Welcome to Hayward Holdings Second Quarter 2022 Earnings Call. My name is Sam and I will be your operator for today’s call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Kevin Maczka, Vice President of Investor Relations. Mr. Maczka, you may begin.

Thank you and good morning, everyone. We issued our second quarter 2022 earnings press release this morning, which has been posted to the Investor Relations portion of our website at investor.hayward.com. There, you can also find an earnings slide presentation that we will reference during this call. I am joined today by Kevin Holleran, President and Chief Executive Officer and Eifion Jones, Senior Vice President and Chief Financial Officer. Before we begin, I would 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 second quarter 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 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 Form 10-Q. I would now like to turn the call over to Kevin Holleran.

Thank you, Kevin and welcome to the team. 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 the second quarter. We delivered another solid quarter marked by net sales growth of 10% year-over-year to $399 million, which was on top of exceptional growth of 66% in second quarter of 2021. In our core North American market, net sales increased 17%. Adjusted EBITDA in the second quarter grew 16% year-over-year to $128 million, yielding a 32% margin. This represents an increase of 166 basis points over the prior year level despite the sustained inflationary headwinds. Later in the presentation, we will discuss our outlook for the year, which we have revised to reflect current channel inventory dynamics and macroeconomic conditions. Before we do that, I’d like to take you through why we’re so confident in the long-term growth model for Hayward and the industry. As outlined on Slide 5, our performance continues to be driven by our ability to execute on the core drivers of growth, including digital leadership, dealer conversions, new products, operational excellence, and broad channel access and environmental sustainability. Importantly, this resulted in solid net sales growth of 28% over the last year. Notably, I’d like to highlight continued strength in our OmniLogic IoT-enabled pool controller installations, which have grown over 60% in the last 12 months. We also see continued strong momentum with our sales team who have added over 1,000 Totally Hayward Partners year-to-date after approximately 1,500 in full year 2021. These dealer additions are key to our long-term growth through their dedication and advocacy of Hayward products. Finally, I’d like to draw your attention to our new product vitality index, which increased 29%,…

Thank you, Kevin and good morning. I’ll start on Slide 11. All comparisons will be made on a year-over-year basis. We delivered another quarter of growth and profitability with performance supported by operational agility, new product adoption and successful management of ongoing inflation. Net sales for the second quarter increased 10% to $399.4 million. The growth during the quarter was driven by 17% price realization and 1% contribution from acquisitions, partially offset by a 6% decline in volumes and unfavorable exchange rate impact of 2%. The net price impact over the prior year period reflected the full accumulative impact of our previously announced price increases over the last 18 months to mitigate the escalating inflationary cost pressures. During the quarter, we also saw the initial contribution from the recently announced acquisitions, notably the specialty lighting acquisition from Halco. The volume decline during the quarter was primarily driven by a sharp reduction in our European sales, the result from the war in Ukraine, which required us to exit certain businesses in that area, and it has led to a general reduction in consumers’ confidence across the region. We also experienced initial impact of the poor weather in our seasonal markets, namely the U.S., Midwest, Northeast and Canada. These markets suffered from unusually cooler wet conditions throughout the quarter. These conditions delayed pool construction and remodel projects as well as the openings of existing pools, all of which drive equipment demand. Consequently, channel inventories serving these regions were higher than usual at the end of the quarter. Despite these volume challenges, we experienced good adoption of new products as evidenced by an increased sales mix of controls, sanitization, energy-efficient variable speed pumps and lighting. Growth in these product categories offset the expected decline in demand for heaters. Gross profit in the second…

