Welcome to Hayward Holdings third quarter 2021 earnings call. My name is Patricia, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press star then one on your touch tone phone. Please note that today's conference is being recorded. I will now turn the call over to Kevin Maczka, Vice President, Global Strategic Planning and Business Development. Mr. Maczka, you may begin. Thank you, and good morning, everyone. We issued our third quarter 2021 earnings press release this morning to the investor relations portion of our website at investor.hayward.com, where you can also find an earnings slide presentation that we'll reference during this call. I'm joined today by Kevin P. Holleran, President, Chief Executive Officer, and Eifion Jones, Senior Vice President and Chief Financial Officer. Before we begin, I'd like to remind everyone that during this call, the company may make certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include remarks about future expectations, anticipation, beliefs, estimates, forecasts, plans, and prospects. Such statements are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from those indicated or implied by such statements. Such risks and other factors are set forth in the company's earnings release posted on the website and will be provided in our Form 10-Q for our third quarter of fiscal 2021, as filed with the Securities and Exchange Commission. The company does not undertake any duty to update such forward-looking statements. Additionally, during today's call, the company will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations of net income calculated as a GAAP to Adjusted EBITDA, as well as reconciliations for other non-GAAP measures discussed on this call, can be found in our earnings release and will be included in our Form 10-Q for the third quarter of fiscal 2021. I'd now like to turn the call over to Kevin P. Holleran. Thank you, Kevin Maczka, and good morning, everyone. It's my pleasure to welcome all of you to Hayward's third quarter earnings call. I'll start on slide four of our earnings presentation with some highlights from our third quarter results. We had another very strong quarter of growth as we delivered net sales of $351 million, an increase of 56% year-over-year, and adjusted EBITDA of $98 million, an increase of 61% year-over-year. We achieved nearly 90 basis points of margin expansion despite sharp increases in inflation and supply chain headwinds that are creating challenges throughout the industry. We continued to delever during the quarter as a result of healthy cash generation and remain in a very favorable position to invest in growth initiatives as part of our capital allocation strategy. Strong growth levels and more pronounced supply chain disruptions are resulting in rapidly rising cost of material and transportation across the pool industry. In this environment, our strategic manufacturing footprint and operational capabilities are key differentiators. These strengths, along with our vertically integrated capabilities and strategic pricing actions, have allowed us to not only increase output, but also dampen the adverse impact of inflation on our results. As we look forward, we believe additional price increases are warranted to align with the current inflationary environment. Now moving to our guidance on slide 5. We expect the current demand trends through the end of the year and into 2022, driven by pool remodels, upgrades to SmartPad products, and new pool construction returning to historical averages. Given the strong performance to date and our ability to execute on our growth levers, we are raising the net sales guidance for full fiscal year 2021. We now expect net sales growth of 59%-62% year-over-year compared to our previously provided outlook of 54%-58%. Given the demand levels and backlog growth, coupled with rapid inflationary pressure, we have been proactive in managing our price, implementing cost reductions, and improving production levels. However, during the quarter, we saw an acceleration of our supply chain and inflation headwinds, leading to higher costs than previously anticipated. We've taken strategic pricing action this year and see the runway for these actions benefiting the price-cost dynamic positively, but we also expect a volatile environment in the near term. Despite these challenges, we're pleased to reaffirm our Adjusted EBITDA guidance range for the full fiscal year 2021 of $405 million-$425 million, a growth range of 75%-84% year-over-year. We field a lot of questions about the outlook for the pool industry, and on the next few slides, I'd like to spend a little time addressing why we continue to be very positive about the health of the industry, both in the near term and over the longer term. Turning to slide six. We believe affinity for outdoor living is here to stay, with strong secular trends driving a new appreciation for the backyard of which pool is the centerpiece. In addition to de-urbanization, migration to the pool-rich Sun Belt, and new work from home dynamic, we see millennials becoming an increased force among home buyers, and they have embraced outdoor living as a key component of their home experience. According to the National Association of Home Builders, we're also seeing solid interest from potential home buyers and strong year-over-year improvement in confidence levels in the remodeling industry. Collectively, these factors create a favorable backdrop for pool demand. On the right side of the slide, we reference some key metrics which capture the rapid adoption of IoT smart digital technology conversion of the home. There will be an estimated 77 million smart homes by 2025, with smart home penetration rising to 60% from about 40% today. We're seeing very strong adoption in the pool market, with smart IoT controls on 65% of