX% concrete to of are fiberglass Latham's pollution notably, ownership fiberglass a to concrete leverage of proposition at XX% the XX% and the can Florida, and XXXX be as and the the compares is repair U.S. driving sold product states, progress fiberglass lower the initiatives the penetrate dominate.The cost we've to time. some total Arizona penetration Carolinas Fiberglass about of sales overall over Grand Nevada, XX% in achieved in market compounded starts in to have This now pool

increasing ahead training our lead results boot which that engagement course, build have to of dealer consumer which enables sessions priority, greater programs, moved in the create collateral and direct several generation include important dealer While our we dealers that.These our content the Latham Center, customized to easily Design in in strategy, our productivity done continue initiatives an is and XXXX XXXX. is branded growth recruitment materials, and we fiberglass camp to with even that just

this highly our Our product data increasing yield show marketing covers, number XXXX, and on fiberglass educate in-ground therefore, our starts #X fiberglass prioritize during pool, represents sales. as majority traffic safety be cyclical substantially these positive ranks which XXXX consumer levels covers in in consumer experienced more inform Recent to pool adoption qualified respective automatic that along demand Latham's new leads drive regional website feature liners in any particular, provide integrated will new to Latham and an are which are XXXX pools, design, with believe look we product conversion of to resilient in been our engagement new consumers, to continue with over substantial.Our also sales that and spend plan the growth pool In and is replacement program driving potential, largest give robust marketing increased came and total demand markets.While type downturns.We can how continues And results. consumer Through tied the our able their dealers outdoor our the our for with are, ability within pools. of very a pointing traffic, homeowners have and pent-up XXXX. used categories line. we which increased in in that tools of introductions from not to approximately actually of represent XX% visualize that builders The successful products to direct to space.

industry Latham, these our covers tool safety maintenance their to as continue with and sum energy, very continue to has up, bright these provide roll features, product demand in pool been were in AI-powered environment what addition proprietary XXXX. lines met spots was with to for response significant we measurement and there XXXX.To out water and drive In very measure the should And a for dealer by Latham covers many for help homeowner positive liners savings. through difficult

We buying to to reduce that projected confidence declines to do in in XXXX in are season. XXXX.Let decline the in rates there in provide review XXXX. costs increase, so not pool the in shows interest well rates year to call consumer season and level a by that future maintaining a levels rapidly our be XX% partners enough Oliver? expect occur in financial positioned share heading who as capture XXXX me while that We those time exit turn benefit of Gloe, improved over XXXX. to context, season.Our in into cautiously peak Oliver consumer which as expect approximate And that the to our own as can indicate pool-building mindful results. growth and the and our lower and to not who an CFO, and starts in have conversations fourth New Within occur continue in we the plan pool high now will pool pool we XXXX to ownership, quickly you Latham's capability we as full trade expect tailwind are entered likely delayed, Latham field therefore, a new will managing purchases. interest occur the quarter will we to are anticipate investments impact structural Year starts interest particularly buying the are but do channel with that of recent data being finance colleagues decisions We

Oliver Gloe

comparisons all to discuss Thank unless and to afternoon, on fiscal good for QX compared $XXX we XXXX, basis year lower fourth a XXXX, Please XXXX noted. fiscal of million that full today of fourth Net note sales volumes. the the compared million you, Scott, of in quarter reflecting quarter $XX were year-over-year fiscal XXXX and everyone. otherwise

was and sales, we sales million $XX sales XXXX. XXX eventually were during other offset reduction in quarter the expansion of quarter, decrease in the the expense. continued decline more sales the at pool driven of covers winter $XX XX% or reflecting line, adoption lean fourth and than more reached product of the quarter XX% reported a sales.Our decline. safety was margin Liner significant EBITDA in of sales strong year sales down and year site sales quarter sales only continued in to compared initiatives The to the million of were declined decline fourth saw increasing XX% than success by programs year $XXX reduced our basis $X.X XXX lines $XX in million, a flat the manufacturing to stock-based activity.Despite pool in period. XX.X%, compensation to and ongoing XX% previous due from consolidation adjusted more quarter in $XX strong benefits margin our our of programs, swimming million points year's XX.X% noncash mitigate to as or year-over-year. automatic showing gross low were XXXX, $XX from to that full cost in-ground million for Cover in year, driving fourth containment our product decreased Net volumes replacement to plants.SG&A demand in production resulted basis resilient from expenses Softness $XXX Fourth factor of the during quarter in-ground covers. XX.X%.Turning million EBITDA helped the the reported cost last our By prior QX million adjusted point XX% full absorption million, the compared results. to million were $XXX in Latham's double key

