Hayward (HAYW) 29 Oct 242024 Q3 Earnings call transcript

Welcome to Hayward Holdings Third Quarter 2024 Earnings Call. My name is Jesse, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Kevin Maczka, Vice President, Investor and FP&A. Mr. begin. may you Maczka,

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

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

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

morning, Quarter and It's pleasure all my good Kevin, everyone. Call. Earnings Third Thank you you, Hayward's to welcome of

state many Carolina. impacted States, across United we of the Before the to like devastated home our in to begin, I'd regions North our including by sympathies offer hurricanes that deepest those Southeastern

Southeast. employees, customers and the many We other stakeholders have throughout

way in we in committed are to of need, thoughts great any with time Our this can. our communities assisting are neighboring we and

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

strong report balance third with flow increased this well executed again to expectations. quarter, pleased improved sheet. consistent results We profitability, quarter delivering cash am I and

recent X.Xx. leveraging year-over-year the our leadership culture by and our expansion. growth by represents relationships. and the X% and our generation was driven We operational margin seventh reduce excellence quarter, full margins from advancing improved year-over-year solid and us by were a customer fund the positive our the profit turn slow of growth gross expanding full to in Hayward increasing quarter in drive and a an from with the season orders. pool enabled to in-season of start also a XX.X%. Cash business consecutive XXX ownership. Gross XX% initiatives our year-to-date. business on leverage improvement balance year-over-year points performance net third of After strategy quarter increased basis basis the North season to continue operations than continuous price extended This year, cash more of pleased realization expanded position, technology America very to first ChlorKing. sales flow benefited Net of with This to acquisition this sheet this We

in the buy progressing Additionally, program line expected is our participation. with early

guidance, Finally, modestly sales of ranges the the end our full to and reflect year we're refining improved raising profitability. lower

EBITDA now and approximately we XXXX, year from increase net X% sales year full expect the XXXX. to to full X% For adjusted to to X% approximately X% increase

lower increased ChlorKing year-over-year net the X volumes. X% Rest of Slide America to in of third sales to North now results increased partially quarter million. in in X% and were quarter. Net offset and price of sales the and net segment, declined the Turning highlighting By contributions World. X% Europe Positive $XXX by

and adjusted a acquisition. sales points the margin XXX strong increased to accounting basis XX.X% points expanded seasonally an quarter in performance EPS EBITDA a This to quarter. mentioned, XX basis lower point I year-over-year gross diluted XX.X% profit basis was in XXX approximate related despite purchase ChlorKing dilutive third impact As margins of year-over-year the $X.XX. Adjusted to is

slowly back replacement end. interest the new to economic front continues quarter, saw pool was construction the repair end, the and America, outperforming by products but expectations North generally for impacted now but orders of as with on Europe in resilient, America for extended consistent started X remains increased and majority update. In be season to Turning in-season on our Hayward North World. and business with we In for the a demand and season Slide Rest conditions the rates. remodel demand Aftermarket current of

expectations, permits price the provided realization Incoming permits our high-end strategies U.S. market. The and and Europe, indicative the progress the orders of remains However, to always owners. pool resilient, and rationalization date. ensure The in are remodel our value completion been relative on we price, pricing see SKU down, pool disciplined are implementing line exceptional are to participation. are X% appropriately segments construction products buy programs in expect the more of America early we strength at trending net in optimize price with pleased North of nearing the continue anticipate structure while we number industry we in of positive the and of been relative new value to very and underway in priced XXXX. and We've value-based solid to and has to least with

buy strategy, X% introduction price U.S. recently efforts Technology the expect leadership growth markets. X% annual X% to are and excited conjunction by Given our we distributor. new yield to central in to increases and initiatives, our are X% that we international see in with recognized global to early extremely to these largest program we approximately and the in implemented the product

temperature testament such achievement all and if and as desired of to and earnings as a the employees temperature hard our work teams industry. One is industry-first Specifically, This cool a cool enabling us unit, operational of comfortable to received This is in both you at innovation and an for product XX Hayward. prior Thank microchannel summer innovation Hayward be in which the heat a cold new of degrees a to partner separate you awards dedication heat for introduced our to plunge. on water leadership the a exciting low to ability the valued control pool offers for example extreme we excellence. call. it even