new pools built compared to less than 30% of existing pools. Awareness of this increased functionality is driving upgrade conversions, and we believe we're in the early innings. This trend not only affords the homeowner greater control and ease of operating their pool features, it also provides Hayward the opportunity to directly interface with the user. Turning to slide seven. In addition to the digital conversion opportunity I just addressed, you can see similar opportunities with chemical treatment moving to natural saline pools and energy conversion to high efficiency variable speed pumps. Our market-leading Omni app is a gateway for controls and automation to become more mainstream, while simplicity of use is removing the barrier for homeowners and, frankly, trade professionals to include more technology products onto the pad as well as in and around the pool. Our product content opportunity on the technology-rich SmartPad pools can be 3x-4x compared to what we see in legacy pools. The SmartPad truly delivers the ease of use, ambiance, and enjoyment elements homeowners desire in addition to lowering cost of ownership and providing environmentally sustainable solutions. Importantly, the equipment still only represents a small portion of the total pool cost. Finally, on slide eight, macro environment remains very positive, supporting the broader housing industry, and remodeling activity remains strong and poised to continue growing. Looking more specifically at the pool industry, we have a strengthening trend in new pool construction. 2021 projected volume is just at the 35-year median levels with plenty of runway for future growth. The aftermarket of installed in-ground pools is at a record age now on average greater than 22 years old, providing a rich source of remodel and upgrade opportunity. Lastly, we see the trend in IoT-enabled smart technology in and around the home accelerating with approximately 60% penetration by 2025, a statistic which we now see on new pools. To wrap up on the industry, we continue to feel confident about the health of the pool industry in the near term and over the longer term. With that, I'd like to turn the call over to Eifion Jones, who will discuss our financial results in more detail. Thank you, Kevin, and good morning. I'll start on slide nine. All comparisons will be made on a year-over-year basis. As Kevin mentioned earlier, we are pleased with our third quarter results and the continued demand and ongoing adoption for our pool products that we are seeing throughout the channel along with our operational leverage in a very challenging environment. Net sales for our third quarter fiscal 2021 increased $126.1 million or 56% to $350.6 million. The increase in net sales was primarily the result of higher volumes, mainly in residential pool equipment and our ability to increase production capacity to keep up with demand despite global supply constraints. During the quarter, we saw growth across the product portfolio with demand for more efficient, environmentally friendly, and automated pool products remaining robust. The pool market is seeing extended demand cycles due to the healthy levels of upgrades and repairs in addition to new pool construction. Net sales during the quarter benefited from a 7.1% net price increase as well as favorable foreign currency effects compared to the same period of the prior year. Gross profit increased to $162.5 million, an increase of $56.3 million or 53%. Gross profit margin was 46.3%, a decrease of 95 basis points. The decline in gross margin is a result of the rapidly rising cost inflation as global supply chain disruptions lead to higher cost for raw materials and freight. The impact of these bottlenecks on costs accelerated through the quarter, dampening the impact of our previously announced price increases. As a reminder, the 5% price increase announced in March took effect on new orders written in May. During the quarter, we started realizing those new prices, although the net impact was diluted due to the accelerated inflation trends. The July announcement, which raised prices an additional 5%-7%, took effect on orders not shipped by September 27th. More of an expected fourth quarter impact in terms of benefiting the price cost dynamic. We continue to proactively address these inflationary pressures not only through managing price, but by leveraging our agile manufacturing footprint and disciplined cost management. Selling, general, and administrative expenses increased $90.4 million or 39% to $68.8 million, primarily driven by increased expenses in distribution and variable compensation as a result of higher volumes. In addition to these higher expenses, there were a number of one-time charges taken during the quarter. Most notable being a $3.5 million legal charge taken for settlement of ongoing litigation. As a percentage of net sales, SG&A decreased to 19.6%, a decrease of 240 basis points driven by improved operating leverage. Research, development, and engineering expenses was $60.4 million or just under 2% of net sales, as compared to $5.1 million or 2% in the prior year period as we continue to support growth with investment into new products and technology features. Operating income increased $42.6 million or 121% to $77.8 million. This increase in operating income was driven by higher net sales and operating leverage, partially offset by increased cost of materials and shipping costs. Net interest expense decreased by $6 million or 35% to $11.1 million, primarily due to debt repayment and lower interest rates as a result of the second quarter 2021 amendment to our credit facilities. During the quarter, we incurred an income tax expense of $14.3 million compared to $5.5 million for the prior year period. This was primarily due to increased income from operations. Our