Good afternoon, and welcome to the Q4 of Fiscal 2023 Conference Call for Leslie's, Inc. At this time, all participants are in a listen-only mode. Following the prepared remarks, management will conduct a question-and-answer session. If you should require any operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded and will be available for replay later today on the company's website. I will now turn the call over to Caitlin Churchill, Investor Relations. Thank you, and good afternoon. I would like to remind everyone that comments made today may include forward-looking statements, which are subject to significant risks and uncertainties that could cause the company's actual results to differ materially from management's current expectations. These statements speak as of today and will not be updated in the future if circumstances change. Please review the cautionary statements and risk factors contained in the company's earnings press release and recent filings with the SEC. During the call today, management will refer to certain non-GAAP financial measures. A reconciliation between the GAAP and non-GAAP financial measures can be found in the company's earnings press release, which was furnished to the SEC today and posted to the investor relations section of Leslie's website at ir.lesliespool.com. On the call today from Leslie's are Mike Egeck, Chief Executive Officer, and Scott Bowman, Chief Financial Officer. With that, I will turn the call over to Mike. Thanks, Caitlin, and thank you all for joining us this afternoon. I hope that everyone had a good Thanksgiving holiday. To start, I'd like to express my sincere appreciation to all of the Leslie's associates, whose contributions allowed us to serve our residential pool, pro pool, and residential hot tub customers at a consistently high level throughout fiscal 2023. Because of their efforts, the foundation of Leslie's business remains solid. For the year, our brand awareness, in-stock service levels, and corresponding NPS scores were at all-time highs. Our loyalty program grew for the year, and our customer lifetime value also increased. We remain the largest specialty retailer in our industry, with unmatched capabilities and clear long-term growth opportunities, and industry credit card data indicates that we gained market share again in fiscal 2023. While our financial results for fiscal 2023 were not what we expected heading into the year, we are well positioned for future success as the pool industry continues to normalize from the temporary challenges of this year's pool season. We entered the fiscal Q4 facing 3 headwinds, which are the same ones that broadly impacted our full fiscal 2023 results. First, unfavorable weather. Second, a macroeconomic environment that resulted in decreased retail chemical pricing and discretionary spend, especially on high-ticket items. And finally, customer stockpiling of core sanitizers, resulting from 3 years of supply uncertainty and price inflation. While the latter two factors were largely in line with our expectations for the quarter, weather was better than we originally anticipated and helped us to deliver sales at the high end of our implied Q4 revenue guidance. Profitability in the quarter fell short of our expectations, driven entirely by gross margin. Gross margin performance was impacted by larger-than-expected inventory adjustments made after the completion of our annual physical inventory count. Scott will discuss the inventory adjustments in more detail when he goes over our financial results, but they explain the entire delta between our implied Q4 guide and our actual gross margin and are the reason that EPS came at the low end of our guidance range. As we navigated these dynamics, we remained disciplined on costs and reduced Q4 SG&A expenses year-over-year as planned. Drilling down into our Q4 sales performance, total sales were down 9% in the quarter, with residential pool down 9%, pro pool down 5%, and residential hot tub down 17%. We were up against some tough comparisons from the prior year's quarter, when total sales were up 16%, with residential pool up 10%, pro pool up 18%, and residential hot tub up 80%. As weather normalized, traffic improved to down high single digits in the quarter. Total transactions were down 5%, which was also an improvement from down 12% in the Q3. Average order value was down 4% versus plus 3% in Q3. Equipment sales were down 17%. We saw continued weakness in high-ticket discretionary categories, and we had a full quarter's impact of the chemical retail price decreases we implemented in June of this year. Total chemical sales were down 4%. Discretionary product sales were down 23% and contributed roughly half of the quarter's total sales decline. Non-discretionary product sales were down 6%. Across our geographies, sales remained challenged, with the exception of Florida, which saw a 3% increase in sales in the quarter and was up 11% for the year. Our analysis of credit card data shows that our sales underperformed the industry by 250 basis points in the quarter, but outperformed the industry by a total of 130 basis points for the year. Turning to our results for the full year, sales of $1.45 billion were down 7%, with comp sales down 11%. Non-comp sales added 4%. Residential pool sales were down 9%, pro pool sales were flat, and residential hot tub sales were down 6%.... Gross margin decreased 530 basis points, driven by the June chemical retail price actions, year-end inventory adjustments, DC costs associated with higher inventory levels, lower rebates based on decreased equipment purchases, and occupancy deleverage. We believe the majority of these headwinds are specific to this fiscal year, and Scott will discuss how we expect these to significantly abate in fiscal 2024. Adjusted EBITDA for the year was $168.1 million, and adjusted diluted EPS was $0.28. In the face of the transitory headwinds this year, the fundamentals of the industry have not changed. New pools continue to be built, and the growing installed base of pools need to be maintained. In addition, we believe the secular tailwinds that drive industry demand remain intact, including ongoing investment in homes and backyards, migration to the Sun Belt and exurbs, pursuit of outdoor lifestyles, increasing attention to safety and sanitization, and the adoption of new technologies. The pool industry has a long track record of consistent growth, and Leslie's has consistently grown faster than the industry. We remain the leading direct-to-consumer pool and spa retailer, with scale, capabilities, and brand awareness that our competitors do not have. While our team navigates the current headwinds, we remain focused on executing the strategic initiatives that underpin our competitive advantages and that we expect to continue to drive our success as industry conditions normalize. Turning to our strategic growth initiatives. First, our customer file was down 6% in the quarter and for the full year due to the weather and traffic trends we