Good morning, and welcome to the POOLCORP fourth quarter 2021 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Melanie Hart, Vice President and Chief Financial Officer. Please go ahead. Welcome, everyone, to our year-end 2021 earnings conference call. Our discussion, comments, and responses to questions today may include forward-looking statements, including management's outlook for 2022 and future periods. Actual results may differ materially from those discussed today. Information regarding the factors and variables that could cause actual results to differ from projected results are discussed in our 10-K. In addition, we may make references to non-GAAP financial measures in our comments. A description and reconciliation of our non-GAAP financial measures is included in our press release and posted to our corporate website in our investor relations section. I'll now turn the call over to our President and CEO, Peter Arvan. Pete. Thanks, Melanie, and good morning to everyone on the call, and thank you for joining us. As you all saw in this morning's release, our fourth quarter results capped off an extraordinary year. Favorable weather, combined with strong demand and tremendous execution by our team, helped us post yet another record quarter. This amazing performance helped propel our full year 2021 net sales to $5.3 billion, which represents an increase of $1.4 billion over an impressive 2020. Certainly, acquisitions helped drive growth throughout the year, adding $257 million in revenue to our net sales. The real star of the show, and a testament to our people and strong operating model, is that our base business grew 29% or $1.1 billion in a very difficult operating environment. By focusing on execution, we were able to leverage this growth to achieve incredible earnings. For the full year, our diluted earnings per share soared to $15.97, a 78% improvement over 2020. Yet another masterpiece. Our unmatched operating model and capabilities, coupled with the best, most dedicated team in the industry, allowed us to help more people enjoy a backyard oasis than ever before. We could not be prouder or more thankful for our team's efforts, our customers' resilience, and the support from our manufacturing partners who work diligently in a challenging business environment. In this busy year, we also completed four acquisitions. We added Pool Source in the Nashville market, Vak Pak Builders Supply in the Jacksonville market to our pool distribution network. Additionally, we added Wingate or Wingate Supply to Horizon in the Tampa market. We also completed the very strategic acquisition of Porpoise Pool & Patio in December. This business, based out of Clearwater, Florida, is a distributor of swimming pool products, a chemical packaging operation, and a franchisor of best-in-class swimming pool retail stores throughout the state of Florida, with additional franchise locations in Alabama, Georgia, Louisiana, and Texas. I'll cover this in more detail in a minute. In addition to the four acquisitions, we opened 10 new locations this past year, four locations as part of our Horizon business and six locations on the pool side. Before getting into our view of the upcoming season, let me add some color around our amazing fourth quarter. In the last quarter, we posted net sales of $1.04 billion, which is a 23% increase over the previous year's very strong fourth quarter and helped us achieve another milestone, marking four consecutive quarters with net sales above the $1 billion mark. Base business revenues in the fourth quarter rose 22%, with acquisitions contributing 1% to the growth during the quarter. From a geographic perspective, our four largest markets ended the year strong. California grew by 16% in the quarter and 24% for the year. Arizona was up 24% in the quarter and 23% for the year. Texas posted 22% growth in the quarter and 34% for the year. Florida continues to be a strong area for us, with 26% growth in the quarter and 30% for the year. Combined, our year-round markets grew 22% for the fourth quarter and 28% for the year. Seasonal markets had similarly strong results, with 23% growth for the quarter and 30% for the year. Although it is still a preliminary number, we believe that new pool construction numbers in 2021 will come in around 120,000 units, which implies a growth rate of approximately 25% over the 96,000 pools that were built in 2020. Moving on to end markets. Commercial had a very strong fourth quarter, with sales up 26% and 24% for the year. After a tough 2020, this market has rebounded nicely and continues to drive growth with a strong maintenance and repair market and new construction picking up once again. Retail sales climbed 18% for the quarter and 20% for the year. Let me provide a couple comments on inflation in the quarter. Most manufacturers announced increases in the fourth quarter, as we discussed on our last call, but many came back again and announced additional increases subsequent to those previously declared. We expect these increases to pass through the channel, as is normal for this business, with no impact on demand. In the fourth quarter, we saw increase announcements of approximately 7%. So far this year, we have seen additional increases, which I will quantify for you later in my comments. Turning to product sales performance, beginning with equipment, we saw sales increase 21% for the quarter, bringing the total year to 35%. Heaters, automation products, and variable speed pumps led this category's growth. Chemical sales, driven largely by inflation, grew 26% in the quarter and 20% for the year as supply problems continue to plague us and the industry. Lastly, building material sales, which is a key indicator of the health of the construction remodel business, saw sales climb by 20% in the quarter and 28% for the year. As a reminder, the fourth quarter of 2020 was incredibly strong in this category as we saw sales for that period grow by 42%, making the 20% growth this quarter even more impressive. Now let me turn your attention to Europe. Once again, a tremendous performance. For the fourth quarter, net sales increased by 18%, and this was on top of a 48% increase for the same period last year. For the full year, Europe grew by 39%, another incredible performance by our dedicated and talented European team. Moving on to our Horizon business. We are incredibly proud of the performance of this strategic business and very fortunate to have such a talented team. As mentioned previously, we opened four new branches and completed one acquisition late in December that when combined with our existing locations, helped Horizon grow