Latham (SWIM) 13 May 232023 Q1 Earnings call transcript

Good day, and welcome to the Latham Group First Quarter Fiscal 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note being recorded. Please

now Nicole Harlowe, would begin. like go to to over conference the Investor and turn ahead I Relations Please representative.

Rajeski; you. can the prepared call Investor first Interim portion Borseth. of accompanies issued and press Thank our site, remarks. which the Relations morning, are where slide Web and XXXX that you release, on today's fiscal CEO, find Mark Latham's earnings our available is our this Earlier also On Scott quarter CFO, President we presentation

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

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

found in adjusted adjusted loss our to margin earnings we release measures, discuss will Reconciliations net loss be found under in XX-Q GAAP of company press net and in believe historical Investor the financial EBITDA on debt the call, today’s remarks, performance. during the net could to calculated can site. prepared found can Reconciliations be useful of be our addition, accompanies Relations GAAP which evaluating that the margin measure leverage EBITDA net comparable and In to will presentation our included XXXX. Web QX our in debt can be which for be Form of and also slide non-GAAP

now to I'll over call Scott Rajeski. turn the

then us Thank our Good earnings to begin in dealer Mark our we're and cover fiberglass direct-to-homeowner Nicole. review morning, of for auto marketing, and and everyone. seeing discussion will material call quarter momentum onboarding, financial from turn joining XXXX. for a XXXX to you review with our today's call. fiscal training first awareness for strategies. outlook highlights of conversion results I'll QX and it I the Thanks, a

first and delivered $XX sales We million of million in net of the quarter. EBITDA $XXX adjusted

call, discussed seasonality we last pre-XXXX market the pool the preceding As of three to on years. patterns has versus demand the our earnings returned

for high particularly business levels a benefited set QX supply a as net QX fact, period XXXX increased sales production elevated from we In chain our following for and record challenges. issues backlogs of and

We've expected cost recognized structure. to to year all this market the our lines; actions in-ground adjust operational will liners. covers tough pools, three another have year-over-year we than swimming product performance that deliberate taken for due comparison, stronger delivered across Despite our difficult execution, and and sales XXXX be strong pool

yield lean our of is further annualized In and This by expect XXXX. at November, million improvement initiatives continuous several manufacturing we about processes. ongoing aimed announced reduction work we value that $XX fiscal engineering cost to of in supported savings our

both our dollar across excellent of these X%, supported our also an demand, portfolio. inventory adjusted We QX lead and adjusted still while absolute efforts All margin million basis. times product current on expectations our and EBITDA of delivery have with align exceeding right-sized to $XX margin ensuring EBITDA

the of in goal ambitious our an I that on am year, dealers last update to strategic we an Late ahead achieved that set XXXX, say milestone. pleased to season we've to selling recruit and initiatives. Turning new

and train throughout actively recruit dealers new continue we'll to to are and continuing ramp We also XXXX, them up.

believe While growth. small these set up us we most now, new for well of they for future will dealers are

continue fiberglass and as with in dealer the of more efforts, recognize lead education training. Latham value dealers specifically, Our proposition working and to generation our invest of we

We see continue numerous University, boot strong to camps Latham hosted fiberglass for demand where we year-to-date.

guidance. economic reflected to continue an spending, in rate is Concerns our environment fiscal of interest QX which and on slowdown XXXX consumer in weigh results the

industry. However, interest and tools pool our the to point of continue lead our long-term and ownership, outlook in strong underlying us in the digital generation consumer giving business engine confidence

In been pages enhanced up and our and which we light activity momentum session website our in of is website leads in across to lead average efforts, generation all The ramp across saw number and increased We in strong tools into lead of manufacturing have capacity, strength sessions, dealers. website times digital our apps QX. and our able year-over-year. to duration translating

Latham XX% our drive a our on versus and the first our our My and orders. both ability QX for in over of to year-over-year This users downloads XXXX of number and submissions leads cost quarter. reality app, estimator grew pool by XXX% grew platform to augmented We supports

