Latham (SWIM) 7 Mar 232022 Q4 Earnings call transcript

Good morning, and welcome to the Latham Group, Inc. Fourth Quarter and Full Year Fiscal 2022 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Nicole Harlow Latham, Investor Relations representative. Please go ahead.

Thank you, and welcome to Latham's Q4 and Full Year Fiscal 2022 Earnings Call. slide issued Investor press website, Relations can find we available which where morning, our also the accompanies on portion the this our release, earnings is you prepared Earlier remarks. that presentation of our CEO, are Masson. CFO, and Rajeski; and On today's President Scott call Latham's Rob

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

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

in its in XXXX. posted review earnings Such a information, risks future forward-looking obligation the by fiscal events XX-K disclaims required and company's of any statements, Investor new whether be law. update provided website to otherwise, other to as and our will except Form company expressly or year for or forth release The factors result any Relations set applicable publicly as are

turn our which and during Rajeski. over earnings of found to of the net can company fiscal release today's remarks, call call, evaluating non-GAAP our adjusted press Reconciliations GAAP our calculated be discuss measures, historical income for believe adjusted Form and Scott under net loss and accompanies EBITDA addition, be in margin, included could the margin to useful I'll net Relations XX-K website. in on that loss found in will income we EBITDA our slide be leverage will in can XXXX. comparable now found In financial the performance. Reconciliations Investor net debt to our be GAAP the measure be can presentation prepared debt to

review of today's for for we're beyond. a our performance, highlights in line driving Fourth priorities of innovation year fourth Good thank growth. and XXth and a Full I'll and Earnings sales Call. begin and Quarter morning, XXXX of areas Fiscal call XXXX 'XX marking in discussion Latham's and us full everyone, progress strategic joining the with our you We Year and X quarter consecutive we in in Notably, delivered EBITDA adjusted made with and expectations, completion the of XXXX. our year net XXXX from

growth First, across our year-over-year all lines. of sales product we net X delivered

We installations compared Second, continued we on the grew volume made to conversion as our a decline left industry despite in concrete. XXXX efforts XXXX. fiber pool in-ground progress U.S. pool year-over-year in from fiberglass for

advanced us progress Ontario of We continue Midwest. initiatives capacity into significant the which also our with in to will facility, Kingston, manufacturing and Eastern into allow Canada and expand construction our U.S. Northeast to the Upper fiberglass state-of-the-art

well which position in into market, Southwest ripe We us to concrete the manufacturing for Oklahoma, also is fiberglass assets fiberglass. conversion from acquired tap to

driving Third, fiberglass efficiencies times chain supply operational our implemented North our at we fourth, continuous initiatives lean to our return enabling position, across us our entire portfolio. improvement we drove we normal lead production And in operations. as strengthened product and aimed to enhance American

in to market We response prioritizing deliberate environment growth strategy. still manage actions costs also while took to our the

levels consumer spending the a saw impacted Wholesale demand. environment pool in continue we to macroeconomic historical of the fourth destock to seasonality and quarter. return distributors anticipated, inventory elevated and As packaged

into continue XXXX. We are seeing these dynamics

the of first packaged dealers inventory, normalization pool half wholesale the we partners at to least headwind remain to expect inventory wholesale distribution continue through Our XXXX. a for existing and distribution service of levels

from feedback dealers. ownership interest of our underlying in believe We flow strong, as website, and we're by indicated is traffic pool continued our to hearing leads

couple through versus efforts. resulting our X our to long leveraging are current uncertain the Ingram industry X, of have growth navigate installations our initiatives conversion in for to our the costs. U.S. in and months in the of the Grand XXXX a left prudently before material continuing However, come to season priorities: we our a the executing have improvement and environment pools ability X, to execute X, pool and long-term concrete begins expanding an to strategic up, the Fiber way, new ramp We from for strategic partnerships one, we decline drive direct-to-homeowner and innovation; impact in and confident digital ourselves on market is dealers; as macroeconomic with anticipated continuous pool still XXXX. position our Latham and fiberglass. thanks enhancing managing team's strategy on

most and have on pool attractive the offering swimming We developed the designed market.