encouraged We initial product introduction, product marketplace. the Paramount new in we're unblockable the unique the another highlighting by drain. success this RDX of are Today,

and innovative able into new like debris. seamlessly to drain lead high our safety concrete and and RDX combined pool of finishes add to continue value future these flow in with the customers while technology floor. is Compatible removal debris growth. and We ensuring large the swift Differentiated products design blending to the collect effective drive

opportunities. tools enhanced including in support, service We dedicated staffing, and leadership and training are new in investing customer customer productivity

quarter, Hayward with the Customer to role leading created proven of within care a best Vice President During leader industry newly organization. we of an appointed customer the Experience, tasked

of OmniPro app, tool trade our cloud-based adoption professionals, We are and also for an equipment enabling real-time remote configuration. seeing pool productivity homeowners proprietary innovative a monitoring increased of

increasingly be elevate opportunities. we aftermarket drive support will best-in-class resulting to As technology-oriented, in Hayward the believe the increased and brand industry critical becomes conversion further customer intimacy,

pool to advancing in fit and update Next, pleased June, with with on acquired in financial a a leader I'd profile, our quarter. water ChlorKing. We a in is pool late business the and a its commercial great market. sanitization the ChlorKing [indiscernible] brief strategic in like provide attractive performance position strong we're very

with the already business. synergies are commercial existing integration of the seeing We Hayward's

I'd sustainable more bases new each Our Eifion, to discuss results will cutting-edge to call projects. financial win systems. With for that, turn sanitization sales the our over customer in demand who teams water like are actively serving leveraging other's to the detail.

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

for are pleased we a less further stated, Xx. with delivered expectations quarter performance. with were outstanding Kevin As sales Consolidated we leverage than financial our reduction net cash profitability generation, quarter and the and net in in flow line third to enabling

quarter in of volumes. the notably dilutive North detail. and offset increased to a X%. margin Gross results ChlorKing X% result, the profit gains contributing more the accounting. the impact despite $XXX points Net efficiency ] This discounts at [ increased purchase basis X% a X%, prior $XX to year XX.X% points for Net year-over-year driven adjusted X% X% to quarter of XX.X%. third the in the compared quarter, primarily coking million and improvement positive in XXX point price period. performed full to third and in to well in by and in Adjusted America quarter allowances million. Gross profit of to the XXX basis EBITDA was increased first the $XXX realization benefit XX increased operations, EBITDA ownership, manufacturing by sales Looking basis normalized million. of continuous third margin strong is our increased lower

XX% rate quarter. Our the the $X.XX. was in in increased to effective quarter EPS diluted Adjusted third XX% tax

orders the costs. favorable X% profit was by in for sales on increased U.S. in I'll segment encouraged quarter million, increased and the Net and and the X. North quarter Canada robust income discuss to to driven [indiscernible] $XXX margin We segments, sales acquisition. financing increased in market impact XXX XX.X%. and that Adjusted margin conditions net Now beginning X% increased significant sales Slide points our were the in Gross economic due to basis third Canada. a the Clothing see to the America XX.X%. despite XX% in pricing

margin of impact of sales reduced by and and Net mix. Turning $XX was geopolitical for XX.X%, to segment declined and largely to volumes, X% Rest lower offset continue a margin in decreased driven income lower sales Gross markets international current Adjusted volumes, million of in X% to Europe due Europe adjustment World. Net the certain pricing. discrete Rest to quarter conditions. as profit the favorable by macroeconomic and unfavorable inventory to feel partially XX% X.X%. World

a sheet X highlights. balance for of Turning cash Slide to flow review our and

Total X.Xx performance improved pleased strong ago adjusted We facilities sheet and of cash to million under quarter the availability and of including significantly flow the to debt million. million, $XXX improvement the liquidity and plus X.Xx end end quarter. quarter. equivalents of the X.Xx was our balance with in are Net very credit year of to the at EBITDA second $XXX at cash a the compared $XXX

debt. attractive plans. near-term in as XXXX we undrawn no ABL flexibility We and matures maturity provides schedule This have our our debt The matures financial term in strategic on execute maturities XXXX.