In fact, XXXX dealers sent of the of number XXXX was of greater to levels. actually leads than QX in we QX

demand feel our our to drive we well our enhance execute we capabilities As a to macro our existing expand continue direct-to-homeowner strategy, manufacturing partnerships, deepen consumer environment. in positioned difficult and and dealer base

like Fiberglass XX% total new again in remain market swimming fiberglass fiberglass pools. to we to installation the underpenetrated U.S. compared as in-ground ability XXXX. where the in pool in mature the We U.S. confident of are vastly of demonstrated represents outperform pools pools markets Australia, more

fiberglass because the Australia. conversion admired largest Narellan manufacturer concrete in from pools In Zealand, the acquired how in XXXX, to we they Australia-New tool drove we

pools both a Our North growth concrete American market and marketing dealers. pools led directly the on to by versus is strategy fiberglass similar homeowners benefits of focus

momentum seeing by journey are still are fiberglass our U.S., conversion of driving concrete strong We driven to in early but the the in Latham. we from

being in-ground XXXX. This penetration pool are XX% of to down that was despite We U.S. installations installations of year, in gain a XX%. the versus share fiberglass points report of pleased U.S. share X pool grew to in-ground prior

testament to see points the our for reinforces have our this driven launched our gain share and XXXX, we three X as and confidence We now we are BXBXC in fiberglass we fiberglass building rebrand years. strategy strategy. momentum Since of a in for in

in-ground help Another pools highlight like about is covers, pools is before which swimming to are winter covers not. season Latham revenue to types X product after Latham replaced winter be pools go We've whether for steady line I'd both weather installations safety told you need stream XX a pools, and they to and or over, covers. Winter provide across every all from on safety of the protect replacements. with new years the

about keep covers. and cost automatic lower and Automatic Today, to safety pools They and pets keep chemicals. when they pool the use. children like to help homeowners' also of covers clean and I'd in you help is safe water energy, safety talk maintenance not

In the QX, we year's grew to even prior first automatic compared net safety levels sales covers of when quarter. strong sales net

a automatic made fact, sales covers. in to we in net our order precisely our XXXX. fit covers fiscal is take dimensions. of doubled one fiscal In for auto homeowner's XXXX Latham's safety We automatic Each covers versus to pride pool exact safety

and measuring a of dealers allows of safety AI-powered experience capture measure launch for excited will perimeter the for are breakthrough new Latham, pool pool shape by the measurement dealers about features. This winter digital interior Measure we in-ground and covers for technological entire that and simplify modernize renderings tool Separately, to liners. to the the and unique

minutes, liners winter specifications dealers covers have Measure, within labor. in-ground precise safety saving for and time and With them

covers safety have rollout for select We of the launched by winter initial to Latham dealers. Measure

in XXXX will winter covers and growth we beyond. we're early be While and the into we believe liners safety innings, in-ground now look as Measure opportunity a for

hand Mark, gives off fiscal conference today. touch on I'd outlook call to I reiterate the to Before to XXXX us the our like what

in expectations we a environment performance delivered challenging year-over-year a continued macro QX difficult and First, spite of that comparison. beat

based on pool where we're houses, overall in newly concrete pool we this Second, year much especially the by in are weakness seeing in is in a driven constructed starts market states the many U.S. softness underpenetrated. of market, what for

We road of pool these homeowners, and journey. as fiberglass we awareness convert purchase a would exciting than in fiberglass be what pools opportunity view as their an pool those their build target the concrete down support this to otherwise markets

in Third, and importantly, website momentum lead we're and seeing activity our generation most tools.