quality Our fiberglass Latham finishes selection and to finished. that wide and not we're are stunning aesthetics tools and proprietary and a premium of offer colors

to and we product innovate and which will the believe with further offerings support of continue installation We adoption dealers our processes, homeowners alike. fiberglass

and fiberglass lineup needs. X meet models our exit features, X Tuscan We Tuscan the size. will well-established come wide they a launch design in XXXX new entry sizes models in year. The and range These pool including beautiful Champion contemporary points that swim-up fiberglass that model this of and first the popular geometric fit of seating have and of pool backyard and are trends in the enhancing half and in and with multiple unique design various fiberglass models, encampment are the of shapes

pools. of speed to discussed, is we've the fiberglass concrete compared installation unparalleled As

simplifying backfill are easier select make and on is We to reinforcement and process installation build for further installation new Made faster experience a the dealers. This Easy. models the designed innovation enhancing introducing patent-pending by

out our particularly to a for as year, fiberglass and labor-intensive roll modernize introduced a innovation covers our measure safety the is the remeasure available and we errors over for AI-powered input covers. This this year, and Latham, measure time. unique will time-consuming, across industry, have opportunities tool Backfill increases saves experience by and easy the the evaluate correct given this popular It in simplify and been process. techniques had eliminates allow and relates capture has time will of tools. perimeter to in made taken Latham be for backfilling model technology the Corinthian renderings Earlier dealers scanning to of features. under for manually of harnesses we Measured entire need that and ingrown for extremely the extra measuring installation. steps, pool measurements interior made to the measure, to our and pool measure effort and will the digital speed and tool the materials which Historically, dealers to throughout XD cutting-edge new it by pool dealers and portfolio liners. shape data digital the builder that Latham leader

specifications These management then and measurements with portal. integrate covers. the have dealers Latham measure precise for seamlessly minutes, app safety Within Latham's builder

and As dealers efficiently submit a quickly, track receive and and measurements, cost track late cover and for orders products. more can quotes safety result, easily

hearing have and feedback introduced across trade over positive and We measure various excitement. are very several last dealer shows months the

initial to installation attractive key rollout reignite safety to the partner our later recruitment. begin improved attract select differentiation X, dealers the on set the enhanced this to will dealer factors important competitive new that supply liners training; plans an our are dealers lead We chain X, we ability at enabled for and as date. our dealers. Key efforts; to and apart training times, a spring our X efforts value-added with for generation the Latham in Normalized manufacturing covers to us our on hands-on have inground hands expand resources. and for is our provide lead retain dealers, one, An us capacity

largest the digital we dealers XXXX, virtually. our continue This attend Essentials book had trainings. essentials, And university sales out aimed product We fiberglass interconnected digital university, our with or center either demand the branded camp, and to and or resources. expanding boot continue and The each enhancing base with exterior Pro In and strengthening for tremendous sales further the launch we value-added over turnkey training we education Pro in field enhance tool. for Latham Essentials, see resources experience our better of Latham Pro January, experience, experience to in XXX comprised at our essentials competitive of that packaged full sales exterior dealers. world-class homeowners Florida. Latham is Latham positioning we business is an growth dealers program Interior efforts of to creating collection are essentials, Pro training for by supporting our a Latham essentials. site includes and for category XXXX, and In launched in In and our Essentials design and content, signage, contexts. buying marketing a offering selling collateral Within comprehensive tools categories various person

sales material, Pro online all and These Latham with on co-branding central dealers. enhances and a a homeowner pipeline, and carefully Pro site our site into executing engage orders. programs, Latham the Latham. Latham now order ordering Pro our online also all cost incentive the resources tools business strategic user management initiatives. simplifies resources the elevate touch in forward continuous launch of we tool the It tool of experience. I'll The a how priority, communicate through Essentials designed location our visibility to provide while is The on we opportunities, better and ease access increased give process experience. dealers' offers simplify with creating doing builders It for and leads improvement loyalty and

the packaged decisions. reduce our macroeconomic we to last pools. delay As in on to pool and costs purchase deliberate actions destocking call, as our took we response discussed saw homeowner earnings environment continued And

those this of our complete, Bossier manufacturing are liner year. Salty earlier anticipated of including actions cover closure All the facility and

annual on million we in of track about fiscal generate remain operating such, XXXX. to $XX savings As expense

continuous renewed have improvement focus investments. on our initiatives We and

operations processes. opportunities efficiency in lower continuously and is cost ongoing lean has efficiency work facilities. labor resulted in as improve the team and our manufacturing identifies our of engineering capacity Our and implements our value increased and This to

In our QX. Production focused Kingston and addition, began Oklahoma our our current in our times in investment Fiberglass disciplined outlook we projects, our spend maintaining lead strategy. service late match manufacturing levels. are our CapEx We on pools in levels facilities. ongoing inventory demand Ontario completing while fiberglass In to Oklahoma capital XXXX, including in of is remain actively and and managing

fiberglass new production year. Kingston We also of in expect state-of-the-art to QX begin this during facility our

