Hayward Holdings, Inc.
Q2 2021 Earnings Call Transcript

Published: 2 Aug 2021

[Operator:]

Welcome to Hayward Holdings Second Quarter 2021 Earnings Call. My name is Ashley and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. . Please note that this conference is being recorded. I would now turn the call over to Stuart Baker, Vice President, Global Strategic Planning and Business Development. Mr. Baker, you may begin.

[Stuart Baker:]

Thank you. Good morning, everyone. We issued our earnings press release this morning to the Investor Relations portion of our website at investor.hayward.com, where you can also find an earnings slide presentation that we will reference during this call. I am joined today by Kevin Holleran, President, Chief Executive Officer and Eifion Jones, Senior Vice President and Chief Financial Officer.

[Kevin Holleran:]

Thank you Stuart and good morning everyone. It's my pleasure to welcome all of you to Hayward’s second quarter earnings call. I will start on Slide 4 of our earnings presentation with some highlights from our second quarter results. During the quarter we delivered record net sales of 364 million, an increase of 66% year-over-year. Significant profitability growth with adjusted EBITDA of 110 million, an increase of 81% year-over-year despite inflationary and supply chain headwinds. This result continued to enhance our financial flexibility through rapid deleveraging. Our results build upon the solid growth we reported during the same period last year in which net sales grew 14% and adjusted EBITDA grew 21%. Our exceptional performance this quarter is proof of Hayward's product adoption across the channel, sustainable circular industry tailwinds, operational excellence, and an expansion of totally Hayward dealers. The demand for pools and pool equipment remains strong and we believe our innovative technology and products will continue to deliver growth especially in the aftermarket. We are increasingly confident in our ability to continue to benefit from market expansion given our competitive advantages around product range and technology, operational platform, and partner relationships.

[Eifion Jones:]

Thank you Kevin and good morning. I'll start on Slide 9. All comparisons will be made on a year-over-year basis. As mentioned earlier, we're very pleased with our second quarter results and the successful product adoption we continue to see throughout the channel along with our operational excellence in a demanding environment. Net sales for our second quarter of fiscal 2021 increased 144.4 million or 66% to 364.4 million for the three months ended July 3, 2021. The increase in net sales is primarily the result of higher volumes, mainly in residential pool equipment sales from continued strong demand for pool equipment, driven by upgrades and an increase in new pool constructions, as well as an acceleration of outdoor living trends, and 4.1 net price increase as well as favorable foreign currency effects compared to the same period of the prior year. Gross profit increased to 168 million, an increase of 70.1 million or 72%. Gross profit margin was 46.1%, an increase of 160 basis points resulting from the net price increase discussed earlier. Manufacturing leverage, net cost savings partially offset by inflation increases in raw materials and logistic expenses. Selling, general, and administrative expenses increased 27.6 million or 62% to 71.8 million primarily driven by volume related expenses. The increase in SG&A was also a result of non-recurring costs associated with IPO related stock-based compensation, predominantly non-cash asset write down costs related to the fire at our Yuncos, Spain facility and refinancing charges consequential to the amendment of our first lien term facility in the second quarter. In aggregate these one-time costs represented a drag of approximately 300 basis points or $11.6 million through our operating leverage during the quarter. Despite these items as a percentage of net sales, SG&A decreased to 20%, an improvement of 35 basis points. Research, development, and engineering expenses of 5 million or 1.4% of net sales as compared to 4 million or 1.8% in the prior year period, as we continue to invest in innovative new products and features. Operating income increased 46.1 million or 132% to 81 million. This increase in operating income was driven by higher net sales and the gross profit expansion partially offset by the higher SG&A expenses I mentioned. Net interest expense decreased by 4.6 million or 26% to 13 million as a result of pay down of debt with proceeds from the IPO, reduced interest rates following the amendments of our first lien term facility completed in the quarter, and a comparative reduction in the use of our ABL facility during the quarter. Additionally, we incurred 3.6 million of death extinguishment costs during the second quarter of fiscal 2021 associated with the amendment. During the quarter, we incurred an income tax expense of 12.6 million compared to 5.4 million for the prior year period. This was primarily due to increased income from operations, our effective income tax rate was 19.4% compared to 22.4% for the prior year period. Net income increased 34.1 million or 182.3% to 52.8 million. Adjusted EBITDA in the quarter increased to 110.4 million representing an increase of 49.4 million or 81%. Adjusted EBITDA margin increased 259 basis points to 30.3%.