focus Given start year the the results efforts in we demand to generation that for lead year. of our dealers in to next we increased drive continue XXXX will are as to plan half driving, second and the into

the turn over to our XXXX results I'll call review With greater detail. first Mark? Mark in to that, quarter

good a otherwise. XXXX, first Scott, note and QX everyone. XX% $XXX million, discuss year-over-year were as quarter Net for we quarter $XX in basis morning, quarter fiscal we are or delivered which to a is the XXXX fiscal Thank comparisons XXXX, today XX% growth. compared million that first noted all unless of Please compared sales to which down the on of you, of year-over-year

year's volume, reduction comprised in of a a offset XX% XX% in This price. partially decline was sales X% increase by

for a benefitted pool levels. to in as XXXX in similar comparison the pre-XXXX year-over-year from us trends results to comparisons was what reflect production saw those tough XXXX, of expected, we backlogs increasing return As QX and elevated a notably of market. seasonality QX

shortages, of recall production. half demand, may which strong lead saw supply coupled XXXX, times with material You we our in as second our extended the raw limited

XXXX resolve accelerated well chain which an challenges, to delivered to As we our growth. XX% leading of positioned action we fulfill customer a took rate, at QX we to entered quarter in orders supply

distribution on continued interest greater expensive. this of in inventory as carrying QX more destocking wholesale costs make has their our urgency normalized In which pools year, levels, we packaged inventory our as taken product rates experienced line partners

by ongoing macroeconomic have recessionary those and Lastly, part in concerns, inflation rates, challenges, interest continued. higher persistent driven

due also packaged results in driven to sales lower compared of levels. continued declined the pool declined wholesaler for XXXX. the Looking strong at $XX year XX% fiberglass our by backlogs improved $XX and to quarter. product In-ground and sales QX levels sales production destocking elevated to pools million, net million, XX% period our Liners strong driven unseasonably in in pool categories by ago sales combination year-over-year across the the to sales of

will pleased of decline anticipated and auto see cover was to opportunity in sales Lastly, of drive had awareness our above actual sharply product delivered QX, expectations. as million, year-over-year growth we of We we're this reflecting that sales we're a continue we We pleased see benefits $XX leading the the level strength sales our as economic that of line the covers flat product. at safety market environmental automatic and covers. to our

pool compared Gross two-thirds profit period. markets of driven of decreased to margin of primarily to sales. for to and volume margin due we million gross XX% driven inventory by the the $XX cost to year Gross part pre-XXXX XX.X% million than decreased was XXXX, the XX.X% seasonality leverage returned higher More decline compared of driven or of to cost due XXXX. the QX fixed by by by sell-through declines, throughout to in lower the inflation $XX level experienced negative prior

We improvements year-over-year during comp QX, peak which expect see both to less becomes see and these of in sales a season several of in drag margin. as noticeable going headwinds we and forward gross level on with of pool head net moderating highest selling our into QX raw the we our our of inflation in materials,

We first quarter, gross impacting also reduced our in the inventory margin. negatively

We better align levels. our we demand to expect as this current continue inventory to right-size with

maintain our leading sufficient lead of course, will, times. to maintain industry We inventory

a fiscal decrease in expenses stock-based $XX was compensation reflecting Selling, decreased This $XX expense. XXXX. taken million stock-based excluding million general decreased cost decrease benefits $X million to reduction and in by non-cash SG&A, compensation XXXX. from non-cash fourth expense, the the from of million, actions QX $X in primarily quarter driven administrative of

net SG&A, As QX XX.X% of excluding XX.X% year. sales, stock-based a to increased percentage last from compensation, non-cash for