Kingston up with reduce markets times Oklahoma serve strong facilities us year better for Gearing the large the fiberglass strong opportunity further opportunities. to give will and summary, and full In costs, delivered conversion our results. have reduce production we lead freight

investments will navigate on to to while market continue make demand. industry-leading enable as actions we Delivering long-term position move taken through have us this future balanced strategic continuing drive approach challenges enhance to capture our to We to and growth. XXXX

friendship fourth Before like for I Rob his to him to and the year, quarter thank contributions to our review partnership, full pass for results the to it and I off would business.

our interim best. Latham, all review over at we detail. I'll our welcome will you the wish replacement. turn to to as us who Rob results Rob, call as recruit CFO On back excited in of of Borseth, the that, behalf also the greater With we serve Mark permanent a I'm to

Thank to team that now compelling you, the hands. and Mark's story Scott. long-term a finance rest back of the part has leadership you, be that work it's been executive growth talented alongside wonderful journey and the in and capable team of I leave Latham

results Please fourth Turning note for net quarter year-over-year historical year-over-year we to million. return seasonality, million fourth the comparisons that a full all full saw to and year-over-year for basis down XX% to were resulting sales XXXX. the year as and the fiscal quarter year QX a of fourth In quarter our XXXX. in quarter or In expected, declines. fourth XXXX, compared on XXXX, fiscal to $XX volume of $XXX are

unseasonably in as order reminder, QX a backlog. our we caught were up fiberglass XXXX on elevated sales As comparison,

declined our $XX impacted Our million, ground fourth quarter which In $XX trends. in pools seasonality decreased across net further profit the reflect by Gross lines to distribution pools. declined product swimming to sales channel and XX% $XX declined million. covers million million XX% continued packaged for results $XX Liners destocking $XX inventory XX% or to million. by were to historical wholesale X%

XX.X% $XX Gross the stock-based XX.X% period. noncash compensation $XX year compared million. margin for decreased million or to to XX% profit expense, Excluding prior to gross decreased by

pool by the as of XX.X%. primarily decreased and margin on administrative by general packaged decrease $XX well inflation. fixed impact and of QX the declined Fourth our margin million. XXXX. wholesale declines result primarily our expense driven EBITDA of channel and Excluding distribution points of expenses million, X.X% fixed to in in million impact the in quarter was impact by as seasonally to basis compensation lower excluding gross decreased costs noncash $XX were sales EBITDA noncash destocking stock-based adjusted stock-based million the This million inflation. Selling, of $XX the on seasonal gross continued of noncash expense. million compensation to Adjusted gross factors: $X margin reduced $XX profit and and stock-based to X,XXX expense, volume, sales X the driven from primarily as by reduced decrease impact costs SG&A, volume of decreased a decreased compensation inventory $X

XXXX full results. fiscal year to Turning

Liners by increased X XX% offset all increased and XX% the million XX.X% distribution pools. Net in discussed to market, pools in to of latest in sales across fiscal XXXX. We of the increased the to converting package believe U.S. tools. market destocking prior was by decreased Net in grow despite to the $XXX XX% This We overall reflecting leadership to our is our covers for $XXX period. margin was volumes from declines pool to pools. $XXX market million. our sales is for in-ground profit muted inventory concrete swimming $XXX this channel year in the previously wholesale progress fiberglass compared new packaged ability thanks successful outperformance lines. for and to fiberglass significant X% pleased growth increased million for to XX.X% $XXX product outpace to the X% it million, growth fiberglass fiberglass to in-ground because in installations the to decline XXXX increased position a million. Gross fiberglass demonstration year-over-year Gross were as

of compensation of channel. primarily as points the The volume continued inventory gross was negative XXX Excluding result in in XX.X%. due to of cost primarily expense, and declines, declined distribution noncash stock-based packaged to leverage margin to basis the the a fixed pools wholesale attributable impact destocking inflation decline

year, inflation, As hold to $XXX pricing $XXX noncash from in margins earnings not stock-based decrease cost prior discussed in $XX million on call, expense. actions impact XXXX a our by third SG&A enough quarter primarily decreased our gross the though of offset year-over-year. compensation million the driven million to

