Hayward Holdings, Inc.
Q1 2022 Earnings Call Transcript

Published: 1 May 2022

[Operator:]

Good morning, and welcome to Hayward Holdings First Quarter 2022 Earnings Call. My name is Austin, and I'll be the moderator for today's call. [Operator Instructions]. Please note that this conference is being recorded. I will 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, and good morning, everyone. We issued our first quarter 2022 earnings press release this morning, which has been posted to the Investor Relations portion of our website at investors.hayward.com, where you can also find an earnings slide presentation that we will reference during this call. I'm joined today by Kevin Holleran, President, Chief Executive Officer; and Eifion Jones, Senior Vice President and Chief Financial Officer. Before we begin, I'd like to remind everyone that during this call, the company may make certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include remarks about future expectations, anticipation, beliefs, estimates, forecasts, plans and prospects. Such statements are subject to a variety of risks, uncertainties and other factors that could cause actual results to differ materially from those indicated or implied by such statements. Such risks and other factors are set forth in the company's earnings release posted on the website, and will be provided in our Form 10-Q for our first quarter of 2022 as filed with the Securities and Exchange Commission. The company does not undertake any duty to update such forward-looking statements. Additionally, during today's call, the company will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations of net income calculated under U.S. GAAP to adjusted EBITDA and as well as reconciliations for other non-GAAP measures discussed on this call can be found in our earnings release and will be included in our Form 10-Q. I'd now like to turn the call over to Kevin Holleran.

[Kevin Holleran:]

Thank you, Stuart, and good morning, everyone. It's my pleasure to welcome all of you to Hayward's first quarter earnings call. Near the end of the quarter, we celebrated our 1-year anniversary as a public company. I'd like to personally thank our employees, dealers, channel and vendor partners for making this inaugural year a great success. As I look back over the last 12 months, we have many accomplishments to be proud of. We have executed on key strategic initiatives and made investments in our product portfolio both organically and through M&A that have advanced our reputation as the innovative market leader in technology. We significantly strengthened Hayward's position in the market by leveraging our supply chain advantages and vertically integrated production model. This has proved especially beneficial in the current environment, resulting in share gains. The hard work of our teammates across our global organization have led to consistently strong financial and operational performance. We look forward to many years of success as a public company as we continue to build a track record of performance and strive to create meaningful value for all our stakeholders. I'll start on Slide 4 of our earnings presentation with some highlights from the first quarter. We delivered another very strong quarter marked by net sales growth of 23% year-over-year to a record $410 million net sales, which was on top of an exceptional growth of 96% in Q1 of 2021 over Q1 of 2020. Adjusted EBITDA grew 18% year-over-year to a record $126 million, yielding a 31% margin. As outlined on Slide 5, our performance continues to be driven by our ability to execute on the core drivers of growth

[Eifion Jones:]