Adjusted adjusted result, QX and $XX $XX a sales profit. resulting Both XX% adjusted from net in EBITDA X% QX margin our better million of first expectations from on EBITDA driven a quarter XXXX. decreased or the by to our exceeded XXXX. EBITDA million, As dollars decrease impact and of XX% the was for of margin

operational manufacturing our to response on liner to the our costs. We actions improve in prudently workforce streamlining We and a reduction margins in to focusing and conditions, took cost continue including and efficiency deliberate footprint. managing market our by work cover

staffing We production optimizing our structure manage align hiring, down and with inventory. managing continue demand and environment, gating to cost to our our including levels the

begun production to Oklahoma Kingston our manufacturing fiberglass pleased plants. have are and in We both

we maintain reduction environment, distribution these As continued up production present. growth cost regions the part while the two our of evaluation and ramp facilities demand capitalize opportunities these of ensuring lead are and on we are positioned slowing times long-term the in to

and health sheet balance our with allocation strategy. disciplined comfortable remain feel in to continue We capital our

total availability had million typically $XX into is million $XX equivalents borrowing operations revolver, As $XX our remaining the our we head more of and of as of time cash million giving of of April us majority sufficient than X, cash on and we which generate $XX our the of million, year liquidity cash. the

our And leverage increase was we QX. last saw of at million reduction in a million $XX net of for the as Total X.Xx at QX as working expected, million in year-over-year driven in the quarter, debt decreases of to year, versus the Net by cash operating end activities the primarily $XXX ratio EBITDA. adjusted used $XX end result was year-over-year 'XX debt capital.

the net our business in leverage pool generates building into we half the the head the normally to and we peak year ratio As of of our second moderate cash, year. expect season our would of majority debt time the

at QX and year, primarily investments in were to by capital expenditures $XX spend, million manufacturing facility last Looking Kingston our million compared CapEx driven in projects. $X Oklahoma

performance million, of our adjusted outlook for EBITDA and up to sales expenditures $XXX to of for $XX million million as With we net $XX million. solid $XXX year million to of building capital fiscal are QX million, to $XXX season, pool XXXX affirm $XX and pleased gear we

in-ground XXXX. concerns new outlook as resulting weighing in in Our reflects by environment the driven rate economic well installations first continuing and is of for as on anticipated demand. industry challenges, and our spending This quarter consumer in slowdown, interest performance declines the U.S. an pool macroeconomic

the this inventory At same distribution from wholesale we to conversion and to channel pool in through continue the our generation make the material half on headwind remain pools, progress to this normalization the expect tools We a levels least from to outperform elevated supported drive market enable would efforts swimming of expect and first digital us packaged by of concrete year. momentum again at executing to the our to fiberglass strategy our XXXX. continued time, lead

and previously We're and improvement also to from manage we benefits and our structure. actions cost adjust realizing continue continuous cost reduction announced the monitor, initiatives, closely

Lastly, the of approach first of focus on facilities majority the with investments weighted we fiberglass our Kingston year. disciplined and with manufacturing continue of to a half completion capital Oklahoma to the a take spend the in

I'll with Scott, for back to closing turn that, it you remarks.

Mark. Thanks,

growth long-term of Looking ahead, we remain and confident our opportunities the in fundamentals business.

even fiberglass' markets in pool earlier, to down residential U.S. as in ability were expanded U.S. discussed As to year-over-year. penetration I down fiberglass XXXX installations in-ground XX% XXXX, proving share take in XX%

manufacturing fiberglass our regions U.S. manufacturing We ourselves Notably, continue enhancements to and balance position well capabilities. in to continue capture in manufacturing the to Upper our Kingston fiberglass the to Midwest Canadian enabling us Northeast grow facility producing to with with pools Eastern and to April, new opportunities began better footprint. our first and

in allow orders out We the dealers better fiberglass now shipping are us of also U.S. facility, service existing which Oklahoma our will manufacturing to

that Southwest significantly as recruiting efforts up well in as dealer to ramp market.

translated our automatic strategy similar a sales. awareness-driven net safety to with covers, in are driving momentum We which has

over and replacement on safety can of for opportunities of liners. we continue further to see the covers revenue portion covers the believe by liners our launch with we Measure As recurring installed We grow in-ground pool opportunities business, as base time, and we age growth the winter in continues Latham. capitalize and strong

late as XQ covers, key plan XQ up for continue XQ. season accelerate is quickly to cover it we rollout and throughout Our the into and we ramping will head in

that our to pool tap are into tools. we continue generation over in in We efforts benefit time. lead consumer performance and interest indicates strong This continued can seeing our from website digital across ownership

enhancing deepening and our providing dealers on expanding on generation lead with resources. and by We our value-added focused training are and relationships

confidence believe which in us strong over our we gives positions attractive trends strategy, on to this long-term us growth our capitalize of in the All industry time.