Thanks, Eifion. I’ll pick back up on Slide 14. At Hayward, ESG has always been important to us, and we know that it’s important to our shareholders as well. We’ve continued to focus on the energy consumption throughout our operations as well as making sustainable products, a key focus of our new product development roadmap. The development of such products and technology was recognized by the United States Environmental Protection Agency, with Hayward earning the 2022 ENERGY STAR Partner of the Year Award. The award recognizes industry leadership, product innovation, and an overall commitment to environmental protection through energy efficiency. We appreciate the agency’s acknowledgment as we continue to develop technology and products to help make pools more environmentally sustainable. In addition, we are pleased to announce that we will be publishing Hayward’s first ESG tearsheet during the third quarter. On Slide 15, I will address the main trends supporting our outlook. We remain very positive about the long-term health of the pool industry, particularly the strength of the aftermarket. It continues to grow every year with the addition of new pools to the installed base and provides a rich upgrade and remodel opportunity as this base continues to age. The aftermarket has proven to be resilient across economic cycles. We firmly believe there has been a significant increase in the appreciation for the backyard as a consequence of numerous favorable secular trends. With that as the long-term backdrop, let me now describe the current operating environment. As we all know, macro conditions are especially dynamic in Europe, where the continent is dealing with an ongoing war, declining consumer sentiment and a more challenging foreign exchange environment. As a result, we now expect sales in Europe to decline in 2022. Turning to our core North American markets, operational agility and…

[Operator Instructions] Our first question comes from the line of Jeff Hammond with KeyBanc Capital Markets. Jeff, your line is open.

Hey, good morning, guys.

Good morning, Jeff.

So I just really want to hit on the destock and just understand – it seems like the magnitude is quite stark, particularly given that price is going through and what you had in the first half. So just kind of level set us on how you got comfortable with the level of declines? And do we – it looks like Europe is a little more weak, do we hold flat for the year in North America or is that also negative?

Let me start there, Jeff, and Eifion may add to it. I’d say more than half of the new guidance is related to the channel inventory, as I mentioned in prepared remarks, that somewhere around 4 to 6 weeks is really more than half of what the overall reguide is, the balance would really be comprised of a number of things from they shortened season in the weather-impacted areas like Canada, Northeast and Midwest. Some demand moderation, we are still seeing year-over-year growth, but it is not to our original expectation when we laid out earlier in the year guidance. And then as you mentioned, Europe and Ukraine-related consequences. FX is clearly a headwind with a slight offset around acquisitions. So that’s sort of the bridge of all the contributing factors. How did we get here? As we discussed in our Q1 call, the macro-economic environment is clearly uncertain in North America and especially so in Europe, where we’ve seen a deterioration due to the continued awards consequential effect on consumer sentiment and their economies. We expected to sell less into the channel versus sellout due to the strategic positions that many of our channel partners took at the end of 2021. As Q2 occurred, inventories remain high, and we’re now actively working with the channel to try and reduce those inventories. And as I said, supply chains have clearly improved. Our published lead times have substantially improved, so there is that reduced need to hold these higher safety stock levels, and we’d like to work with our channel partners to destock and have fewer months of forward-looking sales in the channel so we can be more responsive. So that’s what’s kind of gone into our thinking and what played out in Q2. Anything to add to that, Eifion?

No. As you think about the balance of the year, Jeff, I would say both regions will have a restocking recalibration program. It will be larger in North America. That’s where the balance sheets were stronger for our channel partners. We probably saw some destocking in the first half in Europe, but there will still be further destocking. Both regions will take that correction in the second half. But the correction will be higher in North America than it will be in Europe.

Okay. And then just one quick follow-on on the destock. It seems like third of your products, like the variable speed, the controls, the salt chlorinators are still in short supply. So I don’t know if it’s skewed differently. And then just secondly, talk about decrementals as you destock and what you think you can hold them to and what actions you’re taking to kind of mitigate that margin decline?

Yes. I mean, as you said, I think most OEMs are trying to address short supply and some supply chain challenges around the same type of products. Things with chips continue to be a little hand to mouth, and that affects things like controls and salt sales from a specialty metal standpoint, maybe to a lesser extent, variable speed pumps. But those are the things where there is not – but we still have healthy backlogs overall, but particularly in those categories and the channel is anxious for us and others to solve that. We are working very aggressively have been for some time here at the end of the second quarter into the early third quarter to reset production levels and taking the appropriate actions to resize the facilities to get the variable costs out. As we’ve highlighted in prior quarters, we’ve been able to ramp up largely through variable cost structure, and we will be doing the same as we reset. And we will look more broadly than just our facilities across our entire cost base and size the business to the current forecast.

Okay, thanks, guys.

