You can’t defer that forever. So there does seem to be some pickup in interest and activity around the remodel, but not enough so for us to alter what our original assumption was in the guide. So we are holding to that, Brian.
Ryan Merkel: Got it. Okay. So, yes, it sounds like you believe in the pent-up demand story as it relates to renovation, but still a little early. We are not…
Kevin Holleran: We do.
Ryan Merkel: We are not ready to see it yet. Got it. Okay. And then, yes, great to hear that, your price will be 2% for the year. I’m just curious, how would you describe the promotional environment? Any changes there?
Kevin Holleran: I guess, I would say we are back to pre-pandemic, more normal, promotional activity. There wasn’t need for that in the pandemic, obviously, with the demand that the industry experienced. But, it feels that we are back to something more normal. So nothing that’s causing us, alarm. There is, standard promotional activity, obviously, the early buy, some may view that as a promotional activity that’s obviously not end-market driven. But, this was much more of a normal standard early buy program offered and what we experience in terms of order flow and the delivery rates. So it feels like we’re getting back to an environment that we all, expected, or grew to expect from the pre-pandemic period. And that’s really what it feels like is playing out here in the start of the 2024 pool season, Ryan.
Ryan Merkel: Perfect. Thanks. Pass it on.
Kevin Holleran: Thanks, Ryan.
Operator: Your next question comes from Jeff Hammond from KeyBanc. Your line is now open.
Kevin Holleran: We can’t hear you, Jeff, if you’re talking.
Jeff Hammond: Yes. Can you hear me now?
Kevin Holleran: We got you now, Jeff. Yes.
Jeff Hammond: Okay, awesome. Great. So I just want to go back to Rest of World. Can you quantify kind of the disruption impact on sales and on income basis from this, consolidation? And then is this kind of just lost sales, or do you pick that up in 2Q or sometime later in the year?
Kevin Holleran: It’s overall Europe. Rest of World was down 17% as we said. See Europe was a little bit less than that as we look at the weighting there. The order flow in Europe was actually to our expectation in Q1. So there was nothing necessarily about the order inflow that concerned us. This really was about, an aggressive schedule on consolidating from two locations, both in Spain, into a singular location outside of Barcelona. We commissioned a new facility there about two years ago, really with the view that this would be the end state. And that occurred kind of late fourth quarter into Q1, and there were just some, there were some fits and starts through the first quarter, and we’re running it right now. The team has done a fantastic job of getting us, to where we expected to be.
But we weren’t hitting those original rates earlier in first quarter. So, in terms of, the order flow continues to be good in the early Q2 for the European market. So, we’re by virtue of holding our full year guide, we’re expecting to be able to make up for and close that gap that we created for ourselves in the first quarter of this year.
Jeff Hammond: Okay. And then I think you said Canada is still weak but had good numbers because of timing. Is that, is that material enough to impact, anything into 2Q where you saw some pull forward or is that just, noise?
Kevin Holleran: No. Look, the Canadian performance in Q1, frankly, is a pickup from a large shipment that slipped out of Q4. So if you really look at the Canadian performance over a two quarter period, Jeff, it would be on expectation. So this was product that is built offshore, and it just wasn’t received in fourth quarter. So, we’re not ready to call Canada that we have tailwind up there. It continues to be a market we keep close tabs on, and obviously, some of the mortgage concerns and interest rate concerns linger up there. So I don’t want to – I don’t want to give the impression that a strong Q1 is necessarily wind turning to our back, but, things seem to be stabilizing up there, which is solid, starting point.
Jeff Hammond: Okay, then just last one on the – this cleaner market. Can you level set us on, how big of a business that is for you? And then, is this more, upgrade changes or is this kind of a brand new, product and just, any kind of early feedback from customers?
Kevin Holleran: Yes, it’s, as I said, it has been over the last, seven-year period, this has been a double-digit CAGR, and it has grown, actually, the whole category. So the TAM has actually increased. As we’ve seen people really go from hand cleaning or cleaning them to something more automated. It certainly had a bit of an effect on the older technology, both suction and pressure. So it’s grown into a large market. We have a very solid line in the TigerShark, but frankly, we’re a bit underrepresented in the category there. So we’re really excited to bring these products with great automation, great feature and performance, to really start playing into more of the higher end in-ground segment. And we have strong aspirations and expectations with us moving more aggressively into the robotic market, Jeff. More to come on this.
Jeff Hammond: Okay.
Kevin Holleran: A great initial introduction here with a few key models to help building out our product line.
Jeff Hammond: Okay. Thanks so much, guys.
Operator: Your next question comes from Saree Boroditsky from Jefferies. Your line is now open.
Jae Hyun Ko: Good morning. This is James on for Saree. Thanks for taking questions. So I kind of wanted to go back on the gross margin. So looking at North America specifically, you posted a higher gross margin, like, compared to the last quarter, despite having much lower sales when last quarter also had a volume and pricing growth. So how should we think about the margin cadence in North America going forward in 2024? Thanks.
Eifion Jones: Yes, hi, James. Good morning. Yes, look, we’re very pleased with what we’ve been able to achieve in North America. It’s where we have the majority of our manufacturing base. It’s where we see the greatest technology adoption. And so, those are two of our largest underpinning pillars to margin expansion. And we do expect to see margins develop as we get operating leverage across our manufacturing costs base in the peak seasonal Q2 period. So there is some expectations that there’ll be modest margin development there. I don’t want to get into too specifics, but obviously, with that leverage, you’d expect some margin expansion. Plus, as the mix of early buy discounted terms blends out of our top sales line and we move more to in-season pricing, that will also be a tailwind to margin.
