Hi, everyone. Sorry, thanks for joining us today. We're really excited to have Hayward here with us, and Holleran, CEO, Eifion Jones, CFO, and the team in the audience. We're gonna dive into some fireside questions. If you do have any questions, please just raise your hand, we're happy to take any questions from the audience. Thanks so much for joining us. Sure. Thanks for having- Thanks for having- Maybe we'll start with some of the near-term outlook questions. You know, you've talked about new pool permits being down mid to high teens for the year, but pool values being up. So as you think about the equipment decline into new pool construction, you know, how does that compare to the permit decline? Yeah. So to put, you know, a little bit more context around the question there. On a year-to-date basis for the U.S., where we have the best data, permits are down kind of mid-teens on a year-over-year basis, but values are down high single digits, so there's obviously a spread between those two. So we're seeing strength, as evidenced by those statistics, around the mid to high-end pools. What is struggling are more that entry-level pool, where the greater likelihood of need for financing exists. So this really translates for us to having a higher feature set going into new construction. Things like salt, automation controls, multiple variable speed pumps, temperature control units, LED lights, have higher take rates in what we're seeing this year. So, you know, as a result of that permit data, you know, our overall mix is now less than 20% of our net sales attached to new construction. So conversely, and importantly, you know, 80% of our net sales is attached to an existing pool that's in use, being used each year. So that's what we're seeing around the new construction and the permit side. Sorry. So kinda sticking with that topic, new pool construction around 60,000 this year. Yo u know, how do you think about the normalized new pool construction level, you know? You know, and how does that compare to the normalized level of equipment per pool pad if it's a little bit elevated this year? Well, we certainly don't think that 60,000, if that's where we land, is the new normal. You know, to put some context around kind of the last 15 years since the GFC, the shoulders have been sort of mid-50,000 in-ground pools in the U.S. right after the GFC, great financial crisis, up to about 120,000 in 2021, and those two or three years leading into COVID was in the 75,000-80,000 range, which, you know, I think that that's where we see things kinda being more normalized. I think there's some things in support of that, and 60,000 not being the new normal. You know, the secular trends, I think, are still very much there, despite some of the macro challenges that we're facing, the migration patterns, the work schedules. You know, while people have gone back to the office, I still don't think it's a full-time, so people continue to look around their home and how they wanna build that out. You know, and I mentioned the migration. So, the other important thing is around single-family home starts, is a great correlation for new pool construction, and, you know, we can talk about that more later. But, you know, I think this next administration is really gonna have to tackle the shortage that we have as a country around single-family home starts, and that bodes well for the pool industry, as there's an attached rate of about, for every 11-12 new single-family home starts, one new pool gets constructed. So that bodes well for the industry and for Hayward if we start to solve that as a country. That's a good data point. So you know, connected equipment's been a big area of focus, with a potentially higher price point. What's been the feedback from customers and dealers on these connected products, you know, and are you seeing the take rate that you would expect? The take rate is certainly improving. You know, we think it should be on every pool, so I'm not sure we're seeing the take rate that we would expect or we'd want to get to. Automation and controls has absolutely been a big point of emphasis for us, and we're hearing more and more pool owners have interest in it. You know, if you look at the take rate, again, new construction, automation and controls is put on that pad around 70% of the time. We think that should be 100. Why you'd build a new pool and not have some form of automation or a full-scale remodel is beyond us, anyway, but that's about 70%. When you look at what's in the aftermarket, it's more like 35%-40% just because of the age. You know, we're approaching 24-25 years old is the average pool. So a lot of these pools were built at a point in time where automation didn't exist. So our approach is, rather than waiting for the full-scale remodel, when you're gonna put the big panel on the wall and sync everything up, our approach is to bring automation on a more individual piece-by-piece basis, and there's a good example of that. About a year ago, a year and a half ago, we introduced a new salt cell, our AquaRite S3. It comes in two versions: standalone salt cell and one that has Omni, which is our controls platform, attached to it. So if you bring the S3 Omni in, you can sync up to three variable-speed pumps, LED lights, and a heater along with it, so that's our strategy for getting IoT and automation into the aftermarket because pieces of equipment fail every year, and we feel that can quicken the pace of getting