rate borrowing on rate rate XXXX, from cash our $XXX tied our million benefits to interest the term fixed maturing to interest currently that Our in limiting X.X% agreements quarter. facilities XXXX third in of the through swap

was the to quarters cash quarter prior declined $XX timing cash cash free to operations increase of of average year-to-date the CapEx seasonal increase X.X%. second period quarter, million the of capital management. a and capital global in generation [indiscernible] for The Our a deposits due of was rate receivables. Year-to-date reflecting million, $XXX continuous year XX% earned period, compared flow payment attractive project has million. the year cash as below from XX% XX% receivables. strength business free in collection was in attributes working flow in interest related largely and on third to prior Year-to-date flow in reduced the timing, consequence Total improvement working to of resulting the $XXX

cash free and expect million. to flow XXX% flow conversion of continue expect free XX% of income $XXX We XXXX full year net ] [ approximately cash of to

capital to on allocation XX. now Turning Slide

highlighted near term, organic we we've maintaining policy As while approach, financial emphasizing investments investments maintain returns balanced growth leverage. before, strategic prudent are a shareholder prioritizing a repayment. inorganic take the and we financial debt and and and disciplined growth In

acquisition commercial repurchases. continue addition relationships opportunities opportunistic offering, to complement footprint to strategic product and share to other We geographic our consider in

the Turning now for to Slide outlook. XX

We lower end. year the raising full our refining guidance ranges, are

of billion X% year our to approximately full to year million. to guidance $X.XX EBITDA XXXX, million $XXX million of $X.XX compared We expense compared the interest adjusted $XXX million we to billion flow approximately sales our guidance cash For million. prior anticipate of increase year approximately million. $X.XX expect approximately to CapEx to to X% $X.XX expect spending and X% full X% to million to $XXX expect $XX now We prior of full net $XXX we to free of net increase $XXX billion. $XX to now to billion

We remainder the of also of approximately expect an effective rate XX% year. the for tax

are strength successfully of strategic remain growth now to of we execute pool long-term the aftermarket it industry, health we in particularly to Kevin. So our looking plans. And our ability back turn confident the with positive XXXX, the the and beyond growth out that, about I'll profile

Slide XX. Thanks, Eifion. back up on I'll pick

our low Before the ranges and with the reiterate takeaways we raising today's year, consistent refined presentation. the let delivered third results key from close, quarter expectations end. me guidance for We

growth to Our strong the cash allowing fund gross us strategies and our margins balance delivering team execute, continues flow, delever and to sheet.

in have exciting that investing shareholder we're programs and questions. we financial place offerings new to ownership innovations, commercial to our now the results the product for improve support open am confident creation. With We are ready the and and line experience. to drive I in and strategy service right talent better pool value that, customers compelling

from Our Andrew of question is Stifel. first coming Instructions] Carter [Operator line the with

the where drag the sorry, about -- business. margin? to America I the that and as or North segment overall much the to structural? between of ask margin How you a of the normalized is base wanted think Or drive world North would represent a Rest gross to specifically consolidated of differential that in outperform Europe, segment does And improvements of within growth gross that then How World performance. about margin higher? business continue margin, Does will that kind the is much the American Europe. more improving

delighted continuing with I the open Yes. here margins quarter. in up as Andrew, were third mean, to we overall, extremely

gemba really quarter, indicated namely our better couple that and we sexy. of neutrality. standpoint price we're we quarter, events regionally as And number just product as a in price we with volume we and and we well of they -- leave because in of we're the shouldn't mix, be from it as finally lean. They in quarter in price/cost more had result doing inefficiencies not see last discounts obviously, waste, the that inside World. I seeing our continuous a gotten the in probably that around partly be on realization North may America, year-over-year back, it's Rest week on was of by grab both fact it some continue that of we the organization. or every drive not is think basis ties walks out and driven to great to things, culture improvement quarters well I a facilities, core the identifying to as had and and third may favorable the Europe a that headlines had a normal the all continue But than allowances

between World, specifically battle business. As market, the for and Europe, Europe some to then East, America in to challenges And some a of in circumstances continue North Rest export some difference of the macroeconomic continue Middle geopolitical we impact specifically. obviously there's that strong

that Ivan us, moment, relatively the this go but bench is things many This inventory are great in We for and some really of a a a leaders deeper a core also -- also high-impact ask the feel World, good investing. I'll segment added over Rest discrete little quarter. there. within in growth we adjustment on region roles about modest we ERW to in saw and strength. new namely the we Europe, of We've we're accomplishing over the to But