experienced. Second, average revenue per customer was down 3% in the quarter and 1% for the year, driven primarily by decreases in big-ticket items, specifically hot tubs, heaters, and above ground pools. With regard to our Pro initiative, we ended the year with more than 3,900 Pro contracts in place and completed the conversion of 15 residential stores to our Pro format. We currently operate 98 Pro locations. Pro sales were flat for the year, which we consider a solid outcome given the overall environment. Trichlor pricing was a more pronounced headwind to our Pro sales and to overall company gross margin performance, as competition in the distributor channel drove prices down. Trichlor pricing now appears to have stabilized. M&A and new store growth remain important initiatives for Leslie's. For fiscal 2023, M&A and new stores drove $60 million in non-comp sales. During the year, we opened 12 new stores and acquired 12 stores and now operate 1,008 total locations. We remain confident in the long-term store expansion opportunity and have identified over 800 opportunities for store densification. We will continue to address each of these opportunities with a buy or build analysis, though we will be prudent with the pace of expansion as we balance store growth with our other capital allocation priorities. For AccuBlue Home, we were excited to launch the program in May and have been very pleased with the consumer response and demand we have seen to date, even with limited marketing. AccuBlue Home member spend is averaging $1,000 per year, and we believe members see value in the experience, as evidenced by an average review rating of 4.8 out of 5 stars. They comment that the program pays for itself and cite convenience, greater confidence in their water treatment routine, and overall water quality as core benefits of the program. While demand during the pool season was strong, manufacturing capacity at our third-party vendor limited sales, and we deferred launching our consumer marketing campaign due to insufficient supply. We have worked with our vendor to ramp up production during the off-season to meet our expected 2024 pool season consumer demand. We continue to have confidence in the long-term industry outlook and remain focused on prudently executing our strategic initiatives to capture the opportunities in front of us and extend our industry leadership. At the same time, we are taking actions to improve our near-term performance. Number one, we are pricing based on current market conditions, and after our June price actions, we are at our relative historical price position of slightly above mass and at or slightly below specialty. We expect this positioning to hold for 2024. Number two, we are aggressively managing inventory and expect to reduce our 2024 peak and year-end inventory by approximately $100 and $50 million, respectively. Number three, we are managing costs throughout the P&L, including utilizing strict ROI criteria on our marketing investments. Number four, we continue to evaluate, develop, and elevate our processes and people to help improve our efficiency. Number five, we are utilizing consumer insight surveys to further improve our understanding of evolving consumer behavior. I will now hand it over to Scott to discuss our results and outlook in more detail. Scott? Good afternoon, everyone, and thank you, Mike. I'll review our Q4 and fiscal 2023 performance and then provide details about our outlook and assumptions for fiscal 2024. Turning to Q4 results, we reported sales of $432 million, a decrease of 9% compared to the Q4 of fiscal 2022. Comparable sales decreased 11%.... comparable sales decreased 1% on a 2-year stack basis, increased 15% on a 3-year stack basis, and increased 38% on a 4-year stack basis. Non-comparable sales totaled $9 million in the quarter, which was driven by a total of 18 net new stores, including 12 through acquisitions and 6 net new store openings during fiscal 2023. With respect to trends by consumer group, comparable sales for residential pool declined 9%, pro pool declined 13%, and residential hot tub declined 23% compared to the prior year period. On a two-year stack basis, comparable sales were flat for residential pool, increased 4% for pro pool, and declined 10% for residential hot tub. These declines were in line with our expectations and continuation of recent trends in the business. Gross profit was $160 million, compared to $217 million in the Q4 of fiscal 2022, and gross margin rate declined approximately 860 basis points to 37%. Page 11 of our supplemental deck illustrates our Q4 gross margin rate bridge in more detail. During the quarter, gross margin was impacted by the following factors: First, product gross margin declined 385 basis points in the quarter. This was primarily driven by our June 2023 chemical pricing actions, and the negative impact of 70 basis points due to lower rebates. Second, we incurred unexpected incremental inventory adjustment costs that resulted in a 260 basis point headwind in the quarter. This increase was mainly due to excess shrink and scrap due to higher levels of inventory in third-party storage locations, higher movement of goods between facilities, and higher levels of unsellable returns. Additionally, gross margin rate was negatively impacted by 120 basis points due to the expensing of capitalized DC costs associated with the drawdown of inventory. And finally, occupancy costs deleveraged by approximately 95 basis points, mainly due to the decline in comparable sales. SG&A was $122 million, down 9%, or $12.5 million, compared to the Q4 of fiscal 2022. Excluding non-recurring items, including costs incurred from the discontinued use of certain software subscriptions and executive transition costs associated with restructuring, SG&A decreased $18 million, driven by lower sales, lower incentive compensation, and expense management actions. Adjusted EBITDA was $60 million, compared to $100 million in the Q4 of fiscal 2022. Interest expense increased to $17 million from $10 million in the Q4 of fiscal 2022, due primarily to higher interest rates, and our effective tax rate increased to 22.9%, compared to 21.2% in the Q4 of fiscal 2022. Adjusted net income was $26 million, compared to $64 million in the Q4 of fiscal 2022. Adjusted diluted earnings per share was $0.14, compared to $0.35 in the Q4 of fiscal 2022. Diluted weighted average shares outstanding were 185 million in both the Q4 of fiscal 2023 and fiscal 2022. Moving to our full year results. Total sales for fiscal 2023 were $1.45 billion, a decrease of 7% compared to the prior year, with comparable sales down 11%. Comparable sales were flat on a two-year stack basis, increased 21% on a three-year stack basis, and increased 39% on a four-year stack basis. Non-comparable sales totaled $60 million in fiscal 2023. Gross profit was $548 million for fiscal 2023, compared to $674 million in the prior year, and gross margin rate was 37.8%, a decrease of 530 basis points compared to the prior year. As shown on page 11 