Latham (SWIM) 8 Aug 232023 Q2 Earnings call transcript

Good morning and welcome to the Latham Group Second Quarter Fiscal 2023 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

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

Thank you. can issued is quarter Relations prepared available our where we press XXXX portion remarks. morning slide website which the release on you this our accompanies fiscal second earnings of presentation Earlier that find our also the Investor

Mark On CFO, Latham's and are call and CEO, today's Rajeski; Scott President Interim Borseth.

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

financial reflects to filed the statements those or specified. that that furnished as statements, materially and SEC statements as are which forward-looking due with certain annual future today, company today's by in respect constitute with make well the as may factors call, views earnings the forth this Actual reports other During company's the results and company's of XX-K or from set events performance Form events contemplated report the to may such forward-looking date and release. on risks subsequent and differ

disclaims obligation statements company The any law. required by forward-looking as except any applicable expressly to update

In non-GAAP can measures. these Investor Reconciliations prepared that which addition, directly our certain on non-GAAP found now found to the measures to company financial call, accompanies comparable GAAP Rajeski. Relations over can the during website. Scott slide of be remarks, in the presentation discuss our I'll turn be measures will today's call

half from Mark outlook fiscal first quarter highlights Thank it over Good of turn call. earnings XXXX our I'll priorities. to financial quarter and us for joining results a XXXX. I review second begin our second review strategic Nicole. you, call then our morning, everyone. for discussion Thank to and and for will today's with of you QX

towards we with year, sit strategies, our across long-term direct-to-homeowner first way categories the of our position where tough dealer from and our work given product growth our the we've the fiberglass. the in concrete through material pool we're our driving X conversion With continue and opportunity. leadership confidence to environment macro to As our and we continued months today worked unique pleased

term, near operating are costs operations, and focusing At including the and enhancing on nimble across we remaining efficiencies. in same the reducing time inventory

have our net sales EBITDA the range at for result, we the and fiscal tightened XXXX of beginning initiated a initial the year. As we within adjusted guidance

net we EBITDA delivered This XXXX entered pleased from sequential QX improvements XQ season. In in peak margin improvement Despite was QX. were in from year-over-year QX, QX in pool sales as margin XXXX. declines to to and building in our we we adjusted quarterly deliver gross sequential expected QX

significantly reduction improved from actions. cost leverage cost benefit we fixed our our As

our Our levels in maintaining demand management second results best-in-class still with costs types. quarter reflect active of alignment and production lead while of inventory

as dealers and even Our we've ownership seen increased over in underlying remains efforts the website QX. last robust digital purchasing This stretch leads in decision is that and consumer in years. marketing continuing to to activity pool tools drive continue interest to out demonstrates the several what

with will fiberglass supply With increase continued manufacturing of These a the new improved are efforts focus to and strong year. with chain the our on capacity, financing continued conversion line time. we which expectations dealer recruitment, over have in very dealers QX for enhanced support our

As for of well us half in XXXX. expected, our second QX, enhanced we the liquidity positioning

cost strategic have Therefore, management. we the as As of out. better first of think remainder year, and for now prudent year, we on shake we focused efficiency operational our driving continuous will half the priorities improvement think we've the we are our in cleared XXXX initiatives the visibility through how about

for in priorities, strong which continue places a consumer efforts Our and line position show long-term confidence us giving strength lead of demand, our top generation to in execution us growth. underlying continued growth

pools to to of to conversion fiberglass, adoption continued support from and the awareness material focus on have concrete We expanding the fiberglass.

continued has to strategy to Our dealers value of positive and Latham's from yield homeowners we about proposition. have receive dealers continued results both feedback targeting and

are excited digital direct-to-consumer innovation new strengthen strategy. that our will about our also We

material-related robust on supply demand. position to saw shortages, pool raw facing we we and years over industry As business challenges best growth while in the our last focused meet and chain several increased simultaneously

we When XXXX. reduce savings in turn year, costs, yield immediate we on conditions market are which saw of actions QX $XX XXXX late million in took to to last cost our track in

remained conditions anticipated, have As throughout XXXX. market challenging

demand. have closely by matching staffing inventory levels and continued this respond our to monitor We production, and to

discretionary in and reductions, our further count actions restricting streamlining QX enhance our and the we spending. further including to took continued During early the head operating efficiency, footprint, QX, of manufacturing