[Kevin Holleran:]

Thanks Eifion. I'll pick back up on Slide 12. Hayward's core values drive our commitment to ESG. You will hear us talk a lot about the environmental benefits of our products, as well as our manufacturing capabilities. We have a strong culture and focus on creating an attractive and safe work environment for all employees. And finally, we built a leadership team with unique talents and diverse backgrounds that is committed to leading by example with ethics, integrity, and ensuring compliance with our strong policies throughout the organization. On Slide 13, we remained focused on being at the forefront of product innovation. And as we continually expand our product offerings, we are committed to providing more environmentally friendly and sustainable solutions. We design our products to be energy efficient, conserve water, and avoid harsh chemical usage. To highlight a few examples, over the past three years our variable speed pumps have helped to generate approximately 1.1 billion kilowatt hours of energy savings, which is a 90% reduction in energy use compared to the previous generation of pumps. We've reduced chlorine usage by approximately 81 million pounds through the installation of salt chlorine generators. Additionally, following the installation of the UV ozone system, the pool will require up to 50% less chlorine to properly treat the water. Finally, we've saved over 2 billion gallons of chemically treated heated water with the transition to cartridge filters. I'll wrap up on Slide 14 and highlight Hayward's market leading position as a pure play in the growing outdoor living space. Hayward's competitive mode has helped us to grow share and our innovative and environmentally conscious technology products are driving SmartPad conversions and expanding our addressable market. Finally, our superior financial results are backed by an attractive, large, and recurring aftermarket business. With that operator, we're now ready to open the line for questions.

[Operator:]

. And your first question comes from Brian Lee with Goldman Sachs and company.

[Brian Lee:]

Hey guys. Good morning. Thanks for taking the questions and congrats on the quarter here. Maybe just to start off, I guess on the backlog levels and visibility, clearly first half of the year you have been quite robust. Imagine you guys are tracking better than typical at this point in the year, but wondering if you can kind of give it some quantification of whether it's backlog or other metrics you track with kind of guiding and medium term growth outlook for the business and whether or not you're sort of on track for that longer-term growth of mid to high single-digits that I think you guys outlined at the time of the IPO? And then I had a few follow-ups.

[Kevin Holleran:]

Yeah, sure. Thanks, Brian. We are -- the order file, excuse me, is larger than it normally is this time of year. Again, as we move from June into July, that's the final quarter of the seasonal year that our industry defines, and this is the time where inventories -- I know you didn't ask about that, but inventories start to get reduced. But in terms of order activity, it's very strong still. We exited Q2 with a larger order file than we exited 90 days previous. Again, that's exceptional this time of the year. So, I think it reflects the general, secular enthusiasm, sorry, secular trends and the general enthusiasm of that exists out there with the trade and in the channel and really pleased with the market reception to some recent product launches, which has really put some wind in our sails as we've unveiled those products over the last six to nine months or so. So we feel good about where the order file is and then generally what the attitude in the channel is right now with our trade partners and with our channel partners.

[Brian Lee:]

Yeah, that's great. In terms of the order file, maybe just to drill in a little bit more, maybe is there a sort of a delineation between aftermarket and maybe upgrade type of activity you're seeing in that order book relative to new full bills, it sounds like the backlog there continues to stretch out more so to 2022. So can you delineate a little bit in terms of what trends you're seeing across both segments?

[Kevin Holleran:]

Yeah, it's hard to really decipher in the order file what's going to end up on a new construction versus an upgrade or a conversion to a DigitalPad or a SmartPad as we've coined this up. What I think we're seeing, you just indicated there that the new builds are actually pushed out into 2022 at this point. That's what we're hearing from all regions, that it's out into 2022 and even beyond it some. But when you look at the products that are populating the order file, I think it highlights a couple of things, our new construction is starting to see a richer content go in on day one. When you look at some product categories like salt, for example, or controls, with the installed bases and the population is a much lower percentage than what the take rate is on a new construction project right now. But then the products that we're really seeing industry growth, and our own performance in really do point to this SmartPad conversion that's happening out there, with the control, the omni controls being that gateway if you will. With that frequently comes LED lights, heaters, water features, variable speed pumps, salt chlorine generation. And when you look product by product in the order file, it really does reinforce what we've been talking about and what the industry has been seeing now on this uptake to a more DigitalPad that synchronized together and gives the homeowner the control of their backyard in the palm of their hand through our omni app. So, the long and short of it is, we're seeing a strong demand out of both new construction, but really what's driving our numbers and the industry number is this aftermarket upgrading that continues to occur at a very heightened level.