Thank you, Kevin, and good morning. I'll start on Slide 10. All comparisons will be made on a year-over-year basis. As Kevin mentioned earlier, we are pleased to report record results in the first quarter of 2022 driven by the continued adoption of our pool products that we are seeing throughout the channel, particularly our increasing suite of Omni connected SmartPad and lifestyle products, supported by healthy aftermarket adoption and improved operational capabilities with excellent production results in the quarter. Net sales for the first quarter increased 23% to $410.5 million. The growth during the quarter was driven by a 17% price realization, 7% positive volume growth and mix, partially offset by a 1% unfavorable impact from foreign currency devaluation. The net price impact over the prior year period reflected the accumulative impact of our previously-announced price increases to mitigate the escalating inflationary cost pressures. Sales volume growth continues to be driven by demand for pool equipment both in new construction and, more importantly, in the aftermarket. Volume growth was achieved in North America, with Europe and Rest of World muted by the geopolitical circumstances in the region. Gross profit in the first quarter increased to $190.4 million, an increase of 19% year-on-year. Gross profit margin was 46.4%, a decrease of 144 basis points, primarily resulting from inflation pressure in certain commodities and freight costs as well as unfavorable foreign currency impact. Our pricing initiatives and supply chain capabilities have been successful in maintaining the structural margin profile of our business, but we are navigating a challenging and lengthy inflationary cycle. We remain confident in our ability to operate in this environment and have implemented a price surcharge at the beginning of the year to help mitigate the impact of inflation, and we're evaluating the need for the surcharge to remain in place and further price increases as inflation persists. Selling, general and administrative expenses during the first quarter increased 4% to $68.9 million, primarily driven by increased expenses in distribution, warehousing and marketing as well as increased regulatory costs as a public traded company and bad debt expense, which included write-offs for Russian-owned customers. This was partially offset by lower incentive compensation compared to the prior period, which also includes stock-based compensation expenses in the prior period related to the IPO. As a percentage of net sales, SG&A decreased to 16.8%, a decrease of 312 basis points, reflecting the leverage we have achieved as the business has grown. Research, development and engineering expenses during the quarter increased 8% to $5.2 million, reflecting continued investment to support business growth and product development. As a percentage of net sales, RD&E was 1.3% and compared to 1.4% in the prior year period. Operating income increased 34% to $106.4 million in the first quarter. This increase in operating income was driven by higher net sales and conversion to profitability. Net interest expense decreased 48% to $9.6 million for the first quarter compared to the prior year, primarily due to debt repayment and lower interest rates as a result of the second quarter 2021 amendment to the credit facilities. During the quarter, we incurred an income tax expense of $23.3 million compared to $15.2 million for the prior year period. Net income increased 101% to $74 million. Adjusted EBITDA increased to $126.2 million in the first quarter, representing an increase of 18% as a result of the higher net sales and operating income. Adjusted EBITDA margin decreased to 30.8% or 134 basis points compared to the prior year period. The decline in margin is primarily due to the inflationary impact on raw materials, freight and labor as a result of higher demand and supply chain constraints. Now, I'll discuss our reportable segment results for the quarter. As a reminder, Hayward's operational and management structure is aligned to its key geographies and go-to-market strategy, resulting in 2 reportable segments

[Kevin Holleran:]

Thanks, Eifion. I'll pick back up on Slide 13. At Hayward, environmental, social and governance, or ESG, has always been important to us, and we know that it's important to our shareholders as well. We continue to focus on the energy consumption throughout our operations as well as making sustainable products a key focus of our new product development road map. We strive to promote a diverse, safe and inclusive workplace, and we pride ourselves on our strong company culture. As a recent public company, we have partnered with a third-party expert to conduct a materiality assessment and identify where we have the most impact across key ESG themes. The results of this materiality assessment has shaped the framework to guide our strategy focused on 4 key pillars

[Operator:]

[Operator Instructions]. Our first question is from Jeff Hammond of KeyBanc Capital Markets.

[Jeffrey Hammond:]

So just on the guidance, I wanted to just clarify on like how you're thinking about the surcharges, because I think you didn't have that 4% in? I don't know if you're including that. And just on that topic, is the thought to kind of change those to price increases and have those stick? Just an update there.

[Kevin Holleran:]

Yes, I would say -- as for the second part of the question, Jeff, the longer these surcharges stay in place based upon the inflationary pressures that we hoped were more transitory when we implemented them. The longer they -- we have the need for them, the greater the likelihood is that we'll roll that into the structural price lists. Haven't yet done that. We still are doing it on a month-to-month basis, but the inflationary pressures are not abating. In fact, we felt more inflationary pressure through Q1 than prior price increases had necessarily contemplated.

[Eifion Jones:]

Yes, Jeff. In terms of those parts of your question, no, the guidance does not consider the balance of year inclusion of the surcharge. But again, as Kevin just mentioned, it is evaluated month-to-month.

[Jeffrey Hammond:]

Okay. So I guess with the strong start of the year and, I mean, I guess, the view that there's probably more pricing in there. Is the offset -- you're lowering your volume assumptions within the guide? Or what are the moving pieces?

[Eifion Jones:]

Sure. I mean, in terms of the guide, we're still looking for a high single-digit growth year-on-year for price in the balance of the year. Certainly, FX is a headwind, more so against the euro than the other currencies, the Australian dollar and Canadian dollar. But FX is certainly more of a headwind than we originally thought coming into the year. In terms of volume, we're still looking for a good volume growth in the balance of the year. It is, as we mentioned previously, for the full year, mid-single digits, and it's a little bit lower for the balance of the year than that, given the good start to the year.