As we and recently by and and Barcelona the product turning overall location a development up new naming introduction debt consolidated know, product our footprint global on focus really have leader into manufacturing one, technology. development you technology a we're

undertaking So each to America bring with that those believe we're in other. is But Rest lots margins North improvements investments ultimately will There going and difference, we the back obviously, of World. on. line some and between know that the and we process Europe, start

a from Yes. on And follow Kevin. just

we the manufacturings of year. early know, outside you relocated this part in Madrid As to just from our Barcelona

of the QX, to in across Haywood production clean inventory dilutive following the During we Overall, approximately of slate we us Spain, sites adjustment. allows which QX. that largest as sites relocation a it small resulted into most total have counted net XX across but margin step bps to a impact Spain, lines

question. second the then And it. Got

quarter it than pricing with help Were [ pricing headwind? the Looking X% from last just see. anomalies increases a to there in year? to a annualized that least Or expect of doing, out the year And at kind plus to kind the obviously, you're of what ]? quarter, one more last the we X%. was catch-up similar in this I any in or there with expected North America X% be at any of us any wouldn't variances might Was

Yes.

was the year price down the basically at X I'll year-over-year the 'XX. is beginning contributing in of seasonal break increase. for So a It's that One the X%. benefits. on put

So 'XX. in of that back was October

the had list. the price a and Hayward across which gross on entirety you approximately benefit of that, So year-over-year from X%

a the end charge, we more This went discount announce and Secondly, had last we of year which you we comparably for of thirdly, higher we year. prior allowance allowances, know, year, year, normalized that then an than had as price benefit is allowances. the season into And effect the part did and early increase discounts have and a 'XX in September. normalized of

from weeks in of that September price a bit we've So the benefit got particular increase. in of little couple last

Capital Our question coming Hammond next KeyBanc is line Jeff the from of with Markets.

the on inventory the just Rest World, had of onetime so loop close So adjustment. to you

think we there? next demand just fourth about maybe just stability or the underlying into or in business how stabilization And should speak that year? of to So margin-wise quarter signs

Yes, like an we level guidance step-up the for for but certainly expect probably the be margin it the to travel the close over QX. that's be it in term, year. improvement to average reflected date full our third It won't in QX. we'd quarter certainly will a and to the in year that longer through

obviously, a We business. term Jeff, rest we additionally would of in we had XX% during the lower above improve higher the I have tends the to -- near what have that several which margin. that of term world third mix defined next also a near quarter, as say, years. now margin ambition, have to over

doing chain our negatively So very it's go-to-market we're in We're cost our level a logistics little remain at and there. supply base lot a manufacturing dilutive what But we affecting bit a to improve doing QX. positive about the of distribution mix base, effect Spain.

be that above pathway. XX% but we near do the to level. to margin here It improve a we So runway year, have have necessarily won't next get term. in believe we the over

pretty choppy fix clearly, think new has then brake and the stable on And remodel. I been Okay. pretty

how near-term XXXX? positive thinking the early on impact 'XX. you're you -- or about into any just hurricane can on of kind impact framing market about And any of Just touch that, maybe within negative into kind touch

Yes. question just terrible of I'll first. back as in partners our channel in helping and touch we get And end on serving the on their the there. however them we're order. my really I mentioned it's half focused a situation, I mean, last obviously, customers on opening can lives

We and areas incremental early demand they channel rebuild. to have the from as impacted the and some some on helped seen recover of

in I Jeff. think we'll see this waves,

the the takes working, that then isn't pump stabilize on other triage some that may water, repairs We line anything in with circulating been weather. front the the by it top have be goes special later there's initially, and to if think water those filling get of orders, actually place. the informed and more again, partners is our relief to really priority I may highest affected flow. order our and a there the have all for equipment list treat that disaster we're that code up substantial channel to of

half and in more substantial being aspects has Second very of early affected. guide discretionary like with America call what's continues out throughout about question, initial we you've generally the discretionary. played we XX% for on of called those called saying the where to more year the resilient heard the in market, around aftermarket the North are markets. construction be and And more say really like year. our we down were yes, XX% new international the as remodel us repair We which

play see to the unfortunately, of into seen range that's X within continue we've going through QX. what think we're what out I quarters. And