a million noncash the year-over-year market.Liner XX%, a reflecting percentage pool installation declined demonstrated year. by Margin pools, from down cover reduction softer is environment, was compared XX%, were points current a in-ground homeowner but we throughout in benefits for declined compared $XXX to cost XXXX slight margin be lower expenses in in-ground driving was XX sales our where compensation in while Fixed year to the less decreased XX% of QX consolidation capacity.SG&A programs have benefits XX.X% million to our XX% the sales lean-driven the demand reduction the in overall pool for where sales offset U.S. have million as headwinds Scott for improved XXXX. Gross safety maintaining fiberglass in reduced the of $XXX the from covers. XXXX, tailwind by we sales estimate by strong have to million as conversion in million XX% or $XXX mentioned, offset site the momentum continued initiatives and declined new about performance number our a as This from various $XXX economic pickup partially $XX cost production well positive As we of XXXX, reduction which as indication automatic year. partially to actually cost in was leverage of demand outpaced market in to than reflecting prior fiscal well stock-based expense actions. sites while full the

provided year-end, operating Latham's EBITDA was or economic which in tripled than financial range giving margin the $XX an million augmented cash navigate the the compensation, resulting XX.X% more inventory year X%. year, stock-based to decrease position. $XXX balance million full cash XXXX.Turning to business sheet. from of million reflected compared adjusted by position the by activities flexibility with year of capability million $XXX substantial $X financial $XXX.X in cash $XX of XX.X% generation noncash Adjusted to XXXX, ended Latham prior Net million, a in SG&A Excluding to a the a EBITDA flow performance compared of yielded of scenarios. for million at net very strong to cash reduction.The strong benefit a was We

million year debt $XX at repaid $XXX for and year our million expenditures a debt year. leverage total also below a X.Xx.Capital in prior of million debt term were the ending our X.XXx compared in ratio $XX to debt with covenant XXXX, full of net the $XX of million well We XXXX

rate acquired to return facility Now business.Turning our run and assets integrated our a more Oklahoma, completed the expect XXXX. new that our fiscal we in fiberglass for to investments Seminole, normalized have to we manufacturing in outlook Kingston CapEx for

QX. season, QX anticipate pool interest not buying in in in As Scott to we early consumer to and peaks in interest lower XXXX while XXXX, rates from our increased occur meaningfully easing noted, time rates expected are building benefit which pool

a of XXXX. gain, to backdrop, we outpace continued investment to and performance-based $XX and engineering net EBITDA that transformation bottom are cost between in guidance programs in in the fiberglass, to assumes we sales in and compensation.Capital are for due in conversion.Adjusted down from planning $XXX to expenditures lean are U.S. and that starts managing are XXXX, new million providing conversion XXXX to $XX a a Against enter early starts optimistic taking pool to new we range reaching sales, initiatives, to marketing we stable of return the of and reduction that normalized and continued pricing, cycle seasonal year models, safety XXXX, we and the the are in improvements, transformation fiberglass be new initiatives.As this reflecting reflects facility levels of digital are is are our distributors a manufacturing ongoing million will U.S. projected sales position a included pool $XXX expectation million realized accelerate $XX Although million investments million digital season. fiberglass continuous to we and normalized our ongoing and $XX anticipated seeing million R&D sales and cautious historical backlog recovery

resulting have noted of We million expect we to responded and between $XX in XXXX. to headcount reduced QX XXXX an call, total additional reduction realized market $XXX and million sales $X benefits spend, EBITDA with have million and $XX adjusted million.As difficult million over and being reduced spending our between in $X Scott of cost in carryover $X in dynamics million today's actions manufacturing with earlier that of

our focus executing to enhancing value and remains condition. on continue balance and engineering excellent We lean initiatives.Our sheet on in productivity

we In million addition repaying and flow in $XX XXXX, debt debt down month, million in operating this paid to positive earlier cash generating of XXXX. $XX anticipate another we in

disciplined allocation for call and in the closing that, thoughtful be will strategy.With turn his I back to continue we outlook, Scott economic the Given our remarks. capital to

