I think we’re trending to the numbers we had expected in our guide overall. But what’s happening is we’re seeing good traction with our Radiant panels and Radian Pools because that’s a lower priced inground vinyl liner option for those consumers that, I hate to say, step down to because the Radiant panel and pool is a really, really nice pool compared to other options out there at that, let’s say, maybe a little bit more entry level or second level pool you’d be stepping into versus your typical on-ground or above-ground pool you would see. So a little bit of a mixed bag, but when we look at the fiberglass, that’s what we like to see. We’d like to see the traction we’re getting with the Radiant Pool out there and the acceptance as well.
Anika Dholakia: That’s really helpful. Thanks. And then second, just curious, how are you guys thinking about current capacity levels today? Should we assume that there is going to be additional capacity investment in the near term, or maybe given your Kingston investment, some other cost initiatives, maybe you’re holding off on that. Thanks.
Scott Rajeski: Yes. So on the capacity side, we really like where we sit with capacity today from all the investments, getting Kingston brought online. And just thinking about Kingston. It gives us the opportunity to attract new dealers to those locations. They now have capacity in their backyard with fiberglass, much more capacity than we had before. They’re looking at Latham as a manufacturer of choice. It gives them a lower cost model to pass on to their consumers to get more demand. So we had a really, really nice customer win and pick up, up there. I think we might have briefly touched on that in the last call. Similar in other areas of the market, we’ve got good capacity and that leads to great service levels and lead times.
Where we will continue to invest is in product launches, product lineup, new models, new feature-rich fiberglass pools. We talked a lot about plunge pool series and some of the new models we’re getting out there where consumers are looking for particular features, whether it’s a side entry, bigger tanning ledges, or some of these smaller cocktail/plunge pools. So I think it’s those types of investments. Look, the operations team continues to drive a lot of really, really good value engineering and lean events in the facilities, which is actually creating more capacity. And not to sound like a broken record, but you go back to the big cost reduction initiatives we were able to do last year, taking five facilities and locations offline. It’s because of all those efforts of the operations team freeing up capacity.
So we’re in a good position. As of right now, it’s not like we need to go do chunky type of capacity. It’s tweaks in each of the small facilities to make sure we are positioned looking out to the ’25, ’26, ’27 market and where new pool starts will be.
Operator: The next question comes from Susan Maklari from Goldman Sachs. Please go ahead.
Susan Maklari: My first question is, thinking just a little bit about the input cost environment, how that came together through the quarter. Any changes that you’re seeing as you think about the balance of the year, perhaps any chemicals that are coming up or those types of things? And then just any thoughts on price cost, how that trended through the quarter and the outlook there?
Oliver Gloe: Yes, let me take that, Susan. So let me start with our annual guidance, and then I’ll go back and take that back to Q1. So we guided on price, flattish and on deflation. We added some modest inflation to our guide. And in Q1, we’ve seen deflation in several parts of our baskets, primarily resins, the PVC film, aluminum, quite in line with our guys and our expectations, maybe a little bit better, more favorable. But we’re also seeing some increases most recently driven by styrene and benzene. So I would say, overall, our guidance being a modest deflation for the year is quite intact and confirmed by our Q1 performance. I’ll give you a similar comment on the pricing side. We generally see prices sticking. In our last earnings call, we said that some of our product categories took down a little bit, some we took up a little bit. But overall, we guide towards a flattish price. And that again, the same is true for Q1, we saw flattish pricing in Q1.
Susan Maklari: Okay. All right. That’s helpful. And then when we kind of look across our coverage, I think there are some companies that have talked about seeing perhaps a moderation in activity as rates have moved higher in the last couple of weeks or so. It doesn’t sound like you are seeing that as we get into the kind of core of the pool season, but I guess, Scott, can you just talk a bit to what you are hearing on the ground from some of your dealers? Has there been any response to the move-in rates and just how are you thinking about that as we do get into the spring and the summer?
Scott Rajeski: Yes. So Susan, again, if we go back to kind of our guide for the year. We were expecting pool starts to be down further than others and probably the rest of the entire industry. And I think some of the commentary we’ve seen out there is, I think people are experiencing closer to our number, call it, around 15% down for new pool starts. There’s really not a lot of financing activity out there right now. So as rates continue to trend up, trend down, bounce where they are at this point, I don’t really think that’s impacting our dealers, our consumer base. We typically have the higher end of the market, more of the cash buyers. We’re actually seeing the 7,500-plus thousand type pool backyards holding up extremely well as those individuals have the capital that they can deploy to make the pool purchase.
So I think all helpful to us as we go forward here. So I think we’re in a good position there, Susan. And look, we’re all looking forward to when the Fed starts to see the rates go down because I think that will really start to allow others to come back into the market. We got some new intel from one of our third-party financing companies. And I think they’ve tightened up the credit limits and I think what they’re doing now is they’re getting a little bit creative. One of our partners has now introduced the 20-year loan again. They have pulled that back over the last year or 2. So the fact that now you can go out there and finance a pool project for 20 years helps lower the overall monthly payment for a consumer, which is keeping folks out there.
And I think dealers are also getting very creative of scaling back the overall dream of the homeowner for the backyard. Homeowners are coming in. They’ve got their pool. Their huge patio. Their outdoor kitchen, the fire pit, the pavilion, all the lighting, the landscaping. And I think dealers are saying, “Hey, look, we’ll quote out the full backyard projects for you, but we’re going to do it in segments. If you can only afford X, let’s get the pool in and then let’s get your 3-feet of concrete in, and we can fit you into your budget and payment that way. And then we will come back in a year or so and finish up your dream of what you want your whole backyard to look like with a bigger patio, getting that fire put in there and the outdoor kitchen.” So I think its people being creative.
In some cases, dealers have had to lower their price to the consumer as they readjust their pricing model in a lower demand and lower new pool start environment. So it’s really, I’d say accumulation of several different factors they’re working on out there, Susan, to try to keep business flow and keep their employees engaged out there. But look, I hate to say, we’re looking forward to getting into ’25. We still think ’24 will be the trough. New pool starts, I don’t see how they could be any worse next year than they are this year. They should go up, barring any unforeseen incident, but that’s where we want to be conservative in our actions as a company here, making sure we’ve got the capacity. We’ve got the investments in plants and personnel.
We keep investing in new model and new product launches because we’re looking forward out to ’25 and ’26 when the market rebounds.
Operator: There are no more questions in the queue. This concludes our question-and-answer session. I would like to turn the conference back over to Scott Rajeski for any closing remarks.
Scott Rajeski: Yes. Look, thanks, everyone, for participating in this afternoon’s call. Look forward to seeing you all at our upcoming conferences and meetings. I hope everyone has a good evening, and everyone have a safe summer until the next time we talk. Take care.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