controls into the aftermarket environment. I appreciate that. Just for background, like, how much of your sales are in connected products or automation today? And then, like, what will that be in the future? Yeah, I mean, I'd say today we're about 80% of our product lineup can be dynamically controlled by some smart device. The products that that are exceptions, that would be in the 20%. We sell a lot of white goods, as we call, a lot of skimmers, a lot of valves that go in the construction. Of course, there's nothing smart about those. Cleaners and filters, those would be the three categories. So, you know, I think there might be some opportunity around those last two categories going forward, but that might, that's probably not on the immediate horizon around controlling the cleaners or the filtration. We've heard a little bit, I think, in the last few days, about maybe consumers trending, trading down a little bit. Like, have you seen that, you know, in your end market demand? No. I mean, I guess what we've seen. I mean, some of our dealers say that folks are looking to, you know, what's the most economical way? What I think we've seen evidence of is a little bit more a tendency to repair, to maybe bridge for a year or two, as opposed to trading down. But again, it truly is a bridge. I mean, at some point, the repair will cost you something less, but that piece of equipment is gonna need to be replaced in the one to two-year timeframe. So that's what we've seen more evidence of than maybe trading down. You know, channel partners have been pursuing leaner inventory positions. You know, just, do you think that this is something that stays as maybe you condense lead times, or will there be a point when dealers need to restock? Want to take it? Yeah, sure. Good morning. I would say we've seen a progressive leaning up of inventories over the last eight, nine months. I mean, we got that signal coming into the year. You know, the focus has been on making sure that the channel has the right inventory in the right place at the right time, and we're working diligently with our primary distribution channel partners to accomplish that. I mean, we're pleased with the level of right first-time fulfillment of orders that are coming out of the channel, so their stockouts are being held in check, and so there's been no degradation of stockouts, which is great to see. So they're being very successful in reducing that working capital element. We ourselves, as Hayward, are doing the same on our own balance sheet. I'd say there is a continuum to improving working capital. I mean, customer comes first, so there'll be an endpoint here to make sure that supply is protected, but there certainly has been a cleaning up of channels throughout the year. You know, I asked a little about the trade-down. You know, we had one retail channel partner publicly talk about being more mindful of price increases as it relates to consumer demand. You know, how do you think about the ability of the consumer to take on more price increases in 2025? Yeah, I would say that retail channel partner that you're referring to is not alone. We also are very mindful of the significant price that's been put into the market in recent years to combat the inflationary headwinds that we've all seen, and in fact, we're still facing inflation today. Maybe not to the scale that we were two, three years ago, but inflation still exists. You know, that said, I think we do provide high-value, energy-efficient products that provide quick payback in many instances. You know, in the aftermarket, you know, where products. You know, replacement is more discretionary and price more inelastic. You know, we believe that they're increasingly looking for higher value products and willing to pay for that. On the new construction side, again, that 20% of our business there, which is obviously more discretionary. Equipment, you know, on the most monumental pool built, you know, equipment is maybe low teens percent of the overall construction cost. Most new construction would be high single digit percent of the overall construction cost. So frankly, we don't necessarily see the equipment price to be a huge driver, either for the good or for the detriment of new construction. So, you know, he's building one right now. I built one not that long ago. You don't see a line item necessarily for the equipment, so I don't think that, you know, that becomes the decision point, whether you're gonna build one, you know, in Chicago, or not. It's kind of a full project cost. So we're very mindful of it, but I think that, you know, in most instances, our equipment has great payback characteristics to it, and the market is accepting the pricing that we've put in. My family wishes we would build a pool. So you cited opportunities in value-based pricing and SKU rationalization. Could you help us understand the number of SKUs you have today, and what percentage of them are making the most, the majority of your revenues? You know, what's that opportunity set to cut SKUs or raise prices on some of these low-producing products? Yeah, I don't know if I'm gonna be able to answer the question as specifically as you asked, Sari, and I don't wanna get into exactly what the SKU count is or what's ripe for rationalization, but you know, we're already seeing some benefit from those efforts in our margin profile, and there's a lot more opportunity out there. Our product managers, who really lead