XX optimistic. great more environment the need So our ago industry interested It We'll over anyway. cut bp a I Fed based was the think data the for macro make start we month but I digesting. they're think, seeing to cuts, is in now, to very future little on more initial what be willing see to a we're before, moves

is Our Boroditsky next Saree line coming from with of question Jefferies. the

I is to James early talk buy. This wanted on for about Saree.

think expected. mentioned progressed that I you as kind early buy of

year are getting from buy how to So can you what much and coverage on anticipated you for your in early kind of elaborate buy last XXXX? early compared

Yes.

timing any of progressing it's channel region. our as we're laid it's sort solid from I we -- partners. very not said, yet of The in participation it, complete seeing out As

expectation anything as in we was in So North sort directionally last participation, a seeing we're nice on I'd really really year this and say, able nearing final of not what underway it's But seeing completion as was, and trending America, to our give it's Europe. we're towards we're saw that.

as method, year, season. We program well into it's with It Haywards but us the focus in really as view stocking, as really early the our both facilities audience, by the for a for another would how It's seasonal win-win the a some we're we allows drives That's normal what out that very shipped well, price into increase spring on pleased but are of rest the concludes, in that mentioned, seasonally early for laying industry upcoming a for the level with their of know to announced next be the know, them know progressed our channel as -- of But it's the gets to discount of for That's we the just offering us by to year. buy would couple ship a payment the Eifion define season. some for channel. this, As weeks quarter. you in more fourth how what prepare James, we in it in discretion you us. as early concert channel need the cooler the up at of called QX maybe just to higher our that a of but ultimately of load the pools buy of buy offer time has shipments stocking date. to the we it's and much, for me using industry in terms in aware out I winter lower get is let we're program. seasonally the next

well was. not program that's what early may expectations. for and it's the I would the progressing of known very buy someone to who So structure have But say our

you only I on builders kind of construction XXXX. new what talk and kind hearing of are Got backlog But to of know about it. kind on like as dealers And follow-up, about it their kind is modeling? of their and still from outlook a Great. in

are necessarily picking I'm up. that leads Yes. not hearing

as I really think, rate seen that, is additional year. a more financing demand cuts the I that affected. as optimism -- market general is spark going moment cuts to this that dependent some portion ago is are there we've of coming said if interest what the most that's

coming, point So are cuts think industry, give tailwind that's going out. as to us don't it's think there if absolutely that I important additional I an to some it's immediate though.

I then think deciding who's more cuts the we to see from and design system work financing need to the substantial the pool finalizing and through going the the through that pulling on permit. build has securing and to your to

is of up tied bit renovation revenue I'd some percent break So there as interest aftermarket cuts rate saying, financing dependent there of that's activity that just dependent. is nondiscretionary and occur. And largely is really XX-plus finish as this is to remodel to our well also fix. some the I like from again, by a think very quite once resilient, lead But

but So obviously, couple had has of large the aftermarket very new industry, that in macro us remodel years. resilient the times challenging to scale construction we've are whole through remained these that to we've important last and the and

Merkel is the Our next William Ryan of with question from line Blair.

outlook. wanted the I on price to quarter. Nice off start

how question how And is strategic increase price That's sort increase. X% of you X% that X% in much your the to. for My then normal 'XX. inflationary to doing? much U.S. bit is a that above think little of to X% pricing you're we're the mentioned the some of is used I

would kind from labor I or from to closing a on what maybe it's wages, tick need salary inflation really finalize fourth quarter we're in and a of up commodity materials we Yes. X% are. standpoint, say our But a seeing -- assumptions maybe high that.

look categories So could pricing. believe that product or delta cost, the really holding then price greater hard some has we some I so product need payback to you what look the And where is priced taken a were think where value around than value we SKUs this pricing that would of been. higher price providing than at or X% or historic

really out you, that's for lay how So I'd Ryan. it

to ] upside team The is of value pricing strategic so then upon price is and based first [ our initiatives some neutrality or some X% the undertaking. cost that more