of the supplemental deck, 205 basis points of the rate decline was due to chemical pricing actions and lower rebates, 215 basis points were due to DC costs and inventory adjustments, and 110 basis points were due to occupancy deleverage. SG&A was $446 million for fiscal 2023, compared to $435 million in the prior year. Excluding non-recurring items and non-comp expense from acquisitions and new stores, SG&A decreased $15 million compared to the prior year. Adjusted EBITDA was $168 million for fiscal 2023, compared to $292 million in the prior year. Interest expense was $65 million for 2023, compared to $30 million in the prior year. Adjusted net income was $51 million for fiscal 2023, compared to $176 million in the prior year. Adjusted diluted earnings per share was $0.28 for fiscal 2023, compared to $0.95 in the prior year. Moving to the balance sheet, we ended fiscal 2023 with cash and cash equivalents of $55 million, compared to $112 million in fiscal 2022. The reduction was primarily due to the decline in net income. At the end of fiscal 2023, we had no balances outstanding on our revolver and availability of $239 million. Year-end inventory was $312 million, a decrease of $50 million, or 14%, compared to fiscal 2022, and a sequential decrease of $125 million, or 29%, compared to the Q3 of fiscal 2023. This reduction was possible due to fewer supply chain disruptions, implementation of our new inventory management system, and strong execution at our DC locations. Importantly, we are maintaining strong in-stock positions at the store level to support a high level of customer service, which is reflected in our higher NPS scores. At the end of fiscal 2023, we had $790 million outstanding on our secured term loan facility, compared to $798 million in fiscal 2022, which translated into a leverage ratio of 4.4 times. The applicable rate on our term loan was SOFR plus 275 basis points in the Q4, and our effective interest rate was 8.1%, compared to 4.3% in the prior year quarter. Now for our fiscal 2024 outlook. In fiscal 2024, we expect an uncertain macro environment and a more cost-conscious consumer, especially in discretionary categories, to continue affecting sales. We anticipate this to be more acute in the first half of the year, though we expect positive comps in the back half of the year due to the lapping of the June 2023 chemical pricing actions and easier compares. With fiscal 2023 being an anomaly from a seasonality standpoint, we are planning for seasonality to be more comparable to fiscal 2022 and expect to deliver more than all of our profitability in the second half of the year during our peak pool season. We expect sales of $1.41 billion-$1.47 billion, which assumes normal weather over the course of the year, and a non-comp sales contribution of approximately $7 million. The low end of our outlook assumes comparable sales growth of approximately -3%, while the high end of our outlook assumes comparable sales growth of approximately 1%. For the full year, we expect to see gross margin rate improvement of approximately 100 basis points compared to the prior year, driven by lower DC costs and fewer inventory adjustments due to reduced inventory levels and improved supply chain efficiency. That said, we don't expect to see the majority of these benefits until Q4, when we start to lap the unusual items that impacted Q4 fiscal 2023. Additionally, we expect higher impacts of deleverage in the first half of the year due to lower sales compared to the prior year. We expect adjusted EBITDA of $170 -$190 million and expect a slight decline in SG&A expense as we drive efficiency in our cost structure while making prudent investments in the business. We expect net income of $32 -$46 million, adjusted net income of $46 -$60 million, and diluted adjusted earnings per share of $0.25-$0.33. Our outlook assumes an average interest rate on a floating rate debt of 8.2% and assumes interest expense will be approximately $7 million higher than fiscal 2023. Our outlook also includes an effective tax rate of 26%. We estimate a diluted share count of approximately 185 million shares, which assumes no share repurchases during fiscal 2024. Now, as you will see on page 14 on our supplemental deck, along with the full year guidance, we have provided an outlook for Q1. While it has not been our historical practice to provide quarterly guidance, nor do we intend it to be our practice going forward, given the unique dynamics related to Q1 and the comparison to the same period in fiscal 2023, we believe it is appropriate to provide a view of Q1. For the Q1, we expect total sales of $166 -$172 million, Adjusted EBITDA of -$27 to -$24 million, net income of -$43 to -$41 million, adjusted net income of -$39 to -$37 million, and adjusted EPS of -$0.21 to -$0.20. Underlying this outlook is our expectation that comp trends will be similar to Q4 fiscal 2023, and non-comp sales will contribute approximately $3 million. In addition, we expect a significant gross margin decline compared to the prior year quarter, driven by the expensing of capitalized DC costs and occupancy deleverage. Turning to CapEx, we expect to invest $50 -$55 million in fiscal 2024, of which approximately $20 million is expected to be invested in our existing assets, and the remainder is expected to be invested in growth. These investments include new store openings, improving the capacity of our distribution and manufacturing facilities, and investing in IT and other projects to improve the business. We also expect a meaningful improvement in working capital and plan to reduce inventories by approximately $50 million. Regarding capital allocation, we expect significant improvement in free cash flow due to higher net income and lower inventory, and our first priority will be to pay down debt with the goal of achieving a leverage ratio of 3.5-3.7 times in fiscal 2024. Longer term, our goal is to achieve a leverage ratio of 3.0 times. Our second priority is to invest in growth. This will include organic growth through the opening of 15 new stores and the conversion of 6 residential stores to the Pro format. We have not included any M&A activity in our fiscal year guidance at this time. Our final priority is to return excess cash to shareholders. While we do not expect to repurchase shares in the near term, we will continue to evaluate this based on our financial position and market conditions. Before I turn it back to Mike, I want to address two items that will be covered in greater detail in our Form 10-K. In short, we have identified two material weaknesses in internal controls over financial reporting. One weakness relates to insufficient controls over an internal database that is used to calculate vendor rebates, and the other weakness relates to controls over the performance of physical inventories. As a result, we are designing and implementing new processes and enhanced controls to address the underlying causes of the material weaknesses and expect remediation to be completed during fiscal 2024. With that, I will hand it back over to Mike. Thank you. Thank you, Scott. After three years of unprecedented growth, the pool industry and Leslie's faced multiple transitory headwinds in fiscal 2023. Despite these headwinds and their impact on our results, we continued to deliver exceptional service to our customers, as evidenced by brand awareness, in-stock levels, and corresponding NPS scores that are all at all-time highs. Taken together, these serve as a testament to the focus and execution of our team members. As the industry continues to normalize, we remain focused on leveraging the competitive advantages from our scale and capabilities and executing our strategic initiatives to continue to drive growth and market share gains. With that, I'll hand it back to the operator for Q&A. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we pull for questions. Thank you. Our first question comes from the line of Ryan Merkel with William Blair. Please proceed with your question. Hey, everyone. Thanks for taking the questions today. First off, I just wanted to ask about sales guidance for 2024. I'm a little surprised with the guidance at flat to down. Mike, can you just walk through, you know, some of the pieces there? Because it was a pretty rough year in 2023. We had horrible weather, and, you know, your business is largely, you know, to nondiscretionary aftermarket. So kind of explain why we're not seeing a bit more growth in 2024. Yeah, thanks for the question, Ryan. The first assumption is we don't see any recovery in discretionary sales, and at the midpoint of our guidance, we have discretionary sales, which, as you know, is about 20% of our business, planned down an additional 10%. Nondiscretionary sales, we do have growing plus 1.5%, but we also have the headwind of the chemical price actions we took in June, which, through the first seven periods of the year, are our definitive headwind. So with the discretionary sales being down, which are predominantly high-ticket items, and with the headwind from the chemical, you know, there's about 400 basis points of headwind in those two items prior to any growth. That's why we're, that's why we've got the midpoint of the guidance basically flat for the year. Okay, that's helpful. Just a question on trends. It looks like Q1 sales are also coming in a little bit below where The Street was modeling. What, what are you sort of seeing out there? You've seen the consumer slow down. What, what's happened with traffic the last, last couple of months? Yeah, the way the, the quarter played out, September... First, let me back up. In, in Q4, July was the best month, August was a little weaker, and September was tough, tough. October, we saw a continuation of that trend. In November, we are seeing some turnaround on some of the categories and some increases in traffic. So it's a slow turn, and it's not definitive yet, but the, the real change in the business has been as traffic has, has normalized, or excuse me, as traffic has improved with improved weather, we are seeing transactions start to recover. But at the same time, we're seeing the average order value down, and that's really being driven by the equipment business and the discretionary business, the high-ticket items. And equipment is, you know, it's been a, been a tough trend for equipment. It was down 17% in the quarter, 12% for the year. Starting to see it turn now, but, the more discretionary parts of the equipment business, particularly heaters and robotic APCs, has been a little challenging. Got it. Very helpful. Pass it on. Thanks. Thank you. Our next question comes from the line of Simeon Gutman with Morgan Stanley. Please proceed with your question. Hey, good evening, everyone. Hey, the first question, I guess it could go to either way. I think, Mike, you said that the biggest gap in the guidance you gave was the inventory adjustments. Can you talk about why those were not observable in July? I can, I can start with that, Simeon, and Mike can tag on if needed. You know, the main reason is we kind of stepped back and looked at, you know, the issue on inventory adjustment. The main issue was just having too much inventory. You know, we, we peaked close to $500 million, and it started to come down, but it's, it's more inventory than we've had in the past, and that, you know, required us to use several third-party off-site storage facilities, with a lot of movement of product between those facilities. We had some higher unsellable returns, and so it just created a lot of movement of goods, and goods not inside our four walls. So that is, you know, the root of, you know, the problem. As we've kind of thought about it and talked about it, you know, the problems that we had with inventory adjustments are really not systemic. They're fixable, and, you know, we're kind of on that path to improvement. You know, the first step in that direction was just to get out of all those outside warehouses and kind of get it inside our four walls. So we've worked really hard over the last several weeks to do that, and, you know, as we stand here today, we're out of those additional off-site storage facilities. So that's a great first step for us. We can put eyes on the inventory; it's inside our four walls. We don't have the movement of goods that, you know, we had before. And so just the extra visibility and having it there is the first step for us, you know, to improve, you know, that whole process. Along with that, you know, there's some improvement we can do just to improve controls on our scrap. You know, it was just outsized with just the sheer volume of inventory. We had to add to our excess and obsolete reserves on inventory because we had so much. You know, as we have now brought that inventory down, you know, we should be able to release some of that. And we'll also just put more focus on kind of monthly processes just to identify any major variances that come along in early warning signs. But, you know, before we, we built up that inventory, you know, we, we actually controlled it pretty well. And so now that we're back down, we have a really good DC team, you know, some new talent. We feel like we're in a much better position to manage it going forward. Okay, a follow-up. It's maybe a bit broader. It's your approach to your guidance, and I heard some of the components and then the answer to the last question. In thinking about the industry, you know, e.g., your assumption, does it grow or contract? Do units get better? I heard what Mike said around discretionary stays weak. Are you doing that assumption out of prudence, or you know, it could happen that way? And then even in your gross margin, you're not even recouping what you gave back this year in inventory adjustment, right? It's a very mild level of gain. So your approach seems conservative, but I, you know, it's a tough, you know, argument to make given this miss, but curious how you thought about it. Yeah. Yeah. Go, go ahead, Scott. Yeah, I can start off, you know, on the gross margin side, and, you