SG&A, noncash year. Adjusted as margin EBITDA stock-based stock-based was net points SG&A XX.X% compensation adjusted million, sales decreased Excluding excluding expense, expense, X% noncash and XXX basis $X prior of to declined to increased million. percentage from XX.X% the compensation just to a EBITDA $XXX XX.X%. for up

the to sheet. balance Turning

XXXX, for equivalents $XXX activities cash facility. by cash of on of return we of was we full X.Xx. end $XX the the December $XX In million XXXX, XX, of fourth last at million, had $XX in leverage and fiscal debt year. revolving year our As XXXX of versus Net credit availability our and seasonality operating $XX light to of million total of million net ratio saw quarter historical was provided the debt million the cash year

primarily in fourth We million year our in remain Kingston, loan were by manufacturing for refinancing driven term $XX XXXX revolving Ontario $X us and full with Capital fiscal the year. expenditures fourth million million in provides to health. $XX fiberglass quarter of credit our QX in to XXXX compared confident facility. sheet $XX XXXX. last our year-over-year and in comfortable flexibility. full facilities were in increase The financial and year XXXX The investments million balance of with earlier the quarter and enhanced compared

and of strategic Our on unchanged, capital for remain shareholders. value allocation enabling priorities execution maximizing centered our the our objectives

to discuss We a for XXXX. and the focus strongest turn the to opportunities in our investments are to committed back with reinvesting call that returns, on Scott the primarily expectations generate Fiberglass. business I'll the

Rob. Thanks,

normalization from inventory continued X destocking at impact announced strategy we in impact to and be the we're first of level declines are demand as headwind pool concrete Four, consumer packaged least through and pool ongoing to of realize key actions in-ground will to dealer there the half continue the on executing pools we benefits from reduction XXXX, distribution and at seeing the drive improvement conversion of through and continuous believe anticipated initiatives. XXXX. Three, move wholesale business. remain progress material a on and resulted new a expect we industry our spending One, to levels expand of inventory XXXX. adoption. expect previously our homeowner U.S. in we the As the tailwind awareness see Two, for we fiberglass factors cost installations in our of uncertainty that macroeconomic

continue to the This a on completion of approach as production spend we capital to CapEx disciplined completion Ontario Kings Oklahoma. as includes the investments ramp-up focused take well of projects. previously the Lastly, XXXX fiberglass announced with our in glass fire facility in

is call, of wholesale $XXX impact $XX we of net of are All in million; the the that expenditures which of million and expectations to and reflected the return half Throughout of discussed $XX year $XX the this of adjusted expect the packaged in historical year. $XXX consumers to first full seeing on the million, for our have $XXX million capital to of including seasonality the majority million to we pools today's uncertainty level. to EBITDA we in XXXX, million distributor business, at continued in incur the destocking macroeconomic sales

outlook these Given of the like on to to and expectations want with sales late. gives on of more and for confidence would first the have clarity net To I in to quarter adjusted million for we what $XXX million prospects $X for long-term QX provided close, factors, an provide touch $XXX our XXXX EBITDA $XX to us million million. of

build Latham for brand and own that be dealers. to consumers lifestyle as choice to aspire the to a continue partner We of

Our continues demand. potential there's results, direct-to-homeowner strategy generate demonstrating to untapped that still

product on portfolio. the continued profiles exclusive number lead We're in our estimator market our In XXXX, This double and the entire dealers. number increased across Latham than resulted to My we cost flow of of more for triple pool users the of views leader network website, page our our XXXX. versus

onliners with pool are and ability installed new market capitalize models key further on premium and has safety and strategy. variety to We a by quality sales launching business beautifully base. Fiberglass tool to for in to like our growing recurring will the tools to measure enable of breadth been conditions. the drive This strong net in our our Latham of and of covers have us and liners that thanks our is covers revenue portfolio in designed direct-to-homeowner opportunities

As to strong we focus this be conversion component to concrete expect long-term of continue material we to the on fiber growth. a glass, from driving

efforts that on resources expanding lead enhancing forward and with focused training our believe over efforts and hands-on propel time. gen in are dealers value-added deepening We our relationships these and our efforts, will

the challenges we the recognize believe trends we our which us conviction attractive in While is and underlying our capitalize in strategy, we in positions strong XXXX, confidence faces have pool time. try industry to over on

open will We the line questions. now to

Instructions] the first And Matthew [Operator be question Barclays. Bouley will from with

Elizabeth on for this have Matt morning. You

off, this through you So well. it And talk new about on year the could you've if for volume assumptions in construction, the touching touching then would just the the maybe -- your the year on kick mind cadence you guide pricing expectations to and embedded pool specifically? for as

