Hayward (HAYW) 28 Feb 232022 Q4 Earnings call transcript

Welcome to Hayward Holdings Fourth Quarter 2022 Earnings Call. My name is Daniel and I will be your operator for today's call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the call over to Kevin Maczka, Vice President of Investor Relations. Mr. begin. may you Maczka,

at presentation good press earnings We has release Financial Investor our Kevin this Senior by we to will and President can quarter been our Vice Eifion XXXX Officer. Jones, and Chief President also call. slide the website of reference joined portion Chief I'm earnings this Relations There, find morning, you, that you an issued everyone. and and fourth today posted investor.hayward.com. Holleran, Thank morning, during Executive which Officer;

those variety Before that The management's recent cause we and undertake does are company certain remind XX-Q and subject begin, Exchange I discussed of including and Form would a Securities Such most that materially. for with outlook like could may risks any Commission during to that to such everyone in periods. considered differ statements nature, are XX-K company future the our this filings in XXXX to forward-looking forward-looking Form call, the statements. statements and make to update not duty results uncertainties, actual including

the release Additionally, GAAP found the during company will to historical non-GAAP can discuss measures the slide and earnings measures the discussed today's appendix in this presentation. call measures. our Reconciliations be on non-GAAP call, of comparable to

now I turn Kevin the like to Holleran. would call over to

my call. welcome all to Hayward's earnings everyone. of pleasure quarter Thank It's you, morning, and Kevin, to fourth good you

X of on Slide presentation today's messages. I'll earnings start with key our

a additional the of days very in communicated quarter our with moment. reflected inventory hand. that channel fourth was in our for channel navigate on we line our reduction a As I'll pleased on continued results we with quarter Consistent continue dynamic make expectation inventory operating ago, a I'm comments environment, the to expectations. performance outlook

previously executing current SG&A Under initiatives. took in conditions XX% structural growth includes designed structure drive savings to was cost quarter successfully million to and steps to of program, we reduction maintaining productivity investments our enterprise of are second This during basis. and approximately cost our announced while annual half million which the Second, the fourth to in to realign market in variable $X we proactive and full strategic XXXX. delivered million the substantial the savings an track on on annual SG&A $XX $XX deliver savings program, reductions this approximately cost

has half lean manufacturing half year, in Hayward and backlog, improvement. commitment Third, demonstrated advantage. the then reducing a a to days volume margins as and competitive inventory to agile declining the production capabilities our production long-standing to operational deliver record view the ramp We significant in continuous structural first throughout during manufacturing a reducing excellence We period channel hand. on second to a on support continuing of

premier industry. to company the position continue we as the Hayward's pool attractive strengthen Fourth, in

seeing positive of Hayward's We innovative accounts market target are new and to increase our dealer products reception converting are actively base.

to XXXX, years, will introducing net we EBITDA pre-pandemic and XX% are to respectively. of XXXX sales come. we drive XXXX the guidance. recent year our increases customer last installed XXX%, aftermarket for Finally, Compared sales that base delivered growth upon building in a tremendous expect represent Hayward and strong years year, full adjusted

trajectory. historic now and growth, economic to of mid- strong difficult a before to expect this XXXX extremely comparisons resuming high conditions in to global current period we reduce growth Given sales single-digit

of products, innovative price recalibration continued our channel with new We the sales XXXX the will management and adoption offset partially as into This below sell-through. a channel operational year disciplined be by inventory net see cost of excellence. meaningfully headwind

$XXX of million. XX% net $XXX and to For adjusted the reduce full approximately year million to XXXX, we to sales EBITDA expect XX%

due to XX% and certain highlighting full Net reduced year-over-year movements the year. million, markets, related and volumes Europe in channel fourth Turning quarter sales fourth the in Canada. lower now largely of especially to conditions quarter to X, results and Slide to inventory the softer $XXX

realization continued during more by new positive offsetting than encouraged innovative are the We success inflation quarter, solutions. price of and our the

quarter XX.X%. and $XX the in We quarter program volumes million, a was cost the in $X.XX. savings cost margin EPS savings to structural manufacturing of margins with realized Adjusted initial our Adjusted under fourth declined. as was support production EBITDA reduction SG&A the

partners into $X.X in sales reduced XX%. our full sell-through each guidance. healthy year Adjusted U.S. the our full with the net our the consistent revenue of the market record year For of core delivered adjusted with for XXXX, was $XXX Hayward reduced $X.XX. billion products net EPS X% margin Adjusted million, to channel sales a Despite EBITDA primary XXXX. was into EBITDA channel,

continues Turning business demand to a region. vary update. now for to significantly by Slide consumer End X

are demand relative area driven trends to outdoor underlying to in America, an North While living. continues be strength, the moderating trends sunbelt and secular demographics by of related