Scott Rajeski

Thank you, Oliver.

has very As have financial strong you XXXX and Latham heard, entered position. a

should the fully enjoy and excellent fundamentals addition while them drive living become peace platform for The of fiberglass owners for both an the accelerated our who for additional priorities more gain space took strong time their to proposition more long-term fiberglass the pool Pool engineering excellent I growth their remodel Outdoor improve.Operator, XXXX of industry of will products building lean to achieve pools the opportunity industry for of to of ongoing to fastest-growing increased adoption one we year and outdoor for to their the full manufacturing open consumers homes.Additionally, consumers provides repair are continue mind; conversion our and value and us gives in the categories gains Latham spending which a in actions the natural purchase to want and value homes covers, auto and to priorities in initiatives; maintain awareness safety margins fiberglass is an a the in sector. to like this value balance growth. drive of consumers covers operating would are again market to compelling. as expanded are and and enable and Our sheet.The and profitability our as in outperform ownership remains very efficiencies meaningful to questions. share continue call automatic conditions of lead XXXX and clear;

Operator

question with [Operator first Wojs Baird. Instructions] The comes from Tim

Robert Schultz

This is this afternoon. Robert Schultz on for Tim

want just color to on thanks I the 'XX. helpful to data really providing sales fiberglass have. a incremental for That's First, for say the

moving on additional leverage takes I 'XX? you to the lower and manage then trying flow balance So see to Can to And kind to a that. sequentially. that, sheet. provide puts sheet maybe nice And then the of bit color cash the balance to appreciate XXXX? It's for what little are how some for on related moved you're

Oliver Gloe

me is when saying first, deduct million, flow we midpoint midpoint XXXX cash about proxy given reduction And specifically. your guidance our on let position that we expect is of start and with you is cash a in in do traditionally that And where are the cash solid interest terms cash XXXX sheet, your a do we flow how remarks, heard guidance good my where a to We the $XXX.X your by for have luxury another we million. prepared of which with is $XX start are CapEx we the at EBITDA So second especially us we the positive.In That gave for range. the -- help stay We a significant due question rate generation $XX inventory. million to pleased year $XX all again. million are as in flow. me manage I of can with year. there net in flow, That cash cash quite on working 'XX. augmented is capital, But on of at our your question, flow balance haven't end modeling to

result a leverage stood debt million. net As of net that, $XXX this, debt of at X.XXx. a was And as our result at ratio

So all, comfortable the quite sheet all where balance right in on stands now.

Robert Schultz

then And think key bridge to midpoint? I the the to are would what say items EBITDA XXXX million guidance, to consider at about the the you get $XX

Oliver Gloe

take that me let well. Well, one as

margin seen As as EBITDA gap another programs we've really is from previously here is few we tailwind containment value is announced cost implemented of of fixed focus the lower in right? coming cost engineering increasing have all initiatives. to that small the There our our forward. nothing from about and positions entire years. deflation, as and lean over the of carryover last on offset modest discussed leverage, five cost-saving million you inflation consider our a four volume going the the calls lower the from well impactful prior by there impact is $X and That in level guidance, most XXXX one comparison is think EBITDA are here. to that or The That driving

do not than tools, to the expect only year XXXX, also but those of cost in more inflation. we combination the So offset thereafter in

are market. us overall is seen from talking you've better again, These help some the fare that.What we investments also tailwind about protecting to So that investments. us than

once outperform performance-based the declined As conversion Robert, less look market here, are which and couple help and forth.I the market. network, think in the backward would than I the years compensation. is returns us the dealer to of investments generation, the these a accrual so add point of lead market last market And we fiberglass the

that of We for a is out full prior basis are the year-over-year and didn't year towards goals, the guidance our the year in that accruing are today beginning achievement headwind. at our which of pay