by 28% in the quarter and 29% for the full year. Looking only at base business growth, Horizon posted 20% growth in the quarter and 22% growth for the full year. Proof that our focus on the customer experience is helping us gain share there as well. Turning to gross margin. Overall gross margin for the quarter ended at an impressive 31.1%, up 260 basis points over the same quarter last year. For the full year, we ended at 30.5%, a 180 basis point improvement over 2020. Volume-related incentive programs along with supply chain initiatives, pricing management, and product mix all played a part in this improvement. Operating expenses as a percent of sales came in at 18.8% for the quarter, which is an 80 basis point improvement over the same period last year. For the full year, operating expenses as a percent of sales ended at 14.8%, which is a 210 basis point improvement over full year 2020. The team continues its relentless focus on capacity creation, and when combined with strong growth, the results are very impressive. POOL360 continues to be one of our biggest productivity tools for our team and the customer. Revenue growth through the tool was 46% in the quarter and makes up about 10% of our order line volume. We expect continued gains in this area as we are now rolling out our next generation of POOL360 with many enhancements that will continue to drive adoption, customer engagement, and provide additional value to our customers. Wrapping up the income statement, we are exceptionally proud to report operating income of $128 million for the quarter, which is 72% higher than the same period in 2020. Operating margin came in at 12.3%, which is a 340 basis point improvement when compared to the fourth quarter of 2020. For the full year, operating income totaled $883 million, which is up 79%. Operating margins for the year ended at 15.7%, which is 390 basis points better than 2020. This would not be possible without a strong market, dedicated and talented dealers, excellent manufacturing partners, and the world-class team here at POOLCORP. Before moving on to the outlook for next year, I thought it might be helpful if I provided some insight into the strategic acquisition of Porpoise Pool & Patio and SunCoast Chemicals. We paid $789 million, and we funded this transaction through our existing credit facilities and remain well below our targeted leverage range of 1.5-2x trailing 12-month EBITDA. This unique acquisition is essentially three businesses. One is a pool products distribution business that provides supplies to 262 individually owned and operated franchise pool and outdoor living retail stores and three company-owned stores. The second part of this business is a world-class chemical packaging operation that packages and sells chemicals to these franchise stores and other distributors and retailers in the industry. The third part of this business is a franchisor, Pinch A Penny, an award-winning, best-in-class franchisor with a stellar reputation in the franchising world and in the swimming pool retail market. Their retailing and customer support expertise, developed over a 45-year history including a cutting-edge technology platform, will provide new capabilities to POOLCORP that can be leveraged to benefit all our current customer base segments. When combined with our tremendous buying power, our international distribution network, and proven execution-focused operating model, this is an extremely powerful and unmatched combination. As I mentioned, the business includes a world-class chemical packaging operation that produces and packages trichlor tablets and other proprietary specialty chemicals, including a variety of proprietary liquid chemical blends under several well-known brands for use in swimming pool maintenance. The operation enhances our cost position, improves supply consistency and reliability, and is scalable for future growth. Today, all products are warehoused in one state-of-the-art distribution center located in Clearwater, Florida, and delivered to the retail stores by a fleet of dedicated delivery vehicles. As previously mentioned, the business has 262 stores. 232 of the stores are located in Florida, with the remaining 30 located in Alabama, southern Georgia, Louisiana, and Texas. Supplying the now 21 Texas stores from South Florida is a challenge, so you can see that our existing distribution network creates tremendous synergies. It is our intent to leverage these capabilities over time and establish franchise locations throughout the Sun Belt to enhance our service to the significant number of homeowners maintaining their own pools. One of the most strategic capabilities and key motivation for the acquisition of Porpoise Pool & Patio was the technology platforms and tools they have developed that we can leverage across all of our customer segments. Best-in-class tools such as a point-of-sale system, a water chemistry chemical application guide and customer apps, demand creation tools, service management software, and valuable local pool market databases that will help fuel our business growth, and product sales for many years to come. Jim Eisch, a 28-year veteran and key architect of this amazing business, has joined the POOLCORP team and will help us integrate and grow this business going forward. Jim will report to me and has already become a key contributor and confidant to our team. We plan to expand the Pinch A Penny franchise store network at an initial rate of eight to 12 locations per year, focusing on maintaining and enhancing the brand while providing the high level of support that the franchisees have come to expect. To date, we have opened one new store in 2022. The acquired Porpoise Pool & Patio operations are expected to contribute approximately 5% to POOLCORP's total revenue in 2022. We are confident that over time, this operation will accelerate our penetration into the important DIY pool maintenance customer sector, comprised of highly desirable recurring revenue maintenance products for the growing installed base of swimming pools. Finally, and before I turn this over to Melanie for her commentary, let me provide some thoughts for 2022 and our initial guidance range for full year EPS. The pool and outdoor living industry, driven by consumers' desire to spend more time outdoors in the comfort of their own backyard, is strong. Whether it's an afternoon in a pool or spa with family and friends, or grilling dinner on the patio in an amazing outdoor kitchen, or simply enjoying a quiet evening in a manicured backyard that is accented with beautiful hardscapes and outdoor lighting, we are an integral part of the equation, and