to savings, fiscal in expect actions. million expected million cost to realize in annualized XXXX from these realized $X with We $XX be

which tandem, we the efforts have In improve allowed our manufacturing traction engineering efficiency value our us to on of lean are processes. gaining

facilities made lean several material space products have continue in of good reducing and We productivity as initiatives a with and progress inventory lower free improving drive our on our redesigning levels. costs up capacity floor focus in and to

increasing benefit these reflected adjusted of EBITDA second in an see to of expect We actions XXXX. margins half the in fiscal

pool firmly continues the growth attractive opportunities long-term material conversion to from for present fiberglass We to believe concrete the business.

installation drove we XXXX. XX% share points down expansion fiberglass X of of percentage U.S. XXXX, XX% installations the in-ground versus in-ground residential pool to U.S. recall, you'll despite being in pool residential As

better two facilities opening drive as rebalance to us our the conversion fiberglass These During improved lead and our Kingston, facilities QX, well our reduce allow markets large and grand costs manufacturing we Oklahoma. community in as of with we manufacturing times to serve opportunities freight will footprint. fiberglass strong across as Ontario celebrated

we match up markets. these on we to the are these discussed As our we last in call, demand are seeing ramping facilities

activity such drive even generation Latham's seeing as continue growth in use tools Pool And to and we're homeowners digital website efforts to Estimator continue and year-over-year QX. lead Our Cost the MyLatham.

deeper strategies, by leads to became us journey. to As a analytics our started Notably, are on highly that support as and qualified were a nurtured prospects full in as we've advanced the through and number result. opportunities further focused direct-to-homeowner homeowners we purchase of XXXX leads

more XXXX allows MyLatham us better less existing decisions our homeowners informed dealers. purchase their to before of on to focus allowing dealers sending more account an and installation. to This half understand on and and make them preferences selling have budget leads helps Roughly in

business. Beyond drive driving strategy existing with concrete, fiberglass, our adoption homeowner material important smaller deepening to conversion rapidly from opportunity dealers times an the their crew to to adding new component fiberglass. and provide faster of relationships dealer of and the needs expand in awareness compared installation is fiberglass pools concrete With

Our bootcamps combined coaching productivity. at aimed dealer excellence are business enhancing our with

this we enhance will our our and training dealer Florida to partnerships. enable Heading into attract Continuing value-added season, at had peak and strong facility pool we're fall. in us to for resources training Zephyrhills, to bootcamps resume again held building our demand retain excited

year. we to such, are [Pro] excited As our website later new Latham launch this

of help our resources. run We believe this tools, will be turnkey content, comprehensive haul exterior collateral digital their allowing more for online including game-changer them branding a marketing signage, designing to sales will businesses This product education all dealers, and agent efficiently.

a time we dealer meet for dealers for XXXX. in us new dealer will first we dealers the in on to with small, believe targets and up internal growth year-over-year are signups new ramp It set network but future growth. expanding Lastly, to start of our new takes up many track the half

we've our closing, pillars. about made progress the strategic we In excited on are

the macroeconomic year. our sales EBITDA us has the beginning fiscal to well we initiate way future. adjusted environment also we This initial remains guidance and tighten challenging, of the are our XXXX net maneuvering range at through While the enabled for the within position us

the production our value and Looking conversion market out to concrete time, continue same the delivering dealers. capabilities dynamics remain balancing to for in we At rest from the responding capacity strategy to pools, will our expanding we direct-to-homeowner year, well-positioned ensure evolving to the of fiberglass are will nimble our driving growth. we in and future to

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

that everyone. all XXXX year-over-year Scott. on otherwise of you, today the we fiscal fiscal the compared comparisons of and are And basis first noted. good a half Thank quarter unless discuss morning, second note to XXXX Please