effective income tax rate was 22.2% compared to 26.5% for the prior year period. Net income increased $35.1 million or 231% to $50.3 million. Adjusted EBITDA increased to $98.3 million, representing an increase of $37.3 million or 61%. Adjusted EBITDA margin increased 87 basis points to 28% as higher volumes and improved operating leverage was partially offset by the spike in costs. Now turning to our segment results beginning on slide 10. As a reminder, Hayward's operational and management structure is aligned to its key geographies and go-to-market strategy, resulting in two reportable segments, North America and Europe and Rest of World. In North America, net sales increased 62.1% to $298.2 million for the third quarter. The increase was driven by higher sales of residential pool equipment and increased pricing. Gross profit increased 56.1% to $141.7 million. Gross margin contracted 183 basis points to 47.5%. Gross margin contraction was driven by elevated inflation from raw materials and freight as supply chain bottlenecks became more pronounced, partially offset by the net price increase, improved manufacturing leverage, and additional cost savings. North America segment income increased 87% to $91.9 million. Adjusted segment income increased 73% to $98.3 million. Segment income increased mainly from higher sales, partially offset by higher SG&A expense. Turning to slide 11, for Europe and Rest of World, net sales increased 29% to $52.4 million. The increase was due to sustained market demand and favorable foreign currency effects. Gross profit increased 35.1% to $20.8 million. Gross margin expanded 167 basis points to 39.7%, primarily driven by favorable product mix and volume leverage, partially offset by the inflation impact on materials and shipping. Europe and Rest of World segment income increased 52%, $10.6 million. Adjusted segment income increased by $3.6 million to $11.2 million from $7.6 million for the prior year period. The increase in segment income was due to higher gross profit, offset in part by increased variable and incentive costs. We continued to strengthen our financial position as we delivered to net leverage of 1.8x as of October 2nd, 2021, compared to 5.2x as of December 31st, 2020. This was facilitated by strong cash flow generation to pay down debt as well as a robust growth in our LTM Adjusted EBITDA. For the nine months ended October 2nd, 2021, cash flows from operations was $199.2 million, compared to $226.4 million during the prior year period. There was a cash use of $13 million for working capital compared to a cash source of $156 million in the prior year period. Cash used in investing activity was $19.2 million compared to $12.8 million in the prior year period. Total liquidity at the end of the third quarter was $402 million, inclusive of $295 million unrestricted cash on hand and $107 million availability on our revolving credit facility. Given our strong cash flow profile, available liquidity, and the consequential reduction in net leverage below our target range of 2x-3x, we have the flexibility to fund our organic growth initiatives, pursue M&A, and return capital to shareholders. With that, I'll turn the call back to Kevin P. Holleran. Thanks, Eifion. I'll pick back up on slide 12. We remain committed to the importance of ESG to our stakeholders and our business and are driven by our core values. We've continued to focus on the energy efficiency capabilities of our products and throughout our operations, for which we've been awarded the 2021 ENERGY STAR Award for Excellence in Product Design. We strive to promote a diverse, safe, and inclusive workplace, and we pride ourselves in our strong company culture and recently completed our global employee engagement review. We have improved the diversity and independence of our board with two new members, as well as the diversity of our executive team and management team at the vice president level and above. We have more work to be done, but feel good about the improvements we've made since becoming a public company. Lastly, our commitment to community remains a priority, and we recently became a platinum sponsor of the Step Into Swim charity organized by the Pool & Hot Tub Alliance. The association uses its resources to provide swimming lessons and access to pools to underprivileged children who wouldn't normally have these opportunities. The charity's mission is to create one million more swimmers, and at Hayward, we're excited to be a part of realizing this goal. We look forward to enhancing our approach to ESG and to engaging our stakeholders to define Hayward's most material ESG topics. I'll wrap up on slide 13 and highlight Hayward's market-leading position as a pure play in the growing outdoor living space. Hayward's competitive advantages has helped us to grow share. Our innovative and environmentally conscious technology products are driving SmartPad conversion and expanding our addressable market. Finally, our superior financial results are backed by an attractive, large, and recurring aftermarket business. With that, operator, we're now ready to open the line for questions. Thank you. As a reminder, to ask a question, you will need to press star one on your touchtone telephone. Again, that's star one on your touchtone telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Your first question comes from the line of Ryan Merkel from William Blair. Good morning, and thanks for taking the questions. Hey, Ryan. Hey, Ryan. I was really impressed with your gross margins this quarter. I wasn't expecting you to make progress, you know, have gross margins up sequentially. Can you talk about price cost in the quarter, and then how should we think about the progression in 4Q and into early 2022? Yeah. Good morning, Ryan. It's Eifion. As you know, we instituted the out-of-cycle