Thank you, Jeff. The next question is from Brian Lee with Goldman Sachs. Brian, your line is open.

Hi, guys. Good morning. Thanks for taking the question. I guess – good morning. Couple of questions from my end. First, on demand, it does sound like you guys are alluding to, beyond channel inventory build, there is some moderation in demand. Can you kind of give us additional color around the different segments? Whether you’re seeing that with new pool builders, whether it’s in the aftermarket? And is this an affordability issue with all the price increases? Just trying to get a sense for maybe where you’re seeing some of the demand softening and maybe where you guys have been more bullish coming into the year, and that’s where you’re seeing some downside risk here?

Yes. There is a lot there. But let me try and address it as we’re – as we see it. Overall, when we set coming into the year, with last year’s retail pull-through in front of us, we expected some moderation off a very, very high pull through the channel last year. And at the halfway point, I would say, while there is still growth clearly year-over-year, the volume has not quite been what we expected. Lots of price. There are some areas where mix is contributing to it, but that’s kind of the equation there, price and a little bit of mix, but not quite on the volume side. From a regional basis, there are some regions that are doing extremely well that haven’t been affected by weather or some of the geopolitical. But in general, the economic uncertainty is certainly there. And I think that that’s what we would attribute some of the volume – the volume not playing out as we originally expected. New construction, our builders are still extremely busy. They are saying that the leads and the quotes and we see it with the permitting is not quite what it was this time last year, but they are still extremely busy and their books are full. We lost some building days for sure in some of these regions affected by the weather. And if we have a late summer or late fall, we may be able to make some of that up, but that was probably lost time based upon Mother Nature, not cooperating this year. So we continue to see lots of folks from a technology standpoint, opting to bring Omni Controls on and take control of that backyard. So that trend is still very positive for us and that’s really how we see it.

Okay. That’s great. Appreciate the color. And then maybe just secondly, on this whole channel inventory reset, it sounds like it came here sort of real time in terms of how you guys saw it evolve. What’s your sort of – whether it’s based on historical precedents or what you’re hearing from the channel itself? Like, is this a one to two-quarter reset? What’s sort of your thought process around the timing of kind of recalibrating the channel to the degree where maybe you’ve got a more normalized backdrop heading into the ‘23 pool season?

Yes. That’s exactly the timing that we’re looking to address this, Brian. Clearly, the pull-through is ultimately what affected this. We’ve been shipping for 18 or 24 months at a really strong clip. We want to make sure that with all the uncertainty flying around the economy and the various markets that the responsible thing to do is to look into the channel, work closely with them to get these days on hand down to a more healthy level, which will give us – which will allow us to really address whatever 2023 has in store for us and be in a much better position to be able to accommodate a wide range of 2023 outlooks.

Alright, fair enough, I will pass it on. Thanks, guys.

Thank you.

Thank you, Brian. The next question is from the line of Ryan Merkel with William Blair. Ryan, your line is open.

Hey, guys. Good morning.

Good morning.

So I wanted to start off with the demand trends through the quarter, if I could? I know weather was a factor for South in April and May, but it would be helpful to understand what demand is doing and then what you’re seeing in July?

You broke up a little bit. I think you were asking how it looks maybe later in the quarter and early into July. Frankly, we don’t have visibility specifically for July yet. I would say we’re seeing it based upon conversations as we guided for the second half year. There were some markets later in the quarter who had – that had some nice pull-through, the warmer climates. We saw a bit of recovery in the weather affected regions. But in general, when you look at Q2, it was not to our original expectations on the retail pull-through and clearly, with the volume being net down year-over-year. That’s really what informed us as we looked hard at the second half guidance.

Got it. Okay. That’s helpful. And then can you quantify the impact to ‘22 sales from the destock? It sounds like you’re being conservative. I guess the harder question that I want to ask is, as you think about ‘23, could there be more destock? I think you mentioned you’re going to go 3 months of inventory for the channel. I mean, could that go to 2 months? I know it’s hard to call at this point, but just how you’re thinking about that? And are you being conservative?