this effort with our engineering team, are reviewing their respective businesses on an ongoing basis. This isn't episodic. This is what we do running our business, and they continue to identify products that where the movement is slow, or in some cases, where a near duplicate product exists in the product lineup. That's the low-hanging fruit, and there's still plenty of that for us to harvest in the product lineup. So, you know, it's also good because you have a lot of habitual buying, like with anything. Contractors, like all of us, are creatures of habit, and they continue to lean on old reliable, which may not be the most efficient or the most high-functioning product out there. So we think that through rationalization, we can help push them along a little bit, offering an even better feature set to the homeowners that they either build for or they service and repair for. So this is ongoing. I know it's been more highly featured in our last couple earnings prints, and we're gonna continue to be talking about it because there is opportunity for us to continue on the rationalization and the value pricing side. I remind, if you do have questions, just please feel free to raise your hand. So I mean, one of the most, I don't know, if surprising, parts of the story has just been how great margins are in this business. So, you know, gross margins are closing in on 50% for the full year, which puts it at one of the highest levels in our coverage. So could you just help us understand, you know, what makes pool equipment such an attractive industry, and what are some of the barriers to entry that allow for such margins? We'll let the finance guy talk about margins. Yeah. So we're super proud of what we've been able to do with margins over the last, call it, two years now. Some of it was on the come line, as I would like to call it. The COVID inflation battle masked a lot of the hard work that was done pre-COVID in rationalizing our manufacturing footprint back in 2020. But now that we're coming out of the price cost, the inflation battle, we can now see the benefits of all of the hard work that the operational teams have done. I mean, this industry has an inelastic price attachment, as Kevin mentioned. At new construction, you do not see the line item for equipment. It's part of the overall installed cost of the pool. So there's very little price sensitivity at that particular point, and if you're a pool owner in the room here, you'll understand the criticality of repair and replace when that piece of key equipment goes down, so the homeowner is willing to pay to make sure that that pool gets back into service. We see very little price pushback at the end consumer level. We certainly don't see it within the channel. In terms of margin development, we continue to focus on four key areas. Obviously, continue to battle and maintain price-cost neutrality. So, we've demonstrated that we can pass inflation through. We've done off-cycle price increases where necessary, and we'll do it again, if necessary. I'm hoping not, but if necessary, we'll do it. Two, we'll continue to execute on lean manufacturing processes. We've got six manufacturing sites around the globe. Those manufacturing sites operate to a very high level in terms of focus and attention in Lean Six Sigma-type manufacturing protocols. Leverage, we've talked about this publicly a few times. We have a tremendous amount of surplus capacity within those four walls that we own at the manufacturing level. We continue to grow without adding CapEx, which should be margin accretive. And then I'd say finally, and Kevin's mentioned this a few times, we're in a bit of a renaissance, a bit of a move up here on the tech curve of equipment, and most of those new products are coming with high margin attachment. So we'll continue to see over the course of time, margins develop. It's not easy work, it's hard work, but we certainly believe there's more runway. You know, Hayward gained, I think, about 2.5% market share during the pandemic. You know, we're two years outside of that. You know, have you seen those share gains stick? You know, how do we think about your market share today, and what do you think it could be long term? Yeah. Yeah, we're very pleased with the share gains in recent years. You know, when I think about what caused it or how we achieved that, I really think of three areas that I think the organization's done an exceptional job on. First and foremost, we kinda called it the Big Bang. We had some great product launches in the 2021, 2022 timeframe, that the market has shown great acceptance for. I think secondly, was some enhanced go-to-market strategies from our marketing and sales team, you know, with concentration on some key dealer conversions, bringing some new people into the family, if you will. And then thirdly, and perhaps most impactful during the COVID experience, was our operational capabilities. I think most, if they were in the room, dealers or distributor channel partners would say that Hayward was able to satisfy the surge in demand, as well as, if not better than, other suppliers out there. I think it's a function of some of the things Eifion just touched on, us controlling manufacturing. You know, about 85% of our production is here in the U.S., which is the largest global market, and it's a real competitive advantage for us. So I think all three of those areas led to that 2.5% market share that you mentioned, Sari. Much, but not