demand is growing. Dealers are reporting very strong backlogs. Realtors are reporting that homeowners seek properties with a backyard retreat, including a pool, are in very high demand. COVID has accelerated the movement to the suburbs, fueled the southern migration, and changed the way people work, allowing millions of people to work from home. It created an environment that supercharged our industry. Demand remains very strong across all our geographies, and we see some encouraging signs as the supply chain is improving as well. Inflationary pressures continue, but have yet to curtail demand, so we remain optimistic that the underlying strength of the industry. We see labor constraints as continuing to be one of the biggest limiting factors on pool construction and remodeling growth, but again, are encouraged by signs of our contractor customers wanting to expand the size of their crews in many areas. Labor will continue to be a limiting factor on how fast the industry can grow. Whether we're talking about new construction or remodeler service, skilled labor is required, and there is a war for talent. This war also affects our suppliers and their suppliers, which is continuing to impact product availability for the coming season. Chemicals will continue to be tight, and the products that contain computer chips, such as automation and some variable speed pumps, will remain challenged. Inflation increased more than we previously expected. We ended the year with a benefit from inflation of 7%-8%, including 8%-9% in the fourth quarter. Inflation now looks to be in the 9%-10% range as we move into 2022. Acquisitions and new locations will add 5%-6% to our revenue growth. Taking all of this into account, we expect top-line growth to be in the 17%-19% on top of an amazing 2021. Earnings per share are projected to reach $17.19-$17.94 per share. In closing, I would like to thank the POOLCORP team, our amazing customers, and incredible supply partners for helping us bring outdoor living to life for so many people. I will now turn the call over to Melanie Hart, Vice President and Chief Financial Officer, for her comments. Thank you, Pete, and good morning, everyone. We are very pleased to announce our outstanding fourth quarter and full year 2021 financial results and begin our discussions on 2022. As Pete mentioned, our fourth quarter results were very notable as we achieved a record $1 billion in net sales and saw the momentum continue from our third quarter reported results. Gross profit increased 35% to $322 million, and we saw gross margins increase 260 basis points to 31.1%. This is a record high and was aided by continued strong realization on purchasing incentive programs and actions we took to proactively manage our inventory needs in times of longer lead times and rising cost pressures from suppliers. Fourth quarter operating expenses were well controlled, increasing only 18% over fourth quarter 2020 expense levels, including additional incentive compensation expense incurred during the quarter, offset by higher bad debt recovery. We saw an increase in operating margin for the quarter as we realized 12.3% operating income from net sales, up from the prior year fourth quarter operating margin of 8.9%. The robust demand-driven growth in our top line and expanded gross margin provided the opportunity to increase operating income performance for both the fourth quarter and the full year in 2021. Interest and other expense for the quarter was lower than expected, primarily due to interest income received on a note receivable recovery. Moving on to the full year 2021, eclipsing $5 billion in sales for the year is a remarkable accomplishment. Even more so when considering the growth rate in prior year, where sales were up 23% in 2020 over 2019, resulting in a two-year sales growth stack of 66%. Revenue growth was primarily the result of generally favorable weather throughout the year, strong new pool construction activity, higher inflation, and revenues added from recent acquisitions. Other contributors to sales growth included the winter weather anomaly affecting Texas and parts of the Southwest in February, resulting in additional sales in the first quarter of approximately $20 million and an additional $10 million in the remainder of the year. There was also a new Department of Energy regulation that took effect in July, requiring that the majority of new pumps being sold be variable speed pumps. We saw an increase in the percentage of higher ticket variable speed pump sales in the second half of the year, realizing approximately $20 million in incremental sales in 2021. Base business sales increases of 29% included market share gains and an estimated 25% increase in the number of new pools constructed during the year. As we look at the expected contributions for 2021, we estimate that the maintenance portion of our business will continue to be around 60% of our total business, with a slight increase in the proportion of new pool construction-related product sales. As with limited labor, our customers prioritize new pool construction projects over remodel and renovation activities. Gross profit reported was $1.6 billion, a 43% increase over 2020. Gross margin increased 180 basis points over the prior year to 30.5%, bolstered by supply chain management, pricing changes, and vendor incentives from increased purchasing volumes. Overall, for the year, we had an increase in operating expenses of $117 million, which included increased performance-based compensation of approximately $20 million. Our reward programs are directly tied to increased financial results, which allows us to leverage our overall compensation. Effectively executing on our capacity creation initiatives allowed us to keep expense growth low at 18% compared to 35% sales growth during the year, even after considering the increased performance-based compensation paid to employees to reward them for their efforts in delivering these results to shareholders. Where we have sales centers at capacity, we will look to invest in 2022 to enable additional continued growth in those markets. Our expenses for the year benefited from a one-time note recovery of $2.5 million that was previously written off in March of 2020. There are no additional benefits expected on this note as it is fully recovered. As a result of substantial revenue growth, enhanced gross margin, and focused expense management, we realized significant operating income leverage throughout 2021, increasing our operating margin to 15.7% of net sales, up from 11.8% of net sales in 2020. Total reported operating income of $833 million represents