We Rest of trends are Canada. as growth Middle East continue solid in Northern Southeast whereas see softer are Asia, seeing Europe U.S. Within and in we conditions World, challenging in markets and Europe. seasonal the and more to such especially the Northeast

captured trend like variable than speed the was pumps This most transitory. on We more We sanitization. last notable in is and in and critical water controls, significant products market the U.S. [pool years. share region strategically structural estimate over Hayward sunbelt the X that pad] believe important this

dealer ecosystem. Hayward of driving Our strengthening with our position IoT loyalty development our continue responding traction we Totally the gain omni automation connected leadership market is within additions as The in products program. to is digital favorably

of structural dynamic. protect out-of-cycle were A margin to inflation price required increases profile cost versus over price years few series the business. last and Turning combat the of the to

remains commodity inflation start While to cost costs and some have freight elevated. total ease, seen we

expect increase to we of to announced January. very result, the the pool we has recent at a and historically, on the beginning price of been X% implemented X% As increases price hold. previously The price industry disciplined

year XXXX, recalibrate distributors relative meaningful expected of continue half reduced to inventory to Hayward as Our significant current a level. appropriately a period the and increased on of the a channel sell-through a In basis conditions. the hand to Based demand days during supply partners estimate level second channel be market to our inventory upon after chain positioned, U.S. disruption. strong record full of we in information, that on XX% build

of However, believe economic now softer additional the on a as I have lower a and higher make the safety stock costs times will channel towards outlook. of as outlook, reflected global low distribution trend days for we channel carrying that course result due inventory will normalized of in historical of inventory. year, over in reductions We ranges the believe and mentioned, we lead XXXX the requirements end hand our the to

structure contemplates inventory the with channel impacted first proactive during days on We an and the took quarter margins Our mid- actions margins. in high of This cost the attractive in most our XXXX fourth and to reduction base and cost to maintain support in guidance organization includes reduction XXs. hand optimize streamline variable the quarter the to a manufacturing gross now supply significantly. to costs chain additional responsible

deliver of addition, XXs structural basis million SG&A annual EBITDA to savings In an XX% or profile. high actions to $XX adjusted million to on we maintain in $XX approximately are These a expect intended XXXX.

our important very shareholders. ESG and Hayward Finally, is to

planet strategy included our sheet, disclosure, Hayward So other our partnership a and These during XXXX, our completes reporting in data I'm are and website inventories ESG in people, third-party our shareholders our published I we our first and stand-alone the the new would metrics expert. to review which year. these encourage results on on developed disclosures. Scope In to principles pleased progress products, and with journey. report framework, and X first ESG X to which aligns continued emission we

the strengthens to now installed which This in an line brand our XX% introduce all Turning comes sales. to largest growth I'd and some from into complete having to the the our base the ample Slide a trusted for position is mode primary making, business market and drives have we're new provides at position on on X. technologies of strong Starting types. our the and the across pool the approximately perspective shareholders. of competitive incredibly that we like aftermarket, driver product decades chart, that opportunity at share pie company's X:XX

business growth revamped multiple drive across is new Next reputation pool our servicers program Hayward remodelers been loyalty state builders, customer sales to Totally included to backyard. go-to-market and The on on result of acquisition. Hayward dedicated their we products continued the the This number teams solely has every restructuring that as model introducing our channels development strength the in force and our growth. in focused day

e-commerce that We a online. resulted also approach distribution, and retail in across introduced capabilities unique multichannel true

and years. We improved improvement. continuous primarily committed in capabilities Moving substantially with and our supply our recent U.S. production we chart, And in Hayward the of approximately XX% the operational manufactured to around chain domestically excellence is manufacturing

shorter chains We are others. vertically with supply integrated than

limited flex incremental the with agile and down automated highly are as with proven up to and facilities appropriate ability Our capital.

will our of following a our differentiators growth which for product discuss is strong the longer technology form profitable Hayward one moat of slide. important leadership, These term. elements Finally, on foundation sustainable and biggest competitive I

Slide and to detail like to industry-leading provide I'd Turning products on technologies. additional our some X.

solutions operational compelling categories, new key Key Hayward's the core our into market make as as our to new customers designed in They gains. are of competencies more must-win delivering Hayward deliver as a as have market product products, by pools to are and at launches both, heart, and pool of While in-house focused growth easier, investment company. sustainable. excellence into innovative, been the prioritize technology strategy. installed driving to incremental attracting service have ingrained its development content lower identified with affordable patent-protected customer goal culture, expanding capable driving We total addressable in product base. showcased Recent well ownership product product these categories share leveraging and

introductions A slide. of the on here shown recent few are these

STAR AOP Our HydraPure use concentration to and the our builds DOE-compliant the Omni salt for legacy are offering salt designs and X-in-X cords,] both, way the effortless homeowner technology of simple combining providing and efficiency variable and and trade lead IoT water is [app Partner professional. be UV AquaRite novel platforms treatment SX automation new Award. responsible and energy at with to chlorination clearest speed Ozone of the pump, continues provide platform safest, of operate in the to The control choice platform unique our on purest best-in-class the ability capability. water. XE the Our a ENERGY X/X of and for Year

recently added Our pool, of lighting the Simplicity water spa, LED through introduction control landscape. SmartPower. and was features of [fan] now installation and solutions,