[Brian Lee:]

Okay, that makes a lot of sense. Maybe last one from me and I'll pass it on. Just the pricing outlook for the year, I think one of your peers implemented something for the second half. So wondering what you're planning for price this year, maybe, what's baked into the pricing views for the 2021 outlook as it's updated year. What's been realized year-to-date, maybe what's left to be realized, and then just lastly on price cost, where you are on that dynamic if you're net neutral or still trying to catch back up to net neutral and then under -- over what timeframe potentially? Thanks guys.

[Kevin Holleran:]

Let me start that one, Brian, and then I'll turn it over to Eifion for some of the more specifics. So at this point we have actually made two, let's call them off cycle price increases. The first we spoke about this time last quarter, we had announced at the end of March a price increase, call it 5% that would take effect on new orders written starting May 1st. As we indicated at that point, it would be really out into call it later Q3 before we started to realize that because that we had to work through the order file, the four new orders had that price attached to it. More recently, the 1st of July, we actually made an announcement on a range of say 5% to 7%, and this would really be considered by the channel, our more typical kind of early buy. But with one important distinction, we announced it 1st of July, any orders that were written or received by us in the third quarter that are not shipped by September 27th will actually be priced at the new increase rather than waiting to extinguish or to invoice the entire order file. We frankly couldn't wait that long. So, call it an effectiveness change on the more normal price increase that it's going to be realized the start of the fourth quarter, as opposed to waiting into the new year before that applied to new orders. So hopefully that helps. Now I'll turn it over to Eifion to address some of the other parts of the question.

[Eifion Jones:]

Yeah, the price cost dynamic, I think will start to normalize at the very back end of Q3 and then as Kevin mentioned, the full implication of the price increases he mentioned will come in in Q4 and normalize the price cost dynamic with the margin that we will be able to deliver in Q4, similar to Q1’s fine margin.

[Brian Lee:]

Alright, thanks guys. Appreciate all the color.

[Kevin Holleran:]

Okay Brian, thank you.

[Operator:]

Your next question comes from Michael Halloran with Baird.

[Michael Halloran:]

Hey, good morning, everyone.

[Kevin Holleran:]

Hey Mike, good morning.

[Michael Halloran:]

So, can we just talk a little bit then about how you're looking at lead times, how those are stretching out, how far your backlog is stretching out, and any kind of commentary on what the spread is between where demand is currently and how quickly you guys can meet that demand?

[Kevin Holleran:]

Well, I don't think we're going to quote specifics on the size. Again, I was prepared today to discuss the fact that starting the third quarter, we have a larger order file than we had this time 90 days ago. We continue in our operations to do phenomenal work of pairing up supply chain material, arrival with ramping up, getting more increased staffing into our facilities, implementing some additional shifts in our facilities. We announced during the quarter that to complement our West Coast distribution center in Phoenix, we're going to do the same in a neighboring town to Clemens, North Carolina which then frees up additional square footage for production to move into. So, the order flow continues to be very, very strong. And, we obviously are doing everything possible to marry staffing material and production capacity increases to grow that capacity as quickly as we can.

[Michael Halloran:]

Maybe I'll ask it a little differently. When you think about all of those factors, how far out does that give you visibility and what would visibility normally look like at about this time of year?

[Kevin Holleran:]

Yeah, this time of the year I mean, we have a much -- traditionally we have a much reduced order file than what we have now. I mean, it's multiples higher than where it would ordinarily be at this point in time. Frankly the second half is as much about building and monetizing the order file to hit guidance as it really is, needing a massive influx of additional orders to deliver on the second half guidance. So, we're obviously not halting any product launches or efforts with the channel and with totally Hayward dealers, but we have a very meaningful order file that allows our operations team to plan the factories as well as possible because we have a full file at this point.

[Michael Halloran:]

And then the follow-up, when you think about leverage levels near two times, how does that change your thought process, is that pay down still prioritized or are you starting to think a little bit more offensive with capital usage?