So with lays year we've I it out pricing we we're very the process Traditionally, haven't doing pricing selective see of other consider a about and in actions, we volume we're the and than price you what out. of as years, at last our in we've conservative how very really more than or being before. can our deliberate broken looking the talked market out What and number tell guidance. had is

more it's to turn to So that.

of we're XX% it's on think to We guide. we pool going standpoint. 'XX haven't, But as saw what XXXX. given the where a in on part it's new with will level, expect of think distinct in. we probably PK we reported awaiting months. your the like part Yes. of to I in of all as Elizabeth, come question can But outlook feel know, kind data high similar And volume really something And construction XX second come to numbers a on all be line we the in few again,

far? to so fiberglass would is product so mind what this far like And touching between relative on relative you're categories volume a other year with you little -- packaged bit maybe seeing to pools your

what it's pretty here XQ the to into we'll months see gave in Yes. Look, guidance see. X of we that we think early XQ,

right, We distributors. that 'XX, basis on I think a see if impact volume pool being starts fiberglass full market. with year-over-year, in down we down the 'XX, look saw with destocking wholesale we new back at unit what did a up was

And overall, and best destocking category of I think that Fiberloc to forward probably see to guide that's pool we I the in the first give we see to packaged expect this the the the point. we 'XX we and we continue can to view half as for expect the at at think roll year. outperform least market issued, the

And the months XQ really XQ. into get of building and we peak so

be And the Tim with Wojs next from question will Baird.

just on up Maybe to follow prior question. the

you pools to pretty the market starts down in were kind it's think is a for think 'XX. And basis? what new a understand I us going XXXX at down question from Just to be basic of pool install what

we market. think demonstration what we is fair driving Look, in XX% for But actually others probably to at market, I that call down outperform XX%. to revenue there, And be I our for issues Well, been concrete. Yes. number. down starts more hate I thing in fiber to that right. 'XX look the grew out less number But specific us, feels the PK we saying that XX% a which volumes ability in we Tim, fiberglass when will right, if the of Again, importantly, is because again, I think it's to exact kind grew XX% of quoted it's haven't material say think in conversion number to key pool what's an and new industry have tough. the XX% unit

decline business then part to embedding a declined what pool just question just what of good. the, mean, a And business a That's specifically? in there in give Sure. have segment. guess one pool the kind XXXX? to of in good hear you're flavor Yes. for on in-ground is XXXX conversion us way package for No, gap kind the that that that on of I I and I other that that's

in we we see can did about the is but fiberglass it break year-over-year. out generally, talk in volume I growth which don't ground, Tim, so

about you if was the So think fibreglass decline to pools. decline mostly and positive, then that was we've overall shown the packaged in segment, attributable

then can then more of there? been sort web or -- when that I traffic in in over lead any of there your end metrics think on you're some add just X conversion seeing you And the sort you decrease just any the throw just color downloads Okay. front needs one business around about could X increase of has past of And overall like -- breakage kind the to years? versus in

Yes. Tim, I engine. team My really website, out think time continued number the building really pool job front marketing and doing accounts, average at mention of Joel leads, estimate. and of have time the nice a people look the Latham spent, the end a All we on do mypool nurturing to the we

I say, feel at year. We're ahead, well. of picking tracking the overall levels last all think ahead there. the we're 'XX trending think they but They're are have We seen roof, not tracking through And in levels. pretty let's we leads 'XX, I might when good up. 'XX type went

We have kind back of dealers. for on turned the generation engine lead

think pool. we've fiberglass year boot through for XXX-plus about last went the both I dealers camps fiberglass and talked package

Our signing up commercial family new good proactively to new acquisition. We're Fiberglass progress out dealer really, join engaging really is with seeing back team dealers the Latham. in there

that look -- hot white views, the that a nurture the on a I to lot and think got good all the to really turn hand website, So lead indications trying those are them dealer. leads off to of of early on

conversion of seen metrics. kind to big think drop really the We consistent. better a out the conversion leads the report fall type Well, don't have I we've convert we on or there. ability off remains off think I don't

this year. on luck Good

of from America. Next question Calnan from Shaun be will Bank

an Just destocking be it the you us in estimate expect can or impact first, XXXX quantify XXXX? and you the to of what of give in

down our had I'll volume a Price go mix price just up volume on We growth XX% Well, X%. year was basis. XX% overall. overall back to and

disclosed I volume happened each year-over-year. fiberglass actually over And I'll think that grew segment. years. just we've then the reemphasize again, what in