HC combines to footprint, universal new install the and industry's the heater efficiency dual heater. fuel in offers and Finally, performance smallest easiest capability

are summarize, innovations. To strategy, our central very growth leadership we our recent to of proud is and technology

and We continue and customers competitive product our to positioning to prioritize investments our support with developments into further industry-leading technologies. new products strengthen

to in detail. to will discuss our the now more With Eifion results Jones, who over that, I'd like call turn financial

morning. All start Slide good a on basis. I'll made and Kevin, on be you, X. Thank will comparisons year-over-year

offset million. $XXX XX% a our was to Net XX% primarily as primarily realization reduction driven quarter. during contribution decline which volume volume in in line by quarter The by and were This exchange by entered with impact, fourth foreign distribution sales unfavorable a price for the from channel quarter partially driven X% decreased X% expectation and and the X% anticipated inventory acquisitions. was movements, the from we

Gross year by reduced lower operating profit fourth as period declined profit basis with fourth the consistent $XX.X general during expenses XX.X% $XXX.X quarter Selling, realization were representing continued million, the million. strong leverage to of quarter sales. on prior margin volumes. Gross offset was points production net price and in at administrative the XXX XX% was

And proceeds million in from reminder, insurance quarter XXXX. a related cost a fourth in realized from a benefited approximately we $X item, $X XXXX the million savings structural quarter the of favorable As to claim. fourth property nonrecurring

Adjusted margin fourth XX.X%. the in quarter, was EBITDA adjusted EBITDA $XX.X was million and

in to period. result in quarter $X.XX, diluted outstanding, rate The change tax million during XX% shares has fourth compared the the X XX.X% was completed the discrete year XX.X% in effective prior timing repurchases Adjusted was of EPS approximately Our decreased of primarily shares the due the year-over-year items. share count of of share to the the XXXX. quarter first XX or fully primarily quarters was

by billion. $X.X in and XX full driven price year Slide the for XX% contribution and by XX% sales decrease acquisitions. primarily to from a from line in our Net XXXX for of decreased year a X% now fiscal unfavorable This realization and results. guidance impact, exchange to X% foreign X% offset was reduction our with review a partially Turning volume

operating million. margin year year for by declined as was year percentage was was XX.X% a to benefits to reduced basis Gross full volumes inflation of declined and On reduction for program. engineering half. million, by the to invested RD&E discretionary SG&A leverage support lower to profit full second the $XXX realization offset price as net innovation. driven our $XXX our points We combat strong initial lower commitment Gross SG&A to a on in a profit plus $XXX the X% $XX and expenses in XXXX million and basis, XX%. the expenses growth million and cost of volume-based in sales

EBITDA with an EBITDA year. Adjusted full of was million adjusted the for $XXX.X margin XX%

rate tax was XX.X% in XX.X% XXXX. was effective in compared Our XXXX. 'XX the full $X.XX Adjusted to for year EPS

adjusted price favorable XX%, was from Now largely on inventories. XX.X%. the $XXX.X acquisitions. quarter rightsizing to impact the net and million, X% Gross fourth contribution Slide volume results. XX% I'll income Beginning XX% margin was discuss sales report segment anticipated North for channel to our X% The in and due profit was of reduction margin with offset driven segment lower volumes, partially by America declined by XX.

quarter margin to Net was approximately X% price impacted headwind decline volumes unfavorable World. currency by X% Rest and was XX.X%. XX.X%, but adversely as income XX% translation. a fourth a decreased were Europe well benefited of to sales adjusted Net net from XX% and Gross margin the favorable sales million. from for a profit $XX.X as segment increase Turning in of foreign

$X.X Slide profit year. price volumes, contribution income full XX of and margin to offset review adjusted of America North net segment favorable billion, a impact our XX.X%. was reportable to by declined from Turning was lower the for XX% and Gross XX% sales acquisitions. results partially driven XX.X% a X% segment margin by for X%

sales from of was margin net to decreased and X%, XX% foreign full margin currency and a favorable a for but segment adversely increase Rest and a year was XX% pricing benefiting Europe profit from to decline XX% million, approximately Net $XXX.X by impacted headwind adjusted XX.X%. of in Turning World. income volumes the translation. unfavorable Gross X%

million highlights. was review with balance availability XXXX the flow X.Xx. cash of undrawn debt for cash EBITDA to Turning facilities We including cash Net total sheet million our ended and liquidity equivalent year XX balance under full XXXX million. $XXX of our and $XXX Slide $XX to and a at credit adjusted of

make We activities. credit will repurchases CapEx, in deductions an share for our not and 'XX, excess permit flow cash payment given M&A agreements