Hi, Ryan, it’s Eifion. I’d say more than half of the reduction in the guidance of the top line is related to channel inventory reduction. And it’s a takedown of 4 to 6 weeks. The channel has the ability to hold between 4 to 4.5 at the top end and can go down to 3 before it starts to feel short. We have taken the channel inventory forecast down to the low end of the 3. So, basically around about 3.25 months on hand and we believe that’s a very healthy position to start the fiscal ‘23 time period. Outside of the channel inventory take down, the balance of the takedown is really related to the consequential impact of the shortened season and the seasonal markets in the U.S. and Canada. Some demand moderation that Kevin alluded to, obviously, the situation in Europe, which is impacted by the events in the Ukraine as well as the FX. And there is a slight offset for the full year impact of the newly acquired business, the lighting business from Halco. But two-thirds of the – or I should say just over half the takedown is associated with a reduction in the channel inventory. And we believe that is the right place to exit the year just over 3 months of inventory on hand in the channel.

Very helpful. Thank you.

Thanks, Ryan.

Thanks, Ryan. The next question is from the line of Michael Halloran with Baird. Michael, your line is open.

Hi, thank you. Good morning, everyone. So just some thoughts on pricing, how is pricing holding in all else equal? And as you think about the destocking, any concerns that there is going to be some price bleed here or has there been pretty good discipline across the players in the industry at this point?

Yes. Look, I mean we’ve instituted our cumulative price increases since January of last year of around 24% globally, 25% in North America. That still includes a surcharge of 4%. That aggregate cumulative price then matches up with our cost of goods sold index of around 25% increase since December 2020. The guidance that we’ve given, like always, or at least that is more recently does not conclude the continuation of the inclusion, I should say, on the surcharge. It’s not institutionalized at this point, it gives us a little bit of flexibility, if we see some decrease in certain commodity raw materials. But as you witnessed over the last 12 to 18 months, this industry has great pricing power. We believe it’s sticky. It’s always had this type of pricing power, but saying that, we are conscious that we’ve put close to 25% price into the industry over the last 18 months. We’re very mindful that’s a lot of price, and we have not contemplated any further pricing action in the balance of this year. But we will continue to monitor costs. And we do believe that if costs are warranted, we can get further price and we don’t necessarily see inflation moving into a deflationary period over the next 6 months. So in terms of – I think we are – maybe the second element of your question was going, do we believe the destocking actions in the channel will cause some price pressure? We do not believe that is the case. Pool equipment still remains a relatively low cost of the overall pool installation value. We have brought products to market, which had great win-wins for the consumer. If we look at the categories that have been climbing in terms of demand of variable speed pumps and multi-speed pumps, coupled with controls, these are high-priced products going into the market and very clearly, reflecting strong consumer demand for win-win and value-creating products. So, we don’t believe there will be price pressure decreasing or price pressure increase leading to decreases, we believe price is sticky, margins, therefore, will hold up. And as far as our ability to manage our cost base in the business, we have talked about how we have grown this organization within the four walls of our existing manufacturing footprint over the last 18 months. That’s a lot of variabilization of costs going into the business. We are now addressing that on the takedown. So, we believe our absolute gross margins will hold in the high-40s, and we are setting our targets to hold our gross – sorry, our adjusted EBITDA margins at that 30% level as we close out the year.

Alright. Thanks for that. So, then second question is just on the willingness to deploy capital here, I know you mentioned, I forget the exact terms, you have been essentially reinvigorating the share buyback side of things. Maybe just talk about the willingness in the short-term to use that as a lever as well as what kind of M&A pipelines – what the M&A pipeline looks like from your perspective?

I mean right now, we are concentrated on the organic side of the business. That’s – we have got management actions right now to address the reduction of manufacturing cost base that we variabilized up over the last 18 months. If there is an interesting and accretive M&A opportunity, certainly, we continue to look at those deals. But the priority right now is the management team is to continue to focus on the organic business as we close out this fiscal year. In terms of the announcement to replenish our share repurchase program, look, we believe the – at the current price points the Hayward share price is an attractive buy. We believe in the long-term fundamentals of this organization, high-margin business with strong cash flow generation profile and enforce this business with a very enviable opportunity to deploy capital across all of the organic M&A and share repurchase opportunities that we may have. But we want to remain agile and use our cash wisely. But certainly, at the current price point, the Hayward stock price could provide an interesting opportunity and be an attractive repurchase.