We questions. the line now open to will

you. Thank

And We come the will go America. the Callan from Bank question begin now question-and-answer Instructions]. of from [Operator session. will Please ahead. first Sean

Hi, you Thank guys. taking questions. my for

expectations the despite the where market in that's talk in came missing. you into your of ahead about are what from full the pool then, of the year? despite versus speed? year other top guide And expectations you raising you outperformed keeping the seeing Can line the first, your Just companies some you coming

hear off for Sean. team the Thanks to Hi. the that is This first quarter you. delivered start we're to your morning, get from to pleased question. in XXXX. Good with the Mark. here Yes, Nice us here

mentioned, we As of our all lines. we outperformed three slightly in product

So we good about feel that start.

I some expected. and than reflection think demand stronger it's a good had we of here the team work really of little

As year at. pool far in into full Sean. peak get to building season, early very We're reaffirm where our now It's guide, the pleased just the we're as starting still season. to we're

very confident there's the soon continuing with inflation. until happy start, thinking higher start look, a feel challenges we season. pool further we get macroeconomic building we through And So also guidance We're interest the are. to still raising where the about little about the rate

uncertainty, in we some there's way started. to if feel where are So get about the but yet, to good a we really year there's go long

Thanks. Okay.

new in seeing metric as like still So Latham's those backlogs into from is pretty based pool year-over-year it turning offering projects? looks leads permits But what down as high. you on of and generation come about provided, terms lead you're you the hearing regions. interest talk XX% dealers in your the we're Can much actual some in

take Sean, Yes, this good This I'll morning. one. is Scott.

refer I are which you a published there. and what would concrete And we locations, have to penetration out high don't that's reports, the locations Latham states, for the as kind we in think various when at permitting look in know all of is that lot sand there dominant data in. of out we

have drive of continue the capacity, they to and improve we're funneling to we're our leads. lead generation as quality where that able dealers the So leads to

sits fiberglass, driving year part also cost, upfront where concrete lower proposition outperform start consumers we're from the our importantly, acceleration standpoint why to last value is the of we concrete, as ownership, we in and versus lower from trade market seeing think I which we look a more in results cost of XXXX. fiberglass fiberglass will down here showed to at that believe

the -- backlog there. was So I piece question backlog another in think the of

online they starting still us now in of where we've locations the why trying in some ability than Oklahoma just we acquisition about the drive facilities fill second of of the gen given and we first think bit. half paused new with or stay and backlogs think demand dealers have little and to incremental incrementally to coming expanding start maybe them year, half we're up those lead to factories, longer make really the lead good Kingston times the any wanted on we've not work sure 'XX where by full territories I a generating see through to had half back to re-ramp to dealer efforts. those been been driving digital in out to

good we we but out fire So I now. board, job the with think that's come feel do economy, all cylinders cautiously pretty right as team, with across said, peak uncertainty coming into I'd there. the as the season the on But Mark second the into say the optimistic building half here, good

you. Thank Great.

welcome. You're

And be Matthew next Please from ahead. the Barclays. from Bouley go question will

Mark. taking welcome the morning, Good questions Thanks guys. back, Hi. for and

Matt. Thanks,

at I side. expect the top like picking I So concrete speak it heard on sounded fiberglass concentrated to when of that a concrete, on you'd decline you think this the that more in say guys year, industry the up be you the versus

the got PK 'XX. final data for you've Now

and for expectation this So a pool your just thoughts Thank market terms guide starts in you. share curious is what your gain of within new that? expectation embedded kind fiberglass own your year of on within from perspective