Cash accounts operations peaked operations use fourth half. was full in stock declined year. terms. a primarily certain safety for in XXXX was million quarter, and Working an use finished related of by the in by the $XX flow the comparably driven end from was higher higher, from order for million Cash capital at in the second of X% reflecting raw materials million positions the receivable XXXX we flow early the Inventories increase goods. second or took quarter and by $XX $XXX in

the period. was the is year CapEx quarter prior in $X million with consistent fourth

driven generation $XX year, cash high-quality support in our by was investments. year to For into CapEx business million full growth automation invest for million the as free to has continue which cash million characteristics, full the XXXX. we facilities. strong flow in our compared of efficient highly flow Free The production XXXX $XX $XX earnings,

XX. on Turning now Slide capital to allocation

a policy. disciplined financial will maintain We

priorities returns maintain leverage. emphasizing prudent growth allocation capital shareholder financial while strategic be balanced, we and Our investments will

the also companies We X acquisitive months, an sales year the contributed XX company, integrated remain in acquired last X% successfully having to full which growth in XXXX.

$XXX share million free we XXXX. XX the opportunistic remaining strong repurchase flow $XXX million cash in million Entering return to shares existing Finally, had shareholders. cash We repurchase $XXX million supports to 'XX, of deployed on X-year generation authorization.

region. anticipates remain the of reflects Slide particularly sales a These in in resiliency that the positive to for the price sales XX%. initiated aftermarket. and X% net sentiment trends net offset approximately geopolitical consolidated health negatively expect at main nondiscretionary will beginning long-term the our now construction full the upgrades. consumer American Europe of pool more about industry, strength XX partially the outlook. XX% in model the in year. reductions new XXXX, the and XX% of Turning and be increases growth to profile circumstances to With and World, line supporting of the aftermarket the outlook we as We of to for from Rest impact decrease that This in XX% North and of a contributions XX% Whereas company decreases in the year X% said, reductions very by discretionary with

additional guidance in channel the higher demand supply our consumer is reduced capital. as in inventory XXXX, a an Included reversion of a of to normal reduction and consequence a of cost chains

and desired end We targets. moved expect to of our these a channel dynamics given lower adopt partners lean their inventory days-on-hand position, the to

We expect more seasonality to towards revert in XXXX. normal

sales However, net we this the first quarter. in seasonality expect most impact quarter channel the with first significantly below inventory trending typical rightsizing the

profit gross of million. realization range productivity year million expect and margin 'XX to to full We the price due executed in anticipate XXXX to positive initiatives. EBITDA We in $XXX incremental increase adjusted $XXX

deliver We million million SG&A are after in wage to to of be savings targeted These approximately million partially inflation or compensation. the $XX on to savings million offset an increasing and $XX cost track achieving $XX 'XX will in XXXX. $X by $XX million variable incremental

cash a also income 'XX own in XXX% reduce strong This result free should cash greater expect net of million. our than levels. We free conversion flow of as exceeding flow free cash improvement flow we $XXX with in more inventory in typical

interest increase reflecting in $XX approximately borrowing we levels. million, and Finally, rates interest of expect expense

approximately at and continue $XX we invest million expect XX% We prior higher million and business a also growth. the modestly for tax consistent support as $XX effective to with CapEx to of rate spending the year

dynamic long-term turn positive growth back successfully with now ability to call And the our confident Kevin. very environment are this that, outlook. We the I'll execute in to about in and remain

Thanks, Eifion.

Slide back up XX. pick I'll on

fourth key were We the consistent that with from reiterate quarter me delivered today's Before expectations. results we takeaways let our close, presentation.

steps to to we manufacturing what for proactive optimizing controlling structure and current future while growth. conditions our base can cost realign control, are positioning taking our We

Our satisfy a capabilities agile as advantage significant to flex manufacturing as demand appropriate and we competitive provide margins. maintain production

a attractive company technologies. the customers pool industry support as we with award-winning best-in-class and position to We our continue and in products Hayward premier as innovate

headwinds but strategy drive value have our and I to reflects have every outlook to conditions shareholder destock, near-term macroeconomic talent continued financial compelling results place that related Finally, right and channel in and XXXX creation. confidence we the

now open for With we're questions. ready that, the line to

Difficulty] [Technical

having appears momentarily. stand a could the difficulty. we're we'll by, that If right be back Q&A just It to everyone session technical

is question Merkel first [Operator Instructions] of Ryan the line William The from Blair. with