know, Mike can chime in on, on the sales side. You know, a lot of that is driven by, you know, just our commentary around, you know, discretionary, you know, purchases, you know, still constrained, interest rates still high, you know, especially in the hot tub business, very high-ticket items. And so we just haven't really seen a, a ton of relief yet from the consumer side, and, you know, their ability, you know, to ratchet up discretionary purchases. That may happen. We, we haven't seen, you know, meaningful signs of that yet. And so, you know, we're kind of taking it with, you know, kind of the knowledge that we have today. You know, as we look at gross margin, you know, we feel like we'll recover the lion's share of the inventory adjustments that, you know, we saw come through in Q4. And so that is kind of a Q4 benefit. If we kind of fix the problem, you know, we should see a big improvement in Q4, and we fully expect to see that. We do have, you know, a couple other headwinds as well. You know, we've talked about the chemical price reductions that we took back in June, which was needed, you know, just to get our pricing kind of aligned where it needed to be. And so as we kind of roll into, you know, the new year, you know, we'll see some impacts of that. We did take some prices up in January of last year, and so, you know, kind of coming into Q2, you know, that'll be a little bit, you know, even more of an impact. Q1 will be an impact as well, but we'll also have, you know, with lower sales, you know, we'll have some pretty significant deleverage, you know, on occupancy, you know, as well. So, we, we feel like the gross margin will get better as the year goes on, but, you know, in the first half of the year, it'll be, it'll be constrained. Thank you. Simeon, oh, yeah, Simeon, a little more color on. Yeah, a little more color on the sales guidance. The, we are planning transactions positive, +3 at the midpoint. We have seen a recovery in traffic, we feel good about our conversion rates, and we feel good about the chemical business, which, you know, as you know, is 45%-50% of our business, and those trends have turned positive. We are, however, planning AOV down 4% at the midpoint, and that really is driven by the mix and a trend we haven't seen turn yet in discretionary purchases, hot tubs, above-ground pools, and more recently, heaters and robotic APCs. So that's how we're thinking about the business, a recovery in traffic, recovery in transactions, but pressure on the AOV, and that's how we get to the midpoint of the guide. Yeah, that's helpful. Thank you. Thank you. Our next question comes from the line of Steven Forbes with Guggenheim Securities. Please proceed with your question. Good afternoon, Mike, Scott. I wanted to maybe start with the performance of the assets acquired during the past few years. Just trying to get a better understanding of how much of a headwind those newly acquired assets are on both sales and profitability as we look out to 2024, or if you've seen some stability to the point where those assets are sort of neutral, right, to sales and profitability. Any context on just how you think through the more recently acquired assets? ... Yeah, thanks, Steven. Well, if we think specifically about the hot tub businesses, and I'll talk to those first, because, you know, as we've talked about, big ticket, discretionary items, often financed, you know, that business has been challenging. We were down on a comp basis with the hot tub businesses, 22% for the year. That being said, there's still very good levels of profitability. We feel good about the businesses long term, and in terms of a mix on our total Adjusted EBITDA, ratios, they are not a drag on the business. Helpful. And then maybe just a follow-up for Mike or for Scott. I think it was Mike who mentioned the inventory reduction of $100 million from the peak, right, and $50 million at year-end. As we think through the guidance here, any help with sort of working capital needs for the first half of 2024? You know, just as we sort of think through the interest expense implications and free cash flow, sort of on a quarterly basis. Yeah, sure. I can take that one. So just given the seasonality of our business, we typically start to use our revolver usually in the late, you know, late Q1, you know, as we start to execute our inventory build. And so, you know, we kind of see this year playing out in a similar way. And, you know, so as we start to get into, you know, the end of this calendar year, we'll probably be on the revolver. You know, as we ramp up, you know, usually we ramp up our inventory late March, early April, is kind of when we hit our peak. Then, you know, when May hits, that's kind of the start of the pool season, and our peak selling periods, and that's when we draw the revolver down. Then the last, you know, few months of the year is when, you know, do we build cash, on the balance sheet. So we see it, you know, happening, in a similar kind of way, you know, this year. I think it will play into our benefit that, you know, our peak inventory, at least what we're planning on, as Mike kind of mentioned, you know, will be close to $100 million less, than what we saw this past year. So that's, that's really a testament to kind of the merchandise planning team and some new tools we have in place. But we really have a good plan of how we are going to get into the season and come out of it. And I think we have, you know, some other things kind of on our side. You know, the supply chain is operating more normalized. Lead times are shorter, so that's certainly helping us. Our DC team, you know, is getting more and more efficient. And so, we feel like, you know, that's how it's going to play out. And so, you know, from kind of a working capital standpoint, I think one thing to keep in mind is that when we started 2023, we had almost $160 million of payables. We paid down close to $100 million of payables during the course of 2023. This year, we're starting at less than $60 million in payables, and so we will not have, you know, that huge cash drain that we saw last year on just paying that, that payables balance down. Reason for that is we reduced inventory towards the end of the year, and in the prior year, at the end of 2022, we were building inventory. And so that is the cause of that, but it puts us in a much better position to generate free cash flow this year. That, along with higher net income, and tight management on, on working capital, will give us much better free cash flow number than what we saw last year. Scott, that, that's super helpful. And maybe just given that you guys provided Q1 guidance, can you sort of marry that together and give us a thought on sort of what the guidance implies for liquidity as of quarter end 1Q? The quarter-end 1Q. Yeah, and so, yeah, our total liquidity will be, you know, close to $200 million at the end of the quarter. Thank you both. Thank you. Our next question comes from the line of Peter Benedict with Baird. Please proceed