[Kevin Holleran:]

Yeah, we remain prioritized to think about the growth in the company, given where we've stretched our facilities in the last 12 months. It's now time to take a hard look at our manufacturing footprint to see what else we can do to automate and expand capacity. So we all be getting to initiate those organic investment plans at a quicker rate than maybe as we have entered the year. Secondly, obviously M&A is clearly in our line of focus. We have several opportunities that are meaningful, that we continue to look at. That's -- both of those initiatives remain a priority for the business. If we remained in the sustained two to three times range, closer to the bottom end of that two times range, as we've always said we'll consider it as the shareholder policy, but not before we execute upon our growth ambitions.

[Michael Halloran:]

Thank you. Appreciate it.

[Operator:]

Your next question comes from Ryan Merkel with William Blair.

[Ryan Merkel:]

Thanks. Good morning, everyone. My first question is on the sales outlook or adjusted EBITDA outlook. So you raise guidance for the second half and my question is, is it primarily the higher sales outlook that is the driver there, or it also sounds like there's some benefit from price costs and maybe less overdrive costs?

[Eifion Jones:]

Yeah, so look, we will continue to see top line contribution to bottom line. So sales growth will be a meaningful contributor to the bottom line structurally inside the income statement. We expect margins to improve towards the very back end of Q3 and then obviously fully the price costs equilibrium will be established in Q4 and we'll see margins rise in Q4. We do expect to continue to get leverage across the SG&A base throughout the balance of the year. But when you look at the mid-point of the guidance, that’s just over 30.3% adjusted EBITDA margin at the midpoint, it's where we were in Q2. So that should give you an indication of how we feel about the balance of the year. In terms of what that does for the full year, it's been a very meaningful step up year-over-year in terms of the structural income statement. When I look back at 2020, gross margins of 45.3% would definitely see a very significant, improved step up as we have through the first half. And then in terms of the structure of the adjusted EBITDA margin, we closed last year at 26.5% and again at the midpoint that say 380 bp improvement year-over-year in margin.

[Ryan Merkel:]

Got it. That's helpful. And then, for my follow-up, what was capacity utilization in the quarter, and then what is the outlook for the second half and really my question is would sales be stronger if you had more capacity?

[Kevin Holleran:]

Yeah. You know, we think about capacity in two ways, capacity with the shift model that we currently have. So it's fair to say that we're running in excess of 90% all of the capacity utilization on the current shift model. And I want to be clear clarifying that. We have further opportunity to expand our shift models to go into a more of a continuous operational mode across the six manufacturing facilities that we have. That will take some management time investment to, to fully realize that. But that's the next phase of capacity utilization that we're looking at and it will contribute partially to the second half growth and into 2022.

[Ryan Merkel:]

Perfect. Thanks. I will pass it on.

[Operator:]

Your next question comes from Jeff Hammond with KeyBanc Capital Markets.

[Jeff Hammond:]

Hey good morning, guys.

[Kevin Holleran:]

Hey, Jeff.

[Jeff Hammond:]

Just two on kind of the second half, just clarity on seasonality, 3Q I think normally you have some dip and then what you've baked in terms of kind of what you're thinking is for early buy and how that kind of shifts between 4Q and 1Q?

[Kevin Holleran:]

Eifion can quote what our normal quarterly percentage is. I think that's just like last year, I think it will be a different profile this year, Jeff as you indicated there. So without given specifics on individual quarters, I would say in terms of early buy, we are doing a program early buy, that’s the price increase that I mentioned earlier was actually in concerts with that announcement, up early buy program. We would largely assume that the orders that come in on the early buy program would really be a 2022 fulfillment. There might be some individual lines or skews that get out mid to late Q4. But I think we're looking at it as really a Q1 of fulfillment time frame on the early buy orders that will come in over the next call it month or so, month and a half.

[Eifion Jones:]

Yeah. Just to follow-up by saying it's been -- the last two years has been somewhat unusual but typically speaking the first half represents about 48% of ourselves, the second half 52%, Q1 and Q3 tends to be the lower time frame, Q2 in particular tends to be the softer quarter and the four quarters as you finish up the pool season here. But this year, it is going to be slightly different. It's almost going to be the reverse. We expect to have -- be significantly leaned in to the order book liquidation in the first half, so I think first half sales will be 52%, second half 48%. So slight modifications to normal seasonality that we see as an OEM.