$XXX the comprised a X% quarter in we in from year-over-year XXXX XX% million XXXX, period partially sales quarter XX% price. which in sales decline of is in second fiscal delivered of offset increase a the in a fiscal volume compared change The to XXXX. Net for XXXX QX $XXX in by of were QX same million growth

pleased pool building As peak to into improve sequentially year. time were see sales QX expected, we we of the entered from the to as QX

as Looking the right-size driven fiberglass results channel pool lesser down at pools sales to in-ground the softness degree, across our net our categories year-over-year quarter, product continues million, sales to $XX sales. packaged lower pool in continued a and inventories by for were XX%

market As we fiberglass in continue in increase penetration XXXX. Scott the to mentioned,

is However, results. new the pool of weighing starts anticipated year reduction our the in this on number

recurring reflection profit $XX $XX compared were sales year, sales $XX increase revenue of were this was while the a line. X% in XX.X% margin XXXX. liner Gross was product compared million, the to versus million opportunity and gross QX in prior XX.X% XX%, down QX $XX within XXXX. to a Cover QX million, million of

The of were of profit versus inventory higher cost XXXX. the by and These by actions prices QX taken of reduction sales. and partially year. reduced our Gross prior higher our total than offset year-over-year more cost sell-through benefits of impacted primarily impacts for XXXX was rightsizing inventory QX accounted the and from margin in

improving a sequential points XXX improvement margin gross we we QX. on a As QX saw noticeable anticipated in to gross margins with basis compared basis,

QX versus significantly we year. peak benefited season QX from as XXXX actions this of pool improved and and in leverage entered cost fixed of cost QX Our building reduction

prices. We also continue to realize higher year-over-year

than As a actions, of gross QX. QX we reduction what year-over-year our result in was saw less margin these half

higher XXXX. of to gross see million realize deflation. inventory to cost general, down prices in inventory, year, our we manufacturing to QX the million begin higher productivity, half expenses levels, the and now further, $XX improvement levels continued our to of increasing we of administrative work stabilize overhead Selling, decreased from continue benefit our as Looking lower from back expect margin and modest $XX

decrease The primarily $X driven noncash a million was traction. stock-based gaining cost are compensation reduction decrease and in that expense initiatives by

a a million compensation employee and year. taken the of second year incentive from stock-based of the cost $XX in expense, XX% this noncash accruals was of fiscal the reduction fourth and decline quarter lower SG&A quarter Excluding or benefits the prior versus actions 'XX $X million, of as result

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

second stock-based partially the million the the by $XX $XX excluding by EBITDA noncash gross reduction profit quarter QX a adjusted for million, decrease As expenses in in driven in expense. to SG&A compared of compensation was XXXX, offset result, and

QX XX.X% profit Adjusted XXX XX% sales net QX margin on as the QX, QX. EBITDA the adjusted a the reflecting versus improved points margin second versus year mentioned. increased versus to $XX quarter decreased Scott Adjusted from basis, sequential period. in incremental EBITDA increase prior in On a for million incremental XX.X% in QX basis EBITDA

first the growth a half which into by the million we sales to Turning fiscal in XX% delivered fiscal million year-over-year XXXX, to half coming XXXX. for the from XXXX first were $XXX half in of compared aided backlogs elevated first XXXX, results, net in period $XXX same the of period

a first million of XX%. half Liner a By first volumes were in-ground increase for $XXX sales comprised fiscal half of sales declined for Well cover line, sales XX% is change $XX XX%. down reduction of product year-over-year million down the in price. The $XX XXXX in and pool XX%. were X% million,

to profit same impacted in XXXX XX.X% results million quarter. factors of Gross $XX half XX.X% $XXX and the first Our in million, are decreased half the compared prior to we from first the the by period. gross being year experienced margin was

rightsizing XXXX above. reduction cost affected sale of primarily More of inventory. First the higher level inventory than our year-over-year lower half to from sales referred of profit margin X/X the came the the by gross and gross was

while leverage by first our headwind remained and costs significantly productivity. costs the prices half. QX These were by fixed higher partially Negative aided in actions impacts versus improved a offset

of from decreased cost the the fiscal million in expenses fiscal quarter million benefits of $XX reduction and an in second noncash administrative the and of from taken well as stock-based compensation half reflecting first general, XXXX. fiscal Selling, actions the decrease to XXXX quarter XXXX, in $XX million fourth the $XX as