with your question. All right, guys. Good evening. Thanks for taking the question. Well, first, just talk a little bit about inflation. I think I heard Trichlor stabilize. I don't know, but just what's the inflation view that's embedded, I guess, in the outlook for 2024? That's my first question. Yeah, Peter, thanks for the question. It varies by product category this year, but like it does most years, but a little more pronounced, we think, going into 2024. The pricing, you know, we have the pricing on 2024 from the equipment companies. As is typical, their practice, there are, you know, 3%-5% increases in price with corresponding increases in MAP prices. So it's not, it's not margin dilutive for us. And, that's, you know, well planned, and our purchases have been made, so very, very easy to follow. On terms of the chemicals, at each of the levels of guidance, low, mid, and high, we have planned a low single-digit ASP decline. We're not seeing that at the moment in chemicals. Chemical prices are holding from where they were during the pool season in Q4, but we think it's prudent that we plan some slight decrease in prices. And if we don't get that, then we should see a little bit more of a tailwind. So inflation in the equipment business and slight deflation in the chemical business, take it all together with the other categories, we think it's a pretty flat year inflation overall. Well, that's helpful. That's helpful, Mike. And just related to that, just the promotional tone, I guess, your promotional tone, but also what's happening in the industry, how that's evolved here since over the last several months, and what you're kind of thinking as you look out to 2024 in terms of promotions? Yeah, again, it differs by section of the business. In the residential business, you know, this last pool season, we think was very normalized in terms of promotions. We were pleased to see that. Our promotions were as we planned them. Going into the residential business for fiscal year 2024, we again expect a normal promotional environment. Normal weather, which we've also assumed should make sure that stays intact. We believe we can plan our promos slightly down, but sufficient to move the inventory that we need to move, including any rec items or other items that are a little more price sensitive. In terms of the pro side, you know, there was more competition on price, as I mentioned in my script, on the pro side in fiscal year 2023. You know, fiscal year 2023 saw kind of the convergence of domestic production of chemicals, specifically Trichlor, coming back online. At the same time, there was a fair amount of imports in the market. That looks to have stabilized. I think supply and demand on the pro side now looks to be in pretty good place. Prices have been stable for the last quarter, and we expect that, we expect that, kind of normalization, if you would, of pricing in pro now to be set for the next year. That's great. And then maybe one for Scott, just on the margin profile of business, and obviously, you're just coming on board here, so maybe premature. But, you know, pre-COVID, this business was kind of, call it 17% on EBITDA line. I think your outlook this year is somewhere, you know, mid-12%. So I think at the midpoint, how are we thinking about maybe the profitability of the business, kind of in a stabilized environment? I mean, you talked about SG&A dollars being down a little bit, I think, for this year. Any more color on kind of your view on maybe opportunities to build back the margin kind of longer term? Thank you. Yeah, yeah, sure. You know, start with just the product gross margin. So, you know, has been impacted, you know, here lately, you know, with some of the price changes that we've made. I think it was the right thing to do, you know, to make sure we have that balance, you know, price and volume and, you know, positioning. So, you know, I think that was definitely the right thing to do. I think our opportunity is in a couple areas. You know, when you look at DC costs, so the inventory adjustments that we talked about, and the burden of the excess inventory, you know, will improve. And so, you know, we were impacted by about over 200 basis points of DC costs for 2023, and that does also include the expensing of capitalized DC costs. And so the way that that works is as we draw down our inventory, we have to bring those capitalized DC costs to the income statement, to kind of match, you know, with the flow of those goods, okay? And so, as you can imagine, when you're building inventory, you put those costs on the balance sheet, until you draw it down. And so what we're seeing is a big headwind now as we draw down inventory, and as we expense those capitalized costs, okay? And so once we get that inventory down, we're still going to draw it down a little further, that headwind will tail off. I think that is a key issue, because without that, the DC costs are going to be way down in 2024. And that is just, you know, just better talent and management of those facilities, using, you know, more metrics and dialing in the expenses, you know, to run those facilities. And so the team has done a great job of really getting the efficiency out of those DCs. Unfortunately, we haven't seen the full effect of that yet because, you know, we have had the burden of expensing these capitalized costs. As sales improve, you know, occupancy has been, you know, deleveraged. You know, it was deleveraged over 100 basis points in last year. And so as sales improve, you know, we'll get some natural leverage on occupancy. And then from an SG&A standpoint, you know, we see a pretty good path, you know, on improving, you know, G&A. So we had some non-recurring costs that came in this past year. Those go away. And so the path to improve SG&A, you know, for this next year, will be really good, because we've kind of delayered the organization, we've streamlined, we've gotten some of these non-recurring items out of the way, and so, you know, we expect that we'll get some decent leverage out of SG&A as well. All right, great. That's helpful. Thanks so much, guys. Good luck. Thank you. Our next question comes from the line of Kate McShane with Goldman Sachs. Please proceed with your question. Hi, good afternoon. Thanks for taking our question. We wondered if you could talk a little bit more about any differences you were seeing between demand in the pro versus residential market, and what your survey work is telling you today about the level of stockpiling chemicals? And as a second question, could you maybe comment on your share commentary in the quarter? Yeah, thanks for the question, Kate. The, in terms of demand, residential versus pro, you know, as we said, there was heightened price competition in chemicals, and our pro business is really dominated by chemical sales for the most part. So that pressure on the chemical side of the pro business, impaired, as a headwind, more predominantly on the pro business than it did on our residential business. That's the reason