Kevin, Can the bigger on with for a some So address changes and and about accomplishments start the in XXXX. set you off the company up wanted high-level market as a stronger changing wanted to talk the to question you I of bigger 'XX? 'XX then

from Ryan. to Sure. for you, hear question. the It's Thanks good

'XX, think an of. bit I EBITDA from performance to recent quite The 'XX we adjusted year sales accomplished a line proud a expectations in full and standpoint. with be finished

slower I I Hayward we second in think digit strong in half adjusted is great well. EBITDA take in into product importantly, that as remarks, record of this low after half key setting that incredibly a in. great the double think a margin accomplishment U.S. Also, as I record, something prepared an pride XX% first mentioned market sell-through that the it's a

the categories like some key gains LED providing name a few. pumps In sanitizers, speed controls, salt-alternate share to in process, variable

which days hand, getting channel expecting, saw to we the destock for we was, the you got where importantly, last know, XXXX to pre-pandemic. the and year which levels really think we was second got I some were of back in as half So the on reduction after that year-end and need of

So probably just returning I $XXX close over to the would year. during shareholders million think with I

up a of mid- of which and back get single-digit historical all rate. to we I accomplishments be, I more think, for that XXXX, are us before think set will to well high growth bit those recalibration great

about U.S. in estimating much you just 'XX follow-up, on sell-through? how guidance. for then are And Can my Then it. destock inventory revenue Got retail your assumption talk you 'XX?

Yes.

pertains -- right, you ask it did Ryan? specifically North As about America,

right. Yes,

mix, our standpoint. talk standpoint, the reduction components which in From revenue remodel around our upgrade a -- Around somewhere we're and XXXX, from XX% let's just XX% assumptions key units. about for is of seeing about a

between coalescing around, XX% think New people we're and reduction mix, I that's construction, and most XX% are XX% calling as there. for

the very which kind of on this nondiscretionary of mix, think our I XX% resilient. is

not as I maintenance that current say think there's X% that some maybe everyone or not would version. unit a reduction we there's for may -- as most upgrade to break, deferred things maybe the there potential

net So about of there's that, X% price.

call call guide. expect it, overall is about, or that that's into destock, would for XX% that, that, gets XX% it, XX% then And beyond to XXXX. what headwind think I up so us going So which additional we channel into

I'll just mention Europe.

think a new little more of we're around upgrades. view bit and discretionary I cautious construction a taking

bit a FX of in there's course, headwinds our Of little expectations.

between somewhere modeling XX% that and we're So XX% segment. for

question KeyCorp. next of The comes Hammond Jeff from

guide, line at and seemed are And fourth the savings. holding pretty really and it decrementals want like in the your worse, well. your of It decrementals. SG&A get XX%, kind like So you looks quarter, I to decrementals your were got I the guess, of some you're

So I into it holding thinking decrementals or the offsets built of just you're whether want to other understand disruption, what about, kind of et kind and cetera, be less that. the confidence in disinflation

the the a It's was forecasting manufacturing level year. And in SG&A was that Yes. at period we as as next in in as the decrementals. to that factory enter we really limited at which noted the prepared shape and more line historical see in level both you're a cost is in severe decrementals right. base, incremental Yes, as XX%, QX cost believe on in we But well we're [Indiscernible] SG&A both the deliver it the recalibrated remarks, XXXX, great those bit to at we year a we've our It with we're in Eifion. level. movement base, more last which for XX%. But

and outlook this provided. construct cost tailwind on deliver we at a SG&A base to be upside the we but last to to are in the XXXX. months, like further see point, believe freight rightsized costs, But some improvements extent that base areas and X do can have over the which manufacturing of our We sorry, we've do particular the upwind our obviously, -- have, tailwinds that that improved forecast,

Because seems odd. Okay. helpful. seasonality? was can talk -- it XXXX was there normal some just we about just 'XX, Maybe like destocking, just That's

normal know I about to seasonality you don't in that quarter of think in first if So kind particular. can how frame

little Yes, the you're the pre-pandemic be half first go preceding or We compensated we back look which But as QX, a and trending low underway, when QX, a is bit reality season. in believe a a X is low we're with I the the XXXX about more in gets QX. mean, reduction higher to we was year end about prepare QX year X start by QX back lower of full as and and QX in season as to second our for our we XX% -- half, seasonality, going forthcoming typically, right. think if QX season at years, slight higher XX%. 'XX maybe that a normal an sorry, -- comes well the to to higher

The next Research. of question Wolfe Nigel comes from Coe

and and build, bit to particular, the the 'XX, wanted the repair to more dig in a in maintenance. Just

Obviously, I I the Kevin, conservative. of X% said to the you think kind 'XX. maybe understand be down in desire

think commented during actually the saw you timeframe. that grow to that maintenance that during [GFC] I you

just were back wondering it then. today like we're in position than So a I'm X% unemployment with U.S., the better in feels we of

maybe pull So just [Indiscernible], why And forward, been cetera. that's there's et X%. the wondering down some

there would So helpful. just be thoughts any

in time. great understand, the new in took saw primarily that we what point the mean, was our construction crisis as really I impact biggest I financial at Yes.

some is into think more of kind the version to that upgrade defer that pragmatic, do us in of at income to the concerns, and for very XXXX like-for-like their wise be the what time. at current a we into fully like look of maybe or it's the this the year, discretionary resilient not looking fourth maybe with XX% ability have maybe some or get point I of as think maintenance inflationary say just quarter people to think upon of that so, and I I that depending looks to

might cautious with the don't anything bigger revenue our a just of So I be what with that trying flow. this bit happen Nigel, think of at there's XX% to than -- play,

deeper digging [Indiscernible] follow-on into understand my that. And question, dynamics. inventory again, then bit a the

little of million, last in North the of So second it bulk $XXX to I year? like perhaps think, inventory XQ and just XQ? for headwind. baked then that of XX what in in the looks to of would you less that's frame see expect points in kind a about Curious then you saw about maybe than if headwinds hit impact to half of America, And

Yes.