SG&A driven lower incentive fiscal of by $XX reduction cost million decrease actions noncash second and quarter XX% the in accruals of was $X the and taken year. or XXXX Excluding quarter million, the compensation, this stock-based of a benefits employee fourth from

to excluding XX.X% period. compensation XX.X% As a stock-based increased SG&A, sales, from net prior the of percentage year from noncash

profit, $XX which was in the driven offset compensation million million, by spend, to excluding gross by XXXX, EBITDA $XX noncash expense. of half partially stock-based Adjusted SG&A lower lower first compared was our

period. adjusted the As EBITDA XX.X% a margin result, XX.X% to decreased from prior for year

of time during cash. liquidity is As our in majority quarter the expected we as our this year we increase of the saw the the an generate

capital strength remain disciplined allocation our We strategy. are pleased with and sheet in balance the our of

During on of our $XX we million of revolver. the borrowing the we all quarter, repaid had

million under cash As of total than had giving $XX of cash up operations of and X, from our of July the we $XX us is revolver, more $XXX million sufficient which of and XX% business. equivalents liquidity the million, borrowing availability QX for

by inventories. the in fiscal $XXX leverage QX to the of of cash ratio was end at Total XXXX end activities X.Xx end quarter. Net the X.Xx provided period, our operating at in million used $XX year the of activities the debt for operating cash first of net of debt half in quarter the was at the was net and compared first $XX propelled by reductions million versus prior year million

year-over-year driven The by modest increase EBITDA. reduction in adjusted was the

capital in spend, CapEx year. at last million $XX $XX were compared QX to million expenditures Looking

versus final Kingston payments nearing to construction we CapEx new expected, facility. spending As the the increased our are QX related of as

CapEx the compared $XX XXXX As $XX million first to of half we year totaled anticipated, fiscal period. the for prior million in

we sales adjusted and our of EBITDA. In release our morning, tightened issued earnings range for fiscal outlook the XXXX net this

pool anticipated, spending in resulting on residential weighing is ongoing and This installations As a U.S. new decline demand. challenges are for in consumer XXXX. macroeconomic in-ground

As continue by to from fiberglass conversion generation Scott our digital executing make our and tools. material strategy to supported efforts to mentioned, pools, concrete our swimming on progress momentum continued lead drive we

manufacturing on facilities. with take our the to We and fiberglass a a approach Kingston to Oklahoma capital continue of completion disciplined focus investments

majority discussed, we spend the of As of was the half fiscal first this weighted XXXX. to previously

work current focusing on managing the to prudently margins improving continue efficiency operational costs demand to also profits We on align and by and our with environment. better

took spend. we mentioned, QX discretionary and head further previously in manufacturing early overhead, QX reduce Scott to and of As our action into count XXXX

of to $X actions realize realized cost total of XXXX to $XX $XX We of with the expect the to million savings QX This in an $XX to took million these annualized we of year. million additional expect realize addition of in year from be cost savings actions reduction in million a this XXXX. this from for is and savings

on seen margins have versus a We some our actions of QX sequential benefit cost QX. already lifting quarterly in basis

of margin and benefits efforts to our full inventory, improvement our back we overhead, from continue our cost from from we lower maintain unlock further half modest year to begin benefit cost the realize and our our as As half in expect sell guidance. through manufacturing higher year first levels, actions increasing the pricing productivity to deflation, amounts of versus the inferred

of a now As EBITDA XXXX sales million of million. fiscal capital adjusted net $XXX expenditures million we million to $XX $XX to $XXX million, result, million $XX and to $XXX expect of

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

Mark. Thanks,

in The long-term remodel are is industry remain facing the engine, their in headwinds, points proactively stay suburbs, the intact. is in in which which of Although see to view generation homes we managing remain underlying we the a repair business. by our migrate energized our longer supported This interest the by ownership. near-term through, robust pool to and attractive lead industry outdoor continue backyard. Homeowners we to and opportunities the invest dynamics

on We their they're demand to homeowners pool the near-term make we the their macroeconomic for ready view backyard purchase. as our build industry headwind when of are impact consumer to well-positioned a dreams and help

grown X% with several XXXX. over to million from significantly has years base The XXXX in pool X.X residential X.X in pools in-ground million expanding installed the than last less

the to our revenue are coverage Measure As replacement positioning capitalize launch products base and with by proprietary within to opportunities liners on technology continues of age we over the Latham. installed grow time, recurring and pool ourselves our

significant the have benefits. every these leader awareness is year we residential brand in and XXXX fiberglass to are drive in over industry, homeowners potential expanding we consumer residential pool in especially the fiberglass, the of compete category share all pool are only market just the on but product and robust a mentioned. long-term pool of and offers swimming for we the these the reasons alike to time. lower believe we the in-ground of trends the in, As well-positioned capitalize benefits dealers pool we market we as demand will be Fiberglass U.S.