for the differential in performance, for both the quarter and the year. You know, for the year, the comp was down 11 in pro pool, and it was down 9% in residential pool. And it was really the chemical headwind in pro that drove that difference. We haven't seen any switch from DIY to DIFM. You know, really, over the course of the last decade, that, that number hasn't moved a lot, and we don't see it moving a lot. In terms of stockpiling, it's, it's a good question. We put out surveys, additional surveys in September and also in November. And our most recent results from that show definitively that fewer consumers have excess carryover chemicals than they did the prior year. I'm going to say, unfortunately, between the two surveys, we're not confident that we can size that. And so for our guidance, we haven't assumed any tailwind or headwind from customer stockpiling. We're going to continue to test every 60-90 days, try to get smarter about how the consumers are acting. But for right now, we can say it doesn't look to be any more of a headwind, could possibly be a tailwind, but we're not able to size it with the current data we have. And in terms of, share, you know, we mentioned that we did not grow as fast as the industry in Q4, 250 basis points. That's a big miss for us. We bridge all of that with the full quarter of the chemical price reductions that we put in place. You know, look, a good question is, should we have reduced the chemical prices? So you understand our thinking on that, you know, there were two things that were very strong signals. One was directly from our consumers, you know, through post-purchase surveys, that we were too expensive and we were not a good value, and we can't have that long term. That's not the brand positioning. That was one. The second was, we were seeing our volume in those chemicals drop. So we made the decision to take the prices down. We did see an increase in volume, not enough volume to make up the entirety of the headwind, but believe it was the right thing to do long term for the brand and the business. However, it did cost us some sales growth versus the industry in Q4. Thank you. Thank you. Our next question comes from the line of Garik Shmois with Loop Capital Markets. Please proceed with your question. Oh, hi, thanks. I was wondering if you could provide maybe a little bit more handholding on how to think about gross margins and in the Q1, just, you know, given that you're providing a little bit more, you know, near-term visibility and, you know, and just given all the moving parts, just around the business here in the near term. Yes. So let me kind of break it down, this kind of first half of the year versus the back half. So you know what I would see in the first and Q2 of the year is, you know, some pressure on product gross margin. You know, as we kind of lap those chemical price changes that we did back in June, it'll be more impactful actually in Q2, because back in January, we raised prices on several items, and so it'll be a little more acute in Q2 on those chemical price changes, but still in effect in Q1. DC costs will be likely unfavorable, mainly because of the expensing of those capitalized expenses that I talked about as we reduce inventory. And then, with a little bit lower sales, we should see some occupancy deleverage, mostly in Q1. Q2, not as much deleverage. And then as we get into the back half of the year, you know, Q3, probably more, you know, flattish. Q4, we should see, you know, the biggest improvement, you know, as we start to lap, you know, those extremely high inventory adjustments that we saw, and as, you know, DC costs are more moderate, you know, without all the outside, you know, storage facilities and movement of goods, and the DC capitalization expensing should be much lower in Q4 as well. Got it. Thanks for that. And then just on the discretionary piece, you know, it sounds like you're expecting sales to be down 10% through the year. I think you talked a little bit about the buckets there, but you know, any additional color as to how you expect discretionary sales to track, and maybe kind of where you're seeing the largest, maybe you know, incremental change in fiscal 2024? Yeah, Garik, the, you know, hot tubs have been soft and the higher-priced hot tubs have been softer. We haven't seen that have any material change either in Q4 or so far through Q1. So that's been relatively consistent. The one change we have seen is in some of the more discretionary equipment businesses, specifically heaters and some of the robotic APCs. That was more challenging in Q4. Equipment sales were down 17% versus 12% for the year, and started out Q1 also relatively soft. We're starting to see some improvement there, which is encouraging, but not enough for us to plan discretionary sales other than we have planned them, which is down 10% at the midpoint. Understood. Thanks for that, and I'll pass it on. Thank you. Our next question comes from the line of Jonathan Matuszewski with Jefferies. Please proceed with your question. Great. Thanks for squeezing me in. First question was on the 2024 sales guidance. So this past year, Pro was an outperforming customer segment, flat relative to kind of residential down in the mid- to high-single digits. So what does your top-line guidance assume in terms of relative performance between, you know, Pro and Residential? Yeah, Jonathan, thanks for the question. We've got Pro and Residential planned fairly similarly for 2024. Really based on the forecast of increased transactions, as I talked about, with some continued pressure on AOV. Gotcha. That's helpful. And then, just to follow up in terms of SG&A for next year, Scott, I think you mentioned, the, the opportunity for slight decline, year-over-year. Can you just expand on, on kind of the, the areas you see to kind of further, you know, rationalize that, that line item in a, in a potentially soft demand environment? What, what are the, you know, buckets that you, you haven't, you know, used yet, the levers you haven't pulled? Thanks. Yeah. So as I kind of look at SG&A for this next year, you know, we've done a really good job of, you know, kind of tightening up, you know, labor and, you know, so we'll see some benefits, you know, from that come through. You know, our marketing will be a little bit lower, you know, this year as we continue to kind of test and learn on marketing and understand, you know, kind of best uses of the dollars and continue to optimize that. There's some room to bring that down a little bit. Really, the biggest pressure for SG&A that I hope that comes true is incentive compensation. You know, that was extremely low in 2023, and so if it would come back to more of a normalized incentive comp, you know, payout, then, you know, that's actually the biggest pressure point that we have. You know, outside of that, you know, our expenses are down, you know, just kind of on the core SG&A. And then we'll have the added benefit of about $14 million of what I would call non-recurring, you