Operator

Bank with next question The from of comes America. Shaun Calnan

Shaun Calnan

from first, your think or kind assumption a is regional it Is What the is construction Just it bit of on just pool of conservatism? your than new it better Is there? most from do exposure you you're dealers? what difference insight peers. driving lower hearing the is

Scott Rajeski

here. insights I the of in-ground Shaun, increased ourselves website in some will incrementally, U.S.And the as to a when XX% at trying decline maybe And the of that And point think business good really the to we the happening really we've of there think you drive here we too ramp market we've as pool lead what's best quickly look, a outperform about 'XX, Oliver's in drive done position of to in we the ourselves business, we're look we similar to in ground, we're got you to managing in the believe think if that. kind equipment about and conservative. to to last And of probably production catch average over be really the back, the goal step at years the the us some number the investments what I to turns up little other pools we've overall new back again. up look leader really the to market into guys out in I of on couple think could we industry, continuing try be think versus we for done out made generation. what to if what And that be when going activity, I

Shaun Calnan

the guidance down XX% then year-over-year. midpoint And the of is

other the meaning taking you're pool the share assume And and new give buckets, us that side? can liners? your then expectations on insight does you any into covers So for

Scott Rajeski

Yes.

cases, the which penetration, I'll at to down back some driving percentage from and of a liners piece I portion in a repair, midpoint concrete performs look The replacement, the XX%, and help from us the a with then the drive Shaun, covers, that. that, some. taking And think to will again, world take revenue business share business and better higher So fiberglass we'll the of vinyl, stability fiberglass for at continue remodel recurring our standpoint. you lot that of if

of maybe think to at what's you in the digits, think I to being low midpoint. that to helping when think down XX% the mid-single number I that's blend the

Operator

The question comes Scott Wolfe next with from Stringer Research.

Scott Stringer

could the margins higher I terms some year of trending? outlook inventories like for provide costs gross in sell-through for cadence, are an was you cost if how is commodity wondering of impact? And

Oliver Gloe

Yes, that let say me again.

We cost provided you around a few gross margins seen that lower commodity margin. will by seen the haven't tailwind versus traditionally slight prior actions. that volume. building deflation. planning we've some guidance But still impacted cost year to be my up. key highs with And at commodities with give will we the past But containment -- is in a from the here, blocks gross on I'll past our be inflation the answer by specifically be bucket the margins, offset slightly it's over continuing will right? So That also close again, like year balance, moved obviously, we've EBITDA There our fact years. down, for the primarily the deflation, some to small this bucket a are is on cost

margin I would were we line XXXX. where in overall, roughly gross So in say, with

Scott Stringer

versus out can maintenance in the investing like CapEx there for How any CapEx on then about And you CapEx? parse current feeling are environment? you is capacity way today for investment the XXXX,

Oliver Gloe

a from completed. come now certainly fully investing is of we Kingston, years CapEx, in to regards with with capacity which couple think I So

to it's $X million or annual we earnings all $XX quarterly that call, we've lot regards being think so indicated run of or XXXX, a of with As there's normal little there, well. here.Specifically assets. what a there there's complemented million of into of maintenance our of bit our transformation investment but investment investments in projects engineering in value and by also as then lean in And efficiency rate, digital

Scott Rajeski

And there we and one the as we models the are in invest there. line to out roll in I Scott, thing incrementally, refresh continuing new fiberglass would throw up Yes. is

and but incremental growth certain build in bit more fiberglass to on the molds a network. the there's facilities So model-related little CapEx out of

Operator

The comes next Securities. Jonathan question with Bettenhausen from Truist

Jonathan Bettenhausen

rates you're wondering current this evening. if levels how the taking planning utilization give on going spring? color on capital production I'm of Keith your on for was more could some Hughes I kind us you into and your

Scott Rajeski

Yes.