open questions. line the to will We now

question first of Our comes Tim Instructions] [Operator from Wojs Baird.

of dealer maybe little net hoping of kind give just bit could where was of you today level -- to some remarks, some the of a and kind just base on I Scott, the in have dealer more start, just how maybe set us that trending been a little Maybe prepared on set mentioned us you adds bit those us color, is activity year-to-date? your

Yes.

an good really the last that and really a we as from the lot and or have in had think year, mid grow a mentioned, clearly, done back northeast done I'd lot to the supply in brought of we territories proactively conversion solidifying the the we've we dealers southwest, the on expand say I got good drive adding and dealer approach opportunity deal of base a to where aggressive new story fiberglass Sales a result really fiberglass, of the job country. last job. dealer of throughout online targeted a teams the late of majority the As year, capacity and acquisition chain concrete I to

accelerate as about opportunity What give this Zephyrhills. them bootcamps, up getting we kind active continue the down here of We'll fall wind this drive to a the season. of and will later lot been us running this trained that that penetration resume like in and fiberglass. is, the of down dealers growth to We've

activity what year after And again, as is to into get the the really efficiency, we to and clearly can time prove for lot of is double generation folks ground can demand them get to and guys solid, for to we've increase funnel goal also year pipeline. time new and these And our they told build that their a dealers lead volume the consumer. these

ahead are. we we be what to where happy year, slightly add of as we maybe the thought would we time time. we're this So throughout go and we'll of We're at continue

conversion then Okay. I at mean, consumer months, what of Good. of how kind of you interaction tracked And the kind I If conversions? you relative kind last I And the into last the changed coming overall have of consumer to of X to over just dynamic mean, that the has I an leads thought lead tracked? maybe pool, lead kind at just the on kind look maybe all months? guess to installed front. year? the how like And what has a your then has XX X from the mean, are

Yes.

with dealers happy we're with We've our lead. wanted where lead success of [SEO] we lead lot activity. regional some organic where more see both campaigns our and had a to run So

Let's across of people or activity, in at a say, website, and number account sign high interest the ownership just for lead up level. consumer the pool remains board activity overall MyLatham

I taking the out over And quick we've last through of purchasing decision purchasing backlogs, into macro maybe I that last little deals, kind where uncertain the of think in decision. environment a that making there. making decision. that's is happening those is nice probably it's make of been them purchasing been a XX We to the consumer longer with consumer couple year the X working the bit years a little say, the we've ahead months over and delay seen what say came with to would in is the what I'd

of Keith Hughes from Truist. Our next question comes

guidance, as comp? that the think on your wrong? business flatten easier Is quarter will the plus fourth trajectory hit in you that a do out we of Kind

and you, for nice speak Keith, with the thanks question. to

kind a outlook year-over-year looking half believe and et the for top year. higher EBITDA implied you focus that softness can at still to second at our our half half. and of for expecting the expecting guidance we inventory second But are we the the to some place, midpoints actions versus year. Again, line year-over-year the cost on updated we're that drive look moment, put at midpoint, second new our second we rightsizing in levels, some see year of half thanks higher midpoints deflation, If the just through the of we in do the in selling of of cost last inventory, cetera, EBITDA the this margins productivity, in

programs. had how of you million second in for script, And 'XX left of X the is much be prepared half the Okay. $XX cost have mentioned saves How the much would and that year? for million you of $XX realized

the behind second in Yes. half driver the the half be therefore Thanks, of first support profitability second versus and which of the Keith. in We've that somewhere second X/X the half, neighborhood realized updated improved would the have in imply and in we guidance to year. half X/X last another

question Bank next of of America. Shaun Our Calnan comes from

walk a is through of we've within fiberglass or quarter, the Just different to And first, the us of some pool some there? Is just are of the versus Or you guys guys concrete able you it outperform share you of construction permit new were seen? share drivers fiberglass? that in taking some the matter it for taking is exposure trends. overall can just data geographical

morning, again and Good question. for Shaun, the thanks

second we our improvement to were we at looked happy see QX. revenue, sequential versus As the very quarter

the continue penetration think when to revenue rates to XXXX million penetration We jumped very feel QX. our macroeconomic $XX X%. feel as drive we in the Look, confident I we we see the to fiberglass ability able versus by -- increase were continue impact our in the of did to up environment.