price increase at the 5% in March 2021, which became effective on orders May 1, and then we announced the seasonal 2022 price increase two months earlier than normal, which was in the range of 5%-7%, which became effective on all orders July 1st onwards that were not shipped by September 27th. We saw some benefit of the earlier March price announcement in Q3. I'd say that was more pronounced in Europe, but given the size of the backlog in North America, I'd say the aggregate benefit of the combined price increases of 11%-12% will primarily come through in Q4. Clearly in Q3, we felt more inflation, and I would say more is projected as we step through the next two quarters. It's critical, Ryan, that we become more agile, I think, in terms of price increases, in the current inflation environment. I do believe more price action is necessary, as we step along this, inflation curve. I would, and you'll see this in our 10-Q disclosures. You'll see that there was a cost realignment in Q3 of about $1.7 million, which increased the gross margin by about 40 basis points. If you discount that, there was sequential step backwards of about 20 basis points in the gross margin. Q3 was a challenge. We do expect price lag to close as we continue to execute on our price announcements, but it is taking a little bit longer than we had expected. Okay. That's helpful and not too different than what I was thinking. You've managed the supply chain very well so far. I'm curious if you think the worst is over or do you expect more of the same in 4Q? I think it's still a struggle, Ryan. I mean, a struggle that I think we're managing better than many, but I don't really see an abatement. You know, we still are seeing some shortages and some difficulty getting material line side. You know, the whole industrial world is seeing that. I'm not ready to say that it's behind us, but our operations team and supply chain team are doing an absolutely incredible job of growing production capacity and meeting this order file or this backlog that's at historic levels for us. Just a quick follow-up. Is it fair to say that there's a little more conservatism in 4Q guides just given what's going on out there? Yeah, I think that's absolutely correct, Ryan. I mean, we did raise the top line guidance modestly over where we were before. We've kept the Adjusted EBITDA range where it is. You know, we are managing through these supply constraints. I think probably we've been challenged a little bit more given we're up 71% year-over-year in our sales profile. As you get up to these upper echelons of growth, it's increasingly difficult to source the material, but we think it's the right thing to do, to get out there and get after it, to do that. I would remind everybody on the call that, when I look at the fourth quarter, there is four less trading days than the comparable quarter last year and three less days than Q3, which is about a 6% reduction in available trading capacity. Though it is a little bit conservative at the absolute level at the midpoint of our guidance, it does underlie a remarkable volume growth, given the lower trading days. Thanks, guys. I appreciate it. Thanks, Ryan Merkel. Your next question comes from the line of Nigel Coe from Wolfe Research. Your line is open. Thank you. Thanks for the questions. Good morning. Good morning, Nigel. Good morning. I'm actually wondering if we could just take a step back and look at the revenue growth and just try and distill it into price, volume and mix. Because I think the assumption is that, you know, price might be, you know, 5%, but the rest is volume. My guess is that mix is really impactful here. I'm just wondering if you take a stab at trying to quantify how much mix benefit you're seeing right now. I'll lead off here. Yes. I mean, you'll see that we have taken a price movement in the quarter. It was more pronounced in real terms in Europe as they saw the realization of the earlier off-cycle price enhancement, given they comparatively had a lower backlog than North America. In North America, you'll also see that we did take a price step forward, but that's really a consequence of the mix that you're referring to. We did see great adoption of our variable speed product line come through in the quarter. We've also seen a significant step forward in the controls adoption. So these are our control products that are coming through more progressively in the queue. In Europe, we're very pleased with those controls coming into the mix. The absolute real price in Q3 for North America was dampened by the size of the backlog, and it will become more of a Q4 reality for us in that particular segment. I think the whole mix thing, Nigel, is, you know, another quarter of this progression that we're seeing to richer content, you know, being upgraded on the pads or through remodels or new construction. Some of the products that Eifion just mentioned, you know, are higher price points than the product that they're replacing on the pad, whether that's a variable speed replacing a single speed or a salt chlorination in, you know, in many ways is a whole new install or color LED lights replacing white incandescent. You can go across the full product line, and this quarter was another, you know, proof point of that richer content and that mix, as you say, you know, across the pool path. Would you say that the mix is actually the biggest part of the biggest component of revenue growth as opposed to, you know, like-for-like units growth? I would say when you look at the revenue line, we saw a greater mix of North America in the quarter than we have been seeing cumulatively. You think about the sequential movement, Europe was down 26% Q3 to Q2, and North America was actually up 2%. There was a bit of positive mix effect coming into the top line geographically. There