[Jeff Hammond:]

Okay. So it sounds like though second half seasonality maybe a little more balanced 3Q to 4Q than you normally have?

[Kevin Holleran:]

Yes.

[Jeff Hammond:]

Okay. And then just on share gains. Clearly, you're outperforming, your pool equipment peers both in results and guidance, and I think you have spoken to new products as well as availability and I'm just wondering how you feel about sustainability, particularly around kind of being able to ship product as some of your competitors catch up, and if you've seen any change of behavior from your distributor base around stickiness of these share gains, thanks?

[Kevin Holleran:]

Yes. I mean, I would really say the share gains are more the result of builders and services pulling through distribution. And I feel as we mentioned in the prepared remarks, I think the ramp up that we've enjoyed this year with the number of new totally Hayward dealers coming into our rewards and loyalty program is huge. I think it's highlighting the fact that not only that we are maybe producing year-to-date better than others or better than some others, I think it really speaks to the fact that some of the new product launches and the innovation that we're bringing to the marketplace is something they want to associate with and want to align with. So when you look at the success of the new product launches to an already competitive and complete product line and now additional builders and services aligning with us, we feel a very good about the stickiness of our more recent market share gains.

[Jeff Hammond:]

Okay, thanks so much.

[Kevin Holleran:]

Thanks.

[Operator:]

Your next question comes from Rob Wertheimer with Melius Research.

[Rob Wertheimer:]

Hey, good morning, everyone. Kevin my question was actually somewhat similar, you touched on your prepared remarks on that thinking this as a share, I wonder if you could expand on it or give us a little bit of a teaching on what that kind of means that your home builder servicer are now familiar with the product and more comfortable selling and installing. A little bit just about the ground game on how you're doing that and creating what you seem to see as a sticky share game? Any just sort of teaching would be great. Thank you.

[Kevin Holleran:]

Yes, sure. First of all, we have a great sales team out there who understands our product line through and through and are well trained on our on the technology that we're now bringing add to that a great technical service team, kind of having a co-pilot out there with our sales team, with our mobile training units that are in markets helping to do training on the ground in the environment where the product is used I think are just as you say, it's a great ground game and we're seeing the conversion as we brought some new technology helping with this digital conversion that's happening on the pool pad. We feel very, very good about the recruitment efforts and folks that are coming in under the tenth. And some of their early feedback after they have installed product on new pads and replacements in existing pads. And again, that's really what's reinforcing our enthusiasm that these are sticky share gains going go forward.

[Rob Wertheimer:]

Okay, thank you.

[Operator:]

Your next question comes from Saree Boroditsky with Jefferies.

[Saree Boroditsky:]

Hi, thanks for taking my questions. So you mentioned having several meaningful acquisitions in the pipeline that you're looking at, could you just expand on the size of the deals, the technology focus that you're most interested in?

[Kevin Holleran:]

Yes. We never gave the specifics on this side but what I would say is we remain focused on businesses, which have similar financial profile to ourselves. They obviously have a technology attribute that's where our focus is both as an industry and as Hayward, clearly those acquisitions that are important to us to expand our position in the backyard in and around the pool, as well as looking at expanded on geographic footprint where we're presently underrepresented. So those are the metrics that drive our M&A investment, the sizing of the deals when I said meaningful typically, the businesses has done, let's say more smaller tuck in type acquisitions. We'll continue to look at those but there are several out there, which are a step ahead of that and more to come as we focus on those growth areas.

[Saree Boroditsky:]

Okay. And then maybe just a little bit more about the positive demand looking into 2022, obviously we will be seeing some challenging comparables, could just talk a little bit more about what you're seeing in the channel that gives you confidence on the growth outlook for 2022? Thanks.

[Kevin Holleran:]

Yeah, I mean I think as we look at growth Saree, it is really kind of five levers. It's pricing to offsetting inflation, it's new construction and then really three different parts of the aftermarket from upgrade to replacements to remodeling. And really across all three of those levers I think there's all plenty of enthusiasm, and there's good trends that I think do not end in 2021 and it will carry over into 2022. We've already touched on some of the pricing that's already been announced. Folks who want new pools built this year, will not get them all built. Where we're quoting out into 2022, the average age of the existing pools continues to get older, needing that remodeling activity. But what I'm saving for last is really what is driving 2021 and I don't see it ending in 2022, it is turning a lower functioning PoolPad into something that's more connected, more environmentally sustainable, higher functioning, and that is really this digital conversion is we when you look at the industry volumes out there, the products that line up with that upgrade are the ones that that are growing most year-over-year in 2021. And there's no reason to believe that that's going to be completely satisfied when you look at what the percentage of those products are in the installed base. I'm talking things like heaters, controls, salt, lights, variable speed pumps. All of those things can be synchronized and give the homeowner the ability to control their backyard through a smart omni app. That gives us enthusiasm as we look out into 2022 and beyond that will have a strong growth profile out into next year.