think, we us well But we I continuing. the of challenges top sequential that's the seeing are So positions the believe improvement, balance for demand year. But line. on the the

do the softer enter we think year-over-year. as some top I comps into line the on have we second half,

into help morning. will that's updated the we factored So released us and guidance that this that

on And Shaun, I'll add that. to

mitigate pool good volume covers outperform across we've base, the there large which revenue seen business that and performance the board. installs liners with overall piece think the our maybe in again, of, market, on new other recurring decrease say, our part of with the the versus categories, I let's of some installed that

we continue we well peak. in the what year in back replacement of to the as the that pretty saw enter season and as here there half expect we're happy cover So with

flowing then you higher impact talk you a Okay. And how negative impact margin. about basically a do to that tailwind? are peak of today? being the gross can to costs inventory you or of just turn input mentioned cost into expect When the And trending through kind the

Yes.

seeing input as moderating. a Let imagine, Input you we're we commodities costs bag. flatten forth, into And costs. modest with and amounts half of of input definitely might costs in half maybe so deflation are the buy but second down, out the of different But with second looking me total, the mixed just total, many very in year, some so products start the some up, deflation it's in and year. modest

expect one And doable. first year to that the would of higher the the feel is in versus last inventory, higher, drag EBITDA the half another in cost and ability a higher then the sell-through, half it the in than a less reasons to was we our and of why drive the we of the second margins second half as as become second far that EBITDA

Our next Bouley Matt from question comes from Barclays.

pricing So think you environment just out higher around I are price seeing kind was or X% the guess, Are first I the the level, on in price additional what X% and think increases it surcharges up quarter there? I competitive you you quarter. said was in taking -- the up on and of price,

for question. Thanks the

expect in to line We balance with fiberglass our price norms business. of with We've first more been the historical X% You're able place. is we've would is the right. that what to increases the to this half in do still surcharge year, The of year. in seen continue the through X% of which

ability there. on around that. need As recall, collecting more you us put that flexibility but in our pricing that's still be, still move to we as and place to We're give

been And what And again, prices all right would product we to around on X% place different in that business. expect lines of with to know, kind that still falling to of norm of historical good as feel able well. number move about here. those. X% that stay Matt, We in we've we But see do you as a the

customer pool Any on of Got second And on. process that you of it. the I the inventories still pools? customer sense going out -- side I there's guess, then we one, packaged packaged are think and kind of some and still where rightsizing that in destocking of kind called inventory

Yes. Again, Thanks, that Matt. I'll take one.

feel continuing see we're levels seeing is repeat the result for take new orders, you of is as year. that right updated that still to in or a but whether channel channel that We balance are the think is pools year. year. this going second see for the to packaged low call slower baked where relatively half in with But goes and have We the a of the getting the outlook demand, tight, what we in we're destocking baked we good of our uptake And which inventory guidance now lower. the into that for

from question Instructions] comes Andrew Carter [Operator Stifel. of Our next

down are the probably that could quantify category are correlating -- construction a at Could advantage disadvantaged pools quarter, much there? in as was X how pools, fiberglass the how the numbers XX% in-ground within around of kind then give performance looking XX%. the they you businesses, packaged I about kind environment, you the you new of minus out And this think us guess destock?

saw question. Yes. our in right, the quarter. recall for We think I we Thanks pool quarter, XX%, in down over what an I saw in-ground first which if is the the category improvement it second was

packaged as in to As degree to channel pools. packaged the we've has space pool seen out softness pool but continued packaged you we're the from year-over-year, the glass fiber is coming lower. in that know, their seeing that we The bulk of Fiberglass that down softness not don't inventory levels decline take the the the and space. split are pools

had add comment And in kind what trade-down. there, of on the I too, a is you would Andrew,

of to I trade-down as the even XX% a see the couple than price in situations, the XX% still think we right? lower Fiberglass risen have products concrete, both in is benefits cost of to consumer.