from fairly destocking significant headwind the So XXXX. you a included in had

forecast impact And to XXXX, whether relative of Just destocking do you could have XXXX an for worse or the your XXXX? in be it better? the estimate for

take that Shaun. one, Yes, I'll

the guidance in we uncertainty there's wholesale think level, of at the half of consumer that's the continue that the assumption with to first will the I the overall macroeconomic destocking issued, out year. distributors which the there lease right, through

level cautious or, demand I think the being typically until to play the with wholesale consumer that we out that or with let's going the issued We're restocking occurring. when most guide see XQ to see say, you distributors. the we how would be at importantly,

of too as the to for ability that's always the has I favorable So have will of outperform our guys ground, versus gotten a all a cost fiberglass concrete for importantly, a think market. expensive, guide then 'XX, concrete prices generation the And driving up, it's shown view help give geno and really to think I initiatives us. maybe ability there. will fiberglass pool a new think to you we option of pool not to the just indication XQ an what efforts total just but the costs, the in our volumes pool We've and do great with given glass lower with dealers the say the fiber lower for more get more economics look pools lead consumers they of ownership dealers upfront benefit sign

XXXX walk for mainly in with you first can half then kind gross the a year just that us expectations impact. be to margin for of assuming And the destocking through what of you're and kind cadence of

and thing the base. gross a lower year. of full you That's important we QX there's gave us, just us for cost margin and impact Obviously, important the the think for much there. primarily different sales of the I and seasonality the our result

for fixed set the cost our is course, base side. Of season the peak on

but that We QX have are we base, fixed a we and for QX. do leverage, variable obviously, primarily benefit in our cost costs

but in and gross that of you a it. margin there's QX So specific no will guidance on of degradation QX see because

that think some track we're to we last really our $XX manage We're it's important XXXX. we know seasonality that. and in savings QX I understand took diligently margin going of million very on for costs gross that actions the our full in and the of announced we year, deliver year to profile

in We at our business. other that manage even that shifts side of manage continue to levels really QX, periods. lower our part and production and season factors to those We QX look the on more the variable are

remain we cost control. our So diligent very in

from Maklari [Operator Instructions] Next Goldman is Sachs. Susan from question

with This get for ability to obviously terms this Susan. volume update of the the you see through for environment year? pricing guess, in that your would I to business is cost first, I in Charles considering what love on offset inflation on in an and XXXX,

Yes.

I think front, world. really back yet. seen of many fiber we've think last typically stopped think side resins do of it the that on lot a here the equation, has the buying, goes specialty accelerate not extents. to I the off it rapidly drop inflation I Again, to we're cost the

some have labor that, in We expenses in seen breaks to but up. freight continues trend

a that the purchased think to we'll key So the to and I We've with the was are to continue think where I or into elevated from remember announced back got that good out 'XX continue prices. But thing views. inflation where the on We bit time sheet on. were levels pricing in through frame. we to as that right is now our prices execute still they are feel and we've extremely pushed little higher we need work at watch pretty need well the balance 'XX

starts is we forward. the need right back But pricing I would nimble as I we any that we now, we on market. Rob pricing. statement go we wane and inflation if deflation, what with to don't headline do earlier, start we'll see again, mentioned to the But to roll to massive believe think we'll reevaluate as think remain

been into half. for and cadence XXXX, last the had, historical the to of first understanding And in pandemic. destocking to seasonality terms obviously, unprecedented for the terms to of in demand X have back then revenue say, of channel the But pool a sense happening the years of in get it's the obviously, the this go the business good hard of impact just prior us let's

on cadence of better how and overlaying for to second know help the in versus of will half maybe destocking don't EBITDA, the frame terms year this I us first of us So you impact channel revenues through maybe or flow obviously, can top the that. half just revenue if understand

we're Charles, we giving before. have second half, half Yes, guide any first on not like

thing with also a impact winners that I've from it I been the X business 'XX months. about call think normal say through experienced all spring say, when and like But right the is over, by never we normal fall now, last in can think spring -- late new to entering what in and we the back what what I would caveat are 'XX in we I'll year. a been years we've we dynamic years, the are business XX-plus I'd of in because feel early XQ say the the or season seasonality. same you there's a weather last let's does rewind

year, revenue when on the that the business, pool frame. that set you XQ we're full where an think we've for destocking seasonality, us. normal the XQ felt point, importantly, as sitting from what kind guidance about percentage out the taking piece time in up 'XX guide, and normal again, business packaged Let's frame of where of the would more anchor but continued that X like account back quarter a XQ of XQ going into kind a for a basis back for laid with to of