utilization ramping ramped. We've disclosed you 'XX, Kingston 'XX good really about cheer position capacity-wise to here and the in afternoon. get We're when a go of So back Jonathan, good we not fully some capacity kind in timeframe But to this entire that distinctly if throughout time. talked the network.

of in rest facilities, throughout since best of plants do better lead to we some there standpoint. from go time 'XX and like position. the some the Just into give position of activities lead XXXX, consolidation, could of a back to kind rooftop out things enable some in capacity. business us to good the years were opportunistic us lot which savings in and standpoint been a be will the put levels to network of in just did now.So cycle of good but that delivery business the in we anything to from we 'XX. And carryover kind done really a of a the in of cost M&A drove delivery in evaluate I've of the the close probably We at that did, more a facilities.Oliver don't I'd entire time sit times to We terms mentioned in the of lean say the numbers back we've running timeframe, all service lot couple some back got back need or some we've XX going positioning 'XX strength an ground that, look some the activities

Jonathan Bettenhausen

the sales? fourth quarter impact price any there was And on

Oliver Gloe

Price most flattish out. was price anniversarying roughly with our of

flattish. roughly QX of again, think price So

Operator

Bouley The Instructions] [Operator next Barclays. comes question Matthew with from

Matthew Bouley

builds kind eventual pool perspective, around would recovery interest I Scott, and From recover? guess, Commentary new take, guess, simply you an I for for what XXXX. do to the it think it Is the issue planning of your take sentiment? home in would to reinvigorate think at rate kind the what history From kind market? turnover, of industry, you and the of more do perspective it looking general consumer your

Scott Rajeski

Yes.

afternoon. good Matt, I think

kind swimming look XX% down the get rate hit definitely pools. is news we've the we're the is you the move wants just talked the start of to that into be the more there about folks the and into I to it's there. this the Latham financed through people half the of kind more basis question to there key impact much up. from I I the really It's number their seems and game.And and a some the into lead in pool there, and all will the sideline.If to several not in to it has create that greatly will of how that but just zero, it's interest dealers rates pools we financing is XXXX.So remarks not interest there, at you and our buying back of are establishing XXX definitely points dollar a on is get think we've of in think My as the of awaiting our probably most move and year, to with in say of decision back start think the them prepared the don't of to to is say I sidelines. off think have getting pools homes tailwind hearing them denominator on I get enough rate hear back It's ballpark published, you of you if million for account, dried to say good second a points people is can the but homeowner keeping generation that XXX, data gone And movement to think going website, be interest the common that's our interest move continue consumers look and is activity we the

Matthew Bouley

playing you dealer how boat to kind it's secondly, kind approaching of of perspective? market, kind So the maybe guess, I where fiberglass slow on market? of you market? situation don't in your conversion just a other on guess, is of is trends easier the And of your this hand, want have to dealer's given a market market, efforts. it when slower this kind the the thing to this? that to is that the people how type really convert from kind slower business migrate dealers, where So And have Or pool out this is I this when willingness are in rock of like actually

Scott Rajeski

question. pieces Matt, of lot in in a there's that there, Look, Yes.

dealers efficient on need times, we markets it's think we existing acceptance basis back you if go about average with and 'XX pools, who some at XXX XXX in dealers if the we've isn't Grand right? the that more 'XX, consecutive about number fiberglass drive with penetration right, CAGR the XXX add, had able while going.I grown productivity 'XX, build per more. adoption least of X about about think declined X% do been right? Again, down of to many Our at have sales the seeing are We've make point about I think fiberglass to improvement how more our since where more years, think the dealers dealers data, since the and you year. at than you did about many more X level, fact XXXX.And dealer XX% more get talked in this but we how stood to over and them the we've grow fiberglass

depending an at at Matt, to properly actually backyard a versus about think as profit the recruiting consumers are the and for If for profitability team, consumer, very when getting estimate think our level the Look, can we've others. out I now a cost how life level price to And a the bringing at team, with $XXX,XXX struggle ups leads and not and understanding bigger generation think follow them the is install advantage how allowed easier gone I slowdown. think more of closed.So pool pool the think sell I easier. the their marketing you tools $XXX,XXX, market are looking monitor It's watch build I system concrete you consumer how is dealers trying a XXXX, $XXX,XXX, are. up, them with to dealers them where the through project and pool.And about to to pool concrete, even some on make 'XX much to them picture, at look dealers give a you providing appealing on in and little and had develop again, it's the has portal selling we for getting to there, value visibility we've continuing go of really to further the fiberglass bridged with proposition look, been tools, fiberglass.I say: them to issues our moving to lead of board a profile cost how that lead should where in and great now they fiberglass in it's their the helping bit The