a 79% increase over 2020 operating income of $464 million. Included in income tax expense, we received an ASU benefit of $14.2 million or $0.35 per diluted share in the fourth quarter, which added to the $0.39 that was previously recognized and included in our guidance for a total of $0.74 for the year. Our full year tax rate, excluding ASU, was 24.7%. For 2022, we anticipate that our tax rate will be closer to our 25.5% historical rates. Turning to our balance sheet and cash flows, we reported an increase in net receivables of 30%, consistent with our higher sales growth. DSO improved from 26.5 days in 2020 to 25.6 days in 2021. Inventory levels increased 71% compared to prior year and 65% excluding 2021 acquisitions. By comparison, our 2020 year-end inventory levels were lower than our sales increases due to product shortages and the absence of typical early buy purchasing programs. During 2021, the increased level of industry demand put continued pressure on our supply chain partners, resulting in us electing to build inventory ahead of anticipated sales growth. Over the course of the third and fourth quarters, we made significant improvements to our in-stock inventory positions while continuing to meet high demand. We also increased inventory to support the 10 new locations we opened during the year and our completed acquisitions. These increased investments in working capital resulted in a lower than normal reported cash flows from operations. We are confident that our current inventory position will provide us a tailwind to better serve our customers in 2022. Executing on our capital priorities, we spent $38 million on purchases of property and equipment to support our ongoing business operations. We invested $812 million on key strategic acquisitions, including $789 million on our December 2021 acquisition of Porpoise Pool & Patio. This also includes amounts paid in the current year for prior year acquisitions, where a portion of the purchase price was deferred. 2021 acquisition activity was funded by our long-term debt agreements, which we amended and expanded in September 2021, providing plenty of capacity to fund our future business growth. We ended the year with a trailing leverage ratio of 0.77 and expect to continue to remain under our target leverage ratio of 1.5-2x. We purchased $138 million shares and increased our dividends per share by 38% during the year, providing $120 million in dividend payments, bringing our total cash return to shareholders to $258 million for 2021. Moving to our guidance for 2022, we expect to realize earnings growth of 12%-17%, resulting in a 2022 diluted EPS guidance range of $17.19-$17.94, including an estimated $0.19 ASU tax benefit, which is expected to be realized in the first quarter. In developing our guidance range, we are expecting high-teens sales growth, including approximately 5% from acquisitions completed late in 2021. Inflation will continue to be a component of our sales expectations for the year. With already announced vendor price increases, we expect that inflation will add 9%-10% to our top line for next year. Selling days for 2022 compared to 2021 will be up 1 day in the first quarter and down 1 in third quarter with the same number of selling days year-over-year. Currency impacts for 2022 are likely to be an overall drag on net sales growth and overall operating profits. Gross profit margin in 2022 is expected to be relatively flat with 2021 as we are well positioned with inventory, which will allow us to see modest improvements in the first half. We expect these improvements to level off as we reach the third and fourth quarters, which will have difficult comparisons because of the inflation realized in 2021. Our Porpoise Pool & Patio acquisition will be slightly accretive to gross margins. The distribution business, which is the larger revenue piece, had lower margins at our historical rates. However, the franchise revenue will have a positive impact. If inflation levels in the industry return to more normal growth rates and we see improved lead times from vendors, we would expect that our inventory levels would increase at a much lower rate than sales increases, returning our expected cash flow from operations to be more in line with our net income. On the operating expense side, we are anticipating that expense growth will come in higher than our historical levels. Our sales growth has come in ahead of our strategic plan for the last two years, and we see 2022 as a year where we need to further increase our investment in technology and automation to drive our long-term growth and enable us to operate even more efficiently. We have initiated a multi-year project to transform our legacy enterprise systems and capabilities to improve customer and team member experiences. We are also expanding our proficiencies and investing in our digital marketing initiatives. We will also continue investing in new sales centers serving growing markets and expect to see some cost increases as we build out these new locations and expand our market reach. For both greenfields and existing lease renewals, we have seen sharp increases in industrial lease rates as a result of the strong demand on warehouse space. We are also seeing external factors impacting our labor costs, causing wage inflation in today's current competitive labor market. As these are our more significant components of operating expenses, higher increases in these areas contribute to higher expense growth. Capital expenditures, including our investments in ongoing IT projects, will approximate 1% of net sales in 2022. Our technology investments are trending toward cloud-based systems and applications and will be reflected directly in operating expenses as they are amortized versus as a capital expenditure with associated depreciation expense. We completed the acquisition of Porpoise Pool & Patio in December 2021. This strategic addition to our business is expected to add approximately 5% to net sales growth and 5% to our EBITDA growth. Although the added debt used to fund the acquisition will result in increased interest expense, and we will incur higher intangible amortization expenses in the current years, Porpoise Pool & Patio performance will be accretive in 2022, accounting for around 3% of our projected net income growth and provide significant long-term growth possibilities. The intangible amortization expense is included in the increases we expect in our selling and administrative expenses. Even with higher sales growth in 2022, our operating margin target is expected to return to our historical contribution levels, where we realized