Yes.

out I from market and probably We exposure for is think set another down our of we with anticipated others the tough have market, tied we'll standpoint. that from guidance category expectation that see to think we are new line much year, market year there a housing. concrete So, standpoint. don't a to more lot what Matt, drastically is, which full saying And I some a fall in when the

XX% I to XX%, when this in moments going you Our said we down on ago, focus last guys, it points down the what's a year, fiberglass view it's couple upfront data been over think, conversion share. been X lot story, And And was back with shared a drive few on to about of back you X grow we We picking the the is is all costs, XXXX. roughly a that long-term resonating. here, look unit up of our just continuing volumes market were fiberglass XX% continuing lower this This asked able put I strategy the and to on finally has of to growth we've gain just market share years. metric, points to fronts. last out focus a there, going at

good we in on capacity, can do think With not think the back clearly state you the or we coming focus we've out I of proven And believe in just with We've XXXX, new been some shared done we've we outperform of years, years said that with will be six, facilities couple last supply seven good the guys but in will data we've will last of prior. growth outperform. not market what what again. the we the online, that's chain fiberglass but backing and be the standpoint, come it will specifically growth

that you kind guys cadence to side one seasonality and and the like on color. that, you and that, you Thank months and to all of expect for normal great move summer That's into seasonality it then that. Awesome. gross increase this Scott. volumes second sort as all production year we've And sounded returned the of margin

go as gross this that on expect side? you. Just point we what's you What you increasing or will and of of kind a think result on Thank curious be of will put And do kind the year? finer can margin that? through the production be the the benefit should impact if you cadence

we things And XX%, we're adjusted margin start an guide which year, couple just This than is Hi, of reaffirming what on Matt. midpoint I today, for a which Mark. is our The obviously is EBITDA the of that better quarter. to the Thanks. delivered first cadence, of in maybe with. think

we're the we QX, QX I a tend season. QX seasonal pattern Like to EBITDA would we think our lowest to and margins. it, you And with quarters, in again I mentioned. seasonality start that the our gross concept that lowest call seeing of QX, see we with that, being margins saw return our in and pre-XXXX revenue lowest

And so we're out. We QX QX, seeing we that would that the in move those. see play pool seasons, expect that improvements we both as of into peak Matt, and building

I think also on when off a couple And you gross look at One the cost really things QX impacted negative gross of margin comp tough margin, XXXX. of fixed QX really we the leverage. had coming a of us is, side.

we fixed structure, have been some place as support peak building our a season, cost rightsizing with kind a revenue that gave headwinds took and the in first we've While structure that the we actions the pool of you in know quarter. decline, with in QX, cost to us

we inflation really through move [ph] running versus P&L leverage Matt, that those to the higher seeing the third other saw, start impact as maybe material and the inventory mitigate. year-over-year will experienced negative even inflation And as quarter. into second the will costed higher we some some deflation, was year cost think the we fixed things, we moderating and of our of start throughout as also cost I last thing Both year. mitigate

Oklahoma at And We're staffing. So we're but we are there production. taking going The manage the look continuing. hiring. quarter at up looking Kingston structure, now, to see We're cost the into out production, gating challenges on at right? and and speed our to continue second things. the We're macroeconomic improvements time, happy we very steps optimizing come Matt, those same should and of from to see third both

better with demand. up slowing to are We ramp the line there

I to if year us put for guide and get we forward you the So improving those that through reaffirmed. would we expect go the balance to things as of together, think that all margins see we

thank Great. Mark, good guys, you luck. Scott, and

You're welcome. Thanks.

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

everyone. Good Thank you. morning,

Good morning, Susan.