[Jeffrey Hammond:]

Okay. And then just if I could sneak one in. Just any change, better or worse, in supply chain of freight dynamics?

[Kevin Holleran:]

We were -- it's a complex question because there's lots of moving parts, as you know. I would say we were really seeing some nice improvement in material flow around some critical components. We were seeing some improvement to some specialty metals that go into our sanitization product and even some components that go into our variable speed pumps. They continue to be at elevated levels, but I'd say as the quarter progressed and even as we turned into Q2, the shutdowns, the quarantines in China, the port congestions in Shanghai and other ports have certainly increased pressure on material flow and some of the pricing dynamics. So I'd say overall, it feels like we're incrementally better than we were in second half of last year. But this feels like it's a week-to-week or a month-to-month process right now, Jeff.

[Operator:]

Our next question is from Rob Wertheimer from Melius Research.

[Kevin Holleran:]

So why don't we try the next one in line, maybe Rob can come back.

[Operator:]

Our next question is from Ryan Merkel of William Blair.

[Ryan Merkel:]

First off, just high level, are you seeing any signs of consumer spending slowing down or any cancellations in the order file? I guess I was a little surprised you didn't raise the bottom end of guidance here.

[Kevin Holleran:]

We really haven't seen any kind of cancellations. We're in pretty close contact with both channel partners and our dealers, and the work on the books and new lead generation both remain strong despite plenty of price increases. And obviously, the channel inventory position has gotten better. We're in a much better position going into the start of the season in 2022. So no, we're still seeing robust demand and the order file on the books is still very strong and seems to be pressure tested, and product is going to be installed in the backyard.

[Ryan Merkel:]

Got it. That's great to hear. And then my second question is on gross margin. It sounds like inflation is running a little bit hotter as you mentioned, so are you still going to see year-over-year gross margin expansion in the second quarter?

[Eifion Jones:]

Yes, Ryan, it's Eifion. We would expect that. I mean, we've -- as we mentioned before, our pricing actions, 3 of them accumulating up to over 20% coming into the year. We did make some concessions on price with certain fixed price arrangements. Those roll off pretty much at the beginning of Q2. So we will get a higher price contribution in Q2 than we did in Q1, and that should be margin accretive.

[Ryan Merkel:]

Perfect. Pass it on.

[Operator:]

Our next question is from Brian Lee from Goldman Sachs.

[Brian Lee:]

Maybe first one, just to follow up to the prior question. Gross margins up in 2Q, pricing actions reading out, I understand all that. But if I back into, I guess, the midpoint of EBITDA guidance and the midpoint of revenue guidance and incorporating the strong start to the year in Q1, it implies EBITDA margins kind of flatlined to or down 50 to 100 bps for the rest of the year. So is something else happening below the gross margin line where you're not reading out some better EBITDA margin expansion metrics later into the year? Or is that something we just see into the second half per se on EBITDA?

[Eifion Jones:]

Yes. Good question. I mean, what I would say is we're very pleased with the start to the year, a great margin in Q1 higher than the full year last year. And it's fair to say that the macroeconomic climate, both in the U.S. and maybe a bit more particular in Europe and rest of the world, is a bit more difficult than where we had started the year. It's something we have to deal with. And we remain cautious about the second half of the year. We want to see the '22 policies and complete out strong, and every indication is it is strong. But we'll get a view then on the start of the new '23 season as we get to the end of Q2 this year and into Q3. I'd say the underlying growth drivers remain very strong. Secular trends remain strong, as Kevin mentioned, and everything is pointing to strength in the industry and strength for Hayward. So in terms of our guidance, it really reflects just a cautionary view on how the second half may develop. As I said before, price is still in the high single-digit growth year-on-year before the continued implementation of the surcharge. FX is a headwind. But in terms of the structural margin on the EBITDA line in the second half, it does represent a little bit of view of caution given the current climate. But we feel good about where we're at, and we'll update you guys as we come out of Q2.

[Brian Lee:]

Okay, yes. That makes a lot of sense. And then just one more question from me and I'll pass it on. I might have missed this, I hopped on late, but can you kind of speak to where you're seeing pool builder backlog trends? Maybe I think, in the past, you've quantified those. And are you seeing any sort of shifts in this environment with mortgage rates going up and maybe some additional pressure showing up in the new home part of the market? Just any high-level commentary around builder trends.