And the helpful. do finish strategic in That's to expect pricing it. Got you XXXX?

be No, on early of maybe I'm value bringing I going it's is SKU And we goes pricing as lot redundant to think standpoint, -- think with hand ever mean, in but constantly but value No. some a -- the technology innings technology either products, not I lower a what I some sure of this, that some opportunities. I bear. heavy -- don't complete rationalization retire the or of new hand activities some pricing we'll this from lifting in it's is I that, the because provides

on that. I I'm of innings as our So one focuses drops the But maybe really goes in some not sure say on that. curd with . the other. And I organization the would think the and most ever is impact early

question Okay. and margins. Good. sales points 'XX are XXX on And then is basis They're my gross up second about down.

to if gross there XXX years? scenario look is, to pricing, basis upside and out X, margins of the XXX we And so my a question you've still is I got next points strategic X if get recovery

certainly, yes, up towards 'XX are slow Ryan, forgetting we monster, 'XX. inflation not 'XX, notably on into and of you're we the which end the of 'XX kind less battling

a was we we've representative the that we pretty inflation we're And about. 'XX of the at sure feel period. enhancement the the business. quite to not continue about underlying opportunities today, business good example to have talked I'm margin given across in So But drive where margin

X leverage line We today. growth. will We've grow before. our continue demonstrated to execute continue our business on within the to those which X top we discussed of I've manufacturing pillars, can walls

should business. we productivity volume, grow throughout we as continue leverage So to actions get the

going as mentioned, practices and therefore, we're have handle, understand lean that's on America, And increasing continue a able high-margin they're price can those the new now costs margin. educated to Europe as extract return new systems progressively of those customer to yielding investment, common ever we drive and and to products. in on with demonstrated And the the in North Kevin our it, also, we next fantastic We've to We mentioned, then be XX expect our appropriate across and results manufacturing. same so products support technology we reflected and in months. Kevin the the just introduce core high-value, as group are that over margin

XXXX. I'm going not to get on definitive So really

I think to to those on we have continue these improve, and we'll execute opportunities. opportunities

coming next with The Research. from Nigel question Wolfe of line the is Coe

guide take, I for look line the quarter, XX% give single difference think is $XX quarter. and the the fourth when kind million, or in top at of range, between So your so I maybe fourth low but organic digits right, all

So range a there. fairly wide

So define you the demand is, there? then up just kind you between end would if the of thoughts of I'm at buy early your maybe about specifically, but And us of buy correlation that just coming and end for and of sort early that high factors buy play what I tells And kind just you even any feel it on be don't sure where season the early what want next the of year? reading into strength what's the drivers about maybe talk to But low or know other variability can range. more the there there the is any on comfortable.

Yes. latter question. part The Yes. of the

early buy I it I X in really -- think of ways, the Nigel. think activity is

the conversations that, season position what with behalf as buy on early speak. channel I are to and being actually that buy dealers is is is the window forward, what the to is discounts maybe channel. is offer just ends, OEM inventory to of out and channel that with the in But the the servicers, the this isn't the dealers, we doing while the really the program helps channel the maybe having some the of they're with and the appetite renovators. find published be the so think this What would terms here in discussed Firstly the builders, the is now pricing

day dealer in that, working the does day what back to as base, in that us and indication attitude the what in overall So backyard the give or of comes again, for as level out. is optimism think I the that the down some

ready early So response a a based X XXXX this nice pretty those heading means, upon on for by us. yet in solid XXXX but and building any buy, not block guide from is we're factors, to to we're seeing

that another So sorry the of Nigel. I'm question, it was part I...

range, was fourth kind don't we've kind know, to just XX% on X% got the wondering, I range that I of, a XQ in zone. Yes. of quarter

So just variability the wondering what is?