approximately 20-40 basis points improvement. This improvement is off of the significantly higher base of 15.7%, which was a 390 basis points improvement over prior year. Interest expense with the higher outstanding debt balances is anticipated to come in between $26 million-$28 million, considering the expected interest rate increases that have been announced for later this year. This is subject to change based on the extent and timing of the proposed increases. Excluding any potential share repurchases, we anticipate that our weighted average shares outstanding that will be applied to the net income attributable to common shareholders will be approximately 40.75 million shares. I am also pleased to announce that later this year, we will be publishing our inaugural report on our ESG efforts. We are delighted to provide more details on the many things we have been working on in those areas. We are excited to continue to collectively grow the outdoor living industry. With that, we will repeatedly offer strong and steady returns for our shareholders. Looking forward to sharing 2022 with all of you. I'll now turn the call back over to the operator to begin our Q&A session. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. We ask today that you limit yourself to two questions. At this time, we will pause momentarily to assemble our roster. Our first question today comes from Susan Maklari with Goldman Sachs. Please go ahead. Good morning, everyone. This is actually Charles Perron in for Susan. Thank you for taking my questions, and congrats on the great results and a great year. My first question is on your inventory. Melanie, I think you talked that you were able to really take advantage of the environment to scale up and load up on products. How comfortable are you with your inventory position today? How much of the growth that we saw in 2021 was inflation versus volume growth? Any need to further increase those levels in Q1, maybe for certain categories? As a result, how should we think about the impact of the early buy pre-buys benefiting your margin and gross margin in 2022? Yeah. You know, we are very pleased with where we ended the year from an inventory standpoint. There were additional vendor increases that took place in the fourth quarter, which is typical for us. Much of that product was received prior to that latest price increase. Some of the vendors have also announced additional first quarter increases. Obviously the inventory on hand would not be subject to those increases as well. With that, you know, we are expecting both of those to contribute to our margin from a benefit standpoint for the first half of the year. From an overall, if you look at the component of it that's inflation related, I would say that it's somewhat similar to the overall inflation that we experienced for the year if you look at the growth standpoint. As we look at, you know, we certainly do continue to see shortages in certain products, but overall, we're very pleased with the way we've been able to manage and balance the inventory throughout all of the various locations and divert it to where the product is needed. You know, very comfortable that we will sell through that product, you know, very quickly based on our expectations for 2022. Great. Thank you for the color there. In your prepared remarks, you commented about your intentions to increase your presence in the DIY market, servicing this market. Can you talk about maybe the dynamics in that market, the growth rates, and how it is different versus your pro distribution segment in terms of the competitive dynamics and the margin profile? Yeah, sure. This, I'll take that one. The growth of the DIY market is really just a function of what percentage of people are taking care of their own pools versus having it done professionally. I think that varies greatly by geography, right? In the year-round markets, there's more pools professionally serviced than there are in the seasonal markets which can be more DIY. If you know, blended, it's probably in the neighborhood of 50/50. When you throw spas and things like that in there too, that just furthers the DIY segment. We like the fact that this gives us additional reach, it gives us additional tools to help our existing retailers as well. We think that as the installed base of pools grows, I think you could look at, you know, the market available growing. Really, it will index to the installed base of pools. Okay. Thank you for your time, guys. Yep. Thank you. Our next question comes from Trey Grooms with Stephens. Please go ahead. Hi, this is actually Noah Merkousko on for Trey. Good morning. Thanks for taking my questions, and congrats to a strong end to the year. Good morning. Morning. First, I kind of wanted to talk about how you're thinking about the sales cadence for this year. You know, 1Q has the toughest comp, but you know, it sounds like you're off to a strong start of the year, so maybe help us unpack that. I know there's also some unfavorable weather earlier this year, plus you're comping against, I think you called out a $20 million top line benefit from the abnormal Texas last year. Just again, any color on the cadence. Yeah. Business is, we ended the year, as you saw, very strong. Then I would tell you that, at this point, you know, we've continued on that trend. You know, we've seen the market is generally strong. It started, really heating up, as you can imagine, as you remember back, right after the onset of COVID and has continued to build, continued to be strong. I mean, weather is certainly the biggest external factor that we have. At this point, weather in the year has been okay. You know, business remains strong. I guess more importantly, the backlog of work with the dealers is really unchanged from where we exited the year, which is very strong. Great. Thanks. That's helpful. On my follow-up, I think you said earlier, you believe new pool construction was about 120,000 units in 2021. What are your thoughts on what that'll look like in 2022? How much of that is baked into the guidance? The new pool number for 2021 is still preliminary, as I mentioned. We'll get a better beat on that in the coming months. What I would say is that demand is still strong. Labor is still going to constrain the growth, meaning that there's more people that are wanting pools that are gonna get a pool. I think the industry has added capacity, but at this point, it's very early to tell because even if there's demand and there's people ready and willing to work, it really depends on the weather window and what happens in terms of available days to work. I mean, it wasn't. If you