[Kevin Holleran:]

I'd say what we're hearing is still a really strong book for 2022. Most builders are quoting out into 2023. A recent report published by PK data had a lot of interesting statistics in it, but one that I really focused on was this increase in time between a homeowner signing. And until the job starts, the shovel is put in the ground, that has increased appreciably. I think that speaks to certainly, the labor constraint that we're still dealing with. That said, the industry has grown kind of 20-plus percent in new construction each of the last 2 years. And based upon what we're hearing, Brian, the interest is still there. The demand is still there, but there's a lot of things maybe out of our control that factor into that, not least of which is labor, weather and some of this interest rates and inflationary pressures that most of the world is feeling right now. But we feel that there is still wind at the industry's back from a new construction standpoint. I'll just pivot for a moment and say -- we've touched on this, and others in the industry have. If there is any kind of a slowing on new construction, we feel very confident in saying that the full-scale remodels have really been pent up and they have been pushed to the right over the last couple of years as labor and contractors have really focused on new construction. So I think there's a strong potential offset for the industry if new ones to start slowing down. But we continue to look for the aftermarket that fuels our growth. Approximately 80% is aftermarket driven, and frankly, that's going to determine our success in the industry's success more than new construction.

[Brian Lee:]

Yes. Absolutely. Appreciate it.

[Operator:]

Our next question is from Rob Wertheimer from Melius Research.

[Robert Wertheimer:]

Sorry about the confusion earlier. My fault. So you've touched on this a couple of times, but I just wanted to go back to it. There's obviously a lot of consternation out there about rising interest rates, et cetera. What are your thoughts on what you just mentioned, Kevin, on the 80% of the business that's not a new build, that's more steady? Any sensitivity to refis or home equity loans or maybe consumers higher end, and you haven't seen historically that kind of sensitivity? I don't know if you have any guide posts for us to think about that core of the business.

[Kevin Holleran:]

Yes, I would say that what we're seeing on the -- really on that aftermarket pull-through is it's a different decision for someone who has a pool in the backyard already that's looking to do -- add a piece of equipment that maybe didn't exist or to upgrade an existing piece for greater functionality or sustainability or enjoyment in the backyard. So again, with that driving 80%, and that's not a full new pad necessarily, we feel very comfortable that even in the environment of increased interest rates that, that incremental piece or a couple of pieces will continue to be installed here in 2022 and beyond despite different economic circumstances or inflationary circumstances. So that's how we look at it. That's certainly being validated by our service, Totally Hayward network and even some of the rebuilders and remodelers that are out there in our network.

[Eifion Jones:]

Yes. I'll just add to that, Rob. I mean, what we're seeing right now is, as Kevin mentioned earlier, continued new construction permitting into '23. We continue to see builders talk about strong backlogs. But when it comes to the aftermarket, it's a not -- for the majority of the decisions, it's a non -- it's not a discretionary type of decision. You have to maintain your pool. And most of the products that we're building to market today have a qualitative attribute, which increases the enjoyment of your pool or a cost saving to your pool in the terms of the energy-efficient products we're bringing. So what we're seeing when we look at where Hayward is gaining strength in the market, it's in those qualitative product categories, and it's in those energy-saving categories. And we think, as we've talked about before, there's 3 large conversion stories taking place in the industry, which is sanitization, energy efficiency and controls, and all of those for Hayward would come at higher price points and higher margin attachment. So we don't believe the aftermarket is going to suffer from the interest rate environment. We don't believe that even in new construction, it will suffer.

[Operator:]

Our next question is from Mike Halloran from Baird.

[Michael Halloran:]

So how do you guys thinking about balance -- how do you guys think about balance sheet usage at this point? Obviously, the buyback in the first quarter leverage, plus minus 3%. If the right transaction comes along, would you guys be in a position to be actual? I know you said over $400 million of liquidity, but just trying to gauge your willingness to put that to work in the short term.

[Kevin Holleran:]

We absolutely are, Mike. We have a pretty robust pipeline right now, so we're actively engaged on the M&A side. That continues to be one of 3 legs in our capital deployment strategy, continuing to fund organically. That's our top priority. We have some projects on the books for use of -- that we use some of the cash there. And then as you mentioned, we've been involved both Q1 with the directed repurchase and then also here in early Q2 with some share repurchase as well. So we're really paying close attention to all 3 avenues of balance sheet usage.