was positive mix product line. Yes, it was more of a mix benefit onto the top line. Unit volume was steady. But there was more equity coming to the top line as a consequence of mix. Great. Then just my follow-on question is on the channel inventories. You know, obviously we heard from Pool Corporation last week, and they've seen a significant uptick in inventories, but it sounds like they still wanna get more. I'm just curious if you can just give us a bit more color in terms of what you're seeing in the channel in terms of inventory levels and what your distributors are asking for. Yeah. Yeah. I mean, I would say Peter's comments last week represent, you know, the industry as a whole. Inventories are in a healthier position than they were a quarter or two ago. If you look at it from a days on hand standpoint, it's still in a, you know, it's an improving position, but certainly not too much by any means. Admittedly, the mix of that inventory may not be as ideal as any of us would like it. You know, there's still some products that are in shorter supply, so we're working feverishly to address that. You know, in total, you know, I think we're taking some extra shelf space right now, so, you know, we look at it really through two lenses. In absolute terms, what are the inventory levels looking like? Also then, accounting for some additional shelf space through our share gains. Yeah, I mean, we keep close tabs on it. We have good insight from our large distributor partners, and these are conversations that we have with them in understanding what they need more of and trying to improve that mix so that we can push more product out to its ultimate use in the backyard. That's great. Thank you very much. Thanks, Nigel. Thank you. Your next question comes from the line of Brian J. Lee from Goldman Sachs. Your line is open. Hey guys, good morning. Thanks for taking the questions. Maybe just a quick follow-up on the last one. You talked, Kevin, during your prepared remarks, you mentioned share gains. Just in response to the question right now, you mentioned it, I think, yet again, and I think it's sort of underappreciated as a part of the growth algorithm that's clearly helped you guys. Is there any way to kinda quantify what you're seeing or what you're sort of, you know, internally estimating for share gains? It seems like it's been a pretty meaningful tailwind through the year. Just how much of the growth this year is coming from that, if you can quantify? Then, you know, maybe where are you seeing it most, whether geographically and market product-wise, just any trends you're seeing that you think will also help into 2022? Yeah. Great. Thanks for the question, Brian. You know, I think it is a big part of our story here in 2021. I'm gonna be a little bit more generic in trying to identify what we think it is, 'cause frankly, the data's not perfect, but I think it's directionally accurate. You know, from a product standpoint, you know, we're very excited that I think our largest improvements are around this digitization or this SmartPad conversion, the you know, that we talk about. Things like automation and controls has been a meaningful share gain here in 2021. Then as we've said, the products that frequently come shortly thereafter, or even at the same time, you know, things like a variable speed pump, we've seen share growth. A gas heater, we've seen share gain. Salt chlorination, you know, some of that may be the result of the trichlor situation, but frankly, the salt chlorination has been a you know a strong product line for us for years. That progression is multi-year in its timeline. You know, we're seeing a lot more volume into the market around these color LED lights as homeowners are really looking to get more ambiance in their backyard. That's kind of product-wise. Market-wise, I think that, you know, we've seen some nice progress, frankly, in some underserved markets for Hayward, be that on the West Coast or the Southwest. You know, I think it has been a combination. Well, A, I think it has been a big piece of our success here in 2021 for sure. I think there's been some regional improvements to it. Then certainly, some of the products that are part of this SmartPad conversion are playing out nicely with a number of new product launches that have been very well adopted early into their introduction period. That's great. Helpful context. Then maybe just my follow on, and then I'll pass it on, is around price. I know this is getting a lot more focus just given the the inflationary environment we're in. If we take your price actions that you've articulated thus far, I think Eifion Jones was talking about, you know, 11%-12%, it won't all read out this year given the timing. I think, Kevin P. Holleran, you mentioned probably some further price actions to come. You know, if we assume there's another one or two here as we enter into 2022 or early 2022 in that same mid-single digit range, is it fair to assume that, you know, the price that you expect to read out in 2022 could be sort of in that, you know, low to mid-teens type of percentage range? Is that the right way to think about, you know, sort of the, that piece of the growth algorithm as we head into next year? Yeah. We're not ready to announce what the 2022 price increase will be, but we are looking at further action, as I said in the prepared remarks. I think at the baseline of the calculation, Brian, it's, you know, that 11-12% that's been announced thus far here in 2021, really only a quarter, give or take, you know, is what's gonna be realized. Three quarters of that will roll into 2022 before the next round of actions. I'm not gonna confirm kind of that low, but we're in high single digits just on the actions that we've already announced here in 2021. Further actions are coming, and we need to better