remember back in 2019, in the beginning of the year, it turned out to be particularly the second quarter a total washout for weather, so we lost a lot of billable days. It really is kinda early for us to comment on what we think new pool construction is gonna be in 2022, simply because one of the factors that we can't control is weather. There's a lot of quarters in front of us right now that weather could curtail or sustain the build rate that we have. Overall, we feel very good about demand. We feel very good that many of the dealers have been able to add some labor to their crews. It's really gonna come down to what weather is going to allow them to do. It really is just a little too early to answer that question. Thanks. That makes sense, and it's helpful. I'll pass it on. Our next question will come from Stephen Volkmann with Jefferies. Please go ahead. Hi. Good morning, guys. First, just a couple of modeling things, if I could. I think, Melanie, if I heard you right, that we were thinking gross margins sort of flattish in the first half and down in the second half. Any order of magnitude as to sort of the full year impact there? Maybe kind of the same question on the OpEx side, 'cause you talked about higher spending. Is that higher on a dollar basis or a percentage basis? Just any additional color there. Thanks. Okay, sure. For the margins, we're looking at essentially flat margins for the full year. We would expect that those would be higher than last year in the first half of the year, and then lower than the current year or 2021 in the second half, primarily because we saw some of those increases in 21 in the second half of the year when we started to see some of these benefits from inflation. The flat expectation is really for the full year with higher in the first half and then lower in the second half. As it relates to expenses, you know, the overall expense growth, as I mentioned, because of the various different, really kind of cost inflation pressures that we have that are impacting the business, you know, we are expecting that to be higher than what we normally would see. That should be, you know, relatively consistent throughout the year, as we start to fill some positions that, you know, we weren't able to get people hired as quickly as we would've liked last year in order to sustain kind of the additional volumes, as well as some market increases on the wage side. Great. That's super helpful. Then Peter, maybe just going back to this question about new spending and refurbishment. I guess I'm curious. It feels like, you know, a $80,000 budget for a pool doesn't go quite as far as it would have a couple of years ago. I guess, you know, are we seeing sort of less content because of all this inflation? Or, you know, any concerns around wobbling of demand because the markets haven't been great lately or, you know, any of interest rates going up, those types of things? Good question. What I would say is that ironically, we've not seen any retreating in what people want in terms of a pool. Rather, it continues to build. If you remember, you know, we started talking about this a couple of years ago about the amount of pools that essentially have no technology on them. As many of these pools are being taken over by new homeowners, you know, that's one of the first things that they're wanting to do is increase or install some technology so that it becomes more of a smart pool. As it relates to, you know, new pool construction, there are some great designs out there. There's some great new features, whether it's a zero entry or a sun, or a sun pad or the spillover spa that, you know, a spillover spa obviously has been around for a long time, but, and other water features, we've really not seen any decline. Rather pools are getting fancier, they're not into value engineering. We're encouraged by the fact that, you know, people see a beautiful backyard with a really decked out pools, and those tend to be the pools that the builders wanna build, obviously, 'cause they make more money in doing those as well. With the backlogs that they have, they can be a little pickier on what they're building. You're right, an $80,000 pool doesn't buy you as much as it did a few years ago, but it really has yet to curtail demand. All right. I appreciate it. I have one of those simple pools with no tech, so you make me jealous every time you talk about that stuff. Our next question will come from David MacGregor with Longbow Research. Please go ahead. Yeah, good morning, everyone. Pete, congratulations on just a phenomenal year. I just, it's impressive that we're looking at 15.7% operating margins for the year, when I guess a year ago, we were kind of all thinking kind of 10%-12% and then looking to grow kind of 20-50 basis points per year of annual progression. In your prepared remarks, you, in talking about this, you kind of said, "Look, we have strong market, but we had just great execution by the team." I guess I'm hoping you can kind of help us understand how much of this, improvement in margins right now would you attribute to just the strength of the market versus kind of sustainable margin growth through execution and improvement of systems and, you know, progress on the cost structure and everything else? Yeah. I think about it this way. In order to have great productivity numbers, you need to have certainly elevated volume helps, right? Necessity is the mother of invention. The busier that we have gotten in the sales centers, and if you remember, we started talking about capacity creation probably three years ago now, as a way to improve our customer service and also to drive our productivity and try and stay ahead of the operating cost increases, whether it was rent or wages or transportation. We've been working at this, you know, for three years. We get a little better at it every year. We have a deck of projects that we work through every year that we think continues to make us better. I mean, you certainly get facilities leverage, right, with the rent. As long as I'm not moving, the rent doesn't change. To the extent that you're having a great growth year, then your operating margin, you know, at the facility level, improves along with that. We're encouraged by the fact that we've seen good results on capacity creation. It's ingrained in the POOLCORP culture right now. The fact that we have a list of things that are on deck that we will continue to work on to improve. I mean, Melanie mentioned that we're spending money on technology too, which, you know, the money we're spending today will reap benefits on in years to come. It is really just, you know, it's