[Michael Halloran:]

And then on the inventory side, maybe just talk about how you guys are looking at channel inventory? And obviously, we can hear some chatter public markets on how some of your channel partners are thinking about inventory and restocking, and just would like to get your sense for what your view of the channel partners is in terms of their inventory expectations and how they expect to build or not build as they work through the year?

[Kevin Holleran:]

Yes. We do keep close tabs on it with our channel partners to make sure that we all feel comfortable with the amount of inventory staged closer to point of sale, and they are largely replenished and in a much better position starting the 2022 season than they were either in the last 2 years. It's not a perfect balance. There are SKUs and product categories based upon a material availability that we need more of. They need more of for sale. Maybe some solve then some sand filters, variable speed pumps, some controls, but it's much improved over the prior year. In absolute dollars, as I said, it's higher at the end of Q1 2022 than the same period. But I think there are a few things to keep in mind that as we look at it from a days on hand standpoint, obviously, that inventory value has a lot of price embedded in it. The industry has also grown, so there needs to be additional inventory in there to support the overall industry growth, which has been 30-plus percent over the last few years. And then from -- specifically to Hayward, some of our share gains, that would require some incremental inventory positions for the Hayward product in the channel. So all that said, we feel comfortable with our inventory position from a days on hand standpoint here at the start of the season. Our guidance assumes that there will be greater sell out than sell into the channel during the 2022 season. And these are the things that we're going to keep close tabs on as we work through the year and start -- continue with our guidance updates and look out into 2023, Mike.

[Michael Halloran:]

Great.

[Operator:]

Our next question is from Nigel Coe of Wolfe.

[Nigel Coe:]

So maybe Eifion, could you just give us a quick dedication again in sort of normal seasonality? I mean, there's nothing normal about the current environment, but in a normal year, 1Q would typically be your weakest quarter, correct, in terms of revenues and the margins?

[Eifion Jones:]

Yes. Our normal seasonality has Q1 and Q3 at similar levels, 22% to 23% of the full year sales, and then Q2 and Q4 being more elevated. I would say, coming into the year, Q1 this year was slightly higher than we would have experienced in the normal year. We do see some seasonality reappearing into '22, but certainly, Q1 was a higher quarter than we think normally from a seasonal perspective. And that's really consequential to the fact that we were still working through and still continue to work through a large backlog. We want to make sure that the channel is appropriately stocked as we mentioned in the previous call. We have to get after some specific SKUs to build out the full complement of what the channel needed to satisfy customer orders. And we were very, very pleased with the ability at the production level across our manufacturing footprint to get after those products. Still more to do, as Kevin mentioned. But yes, normally, Q1 is a weaker period. It was a little bit higher this year than normal.

[Nigel Coe:]

Yes. Okay. Eifion. And then -- I mean, so given that sort of normal seasonality reappearing, I mean, based on what you see today, would you expect Q2 to be higher as normal than Q1 based on what you see today with Q2 based -- be higher than Q1?

[Eifion Jones:]

Yes. So we're not giving specific guidance around each quarter, but what I would say is Q2 is likely to be a higher period for us as we continue to fill out the requirements for the channel to service the season.

[Nigel Coe:]

And then when you think about the second half of the year, obviously, you've got a very conservative back half assumption in your guide. What is your biggest concern right now, Kevin? Is it really -- is it supply chain inflation? Is it help the consumer with rates rising? Is it labor availability? I mean, what would you say is your biggest concern right now?

[Kevin Holleran:]

Yes. I mean, from a labor standpoint, we actually -- where that was our key focus through the middle of last year. We feel pretty good from a labor availability standpoint. There's still too much turnover that I think all companies are feeling, but I think we're able to get folks trained up and building product. I think with what we're seeing around some of the global movement of product and some of the quarantines that are happening in manufacturing-concentrated regions, I think it's wise to be cautionary right now as we look into the second half. While consumer demand and what's on the books is still incredibly strong and gives us strong optimism as a company and an industry, there's a lot of hikes that are being -- interest rate hikes that are being talked about right now. And I think it's just wise for us as we work through the early part of the season here to just be cautious before getting out ahead of ourselves from the second half when there's so many unknowns at this point, Nigel.