align our invoice pricing with what the production costs are at the time that we're filling those orders. You know, we're spending a lot of time, and we'll be making announcements to the channel and to the industry very shortly on what that next round is. Okay. That's great. We'll look forward to it. I'll pass it on. Thanks, guys. Thanks. Your next question is from the line of Michael Halloran from Robert W. Baird & Co.. Your line is open. Hi. Good morning, everyone. A couple questions here. First, you know, leverage sub-2, does this change at all what the focus is for you? Obviously, organic investment's gonna remain very, very front and center. I know you're thinking M&A in a targeted fashion, still there. What about dividends, buybacks, or some other return mechanisms? How focused are you still on the debt pay down side? Yeah. I mean, our priorities really haven't changed. We remain focused, Michael, on the growth initiatives. We've got several larger organic programs that are outlined over the next two years, really focused on improving automation in our North American footprint and improving our distribution footprint throughout both the North American and European geographies. We do have a healthy pipeline of M&A, which is our, you know, our second priority here. We're pursuing those vigorously, and more to come in that regard. As you pointed out, given we are sub-2, which is below the target range we previously communicated, then it does give us the flexibility to think about return to shareholder. We've yet to formalize a policy there, and it's too early to say what that would look like. Yeah. Okay. No, fair enough there. You talked about building visibility into 2022. Maybe just some thoughts on backlog, how you see the lead time stretching, and, you know, what gives you confidence when you look at the various components to your growth, whether it's repair, replace, and the refurb, new build, whatever. What are the factors that drive confidence on the volume side going into next year? Yeah. I mean, the backlog does stretch, you know, certainly into 2022. It's at elevated levels still despite some of our production capacity improvements. You know, as you look at the levers of growth, I think they continue to be very. We have high confidence in them. Certainly new construction, I know others have talked about this. The builders are quoting well out into 2022, some even beyond. I know they're working feverishly to add labor and increase their crews to be able to get more pools in the ground in 2022. You know, the remodeling segment of the market, I think, is another ripe opportunity. As I said in the prepared remarks, pools are more aged now than ever, and there is an interest both with the homeowners doing a full-scale remodel or just looking to upgrade a piece or two on their pad, that they're looking to digitize to take more control and automation over the pool or to increase the ambiance or to become more natural in the water treatment. There's a number of different angles that continue to fuel our confidence into 2022. We have a backlog right now that certainly supports you know volume growth in the early months of 2022 to start from. Great. Appreciate the time. Thank you. Thank you. Thanks, Michael. Thank you. We have our next question coming from the line of Rob Wertheimer from Melius Research. Your line is open. Hi. Thanks, everybody. Please tell me if this is something you can't go into in much detail, but I'm just curious on the channel response to price increasing, whether, you know, your upwards, I think you talked about last quarter, just sort of shifts how pricing goes through, whether that, you know, is receiving any pushback. Just a little bit of curiosity as to whether I can see the share gain you're doing, I get it. Whether, you know, if others don't raise prices fast, if the installer, you know, keeps the margin or channel partners in general. Just in general, how is that going through on changing the pricing mechanisms and if that's it? Thanks. Yeah. You know, I think what you're referring to is the second price increase that Eifion mentioned earlier, which was really our seasonal increase. We announced it sooner, and there was really a change in practice to say that if orders received after July 1st weren't shipped by the end of third quarter, that they would take the price increase. You know, I think the channel understands that the manufacturers are feeling input cost increases right now. Actually the announcement now that's a quarter ago or longer was actually received very well by the channel understanding that the suppliers need to offset these costs to be able to continue expanding capacity and getting product placed into the channel. I think there was great understanding and collaboration between us and our channel partners. I was unclear on the second question, Rob, or the second part of your question. Maybe Eifion got it? No, I. Go ahead, Rob. No, that actually answers it adequately. That's fine. Thank you. Anyway, that'll do. Thank you very much. Okay. Thanks, Rob. Your next question comes from the line of Jeffrey D. Hammond from KeyBanc Capital Markets. Your line is open. Hey, good morning, guys. Hey, Jeffrey. Just on Europe, you know, the sequential decline, is that just typical seasonality with vacations, or is there something else going on there? No, I think you're right. Just typical seasonality. I mean, they had a strong start to the year. I mean, quarter-over-quarter, they were still up 29%, and year to date up 54%. What you see is a little bit more of a return to normality, seasonality over there. I mean, you know Europe, it's a bit of a hiatus in the summer period as far as work activity. No, it's just a reversion back to the normal seasonality a little bit more quicker in that segment versus North America. Okay. Just