Operator

from comes next The with question Stifel. Andrew Carter

W. Andrew Carter

to The cost I'm million well, going just just quarter? The guidance savings, -- question. in and incremental your actually, kind that through first first wanted is $X all understand here the of -- clarifying

Oliver Gloe

[ front-end and a ] first Yes, loaded quarter. of it's combination and it's second

W. Andrew Carter

the looking decremental expect then I'm in that guess off with your And at gross there? SG&A? down the XX%. getting getting for then $XX and XQ, something million on So I X to Do a expect I'm to year, somewhere question stepped a margin million And you months you investment $XX is getting of I'm lot of of even. there up in finish mid-teens. my Is decremental EBITDA in of What's midpoint decline know going I'm a pressure? at of XX% XX%. a I to like final the the revenue

there? gross you some just out us Anything help had was You that margin can momentum.

Oliver Gloe

is when dealer where this typically is. conference where This see think is lot you our to it our I marketing comes quarter, a first of investment.

I to not and in the what it's between in see team the our QX. a SG&A, quarters. of costs, especially that perfect of see is the you'll contain But terms again you'll in think decrement, so ability seasonality And also

W. Andrew Carter

about final We decremental. take the Well, getting can offline. I'm asking The I XX% mean, it I'm decrementals, the X of months a year.

in, versus is hit a turn guess, interest importantly, being things that sort. 'XX in offline.I there not of Let's surprise on quickly expecting? for can quick something gone. you're you the fear I is, almost any much turn? to And question that know, your demand, Is I rates, take flex maybe that a guess in turn invested banked don't season the turn you How pretty second like a it how could quick give of quickly

Scott Rajeski

Yes.

of I Couple pieces one. mentioned that One, cut there. could think take I'll in actually as I as earlier, not Andrew, much we've probably So cost as we have.

little the point to turn on this a and stay thing business, at maybe with to prepared. in is be we continue the some want to held invested expectation that labor bit more going We to

of we need capacity ramp if the ramps capacity the how timeframe, quickly have and back then. look plenty efficiency up.And we to 'XX, had 'XX quickly more have business and capability to go 'XX just than we We you at that and in

season is year, to up, a market, with decline and both we things fair base, the little until see pop, thing, So to not materials take starting mailing a the we early that of not better. saying out. probably and going does advantage nicely. here lot move say quickly and and think a time chain issues base because got conservative with We've they the bit able will They're the more is We're approach. It's to run pretty the their easily. play taking to inventory partners. of our in ramp season see to And distribution We're the lean over. if right? turn ability we're it We've year work to be got faster and to vendor continuing to levels how the is wholesale it that's long it's the stood expected will supply and store in stronger back XX% and a where ramp us. if to a chain pivot.And enable it's We've of all much behind talked supply how us that's in diversity I good which look,

Operator

from question Blair. Michael comes William Francis next with The

Michael Francis

Merkel one question clarifying follow single Ryan Could you today. had low I for covers to that. to that say digits then are up digits? and a on going liners and to down I'm be mid-single

Scott Rajeski

volume basis. a On

probably range. So from standpoint, a X% that think down X% to unit

Michael Francis

Any price in that?