So the the would were is half identified we of second to season. end XXXX, QX we hand I need in say, starting on the XXXX the as when days to obviously, take out call

in by days hand, that. the accomplished of get back months on marker, to was that of the objective be was channel. those days Our pre-pandemic the by on -- on end -- hand the that hand year and did end to the of to would XXXX which levels, in we We kind December, back getting

and half our XXXX and the guide, I spoke of as say previously remodels whatnot. finalize look some As the discretionary around to we out would continue soften as for and played I XXXX construction second to outlook new

less a activity, I half to done that less to of work there's there's contributing So with that XXXX, required is couple that. in Overall, retail second the have less desire in things view, service a inventory. good the channel think having inventory of to if

I are normal back and lead secondly, us to most times. think, OEMs

they supply thirdly, I inventory just during the costs able the are time pandemic. we're largely expensive today chain carrying were now And say, than obviously, a that us. disruptions to So would then more are provide in more behind

[Indiscernible] second what Nigel. XXXX, say be that's for accomplished XXXX, reasons, we would which need I the the of to done work of those all in was in for So the really and half additional a start success

Rob from question Wertheimer next comes Melius The of Research.

year? look is versus a of the already 'XX at just contextualize but of install asked, to similar of kind real it remodel on have recessions? X] that, side. point? Nigel for rough at you or I a and have that this follow-on what outlook this the Or gave commentary the Can to upgrade commentary prior had a and point the at as forecast whatever kind question channel And a kind [tier you in do you enough to

Eifion. jump When we in aftermarket, It's about Yes, we typically our XX% the resilient. I'll think is of nondiscretionary aftermarket say here. would

it's given we [violent] a discussion that economy recognition of are and goes. lot the very right However, unusually where the interest around due now rate with environment

be that said time at takes we've that period. to and a fix So prudent, upgrading break cautious place

the you reflected its the people to are see that's an asset upgrade. end And when in may be end-of-life money go comes spending deferred, latest our to typically that So and life, to guidance. of

to view, cautious off want but We the year the 'XX. very we we think beginning here it's as start be cautious a of in

In about see remodels do we there's installed demand remodel believe -- terms base. for before. remodeling. of We the pent-up We do talked

the the to new based across case down could a here upon again, think [Indiscernible] base. additions of economy, XX% much very construction remodels XX% However, for and business be region that in our the rate backdrop to we similar of

I there? feel that ranges I bottom don't a enough. prior channel Fair after I What So into low room towards of turns at mean this? remarks fall I'll scenario or essentially this Kevin, assume destock. the don't inventory, tailwind, very ranges. outlook another of eventually, inventory it you have go comfortable, of is end year I stop you of we do there the could that to prepared on apart. in the the channel destock markets mean, there. have your think touched brings days that And

Rob. Thanks, Yes.

Nigel's and correction some that expectation don't completed I upon based hand of in I XXXX. conversations factors those maybe just slightly and all the days below dip of with terms would serve on on be is hand, answering we that days channel XXXX question, demand maybe plays can days that say mentioned I the the a into moment less fact think I we will normal that in can overall again, -- ago, will that in while just think, hand. on our our

this long And provide that off some may to seems at XXXX, tailwinds your but point, that point. into way a

comes The next of Saree question Jefferies. from Boroditsky

share some gains. highlighted you So structural

are that about we have you maintaining about think talked that you've now What being you think I and seeing around do that? normalized, chains supply how [X.X%].

that the over growth, than of gains. each X critical experienced Yes. priority share number more X.X We across I which top product years, last some to implies categories. view profitable transitory, a we've mean, our say for share as year, structural reasons. gains I'd is

Vitality introductions as into product our up is Index, reflected plays which over think with it XX%. I

advocating program in more Totally Some the with dealer conversions into backyard product. Hayward our new folks Hayward

products And think of specifically that adoption seen some into And the sunbelt that to the market. think year-round have of still penetration, I innings see in bring products controls I markets. market. new sanitizers. technologies, And opportunity some or we're to great with of be we've we continue the really in great early we'll upgrading I that that Hayward the of feel the alternate to

impacting Great. about And think through savings that should we then could SG&A XXXX how about and you just margins cadence the into remaining the talk of and XXXX?

Yes.

closed of SG&A of we completed all rightsizing our base the essentially out So as have we QX.