on backlog in 2022, you know, I think you show the industry data on pool builds, and I think they have just a small increase, and maybe that's, you know, labor and contractor constraints. You know, how are you thinking about new pool builds into 2022, you know, versus that industry data? Yeah, I think the data that you're referencing, the source is Pkdata there, which I know the industry, that's kind of the preeminent source for that data. It is a fairly modest forecast for 2022. You know, we continue to feel and to hear that there is tailwind and interest in folks building out that backyard oasis. You know, I think what we know here in late October as we start looking into 2022, we believe that there will continue to be some strong growth around new pool constructions in 2022. Okay. Then last one, price cost. You know, I think you're running a little bit negative as the pricing catches up. If we start to see stabilization, which is maybe hard to believe in, but you know, in commodities, you know, how long would it take you to start to get to price cost neutral or even positive? Yeah. You're right. We continue to see inflation. We don't believe we're through the woods on inflation yet. I still think based on the commodity indices that we're looking at, there's still another couple of quarters of rising inflation. Just how much of that is transitory versus structural is yet to be determined. I think inflation is here with us for quite some time. In terms of the price cost lag, there is a lag. We're addressing on how to more proactively close that lag given the size of the backlog. I think it's really important for the channel to understand that we do need more agile pricing, as Kevin mentioned, pricing which is more attached to the invoice than it is to the original placement of the order, which is more representative of the costs that we're incurring to manufacture and deliver those products to the marketplace. We believe, you know, potentially here that we're feeling the brunt of inflation maybe more so than others, given the significant scale-up that we're doing in our sales profile vis-à-vis others in the industry. That incremental unit that we're trying to procure raw material or component from the marketplace to hit these 71%-72% year-on-year growth levels is costing us, we believe proportionally more than maybe some others. We need that more agile pricing. We're gonna pursue it to close that price, cost gap. Okay. Thanks so much, guys. Thanks, Jeffrey. Your next question is from the line of Josh Pokrzywinski from Morgan Stanley. Your line is open. Hi, good morning, guys. Hey, Josh. Morning. I was hoping to ask, Jeffrey's question maybe a little bit differently in terms of kind of the inflation buckets here. You know, you have things like shortages, presumably, you know, expediting of material. How would you sort of break down the inflation you're seeing as, you know, maybe something that is, you know, more commodity based, where if like, you know, we're looking at steel futures, saying this could be a better situation in a few quarters versus maybe something that may stick with us for a while, like kind of your base freight rates or labor costs, which, you know, might not dial back as quickly? Let's talk about it in the big broad buckets. Raw materials, labor, and freight, as well as tariffs. Let's put that onto the table as well. In terms of raw material, our primary inflationary pressures are coming from commodity raw materials. When we think about resins, the multiple resin chains that are feeding to our plastic components and housing. You know, you probably watch the IPEX index, and you can see that the raw materials that comprise that index are elevated now nearly 56% year-over-year. That is challenged. My personal belief, that will remain structurally high because the base chemical industry needs reinvestment economics in order to support the current demand profile in the industry. The next area we see is metals in our raw material, and metals are elevated. You've seen where steel has gone over the last couple of months. Copper started early and remains high. We've got some specialty metals in our product lines, which also are elevated and consequential to a shift in the demand dynamics, not necessarily the supply side. We think that there is possibly a little bit of transitory inflation in the metal sector, which we'll see come off next year. Then I would say, you know, finally, when you look at the raw materials, there are always these specialty raw materials that go into our bill of materials. Microprocessors is a good example. You know, and you know where that tightness is in the marketplace. You've heard others in the industrial sector, in the car sector, talk about a recovery in the microprocessor production levels, and we're following that type of commentary and expect that to improve over the course of the next 12 months. My firm belief is we've seen a structural step-up in inflation, and some of it may deem to be transitory in metals. We're expecting to see double-digit inflation stick, and we're pricing accordingly. The next level, as you mentioned, is labor, and labor is difficult in North America. We've seen at the entry minimum wage level, a step-up of 20%, and that's not going backwards. In terms of freight, we've seen labor impact the freight environment. Ocean freight's complicated. You've heard about the port congestion. That's really coming back to a labor issue. There's lots of things that need to normalize before we see freight come back under control. Tariffs. You know, tariffs remain instituted in the U.S. at 25% from China, and I'm not going to you know to guess whether that's gonna stay or go, but for the time being, we're pricing assuming it's here for a longer term than originally expected. You aggregate all of