ingrained in our culture. POOLCORP has always been very, very tight on execution, and again, part of the culture. I think in a year where you have great demand, like we had this year and frankly last year, we've been able to to get some tremendous results from that. Yeah, it really has been remarkable. Just shifting gears to the acquisition program. You know, there's a lot of consolidation going on in this space, and so I'm just, you know, would love to get your comments in terms of, you know, how you're thinking about your acquisition program from a, from a, an objective standpoint. You know, what is it that makes sense? Are you looking to put more penetration into existing markets, or are you looking to expand geographically? And just maybe talk as well about the discipline of your acquisition program, because obviously, the quality properties get bought first, and then, you know, there's kind of a marginal diminishing of quality, I would surmise, in the market. Just would be interested in hearing, you know, how you're approaching this from a discipline standpoint. Yeah. I mean, part of our operating model is we have a very well thought out strategic plan for the business. Acquisitions are a part of that. Acquisitions we view as extremely strategic. If you look at the geography in North America, for instance, we're essentially in most major markets today. There aren't many acquisitions that we have to make. Certainly, any business that transacts, I should say. For the most part, every business that transacts, we get a look at. I'm sure there's been some exception to that rule, but I can't think of one. We get a look at. We know what they're worth. We're happy to pay a fair market price, but we also, we're in most markets, so we can afford to be strategic about it. If there's markets that we want to improve our presence in and we want to improve our penetration in, and we think that the acquisition is both a strategic fit for us and a cultural fit for us, then we certainly have the firepower to go out and execute on that. But what we don't do is pay, you know, ridiculous prices for acquisitions. We know what they're worth. We're in most markets. We already have a footprint in most markets. So if it makes sense from a capabilities for consolidation perspective, we're happy to jump on and make the acquisition. If we think that it's not a good cultural fit, then, you know, we have a footprint. We have a very good greenfield model. You know, we opened 10 branches last year. We'll open a similar number this year, which is all part of our share growth initiative. You know, growing share is execution with your existing facilities, it's adding facilities, and it is acquisitions. Acquisitions for us tend to be the smaller of those levers. Appreciate the thoughts. Thank you. Yep. Again, if you'd like to ask a question today, that's star then one. Star then one to ask a question. Our next question will come from Garik Shmois with Loop Capital. Please go ahead. Hi. Thank you. Thanks for having me on. I wanted to unpack a little bit more just a comment around consumers investing more in some recently built pools versus the refurbishment side. Curious if there's a gross margin mix impact here, just considering, you know, new pool investment is generally higher dollar but lower margin, and refurbishment is a bit of a kind of a vice versa situation. So, you know, any margin considerations you should be thinking about just given the mix shift that sounds like is occurring this year? Sure. I mean, when people talk about, you know, refurbishing their pool, think about it in three parts, right? One part is the pool pad, and that is the equipment, which, from a margin perspective, has a lower margin component than the shell of the pool. Sorry about the noise. The shell is part of the remodel. That is a pool finish and pool tile, which tends to be very margin accretive, more so than the equipment pad. When you get into the third part of the pool, which is really kind of the decking and water features and fire features and fireplaces and outdoor kitchens, that tends to be, you know, even more margin accretive. If it's just equipment and somebody says, "Hey, I wanna remodel basically and change my heater and go to a variable speed pump," that's good business, but that's not as margin accretive to us as if they're going to refinish the whole pool with new tiles, new coping, and add some decking around it. Does that make sense? Yeah, it does. No, thanks for that. Wanted to follow up just on the Porpoise acquisition and the announcement to expand the number of retail branches, I think if I heard correctly, 18-20 per year. You know, could you speak to just the opportunity set to grow in retail? You know, does this also signify perhaps fewer opportunities to grow in the traditional distribution model? I guess, you know, just the last part of this multi-part question, are you seeing any change in pool owner behavior? Is there a shift, you know, maybe just with some inflationary concerns towards DIY versus hiring out a pool professional to come and service the pool? Yeah, we didn't say that the expansion was gonna be 18-20. I think the number was 8-10 is what we talked about. The opportunity is pretty big 'cause if you look at the market today, and what was again very attractive about this is Pinch A Penny is a very well-run retailer and has very good market share in the markets that they compete. They have very good density in the state of Florida, and we're just starting to gain a foothold in Texas. If you remember, you know, what I mentioned in my prepared comments that said, when you run a truck from Clearwater to Houston, which is how they're delivering and supporting those stores today, that's a 19-hour drive. When you look at our footprint and where our warehousing is throughout the state of Texas and the number of facilities that we have, there's tremendous synergies between the two. If you consider that, there is a certain number of people in every market that are going to take care of their own pool. Their choice is to go to the mass, you know, a specialty retailer, whether that's somebody like Pinch or to have their pool, you know, professionally maintained. But the ones that are gonna do the pool themselves, you know, they need a place where they can get product and, more importantly, get the expertise that they seek. If you think about a pool store, you know, whether it's an independent pool store or whether it's one of, you know, whether it's a Pinch A Penny, for instance, part of the reason they go there is for the knowledge of the person behind the counter. The folks at Pinch