Susan. morning, Good

back, morning. Mark. Welcome Good

you. with talk to Nice you. Thank

lending you you there's is a question impact activity ground? Yes, from talk on or dealer or projects you what how headwinds those too. any been last can the the from about standards My ability the consumers' two? bit that any as willingness take about working on over And a they of Are month dealers these thinking through hearing to first to the you're tightened and perspective? are seeing

Yes.

do And for time hey, they've year. just like the take with this last months half would they more the one. dealers trying few the of asked need? over So, spent a quite of they seasons the see to I'll as get what we the one at And ramping, bit gauge Susan, to as thing look bundling we to leads start second is, a

of So we've you shared lot metrics. the in the there on guys the on we doubled kind digital, down our a of efforts lead gen with

are a maybe let's I consumer position think the better longer homes their level, little higher income who's pool, people buying, in say, situation, financial staying Latham now. in fiberglass a as we spoke bit before,

continue probably here going the for where be are, $XXX,XXX I'm while, swimming we're a I'm housing be buyer sitting interest hearing with the lot a from on people So and home, sitting equity even cash down rates we're that backyard. the what on plug a mid-Xs, sitting mentality to to a going makeover. cash X% willing the their still saying, now. of And a to folks rising not on to in backyard liking pool $XXX,XXX, are because they is, still lot in maybe invest of moving in liking seeing a I'm standpoint, mortgage on equity, for

our to want looking vinyl. I we've pool. pool And completely pricing okay But able that consumers which benefits would There seen right And on A hey, think Dealers step able into for on what might into And being it, thought pockets upbeat. who pool new Latham which last pretty sign a to kind the balance for get fiberglass backyard. the a pool for completely we're have the of I are out very, big the seeing payment where been I dealers seen not feel dealers dealers get folks dealers it though thing as some look, very share, that again, a concern telling now, the is year, advertising might opportunities, maybe was in a dealers shifting dealer us, have a to say, make the creative. how of ground. at the vinyl And BMW versus I'll little sold to say, pool, come I where is a think So in willing industry to that a lot we've let's seeing still with. pool some us very said, feel overall, we're good. pool. get call fiberglass for lease slowing. seeing. then the I even I concrete think reach We seeing that see a demand one someone swimming markets, not They activity into

swimming your in You month summer. a can backyard be for little as as this $X.XX

backyards for they're pool loan to payment long-term length as the and that interest creative without interest to the than it showroom, And and the half pools to on initiatives the the just going payment, in second the car and it lower in the that pool, support angle, we rate with try So of consumer. the a continue get into be get the swimming we've some maybe dealers loan, XXXX. North with but affordability that granulate better much for of do getting lot the leading in a year it America, car all little the making is there's a bit the in training, making feel of like financing to a may cases, activity talked, we're a

do the that side price And how ground, helpful you years? to very in place or the this that bit That's inflation cost Scott. I bit that on of? that, through year. color, moderate think up the that you aware ability you thinking mentioned are hold guess we following going of some dynamics But about forward, you've be the expect two in last anything to I that you go on to put three we guess competitive a as about a Okay. And the do as should pricing on on

can comment margins forward. Mark price maybe then on and versus going piece the impact pricing the take cost I'll on Yes. the

surcharge the there, delivery, have look flex on back looking said, though think we're industry, XXXX inflation they're as seen have you see at or we've historically moderate as fairly in gas, the if typically type of still relief forward. the place sometimes and when elevated look we cost across back elevated. freight, prices but board, fit. seeing we've even bit little still we still And we'll that oil, fiberglass, rolled even we But We levels. to extremely and I not you as a start labor maybe

feel pretty sit we on this price point. at good we will our So with where

the here selective any of price. We will back where think I and there be need drastic peeling we we price. see to on But can don't

guidance, the current kind on of margin of that's our now. our piece laid guidance. out So views right do in the to the side? what kind about reaffirmation you want cost That's of Mark, the talk

Yes. Sure can do.

kind to annual which X% So of much in is saw historical pricing. our first the higher prices, of quarter we closer from here, level benefit a

stay As the even of we or If back we're little of I what's to pricing be things to basis. that would to deflation, of up prepared case, the cost cost inflation ahead proves moderating, on maybe inflation again we'd not ahead we game. do that to think picks be a able anticipate necessary -- a see with price bit stay

color for everything. luck Thank good that and all Okay. with you

Thanks, Susan.