[Nigel Coe:]

Great, and then just one more if I can. The dealer conversions from last year, you also have an extraordinary number of dealer adds in North America. Maybe could you just talk about -- is that continuing? Are you still managing to convert dealers, and to what degree are they sort of adding to your growth rates in North America?

[Kevin Holleran:]

Yes. We continue to see -- our sales and marketing team is doing a great job of continuing to sell the Hayward story and display some of the new products that we've brought to the marketplace and expand the size of the Hayward family working in the backyard. That has absolutely contributed to some of our share gains over the last couple of years, and we fully expect it to continue into the future. When I think about -- I think it's one of really 3 contributors that have delivered on some of the greater than market growth and share gains that we've been able to enjoy the last few years. Operationally, obviously, in the capacity expansions, some of the new product launches that have great early adoption into the marketplace. And then thirdly, just more folks placing their confidence in the Hayward brand and advocating for us in the backyard. So I really think it's a combination of all 3 of those, Nigel, that's paid dividends for us over the last few years, and we expect that too into the future.

[Operator:]

Our next question is from Rafe Jadrosich from Bank of America.

[Rafe Jadrosich:]

First, I wanted to -- it looks like you've been taking some market share over the last few quarters. I'm wondering if you could talk about as the supply chain improves, would you expect those market share gains to be sticky? And then how do you make sure that, that kind of conversion kind of stays longer term?

[Eifion Jones:]

Yes, we firmly believe our share gains are sticky. And it's not predicated on just the very clear ability for us to service the market with our production capabilities. It comes back to the products that we're introducing into the marketplace. We're very proud of the fact that our new product vitality index now has grown quite substantially year-over-year. We're well over 20% in terms of new products coming into the market as a percentage of our overall sales results. And these are really informative products that are addressing the needs of the consumer both in terms of energy efficiency and the qualitative experience within the pool. We're spending quite a bit of time investing into those categories, both in terms of research development and engineering costs flowing through the income statement, but also in terms of cap of the balance sheet. We're investing in the necessary lines to build out those product capability. So we believe though our ability to supply has outpaced the competition, it really comes back to what we showed in terms of that technology platform that we're leveraging where we now are gaining share in some core categories in the industry. So yes, firmly, we believe it is sticky, and it's heavily predicated upon the product portfolio that we have.

[Rafe Jadrosich:]

Okay, great. That's really helpful. And then sort of second question, just -- you commented on channel inventories, but like your own inventory has been growing faster than sales by quite a bit the last few quarters. I'm just curious, what's the inflation component of that? Like if we were to look at your inventory in terms of units, what's that growth rate compared to the 60% sales growth -- or dollar growth?

[Eifion Jones:]

Yes. So when you think about the COGS index, Q1 in '22 versus the comparable period last year, it's about 20%. So 20% of our inventory climb has really come from that COGS index increase, the inflation that's run through. But outside of the inflation, we have taken 2 strategic positions in the balance sheet. One is on certain finished goods that -- where we can get the raw materials. Knowing the demand curve that we see out in the future, we are manufacturing certain products in terms of finished goods to get in into inventory to be a -- an important position to be able to service the market. And then I'd say the second strategic position we've taken is in raw materials. And again, where we can secure a position in raw materials, particularly in those hard to get areas, we have taken that position.

[Rafe Jadrosich:]

Okay. Great. That's very helpful.

[Operator:]

There are no further questions at this time. [Operator Instructions]. There are no further questions registered, so I'd like to turn the conference back to Kevin Holleran for any closing remarks.

[Kevin Holleran:]

Thanks, Austin. In closing, I'd just like to thank everyone for their interest in Hayward. As you can see, our business is producing excellent operational and financial results and we're very well positioned to continue to generate growth for all stakeholders in 2022 and the years ahead. This would not be possible without the hard work, dedication and resilience of our employees and partners around the world. Please contact our team if you have any follow-up questions, and we look forward to talking to you again on our Q2 earnings call during the week commencing July 25. Thank you.

[Operator:]

That concludes the Haywards Holding First Quarter 2022 Earnings Call. Thank you for your participation. You may now disconnect your lines.