So as continued in no that a with the longer pool, category. we're I seeing homeowner fiberglass concrete afford can trade-down says,

a for packaged a now, pool of let's may buy consumer say, and vinyl was trade-down they pool is maybe that decision fiberglass in a now that And category. the little liner make for reach bit out to right, pool

we down I is Mark performing So comments the you fronts is mentioned many XX% on what guys of regions that performance, better and why overall both a pool in the total country. bit doing permit out the in there than have the think activity or this market maybe maybe little win that's morning in seen what was our

year incentive wanted year for is ask then it's Number I about midpoint comp. second comes is wanted guess guidance, comp? modestly the the within of And kind And I kind what year? one, what down. actually, question incentive And therefore, I of to this then -- for to it's next tailwind the ask back the just

So Anything a incentive change as EBITDA comps. difference this The know, on the $X year? only incentive incremental of is million you cost comp you help to savings? how to big there us can

a it's the pretty at Andrew, day. small impact, the end Yes, of

is is, million just as of QX, million I give mentioned, think taken we annualized, into second us this we're another quarter year the cost-out which we've what $X $XX going and year. additional early to doing these very in actions this

the actively balance And guide. really was in that. out million And reason go in doing looking small a we're confidence incentive through into of that which the environment, that's that structure, year, to $XX at is of part nimble, of year, baked looking is the the all half at the What our cost necessary. adjusting comp we for part to again, our staying going the cost have delivering out total of second yes, guidance. we're think the So do as continue as implied I the demand something is we

Hold of Josh on will question Goldman Instructions] Stanley. Sachs. now Maklari For take next Susan Morgan from comes we one Pokrzywinski moment. Our from [Operator

of Kingston new Can the bit You the next ramp ramp those a the how any talked you against will quarters? volume? weaker in how And couple of thoughts capacity about Oklahoma. on in facilities the balancing facilities talk over and you're about

Yes, Susan.

replacing we We right, Kingston for say with manufacturing to remember and pools them both areas, one manufacturing the that in. replacing it's lost in other to those transporting right? regards been things facilities is specifically Oklahoma, in Odessa, really So in is the had pass-through territories, everyone right, to Oklahoma, X here had were other in this let's had we of

demand having we're for us So what match with cost see no up in. a to regional we area to is freight Oklahoma from that ramping in doing that longer coming savings local now

So bringing that the planned facility as kind of up see to really demand signals.

had situation. facilities. have facility, to We Again, the did facility up up again, Toronto of fully the offloading what similar ramping had many just the the new businesses Kingston, of Greater in smaller these area. Greater operate operational, East from all [variabilize] terms of match out we to how Again, the there, up local the our that good shipped benefit, bringing over all Montreal, supporting savings, facility the facilities the nature there. of ability of been kind regional gaining it demand, being we with good of the Coast, cases cost in

we to plant, very balance So maximize be quickly to up but capacity cautious can region of whole efficiency in production total just operation. signals how trying turn every that we see demand the every the we change, in as the

the really taking And again this That's on nice quarter Okay. progress made down. inventories you helpful. then

thinking through you further capital in As next of to thoughts on you're any and the look how any quarters? there of working as the we generation go in half, terms about back cash couple progress

we've reducing And of end the right with P&L. the -- know, Yes, we're in since thing think the I impact the But inventory with the a negative all pleased made the that does we come to an very do, levels lower we're as progress year. impact to happens reductions. see the we're still point probably maintain our at, we're further in We'll levels. maybe the thinking very now inventory times to this balance some stabilizing modest where year. where the about to lead those of We're what levels getting with able that strong

And sheet the pretty $XXX significant availability. negative having million half Feel looks, where the of impact again, with versus QX is on inventories not or from good balance in that liquidity, uplift, the revolver plus is another reduction second in first hand is first really the half. which about liquidity cash our way P&L half

lower a very year. our in the modestly, modest or end tick net go the would that ratio expect, X.Xx. We see We debt-leverage that up of modestly Susan, did drop by would to

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

you. Thank Yes.

to partners of take like thank all and a I'd dealers, Now suppliers. wholesale moment to our distribution employees,

long-term with critical hard and partnership is our really us your work All of success. to

also, us I'm And the next with really to and of and forward looking appreciate be time who a of everyone has out Latham. your I support up safe time. in joined great care. summer, everyone Take there catching thank I call. to hope want today's for the continued interest And rest I everyone

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

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