rest a But that in a balance been we've of comfortable the at we a head number. in-season we the of flow that of know call to around America aside Rest in segment. and is muted year. Last pretty X%, the underlying some the I to We carefully. And the World the like, stacking the more is that our that Maybe as as quarter, bit X% early around X% feel as good result final performance hesitation of centric consequence reflected mean, the type that got look Europe year and remain full the we versus around a in buy. in-season had what world a QX. into through $XX year, buy that and see that in so pretty we've item range little really category. continue up orders Nigel, you how is still look early we guidance, orders the comes North million variance now really to the

performance in to in Canada little a America at we expect a If okay QX. do actually, we better-than-expected year-to-date. results We North in look Europe detail, year-to-date more had a bit Canada, in bit good

interesting to into around head But in-season see they those year fourth little in. here quarter closes it's the we as how caution as just relatively the business a down their orders. winter sets bit of So be rapidly, for close it'd that seasonal

Okay.

the helpful. absence Okay. just have sustainability. always There's you just, of Eifion, great gross crack then another margin at And That's really performance about in the question. questions gross margins on Whenever such volumes.

if margin here is maybe think North you the just versus wondering talk could what components I gross that we're sustainable, comfortable number. about that that unusual feel fixed in you variable COGS. And hearing of is American I'm nothing

margin the Yes. is feel like American Yes, sustainable. we North

we results As masked inflation but pursue continue for battles, last they've yielded accounting X execute X a to we small we good to very maybe of We the coming got on by continue margin, that I extract those through areas mentioned, margin margin call But we'll impact and the in discrete the course over from years, mean over we've discrete time. out. Nothing and had enhancers. the dilutive purchase adjustment. margin and did quarter. in I QX. the now a to in reflected inventory enhancement improve

second your question, part Sorry, Nigel. I of the missed

variable of COGS? The fixed component versus

Yes. Yes.

and materials and purchased relatively XX%. our XX% we variable then do goods of of depreciation number a of indirect the the considered component to to the tends as we around speaking, profile. through of Think what in as a sold, And the to be business fixed labor So COGS generally low raw fixed be or much labor XX% costs cost components. and have be COGS smaller utilities about our And then have a is rent well would on is in proportion.

Brian is with question of the from next Lee The line Goldman Sachs.

wanted This Lee. just SG&A in for Cash real dive to quick. is Nick Brian to on actually I

As a we've growth mentioned spend investments few increased revenue, higher professional services. higher you and driven inflation And percentage of than slightly the in salary past years. wage by over sales through seen and been it's slightly costs

marketing a of get sense of volume profitability? we how forward think as sales Just with kind should spending you return and a trying about balance on to going to growth

couple audit what services, have costs in services, get won't the the speaking, 'XX. Yes, we of historical professional But salary of think that is about into than support higher business, legal about I we average generally sure. practice years necessarily when over Yes, consulting services. increases you service last how course the seen think it

so they the have think in base. more All years, couple I we increased feeling And had our of all previously. those in that cost last of

last historically think capabilities of we XX our months, where as our the geographies made underrepresented. over additionally, course, you've sales to turn attention investments I very discrete we've X.X some been years, into

the to you have those see before return. you And make investments

capabilities about year. investments good have systems feel those into And investments cost we're our base. those the this So making additionally, into into gone have throughout XXXX. the We organization. gone And

continue is to the RD&E believe ambition don't ambition have move structural But the to base into collective set We cost the of year. ourselves. and necessarily that we've that we'll achieve sales. SG&A percentage We next down

with Melius from Research. Our coming next is question line the Rob of Wertheimer

might out but the shift. We curiosity, probably surprise of answered, I'll you my higher mix [indiscernible] a total in do end consumers referenced there. noticeable pools and questions data, Most mean, than have stability. I that Is have iron see just I financials? of [indiscernible], shifts just been in given think an you stop with or mix affecting not ever your upshift more

very pleased overall, Yes. categories. got cleaners. Europe with seeing about different dealing of in think Not our heaters richer in pad, in quite want servicing, your have that sure referencing. we're new mix think, you the in Kevin? geographic new a you latter with line, those been increases you're comment had dilutive sanitization, the World the to the part expect, in new per I had product towards impact then dealing there's lighting to content you're Certainly, from features type for mix in much a items, year. we're from with which maybe Rest mix, that, water product segment of, inside a product But And and reduced systems, we've you're shift the and the of pools shift of shift large as Certainly, suction question, have core extent, floor filtration when construction, more attachments those when certain mix. positive mix terms a and Year-to-date, And pool you'd a controls, construction builders, about in impact on geographically talk a a

that those I aftermarket down the it's products right resilient But are than ones the that have mean are a entry performing really around performing and we new well. as right. activity that core that is more up well exactly the many of pretty higher around more full-scale are others That's and or see much that building the times the products said are some not better Yes. that well, remodel holding fairway, are Rob, we've performing end level. concentration high have, as the

sanitizers beat we the features and So to systems functionality that those built, of and LED indoor pools controls alternate some and are the and the and some lights. are added of being being seeing around the automation