And the so XXXX healthy position of of savings million entirety $XX quarter. to start very entered in the we rate run per a $XX million to realizing

quarters, the base in our SG&A in million around $XX QX. see so of you each And will beginning

out with in of we're the into gate. those realizing come and back the year shape savings those numbers, of our So as we we're great [into] all

question comes Michael of Halloran The Baird. from next

So X questions here quick.

something one, North that to back guidance year-over-year guys when gains? Or growth, in just it on? at Is American year? else you're assuming you like seems get it which half the about that you comps. look at down sellout year-over-year you of as First the there given are channel driving sense the the How still back destock thinking is positive it's the year, destocking Or point? the going of is makes the the the half underlying comps

Yes. Eifion. It's Yes.

impact expect predominantly to So half. we our channel, the no, the first into in sales the destocking

to over but of down the the sell-in second to sell of the our up year we as build consistently fairly channel the the be each quarters to out channel for We pick to 'XX. expect start half seasonal in

Are the You how priorities? then or capital are there buybacks higher buy you thinking you about given back And capital you your as other guys are here. think a here? XXXX, quarter, in still is contemplating just usage is leverage about usage little in where fourth bit guidance

remain would we on Yes. our Look, disciplined I capital say program. very allocation

financial despite X.Xx. guidance X And lower were At maintain we end target policy the of to of requires in to the 'XX Our to by on out year, around 'XX at the range 'XX, in EBITDA close the leverage of versus Xx. of a do at the flow meaningful with we ratios driven expect still end to 'XX, Xx generation. leverage cash X.X us

be cash net to CapEx of as XXXX than capital position throughout to is focus use meaningful the down We've got to no well pay programs the debt the continue on our as And going business. flow generation business. the into from investor plans other for particular now

Carter comes question of William from next Stifel. The

of question I own going So inventory. to kind would first is back your ask

was imply million. volume were before. only I if cash incremental assumptions you $XX plan, to if of drawdown different draw year capital. would that I Your -- $XX And guidance some, million they now next last for look But guess down I million, relative your got flow $X correctly, I are your would believe, quarter to an free read you million working where about [$XX]

frame free is us that drawdown, $XXX from own how your your inventory, cash purchases? much production, what own million you're help there in flow you could to own So planning, potential upside your

sure. Yes,

half inflation. end previously So million. that of million inventory increase around year-over-year $XXX 'XX, $XXX peaks capital, versus by as about in the midyear was million the 'XX our a about communicated, balance When was about in down that working we year, you last the to reduced own -- that of we increase year. think about We sheet, $XX

the is half through acquired divided other J&J and positions stock we The took safety acquisition. between inventory

to super got goods. we're and of And hand our materials raw year X continue for to we're it place X of target months plus. months inventory on there of is position finished We forecasting we've don't What reduce hand on down year, the on for to hand there. quite next to but down months by plans lot a get next drive in end our

figure to next the gauge inventory or plan. to support the of we be will if of we we quoted We sheet, 'XX very about to the QX which is of season. prepared about as yes, And cautious we remain terms to guidance be continue that. want given there not, cash recognize drive can that enter to our to we as is balance but inventory of level million, our start free the have that upside is $XXX I out flow In We want to optimistic being We support fully the appropriate 'XX. cautious, season.

million, prepared But the the predicated 'XX believe to 'XX we at this out our Andrew, close there $XXX upside, time, at that season. what to upon inventory is needs is

pricing I would cost was net material you if is quarter, today. ask last positive. sure That was of you believe that I question I'm inflation said XQ. Second in not said

you've very thinking are pricing it was positive? margin Also Did recognizing, cost about relative year? next for So it a inventory a you know to position. of gross kind accelerate? your got And how long I

So COGS that we've might take in some favorability seen [the] through. away flow

in exactly and about of QX. we think higher our of margins that's right. the at mean That behind impacted acquisition cost QX sales QX talk cost us. That's I when the -- Yes. raw roll through QX. let's into in and They materials of were end about by back

our but which be some now increase some start see tempering January to see QX to start of because period, X. want also we did we we've X%, saw in Now clear, didn't price will instituted a we of de-inflation, tempering inflation benefit XXXX I to inflation. of beginning

based our upon time the believe of reduction costs gross back freight it now elevate of manufacturing and in that end XXs by period cost institution the through over new that the this that price, to of of level get we we continued rightsizing end the our high will will carry the margins QX, into So time the the at full year. start through base,

predicated normalization in So in coupled that raw with freight, tempering this we inflation materials. a we're for the for gross XXs and year, upon comfortable of very forward margin put projections of high their price

question comes Rafe of Bank America. from of The Jadrosich next

I just of on comments just on some want earlier. follow sell Kevin, -- out your to I up