[Saree Boroditsky:]

Okay, I appreciate the color. Thanks guys.

[Kevin Holleran:]

Thanks Saree.

[Operator:]

. And your next question comes from Josh Pokrzywinski with Morgan Stanley.

[Joshua Pokrzywinski:]

Hi, good morning guys.

[Kevin Holleran:]

Good morning Josh.

[Joshua Pokrzywinski:]

Just to dig in a little bit here on mix, I think you sort of touched on it in your last answer. Mix is a few different things in five-year portfolio. If you had to breakdown down maybe I guess first the components of price volume mix. If you can, just give us any color there? And then within, I guess, replacement markets, what you would think of this sort of break fix versus kind of a retrofit. So maybe in the case of automation that's not replacing something that's broken or a heater going in where the previously wasn’t a heater. Just trying to get a sense for what on this is kind of on the upgrade side versus how much strength you're seeing on traditional replacement?

[Kevin Holleran:]

Yes, it's a good question. There's a lot in there. When I think about the upgrade, whether that's when product fails a meet replacement or whether it's more proactively performed by a homeowner there are some categories that are definitely more part of the upgrade. So as I've said, the controls is really the gateway of it. The controls is call it low 20% or so population in the field today with so much higher percentage going in on new construction. So, once a mechanical pad becomes a digital pad, what you're starting to see are maybe waiting to lesser lights being upgraded to LED more energy efficient. Obviously with the DOE regulation change, which is only a couple weeks in the rearview mirror. You're going to start to see much more of the multispeed pumps, which is our new XE line or up to the variable speed pump. This year with some of the shortage on chlorine, I think that as people were looking for other alternatives, a lot of builders and servicers who maybe were resistant to salt, historically have opened their minds to it and just the swimming experience is so much preferred over more harsh chemical chlorine that I think that's a very obvious upgrade. I guess I would finish where cartridge filter, we don't talk about filtration a great deal, but folks upgrading from a sand to a cartridge filter is happening in the replacement cycle also, which has some obvious maintenance improvements as well as environmental improvements without having to lose as much chemically treated water but down the drain as you do your backlog cycles. So those are some of the products that we see that are going in on a higher percentage on new construction. And when someone is remodeling or upgrading an existing pool, those are some of the categories that are most in demand.

[Joshua Pokrzywinski:]

Got it. And I guess the breakdown kind of where the majority of this ramp up in growth is, is it higher mix on somewhat -- on something that is being replaced or is it these newer categories?

[Kevin Holleran:]

Yes. I mean what we're seeing right now is a continuous shift towards the technology side of the product line. And so we refer to it as the SmartPad bundle of products and when you look at the third party data that we subscribe to, we've seen a much richer mix of those type of product controls, variable speed pumps, smart heaters, etcetera. And that's where we're seeing the investment from the consumer and through the channel. And just coming back to the margin side of the question, we continue to see that element at richer margins than the legacy side of the product line. And we purposely invested in Q2 into the wage rates in our U.S. facilities to make sure that we could get sustained production output where the majority of those richer products are manufactured and we'll get price caustic collaboration in March in Q4 as those prices start to recover that invested costs we could into Q2 to get those type of products.

[Joshua Pokrzywinski:]

Got it. Thanks for the color guys.

[Operator:]

At this time there are no further questions. I will now hand the call back to management for closing remarks.

[Kevin Holleran:]

Thank you, Ashley. In closing, I just wanted to thank everyone for their interest in Hayward. As you can see our business is producing phenomenal operational and financial results, and we're very well positioned to continue to generate value for all stakeholders in the years ahead. Please read, please reach out to our team if you have any follow-up questions and we look forward to talking to you again soon. That concludes the call. Thanks everyone.

[Eifion Jones:]

Thank you.

[Operator:]

That concludes today's conference. Thank you for your participation. You may now disconnect.