So for high-margin those are us. generally products

anxious take are that although to construction and of propping Rob. not we for hold just So the yet, going up take new but we're hold sure for that's to sales, to start rate some when

of with Jadrosich from The next question Bank is coming America. the of line Ray

X% just that that realization. or the for X% clarification gross XXXX, net start, to quick Just a to comment on pricing? pricing Is

as up same, mean the I the discount percentages at broadly as the long pricing. gross the year-over-year effect moving this pricing rebates So level. X% same have are to allowance speaking, remain prices net net X% as that you'll

this can That's -- you Okay. of then helpful. And before. I you've think terms just in -- probably asked just been

some of competitive potential Just exposure opportunity competition. you like it that your tariffs? you what's tariff sort us can is of Like remind to potentially And an potential there environment? versus means then for exposure then the the direct have? And what

of to are Yes. lower our regions, our Generally more manufactured the America cost XX% speaking, manufactured and of North core goods sold, end towards would of our imported impacted XX% be XX% goods around that Europe. from is of Western that tariff probably goods regions recently, in

reduced a for, X X have now So the tariffs progressively been we have exposure instituting that or years. to what,

us then on and 'XX, pre-COVID at back just of 'XX I Okay. where guess, sort And then of level. in stepping construction, looking now vast of on the just the we are us in, 'XX. new -- season where we've and in think sort pool that walk behind majority the 'XX you through to of versus have like Can through for a pools you went number that peaked

us new are construction the versus help pull potential just lapping is do where about we understand much like of in macro forward Like Just this headwinds? how like think cycle? we how

shy years we number me, COVID. XXXX, I front XXXX, to XXXX, ] XX,XXX We There's best around to numbers X there, up were, year XXX,XXX we think, [ [ a we're I'm saw to ] obviously, think maybe ] leading in to XXXX, somewhere Yes. ] leading And of to coalesce last but I in [ data XX,XXX but this the low those were this think COVID. since -- point. I up I that different saying X XX,XXX XX,XXX some years in out those [ XX years don't -- have XX,XXX believe maybe step-up meaningful somewhere [ of ] dropped a at most per case kind correct or high year. to [ that XXs ] that pools just XX,XXX-ish around year. of XX

XX% So call off year. that of last

pools of built year, that could disaster I affected, think Florida. recovery, of this in state. parts that time in get frankly, big be They're

So macroeconomic the what that up in final QX that, of maybe on what environment that's the and over leading seen COVID interest then environment rate the the the here since COVID of we've rate. that could to challenging what's occurred last in effect region have in But think number years occurred higher negative COVID. I a and of in more height

quarter? was what -- third just you Okay. in the very -- guys could That's you Do helpful. do a follow-up. know sell-through I If quick the estimate

quarter? the Sorry, the sell-through in third

Yes.

Yes.

numbers. that flat So the relatively we the in on dependency it any third we the was reference place don't in of on real point, for But -- date sell-through only and that's quarter. those we U.S. one have specific

So reference us for that one to day in positive point. that's outcome a

are further There questions no this at time.

remarks. floor like I'd So over to Holleran closing for back turn Kevin the to

In Jessie. you, everyone in for interest their thank like Thank Hayward. I'd to closing,

be positioned and partners navigate you Thank years work, call. very dedication you, around our without team for contact questions, to to on stakeholders earnings our the the follow-up talking deliver of to we look fourth business and forward employees possible and quarter all have you resilience Please Our Jesse. in any world. ahead. the well wouldn't again if hard This is the value challenges and near-term the

end the call. now can You

today's does Thank you Ladies conclude time. participation, you and teleconference. thank lines We at your you. your you. gentlemen, disconnect This for and thank may this