all, has stuck. Frankly, publicly, I've said it was, excuse me, it was never our expectation to hold all of that. There was some opportunistic share, because they couldn't get it from Brand X, and we were able to assess. But we know that as supply chains normalize, those loyalties would revert back. But I think important is, in that period, in an industry that is known for like for like replacement. We're gonna have that annuity in the future as the equipment that we incrementally picked up, you know, starts to fail in six, eight, 10 years. It's easier to replace like for like. From a share standpoint, that was part of the question, we estimate our share kind of in the high 20%, in North America. As you look at it, it's not spread evenly. East of the Mississippi and Canada would be a higher share areas for us. In Europe, we're the number two full-line player over there with share growth opportunities. You know, as I think about growth, you know, commercial, I think we'll probably talk about that and the recent acquisition that we've made. The commercial market is a great opportunity for us. The Western and Southwestern markets of the U.S., we under-punch our weight in those areas, and we have specific strategies and initiatives in place to improve performance there. And of course, Europe and rest of world has opportunity where we're kind of a distant number two in the full-line players. So, you know, we're... Our expectation is to continue taking share in the future. I think the dust has now settled, you know, to the organization. I, you know, I kinda said as we rolled into 2024, the curtain has dropped on the dislocation that occurred during COVID. From 2024 on, you know, it's best company wins, best product, most reliable, best customer service. We're back to more of a normal environment, despite some of the macro challenges. From an OEM standpoint, it's now about best, best product wins. You know, you talked about some of the investments you're making. I think on your call, you talked about teams in West and South Central U.S. You know, have you finished with those investments, and what do you expect the market share opportunity to be in those particular regions? Yeah, so that's what you're mentioning. There are some of the initiatives that I just referenced about targeting West Coast and Southwest. I'd say from a personnel standpoint, from a human resource standpoint, we're pleased with the added resources that we've added. There might be some incremental, but I'd say that investment is most likely behind us at this point, and now it's benefiting from those additional resources. What will continue to be a key area of focus, though, is from the new product development standpoint. There are some nuanced differences if you want to win in some of those markets, where it's not the exact same product that maybe wins in Florida or in Chicago or in the Northeast. Product in particular, small footprint heater. They have smaller lot lines in a lot of those California, Arizona communities, so, you know, we design something that actually fits on the side of the house better. So that's gonna be an ongoing part of our budgeting process that will carry over into future years. You know, we also in some of those regions, we consolidated under one leader. So all service, all sales, all business development are now, you know, under one leader, you know, with a clear vision around customer service and new dealer attraction, and that's really helping us manage that full life cycle from, you know, dealer identification and engagement to education, training, conversion, and then long-term support. So we're very pleased with the investments that we've made and some of the early paybacks that we're getting for those investments. You know, one of the investments you talked about, you recently did was that Hayward Hub in Texas. You know, how does this facility help support your dealers and ultimately gain more customers? Yeah, I failed to mention that. That's another... Specifically in DFW, we put the first of its kind, kind of dedicated training technology center, not only reinforcing our commitment to that critical market, but it's a location where people can get out of the field, learn about all of our new technology, learn how to install it, learn how to service it. We opened it kinda mid-Q2, so call it three months ago or so. Since then, we've had hundreds of builders and service providers through the facility, representing dozens of companies. It was really a pilot for us. There's other markets, I think, that we could benefit from something similar. We don't break the bank with this by any means, but there are some other markets that our team is looking to replicate that hub concept in. Now, you also introduced the OmniPro app earlier this year. Lots of investments we're talking about today. You know, what's the current take rate on that, and what's been the feedback? Feedback's been really good. I don't. I would need our product management team to give the take rate, but I would say the response that I've personally had from some service providers and builders has been really strong, so this is a platform that is really dedicated to the service trade. When we talk about Omni, if any of you have a pool, and you have the Omni app, that's, as a pool owner, you can take control of it, and that's really what Omni has been historically. This OmniPro app is catered to the service trade, to the builder set, where, you know, it