building us you with XQ XQ points both a peak use for XQ. typically in if XQ, So better than being season anchor little those X

want half second to don't quote years. X dynamics, seen to points we it. half, over That's by X them First the I've swing why

to fiber going I start touch year orders last we the far year, pull-through the the we EBITDA focus try on we've just and aspect And of in plays drive see a for for and and there demand then the that this restocking really a -- for deliver quickly up to do when environment new of will we're last seasonality and here our out, be get just macro dealers want see big dealers us world. revenue. packaged think we the pool signed consumers to 'XX. look, happens we to to that what to out first from put how quarter And how and through lot the get continue

much side higher that picks volumes, here right? saw back And We in when XQ the the which those the lower indicating we the cost this bounce and XQ. about last kind a clearly, us. fixed that and down and we're volume the of business on XQ and in do think cost through you level then strong year there's EBITDA on variable XQ running up, back XQ plants for XQ If is the of carry in knocking basis

Stanley. from question Pokrzywinski And the Morgan Josh from next is

just something this pools it bit. little then is but just the that something opportunity set maybe talked should At magnitude us distributors sort normal out now level have we've is maybe inventory size 'XX of can of business Maybe relative packaged business, versus field your about a on kind context normal? the already to in check, of right know, you of rough and in I dealers and days Just a the sort a the on that, on of some of or order kind hand like destock the environment? what for and

steel we've as of I for given us trended between of in you, where the grow has the think the it with down category back is vinyl to years. It is But last pool. and pool that. frame that the very the we've strong inground been the say I continued So business still not healthy, segment business pool the the the of would world than of we've as business had packaged in said, liner time splits plus columnar tell piece piece. fiberglass a packaged the I'd couple stronger 'XX and

and of seen in the XX%. we've I indication that destocking 'XX the continued think as

us. splits, for piece haven't a disclosed in-ground So those that really it's but we of segment big still

position myself, why at half in year. kind we visibility through there expect But and levels continue XQ inventory probably And comment say normalized the little think the the in to I'd inventory the they're Rob got stocking continue. year we of better approach in back in first that more a least a we've full the the in then I the terms front, still than and what's as elevated, I'd bit destocking get cautious it's guide of get of the and both On to made out say potentially okay channel. and levels. earlier this XQ of they that today that's were destocking

impact, and inventory we this inflation on had helps, we're our million. the to but XXXX up of if piece basis, you we where about will we of about. planned lead that know have inventory third was was pool work down. And so I impact $XX we don't year-end 'XX talked increase, just total inventory generally And exiting the extended talk looking -- that a elevated low just if seen on times, we've very part in about back the that year-over-year and then that package company

don't want that inventory whole you that that's associate change I with to So helpful. if

make a some borrowing year. just rates. they maybe today's token, or on higher turnover pool as when have question a lot pool level at the on follow-up, purchase. tapping much like levels, would drivers markets a this pretty necessarily about maybe because imagine equity that then And one re-up think how same I folks maybe home the to interest are not or By refinance folks equity of we want home a don't I high of guess the you should of hand,

longer high. of of whole? how to borrowing hey, costs is Is lot you as worth those my guys industry a I about of, the So and balance be about health a home my you one as the guys might do a here you think think are versus this important more little bit

is Josh, extremely think are pools, is, interest in and all we the high. couple all of overall to at still the And need them think when back important. things look Yes, we for overall a I demand look, I remember step pools swimming

call me in right? X one and -- and XXXX. those uses million off today via about out who pool $X.X that the homes still the depending potential on number heard shakes we sales, think years, have from where the quote pool final want we're about If high I for guys the XX peak next pool on XXXX, XX% million a XX% starts have You number it

where pool is still XX-year there's from a investing fastest-growing opportunity kind of level of today. off, of stat. the ticking starts, backyard business, upside the the There home. of So interest which to then household, sit be and still average suburbs, historical in right, backyard living, enjoyment that we of XX-year, elevated great in of comes And the recurrent the trends segment the that the delay the you start lot that a city formation above the the migration the was that would to return in repair the for XX% remodel from remodel and with

the of interest -- I sitting in saw U.S. done we're XX% the below all rate. homes sit over the weekend, prepandemic, a X% mortgages