that, and I would say, you know, double-digit inflation is with us to stay for a number of years before the supply side catches up. We're taking the pricing actions to make sure we protect the business. Got it. That's helpful. Just a bit of a cleanup question. I think you know, Nigel asked about some of the mix or some of the categories earlier, but anything on heaters that you could share? I would imagine that you know, for all the structural elements, and maybe that was one that you know, folks stuck at home you know, wanting to extend the pool season a little bit more, maybe not as structural. Curious what you think about that and you know, and how those have been doing you know, over the past quarter. Still doing very well. You know, to your point, Josh, it was one of the first products that kind of became out of stock early on in the COVID experience as folks were looking to extend or maybe extend the season, open it earlier, keep the pool open later. You know, based upon the installed base, which is, you know, call it at or around 50%, there's still plenty of opportunity to add heaters, whether they're heat pumps or gas heaters, onto the pad. Add to that the fact that many pads have multiple temperature control units, whether it's, you know, running the spa and a separate one for the pool or whatnot. There is still plenty of elevated demand for gas heaters and heat pumps. It's still one of our most backlogged products in the portfolio. Got it. That's helpful. Thanks, guys. That's all I- Thanks. Thank you. Your last question comes from the line of Joel Tiss from BMO Capital Markets. Your line is open. Hey, guys. How's it going? Hey, Joel. How are you feeling? Hey, Joel. All right. I think a lot has been asked and answered, and I just wondered, kind of structurally, can you talk to us a little bit about how you lead consumers to wanna upgrade their pool pad and to feel the need to do it? Is it through like a better payback or do you have any direct sales people or online that can do that? Is that more through educating the builders and the distributors and all that? Yeah, I think that there's a lot there, and I think we as an industry can certainly do more to be able to educate that homeowner. We still largely rely upon the builder and the servicer to understand those capabilities and feel comfortable selling it and installing it. But I do think that, you know, from a digital standpoint, that there is opportunities to be able to increase the eyeballs on the payback opportunities that this SmartPad has, whether it's subsidization or the energy efficiency or the natural water treatment. All of these. Well, I say all. All is everything. Majority of those are higher priced than the product they would be replacing, but they all have a sound business case, not to mention the fact that I do believe homeowners wanna operate their backyard in a very responsible, sustained fashion. I would say still largely reliant upon the trade, but we as OEMs and as the industry are looking to do a better job of making that case direct to the homeowner or- Okay. Great. One last little cleanup. You usually mention your manufacturing flexibility and the incremental capacity you can squeeze out of your factories, and I didn't hear too much about that. Are you kind of running towards the top end of your capabilities, or is there a lot more productivity to pull out of your manufacturing side? Then I'm done. Thank you. Yeah. Yeah, I would say, look, we've still got capacity that we can unlock in our manufacturing facilities. We've taken the most recent step to establish a new distribution center just south of our primary North American manufacturing facility. That's gonna free up a meaningful amount of floor space in our Clemmons manufacturing facility to add more production capability. That was the underlying theme for that particular move. We continue to have expansion opportunities in Europe, and we're taking steps there to look at site expansion. We have got several automation investment programs underway to build further capability. Yes, we have more capacity expansion, and we continue to look at that. We've done some really innovative things on the manufacturing floor over the last quarter, including converting several of our discrete product lines to multi-product capability product lines. It's not only sizing up of our unit production, it's also adding agile and flexibility to the manufacturing capabilities as well. It's all good news in terms of capacity. It is gonna require some investment to take that next step over the next couple of years, but that's underway. That's beautiful. Thank you. Thanks, Joel. There are no further questions. I would now like to turn the call back to Kevin Holleran for closing remarks. Please go ahead, sir. Thank you, Patricia. I'd just like to thank everyone for their interest in Hayward. As you can see, our business is producing phenomenal operational and financial results. I'm very proud of the hard work and dedication from our team, who continues to focus on providing the highest levels of service to our customers and allows Hayward to deliver such strong results. We've continued to execute during the course of the year, including very strong Q3 results that were highlighted by net sales growth of 56% and nearly 90 basis points of margin expansion. We raised our annual guidance last quarter, and we're able to raise our top line guidance again this quarter while managing through an increasingly challenging supply chain and inflationary environment. We're very well positioned to continue to generate growth for all stakeholders in 2021 and the years ahead. Please reach out to our team if you have any follow-up questions, and we look forward to talking to you again soon. Thank you. This concludes today's conference call. You may now disconnect.