Appreciate it. Thanks everyone.

Thank you, Michael. The next question is from the line of Saree Boroditsky with Jefferies. Saree, your line is open. Saree, can I confirm you are not muted.

Sorry about that, I was. So, this guidance change is rather abrupt. So, can you just talk through your visibility into sales? And how does visibility gets you comfortable with inventory levels heading into 2023?

Yes. I mean again, what we see is, from a new construction standpoint, healthy demand there. We still see upgrading occurring to IoT and connected products. We continue to believe that renovation, which has been deferred over the last couple of years is an opportunity that will play out over the next couple of years, and that the aftermarket will continue to be extremely resilient, as it has been in prior economic down cycles with the great financial crisis being the most recent. New construction certainly was impacted by that. But overall, the aftermarket held up due to its non-discretionary or semi-discretionary nature. We continue to feel that, that’s very good. I mean overall, this industry is still experiencing growth, which is great news. And it’s experiencing growth that is greater than what the historic mid to high-single digit growth algorithm has been. Coming off a couple of years of extremely great growth performance, that’s very encouraging for us and for the industry. So, we continue to remain bullish. We did an exceptional job of getting after our backlog over the last 18 months. The inventory is in the channel, and we just want to make sure that it’s properly sized for what the market consumption is now and what we expect it to be in the future.

Great. Thanks. And then you talked about some end customer demand moderation. Could you just talk about if you are seeing in certain products versus others?

We do see both wholesale shipment data across the industry, and we have done really, really well there. From a product standpoint, we feel good about our share performance around many of these products related to the conversions. I spoke about it in the prepared remarks, whether that’s energy-efficient variable speed pumps, controls continue to perform extremely well. Perhaps what we are very curious about is will these upgrades continue at the rate that we have seen more recently. But thus far, the upgrading is still occurring, and we are very anxious to see what the new construction profile looks like going forward.

Great. Thanks for taking my questions today.

Thank you, Saree. The next question comes from the line of Dan Oppenheim with Credit Suisse. Dan, your line is open.

Thanks very much and appreciate all the color on this. I guess wondering about some of the comments in terms of the new expectations for the full year in terms of sales based on the destocking and such, would seem to imply sort of based on the full year sales, sort of a sharp decline then obviously in the second half. Is your assumption then that much of that destocking occurs here during the third quarter? And I guess looking at the second half, what the full year implies sort of a 25 percentage decline there. So, are you thinking that the third quarter is worse than that potentially sort of 30% to 40% decline in sales?

Yes, your second half numbers are directionally correct. Yes, we would expect to take more of the channel inventory correction in the third quarter. It’s naturally a period in the pool season as it comes to a close when inventories are reduced. And we are working actively with the channel through this quarter to reduce those inventories. So, the majority of that channel inventory correction will occur in the third quarter.

Got it. Okay. Thanks. And then in terms of the – you talked about sort of the business development in terms of adding dealers and such. How much do you think you can do in that area to offset some of the easing of demand during this time? And sort of what efforts are you taking place there?

Yes. I mean that’s been a key focus of our commercial teams is as we have had some great product launches over the last couple of years, recruiting and bringing more service dealers and builder, remodelers into the Hayward camp. And that’s going to continue to be a key focus as we have been able to meet the swelling demand married with some great innovative products that are enabling the SmartPad upgrade. There is a lot to offer. There is a lot that we are arming our sales team with to recruit additional, Totally Hayward folks into our family. So, that’s a key focus of our commercial team right now is to continue that effort of bringing folks over to the Hayward team.

Great. Thank you.

Thank you, Mr. Oppenheim. Our final question today comes from the line of Rafe Jadrosich with Bank of America. Rafe, your line is open.

Hi. Good morning. Thanks for taking my questions. On the updated sales outlook for the year, can you talk about what that implies for volume in the second half of the year? Just given the fact that there has been so much being put in place and there is a lot of moving parts, just trying to get a better understanding of what the volume assumptions are in the second half.