right? -- good market with And terms cash XX% tapping pretty are said, and of people an value type home So to are I where a interest talked sit, equity And that means of there's pool and backyard. that XX% people our some equity of again, they're be data undersupply do like feel the good tools longer, most based net likely beneficial. and folks cater decision. low about all worth, the want make right will we the product, are buyers is which impulse And pretty equity it. for held there that on are them place we market that the stay to you going will moving mortgage be who in home the holds put cash category and think it's and the that going are who kind likelihood of to end has in to out new segment that housing to rates you buying together, there an have which the going homes. of house proslimits their reinvest in that higher We of buyers. in and have us at in of high rates, folks now, their all-time well up not for with are

back You've years, thought website and X this leads. to as the we're about to X, continue we over the nurture that's data

for quickly in have purchase. That's the well. over exposure always to make market And that gloss We they're then a Lower And liners a pool, consumers more segment. a that business we continue right? And of going to little and who when if don't be your our that have those part lead real that business we new you reinvest to a the that going liner. We're cover. a that likelihood healthy covers, to of end high have turn going of just dangerous, our a that as because work could you're with we much to but replace over, we kind replacement have swimming with pool good, it's interest.

You year. base to grow a liner out installed continues makeover and do pull that every when approval you complete might out,

So growth those of lines continued product nice as category driver the for business us well. a in is that's

question from is next Andrew The Carter from Stifel.

wanted mentioned What a... guess I input it I I there you XXX days calculated think risk -- I So around, if of the you're right, inventory. frame kind to of cost and that out the

times? as to that So key lead continuing of you're how would been long to fiberglass pricing kind maintain you're the there what for also have and idea of to a Any tool are dealers? sitting on some competitive for high cost. out pretty take on recruit thinking competitors on sitting stay your potential And a able about

Yes.

terms we it. even inventory sitting I they're and really have on, of I as competitors don't know, what visibility on to don't that. In can't comment

take It's really more -- capacity, it is the resins centric, back product us category quickly really storage packaged based inventory for sitting it's steel. us Latham much to back of else one life turns the and we're that on for just fiberglass. pretty to think and and Everything I shelf on pretty pool.

react of inflation price there, up offset out chunk time the and at buying pricing and us ability market could good and our quicker down trends. that's you to argue So gives we're business, deflationary to a which watching real

feel we pretty think Andrew. of I fronts, on all those good So

in would question the we kind I into of know ask XX%, a seasonality, Second quarter, quarter means revenue fourth is, I what you're suggesting if the of is first getting had right, decline kind XX% -- outlook your to give us in season to I this guess, new year. kind peak X% X% color, of negative one, the of a Can negative construction XX%. you XX of any out minus there, number the that

a data getting you're the final point at the you expecting the that. to fiberglass the price lowest meaningfully -- lower end, income pool. normal then and that have homeowners Do levels fiberglass you're guessing to the you about you if other a outperform I'm What pool, have vinyl? porters. to telling about you lot buy kind in kind of what's households to of of it So their of not have confidence And relative relative

to of a to try I'll lot do them. the try line to my was There best hit

I'd about and spend market. thinking have their pool line at spending their and I don't and taking between they difference a see points, of have the -- I of think that asset on They're for the of or think to interest in-ground purchaser. destocking the market, that and they're a their a they the which in year business we're think vacations, tendency on purchaser tool, repair to right? they're output resiliency more to we outperforming key they going not vinyl really replace so where 'XX seasonality Our that can be fiberglass rate trends, rising demonstrated looking through expectations and folks liners of the home, time dollars say they're of of at full package the we've I hit basis because and guidance on replacement the liner a off, X going big sunken use that time a you first fiberglass and the again, half an time

comes the view they years the even may continue we pool, a and fiber be a talk preference, to is breakeven. last think to XX same And all of the in. with sit and But where The vinyl in fiber the and quickly out you our versus of about concrete to fiberglass drive size the the on to the awareness chemicals really shape thing lot get upfront. replacement design, the operate market the applies that cost down to homeowner expensive line wants, more of of bit cost pool and pool I a benefits because it advantages. you space less little a go the

think, there. equity the all to the does for be Latham we higher into. mid- pull and to of out try fretting network they're and levels market customer on I do side But solutions fiberglass to So overall, to from all that tend home value

answer conference Ladies to and management our gentlemen, session. any the like remarks. concludes question for I to would over and closing back this turn

the We for hope Yes. our look May. providing a interest updates care. and Look, We continued earnings support come have Take everyone, rest thanks call really all further next guys great to all Latham. for I day. appreciate today's on joining us your of of really, you call. forward

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

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