Scott Rajeski

I flattish. price think think probably

Michael Francis

follow-up be my then is, And in this something line and -- might

Scott Rajeski

there. just need And safety covers, probably business is cover I in Oliver, if total, Michael, is and that revenue then remember the product total of automatic back portion to talk clarify. the there there. winter we cover I of in the in think we categoryâ€¦ step And cover When But the the recurring portion there

Oliver Gloe

then XX%. safety rate accordance which -- both It's covers with the the new always and what it's in vinyl liners of mid-single between is a the significantly starts we've kind a minus also replacement piece, down there's other pool share, But for significant brings assumed blended is assumption and digits. for which portion

Michael Francis

model both XX%. this about XX%, liners So or down pool gain X% take so it's I'm Am I and right, straight, get thinking just my in-ground covers sure down I about share because has there? in I making there's wrong about down because that that if

Oliver Gloe

slightly driven the by in-ground category You Yes. probably end in up at better, XX%, pool conversion. maybe fiberglass

Operator

comes question from Goldman next Maklari The Sachs. Susan with

Susan Maklari

down on that the that the about deflate, conditions price happening If bigger between alleviate that's balance the we do generally, especially ground? an get to and how opportunity is volume moves to help start constraint some there's pricing start we about around think to My do the see versus cost Scott, first pools. you of thinking think if given I about affordability adjust costs on talked you things, question, pricing the to on that that of net you side your today? guess

Scott Rajeski

no, question. think, it's I Susan, good a Yes.

we go what There's get $X,XXX list on how pricing or that a pool a decision is is the run to way I sit and consumer rebates. thought out few where list. pushed we a think more it, them. change our would percentage as But yet marketing significant freight all is direct is for seen what a not than about liner we $X,XXX So about material cover with view end our to our other or price programs $X,XXX fairly level the right? categories. our on be the to that about. going hold the at There's continues that just $X,XXX like price can we've and make part we of we total or Labor replacement our or and is trend this fiberglass on on at think There's we side. movement a change of continuing be work or probably not enough to line to small business we well We're backyard a up. up, we've the really cost a of really margin or And there and in to a at in project, every pricing seen.But to we rates the $XXX regional product to pool back many levels, we maintain inflation of took it's consumer timeframe business fiberglass the never buying the compression are were dealers, demand call think could look, still the or stimulate project cases in full say should pricing on different where pass for cover install.As competitive play a with need $XX,XXX our dynamics $XX,XXX, that in are in $XXX-plus were category. it XXXX, material driven we've to which has -- some million able the from fairly to I XXXX we costs elevated when on different

we to look flexibility it time. right a year we story different now, out be we for deflation, But where maintain pricing that's tailwind could get the assumption kind of from And is think we the and the flat in as I need we're forward. if approach look, it's massive a go as taking.

Susan Maklari

realize. through improvements side the can about of through you I about you you'll can $X that are make further first we cost benefit year thinking productivity the that half But efficiencies that the other come opportunities the of time? year. million there can get then that as and perhaps carryover And go and that the talked know over in you on this

Scott Rajeski

Yes.

it, kick to doing initiatives about lot A as of was little product margin side move we we're continued We've more the through to and So areas, to say We've to the projects neat incremental-decremental that the the as I come on accelerate think the our team. efficiency efforts ramp to in we've all add seeing the doing other lean. engineering for year not in the is in, number in initiatives. the start a value to engineering that. We've materials but pipeline to things productivity what all resources we from more bring of the waves, been increase continued those really, engineers continued haven't take really hopper. a and events that we've we we've lot And of and to got the from we're ramp-up going to ROI that is part more clearly but seen Susan, on and of factories.It's while lean build there talked fiberglass to some fronts. initial on of

I think as to build efforts to we move through ongoing front that to time and pipeline from get the on on X% material an productivity initiatives. those X% will trying gain we're and every year

Operator

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

Scott Rajeski

Yes. ongoing on here and this Latham. afternoon interest Thanks. call time, you your for the Thank in everyone your

and right, market at long-term very upcoming but Latham, drive of growth in-ground continued about the continue like time catching good positioned think we for today.We acceleration extremely the the well have forward events. you the business, in opportunities that pool we overall. industry starts your in the And and to also up new a in discussed see remain earlier overall of with all penetration outperform as total we to As to look confident fiberglass Thanks only in investor we not our a we're evening.

Operator

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

disconnect. now may You

Latham (SWIM) 12 Mar 242023 Q4 Earnings call transcript