The next question Please Andrew from go [Operator Carter from ahead. Instructions]. Stifel. is

Hi. Thanks. Good morning.

the wanted year. is prior from I to forgot, ask I one, about I think up leads said this. First we thing I Number the talked think you about were

been of dealers. case, Is you don't know October for shoulder I therefore, can how like April, in leads since I the probably your the that, through higher but you And that think you've you're have the on what encouraging of seasons comp? of the or quality sending to to tell much seeing really kind that too early redefined tell conversion within kind season? leads;

Yes.

the right, just thing their to the They're higher conversion establish pick the to Latham finance quality of the a those So last for going the by hot lead, of is what dealer it and It's conversion vary the because white types make got can And They've because you're anything established improving account. decision. that we've the dealer. to of leads. out focused It's right, budget, ready dealer probability or of the does of leads much My consumers, or on say is also right? percentages the And of we do not pay the like quality factor absolute as kind they purchasing there Andrew, leads, a pool. we number. maybe But improve leads, the their they've just is, disclosed on not the how to talk finalize pool. they're

conversion a to being really the dynamics how So from very code And we're we right marketing are as think, those and that rates high this, of in creative leads Joel level. getting down I region, dialing a those the engine lot continue to standpoint. help to by the percentage talk region fine the this we as tune team are very seeing zip dealers do

So we are. where like we

we as the the move XXXX continue second given about, that terms of feeling incremental the into to do, of we're in season about to think are we'll and numbers half good we just shared slide the when we the activity. substantial of on we number, at absolute talking And will continue guys, through continue dealers to I with it's but those going ramp season. the to the one get starting it's They're look trying But it haven't the see fill drive things you it. to numbers 'XX it.

Thanks.

a Oklahoma, a chain, I particular, just Second supply those to do Kingston in guess, question, understood Kingston, about ramp you two slower a because little if guess game think with than better sales I potentially of Thanks. you or competitive the a open puts a think purely optimization up a this thinking you're a and different additional environment this to that opportunities is opens years in -- volume imagine kind position? this I of correctly, way when kind demand. up good facilities, I you those changer it's bit Is your of for the ago. you're network? adjusting I of two think were

a because, above. point good Andrew, Yes, it's all I'd say the it's

the and there West with up been of capped our ability as facility We a that we are have in to in was Virginia. the where well as standpoint kind from grow expand capacity Northeast limited

serve mentioned actively dealer those recruiting ago, dealers. moments few disadvantage really and was be freight to to we a of I a weren't the that to as The So into on markets region. somewhat pooled able us cost and getting

that helping months. as I up, in plant drive last, recruiting we the we say, that over freight new drastically importantly, margin into lead coming from XX facilities. the more the And getting the ramp down improvements pools will time markets those ramping So from market, savings dealers think to those where the been road potential it, of shrink have

will So California, same into Oklahoma we Florida are exact dealer pools But story but with Oklahoma. ramped. nice. able turn Getting want on. to we come that acquisition better a lead us, from better how cost to back advantage ship ramp online, service, to do those ramping cautious say to Not Tennessee, have having to facilities, we're happy market do in both be really be times, both

which line, now when that first in Kingston you pool heard last one for yesterday Latham enjoying installed think pool about of we fiberglass calls, actually think as with as that off one that another satisfied yesterday I well, got just is from Kingston. rolled swimming of ground pool that staff out the their Kingston week pool first on my came week of the the out homeowner

Thanks. I’ll pass it on.

Andrew. Thanks,

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

great And Take Bye. upcoming next everyone hope so, and We forward day. you I call. care. summer and continued providing interest to thanks everyone at of support for the and into further of on look updates meeting again, Latham. spring with this your conferences many earnings the has a

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

now may disconnect. You