XX% that aggregate, you same units? was XX%. the you're XXXX, the revenue Just of, on think, I or of can And outlook the for down sort XXXX for question clarify expecting if in then

between can revenue just clarify So and volume? you the

sorry, the restate second question, On you that the the could the XXXX, rate -- Rafe? of was part

on Yes, sellout XX% so the units, that the was the one revenue. first you not comments, answered

you are what you number said volume revenue XX%, XXXX, For that and units on was a sellout? expecting I for a number? revenue or think

by be year those to -- by metrics partially will remodel 'XX new the of think we're as XX% year-upon-year. of figures. the is yes, we clear, all increase guiding through sellout, all offset So offset thinking unit-based digits revenue the that the to beginning guidance, single sellout aggregate When X% XXXX. XX% an [Indiscernible]. down price the about a and were -- the discretionary the of aftermarket, think When about construction, that in we full we quoted about we're the and when Those element put we've be reduction high business,

it. Got

[Indiscernible] Okay.

the Adding another -- I would to the saw. add difference you the channels guidance,

So can you years about sellout what think us the sell-in remind the us last was? how just remind Can you're XXXX? sort XXXX sellout you over of here? has few versus Can we trended Yes. what

was mid-XXs. rate, XXXX, believe I Yes.

sell-outs was Sorry, mid-XXs sorry, XXXX actually on for sorry. XXXX. for XXXX. on were expectation That's wrong. That That our No, sorry. no, rate, sellout for no. We was --

so mid-XXs or of want there. to and [XX] We record digits I actually yes, actual low double realized correct XXXX for Sorry, XXXX. the in kind were after calling [Indiscernible]

where could of you And structural where starts see where a inventories, And some more expecting kind to past. of ahead the of return expect been there stabilizes helpful. really that XXXX? that like as -- in just to the about sellout? environment, versus on low commented to anything how to That's and them happen? that you levels would they've to get track could try you're levels? Like there's normal into certainty Is around we at to economic sell-in sellout that point historically channel early continue restock sort the you'd channel just Or to the expect

that will change or think on hand. lower experience forever don't I days we're a seeing Yes. to more

that environment, this carrying to rate marketplace. economic in by is the cost causing that less interest that's think is an I discretionary a environment impacted response for purchasing impacts an in outlook macro

that see operate So levels, hand. we'll lower days to of I I on do time, kind of than more ultimately get normal think but inventory back period we'll that less historical for or a

need. As numbers different season versus the different move we how exiting you year, much of or shelf channel to a quarters the season through on that wants a amounts. changes are obviously How start the different the much

sure ready not I'm when could I'm that So to call occur.

the we're that work we'll channel for be think when focused partners restored. will continue with time closely on and for more destock, the being, our historical levels I to those

Our Joyner final John of from comes question BMO.

over increase us you implemented So I increase beginning on last year year, you much carried guess that to how remind historically other of price are increases have hikes? the typically year? how type environments, that of then price of understanding in much And things from at X% bit, can distributors receptive X% price the the of realized with price you similar into the a the this normalizing increases

that which X% by our about additive be I'll start wrapped year in to saying, took X% to would X% half from off of effect that John, XXXX. per announcement January, midyear

the reduced contribution XXXX. combined. to would But X what in revenue So be expectation for caveat is our go those that the the into growth would I that lower are XXXX. put that's the pricing given pieces just volumes

the part please, John? repeat of question, Can the you last

Yes, Eifion.

kind you but would of through things been much that you expect fully increases in I and actually environments X% I of what had putting types similar distributors to X% are of how price with normalizing have a understanding price has much realized mean typically the you of of just historically So receptive norm? know that to you're probably with but to regard X%, how realize? to X%, hikes,

Yes.

based view of It's at do but the October period instituted expect industry low at this typically tends XX%. our any. -- we maybe overall I an to Equipment over been pool pushback unusual historically a as slightly would X,] higher seen of This price [Xs be nor we've the analysis has typically mean seasonal never price last or element a kickback, not this pricing couple costs, X. years, we the been been of percent. John. the cost year, time. at So that And mechanism any very any installed and upon there's beginning of has history disciplined history of

meaningful as long to will OEM forward. very products to the sticky we value-based As price bring as remain believe we an can as go we continue consumer,

over promotional to but campaigns maybe more X 'XX, in little the that will we and rebates bit activity pricing normal Now of sticky. rebate years, remain do promotional a revert core will a that structure lighter preceding recognize

with closing I And Kevin we will like now Holleran question-and-answer call. for remarks. to portion today's the you. would the Thank conclude that, to hand conference of back over

just Hayward. Thank thank to their you. for everyone I'd like interest in

the Our business years and employees challenges and of resilience the without deliver work, is ahead. very in value be navigate for the dedication well positioned would all our to and partners stakeholders near-term This possible around hard not world. the

team. contact our Please

you any talking to look on you, Thank and quarter questions, forward we follow-up you first If the to have Daniel, call. the you earnings again now call. and may end

participating. conclude Thank you conference And call. we with for will that, today's

lines. You may now your disconnect