Yes. The majority, obviously, of the takedown in net sales value is a consequence of volume reduction. Pricing will still be comparatively high in Q3 and to a lesser extent, in Q4. We still expect, obviously, a little bit of further headwind on FX in Q3, maybe slightly moderating comparatively in Q4 and we will get a positive contribution in the second half from acquisitions. But the majority of the second half takedown is volumetric based.

Got it. Just the 18% price that I think you highlighted, I think that was year-to-date. Like what would that outlook be in the second half of the year? How much price are you expecting to realize?

The average price over the second half is going to be closer to something around 7% to 8% comparatively over the second half of last year.

Okay. That’s helpful. And then when you look at your inventory levels, like not within the channel, but the inventory on your balance sheet, how much of that increase year-over-year is related to price versus volume?

So, our COGS index has increased just under 24% since the beginning of last year. So, I would say, year-over-year, we are dealing with probably somewhere in the magnitude of about 15% to 16% COGS index increase in our balance sheet or raw material index increase within the balance sheet.

Okay. And then just the question, with volumes coming in the second half of the year, I think you implied – the guidance implies a little bit lower margins compared to what you were expecting earlier, but still pretty resilient. Can you just give a little bit more color on how you are going to be able to help your margins with such a kind of sharp decline in volumes in the second half of the year? You were talking earlier about some of the levers you have to pull and the variable cost model, but margins are up a lot in the last 2 years. So, like have there been structural changes in the business in the last that we have seen kind of post-COVID that are going to allow you to hold margins up at these higher levels?

Yes. I think there is a couple of key factors to consider here. Let’s just talk about price. We announced a further price increase in the second quarter, which will have full benefit within the second half of this year. So, that will be a contributing factor to our top line. Secondly, what’s really important to understand is we generally have a very low fixed cost base within our business. When you look at our cost of goods sold structure, slightly over 70% of it is raw materials, about 10% of it is going to be freight. So, the aggregate of freight and raw materials is 80% variable within our cost structure. We have been able to increase our production and our sales out into the channel or sales into the channel over the last 18 months by containing that growth within the existing four walls of our manufacturing facility. We have always maintained a very agile workforce with a large degree of temporary labor, and we are now and have been over the last four weeks, removing that temporary labor from the cost base. We have a little bit more work to do, Rafe, clearly, to fully protect the margin, but we are confident over the balance of the year that we will be able to reduce our cost base within the factory. Given it was highly variable at the raw material level and variable at the temp labor level, we will be able to get that out of the cost base over the course – over the next three months. And then confident as we move into Q4, we will see margins start to level out and thereafter recover. SG&A, obviously, is another focal point. We want to continue to make sure that we are right-sized in our SG&A base. We have opportunities there to do some improvement, but we also want to make sure that we continue to invest within the sales force and the new product introduction and development programs that we have over the course of the balance of this year and obviously into next year. But we do feel comfortable with the effective margin forecast that we have given implicit within our guidance.

Okay. Thank you for all the color. I will sneak one more in. Just how do we think about capital allocation and your approach to M&A in sort of this more challenging macro environment?

Yes. I mean I think Eifion said it well a couple of questions ago. I mean we are really internally focused right now. We want to make sure that we continue funding the organic projects that continues to generate top line growth for us and serve our customers. We will continue from a M&A standpoint, staying in contact with folks and progressing some of those conversations. But that’s really not a focus for us in the more immediate term. It’s much more internal organic focus from a capital allocation standpoint, Rafe.

Thanks. Thank you. It’s very helpful.

Thank you, Rafe. That concludes our Q&A session for today. So, at this time, I would like to hand the call back to Kevin Holleran for closing remarks.

Thanks. In closing, I would just like to thank everyone for their interest in Hayward. Our business is very well positioned to navigate any near-term challenges, while continuing to generate growth for all stakeholders in the years ahead. This would not be possible without 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 the third quarter earnings call to be held the week of October 24th. Sam, you can end the call now. Thank you.

That concludes the Hayward Holdings second quarter 2022 earnings call. Thank you all for your participation. You may now disconnect your lines.