really gives them control over, if you're a builder, you know, the upfront configuration of his pool pad when they're nearing completion of it. Then, as it transitions out of the warranty period, and someone opts for a contract with a service provider, it gives them a control center where they can literally look at their universe of pools, and they can actually see problems before problems occur. They can prioritize their rate, their routes. They can get out before the 4th of July and the kids' swim party to address a flow rate issue that they might see. So there's all kinds of advantages to this. We're gonna continue, you know, upgrading it in time, but this was the first introduction of a service and builder trade platform. That's gonna have great legs to it as we continue expanding on the capabilities going forward. You referenced this earlier, but you recently made the acquisition of ChlorKing d oubles your position in the commercial pool market. Maybe just talk about the long-term growth expected on the commercial side, and then do you have that similar competitive environment and pricing dynamic that you've seen in residential that's been so great? Yeah, it's a fantastic acquisition. Not a big one, but yet it did double our size in the commercial market. ChlorKing is out of Norcross, Georgia, so not too far from our headquarters in Charlotte, and they're the market leader around natural water sanitization for commercial products. We know the team. We've had a private label relationship for what we call Class B commercial pools for several years, so we knew Steve and his team well. That really led itself ultimately to this acquisition. When we look at the commercial market, it's really broken into two categories. We, before ChlorKing, really participated in Class B. These are commercial pools, but they're smaller. This would be a pool at a Marriott Courtyard or maybe at an apartment complex. Where ChlorKing excels is in Olympic-size, competition-size, or even water parks in the Class A category. I think we bring a lot to each other in this. They bring trade relationships and a sales team that Hayward will benefit from. We bring scale, both domestically and internationally, to them. On top of that, there's operational and supply chain synergies, so it's a fantastic acquisition. More to the second part of your question, you know, residential's been doing really well for us. This is not a market segment that the Davis family, who owned Hayward up until 2017, historically focused on. It's been more a point of emphasis since then. Outside of 2020, when a lot of commercial pools just didn't open because of the pandemic, the commercial market has done extremely well. We've participated in that with double-digit growth in 2021, 2022, and 2023, and the dynamics around it are very similar. There's great structure. You don't compete on price. Really, what defines winners and losers in the commercial space is, are you getting spec'd in with the architects and the designers? Those weren't really relationships that we had prior to ChlorKing, and they brought that whole Rolodex. I say that to my kids, they don't know what the hell a Rolodex is, but they bring the whole Rolodex with them of contacts in the commercial market, which is what makes it such a fantastic acquisition for us. You know, maybe staying on acquisitions, can I just talk about where you see the largest opportunities, and, you know, will you stay within that pool space? Are there any adjacent areas you'd be interested in? Yeah, I mean- Go ahead, take it. Yep. I was gonna say, I mean, we have been historically acquisitive. We've done quite a bit of acquisitions over the last 25 years. Not every year. I mean, certainly COVID, we got a bit quiet in that regard, focused on the core business through that growth period. But coming out now, we have turned our attention back to business development areas, and we stay in our lane. Traditionally, you know, we're focused on the pure end market of residential pools. We do have an ambition to grow in commercial, where we see a very large overlap with our residential capabilities, and some adjacencies that we're looking at in and around those particular spaces. But, in the short term, I'd say we're pretty much focused as a pure play on both the commercial and residential pool market. You know, when you think about Hayward's capital allocation policy, it's a mouthful at 8:30 in the morning. Organic investment will always come first, right? CapEx will always come first. We're an OEM. We're gonna maintain our facilities and continuously upgrade them. But we do have this great cash flow profile, converting greater than 100% of net income each year to free cash flow allows us to do some interesting acquisitive actions. We did the ChlorKing acquisition in the prior year. We did the J&J Lighting business acquisition, and we'll continue to do those type of bolt-ons when those opportunities present themselves. And then, as a residual, once we've satisfied the CapEx and our acquisition itch. You know, we will typically have a return-to-shareholder opportunity. And, you know, we were quite active in the 2022 time period. We returned over $340 million, about $343 million, to be exact, to the shareholder. And as we come out of our deleveraging focus period here, we'll yet again have that opportunity as we look forward. And I think we're out of time today. So thank you so much for coming, and we really appreciate it.