know, with some severance costs and some other write-offs. So as we lap that, you know, in kind of unadjusted, the SG&A, you know, will actually be lower than prior year. Very helpful. Best of luck. Thank you. Thanks, John. Thank you. Our next question comes from the line of Peter Keith with Piper Sandler. Please proceed with your question. Hey, good afternoon, everyone. So it sounds like on the M&A front, you're not anticipating any acquisitions, but could you just comment on what you're seeing with the M&A backdrop? It seems like it's been pretty good the last couple of years. Has anything changed on that front? Thanks for the question, Peter. Yeah. Yeah. Yeah, thanks, Scott. I'll, I'll start, and you can, you can follow on. Look, we think M&A is still very attractive, and, we're pleased with the prices, we're pleased with the returns we're getting. In our current situation, and with our debt and with the interest rates, as Scott had mentioned, our, our first priority is gonna be debt paydown in terms of capital allocation. In terms of M&A, our focus this year is really going to be on, building the pipeline and finishing the integration of last year's, last year's acquisitions. So still think it's a big opportunity. Gonna work on building the pipeline. You know, a lot of these deals with entrepreneurial-minded founders and owners, you know, they take some time to, time to work through. So that'll be the focus, and then get ourselves in a position from debt levels and leverage where we can get back on an M&A cycle. Okay. Helpful. And then, I guess I'm intrigued with this, this 200 basis points of inventory adjustment that you were referencing with regard to Peter Benedict's question for FY 2023. Seems like a big recovery opportunity, but I'm trying to size it up if it's a multi-year. I guess with Q4, looking at Q4 is when we hit the inflection, do you start to see full recovery by Q4? Or is this something that it might take, you know, through FY 2025 or even longer to fully recoup? Good, good question. I would say that we can recoup most of that this year. And the reason I say that is mainly because, you know, just like I was saying about having our inventory inside our four walls is the biggest step that we can take in that process. So we're not moving, you know, product around. We're not in outside, you know, storage, third-party storage. And just having better control of that inventory goes a long way in avoiding a lot of that cost. You know, there's continued improvements we'll do on scrap, you know, and so. But it was in control, you know, before we started this big inventory build. So not a ton of work to do, but, you know, just for the refinement of that. The one piece that I didn't really go into a lot, we did have some additional unsellable returns, you know, just returns coming back. And so that, you know, those returns were a little bit elevated by a little bit. And so as we, you know, continue to refine our process of going through, you know, the, those returns and making sure that we're taking all advantage of all opportunity to sell, you know, those products, either as new or or other outlets, that's a bit of an opportunity for us. And so, the returns, you know, did tick up a little bit. Don't know if that's a long-term thing or just an anomaly, but, you know, that wasn't, you know, the major portion of, you know, of the spend there. And so, you know, what I would say is, you know, basically 80% of, you know, what we saw over this last quarter are fixable in 2024. Okay. And just to verify that, Scott, so you recoup this year, but you don't start to recoup it until Q4? Yeah. And then I guess in the following quarters, you'll recoup the rest on an annualized basis. That's, yeah, that's the way to think about it. Yeah. I mean, predominantly, it was a Q4 impact for us, and so, you know, as we lap Q4, you know, this year, we should see that benefit. Thank you very much, guys. Good luck. Thank you. Thanks. Thank you. Our next question comes from the line of Dana Telsey with Telsey Advisory Group. Please proceed with your question. Hi, good afternoon, everyone. On a big picture basis, when you think about the pool season in 2024, are you expecting a positive pool season in the second half of the year? Is that what the guidance infers and how you're thinking about it? And then breaking down the components of the sales, even compared to last quarter, you talked about equipment sales and what made it more impactful this quarter than last quarter. How are you thinking about AOV, and how are you planning AOV going forward? Thank you. Yeah, thanks, Dana. Look, we expect the 2024 pool season, based on what we know right now, to be fairly flat. Like I'd mentioned earlier, we will see some inflation in equipment, but we think the units might be challenged. Likely to see a little bit of deflation in chemicals, but we think the volumes will be higher. And mixing those together, we think, it's a fairly flat season. You know, we're showing a big recovery as Scott walked through from first half to second half. That has more to do with our internal decision on the price adjustments and when we made them last year. But overall, for the industry and for ourselves, from a demand standpoint, we expect the pool season to be relatively, relatively flat. Again, discretionary items in there being down, nondiscretionary being positive. In terms of AOV, at the midpoint, we're planning AOV down about 4% for the year and transactions up about 3%. With normal weather, which we've seen now, you know, in the Q4 and also into the Q1, we're seeing traffic recover. Conversions are holding steady. That's giving us a transaction boost. But the mix out of high-ticket discretionary items in some of the more discretionary equipment categories is challenging AOV. Got it. Thank you. Just following up on the competitor front, what are you seeing from your, from your competitors? How, any change there in terms of whether it's pricing or store openings, store closings? What, what are you seeing there? Yeah, you know, there hasn't been, you know, any new scale competitors that have come on the scene, either in the pro side or on the residential side. You know, on the pro side, we've got two big distributors that continue to, you know, go about their business, running very nice businesses and a little bit challenged this year by their own reporting, but still very, very healthy businesses. And then on the residential side, you know, the one scale competitor, Pinch A Penny in Florida, seems to be having a fairly flattish year. We would expect, you know, them to continue to be good competitors for next year, and can't say how they're thinking about it, but I'm not sure the situation in Florida is much different than the rest of the country in terms of how we're thinking about it. Thank you. Thank you. This concludes our question and answer session. With that, this will conclude today's teleconference. You may now disconnect your lines at this time. Thank you for your participation.