A Penny are very, very good at that. We like the fact that the footprint has yet to expand really much past the, as I mentioned, 21 locations in Texas. I don't think that has really any impact on opportunities to grow the rest of our business, which I think was the other part of your question. Because remember, there's still a number of people that are going to have somebody maintain their pool for them. With the installed base growing, right, I think that there's ample opportunity for us to grow on both the professionally served side and for the DIY, and that was part of the rationale for the acquisition. That and the technology and the tools that are inside of Pinch A Penny that we can help our current independent retailers improve their business as well. Got it. No, thanks for that and thanks for the clarification. Our next question will come from David Manthey with Baird. Please go ahead. Peter, Melanie, good morning. Morning. Morning. I guess I'll stay on Porpoise here. You've given us roughly the revenues of $250 million or so, and I think you said operating margins are close to your corporate average. Is there any variance on the gross margin of that business relative to your core business? Yeah, the earlier description was related to the gross margins. The operating margins were, you know, probably right, similar to what we've seen or what we're seeing currently, but it will be burdened, if you will, by the intangible amortization expense, so you will need to take that into consideration. That lowers that for the projection going forward. I'm sorry, I got dropped from the call, but did you give interest expense, depreciation, amortization for 2022? I did not give it in total, but the addition there is going to be about $10 million in an increased expense. For D&A? Yes, just for the amortization expense on the intangibles. It's about $10 million-$12 million in total, which will be the add that will be coming in from Porpoise. Got it. Okay. As you talked about the components of the business, Pete, I think you outlined distribution, chemicals, packaging, and then the Pinch A Penny business itself. Could you discuss the breakdown of revenues between those? And are there intercompany revenues we need to worry about here? Certainly on the franchise side, right? The way franchises work, you know, there's the franchise fee, which is on total retail revenue, and then, I'm sorry, there's just the cost of goods going into the store, which would be at traditional, you know, wholesale value. There's the chemical piece, which either is. At this point, as we said, some of that product is sold externally. Most of it, by and large, goes to the stores. you know, we will consume a large portion of what else can be produced by that plant. you know, the intercompany piece would be us acquiring chemicals from SunCoast to sell through the branches. Okay. The distribution and chemical packaging business, is that effectively, from a revenue standpoint, the same thing? If you're selling that to Pinch A Penny or if you're selling that to POOLCORP, that would be the intercompany situation? Any chemicals that are sold from the chemical packaging to any of our existing operating locations would be intercompany, and those would not be reflected in the consolidated financial statements. The chemical packaging per se was primarily third party, so outside of the franchise network historically. That would be where we would be taking on the additional capacity. Any of the distribution activity that goes to the franchisees is not considered intercompany because it's going to the franchisee, which is not a related party. Okay. Right. Everything going to the stores, David, is an external sale because they're all independently owned and operated. Got it. Okay. All right. Thanks very much. I look forward to seeing you in a few weeks down here. Yep. The next question comes from Susan Maklari with Goldman Sachs. Please go ahead. Hey, everyone. This is Charles Perron again. Thanks for my follow-up. Just a quick question. Can you talk about your expectations for supply chains in 2022? Is your guidance reflecting any improvement from here? I would assume that any incremental supply chain pressure is a relative advantage for you, given the relative size and scale compared to your competitors. Considering this, can you also talk about some of the initiatives to protect your recent market share gains from mom and pop when supply chains eventually improve? I'm assuming either through POOL360 or others. Sure. All right, let me unpack that because there's a lot in there. From a supply chain perspective, in our prepared remarks, we said that supply chains are improving. We're seeing greater productivity and greater stability and productivity from the manufacturing sites. We're encouraged by that. Couple that with the fact that our inventories are significantly better starting the season this year than they were last year, you know, that is another positive sign too. From an overall supply chain perspective, as I mentioned, there's still gonna be a couple areas of concern. One is gonna be in chemicals, and two is gonna be in some of the equipment that contains a computer chip that you've all read about will provide some pressure, right? As it relates to, you know, the market share that we gained, you know, we are very focused on the customer experience, right? We take every one of those new customers as an opportunity to grow our business. We don't take any of them for granted. We try to make sure that the customers that have switched over and they've come to us continue to stay with us, and we continue to provide them with tremendous value, so there would be no reason for them to switch back. Certainly, I think when supply chains return completely to normal, which appears to be in the distant future at this point. When that does happen, you know, there may be some customers that go back. By and large, I think most of the business that we have secured. We hope that the customers can see the value and our focus on helping them and the tools that we provide that will encourage them to stay with us. Not really a big concern that we're gonna lose the business that we've gained. Okay. Thank you so much for the time, guys. Yep. Ladies and gentlemen, this will conclude our question and answer session. I'd like to turn the conference back over to Peter Arvan, President and CEO, for any closing remarks. Yes. Thank you all for joining us today. We look forward to our next call, which will be on April 21st, when we will be releasing the first quarter 2022 results. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.