So, I think overall, I wouldn’t look for any major change but some dealers have told us that whereas a backyard project was, hey, I’d like to do an extensive decking around the pool. I want to pool with all these bells and whistles on it and I want to out our kitchen, and their eyes may be bigger than their checkbook. And then the dealers sit down with them and say, okay, but let’s — we can do this but let’s make — let’s break it up into chunks. So, let’s decide on the size of the pool and what features have to be buried in the cement so to speak and we’ll put those in. And although, you might like a 1,500 square foot deck around your pool, if it doesn’t fit in the budget today, we can build a pool with a very small deck. It would be like the pools that were built 20 years ago with just coping and grafts and then we can come back later and add the decking.
We can come back later and add an outdoor kitchen. So, if you’re a more price-sensitive builder then those folks are working to make sure that they do whatever they can to bring that price down. Now having said that, you understand that the average is made up of pools that are $1 million and entry-level pools. So every pool tends to be more expensive, but I think our dealers are trying to be more creative when it comes to bringing as many people into the market as they can. The good news is that when it comes to some of the features like that we have been talking about like automation and robotic cleaners and such, robotic cleaners are still outselling the pressure in section which is much older technology even though they’re more expensive, they’re outselling them candidly.
And when people are buying pools and upgrading, they’re not really opting for — I’ll go back to a time clock. There’s still — they’re still going with automation but it may be a more entry level of automation. So it’s a good question. I think what you see is, our dealers working within the environment to try and be as inclusive as they can with as many customers.
Steve Volkmann: Got it. Okay. Interesting color. And then maybe just real quick for Melanie. If we’re having this conversation in three months and we haven’t seen some sense of recovery or reasonable volumes on new build and retrofit, how does that impact your gross margin for the second quarter?
Melanie Hart: Yes. So gross margin for the second quarter, if we continue to see a lesser mix of building materials. That would be, I would say, an added component on top of the normalization in inventory that you would see as the decrease on year-over-year comparative margins.
Steve Volkmann: Perfect. Thank you, guys.
Melanie Hart: I think there is probably just a time for next — we have opportunity for one last question.
Operator: Our last question comes from Andrew Carter with Stifel. Please go ahead.
Andrew Carter: Hey. Thanks. Good morning. First question I wanted to ask just to make absolutely sure. The weather component that you said for the year that you outlined as a negative, was that a net negative from last year in isolation i.e. I think last year was 60 and forgive me but this year, I think was a minus two. So therefore, a net two-year headwind of 80 or was it just those select markets? And then with the guidance coming in just to be clear coming in lower at the top-end of revenue guidance that’s the not an expectations of weather favorability and it’s the maintenance units coming down. Is that, chemicals and equipment both or just ones of those? Thanks.
Melanie Hart: Yeah. So the guide for the year just kind of slightly positive would not include the weather recovery as we had mentioned. And then for the first quarter we did see the positive impacts in the quarter for the normalized weather in California. You’ll note, in Pete’s comments, that California outperformed kind of the rest of our big four markets. But where we saw weather for this year in first quarter was primarily in Florida, which for the quarter the proportion of those Florida sales is the highest of the big four states. So it had a larger impact as it relates to that.
Andrew Carter: And one more question to ask here, in terms of kind of the new branches and acquisitions. I know that the base business was kind of right in line with overall sales. But I think over the past 15 months which I believe is what you exclude from base business you’ve added about 5.5% branches. Is the contribution lower than what you — your expectations would be perhaps maybe this is super cycle dynamics. And of course at the Investor Day you reiterated two things the payback period as well as kind of the bottom kind of the margin, go bottom to your 10% or target. So — but has anything changed where just the new branches are just an expense of competing in the category versus being as accretive to revenue? Thanks.
Peter Arvan: Andrew, what I would tell you is that, when we open up new branches as we mentioned during Investor Day we always do a five-year pro forma. And we have to be very comfortable with the reason and the rationale for us opening the branch and the quality of the pro forma. Certainly, if you look at the branches and their ramp in a market that is more challenged from a new construction basis they would be impacted in perhaps the slower growth, but many of the branches that we open are really not for new construction there could be much more maintenance tied to maintenance and those tend to perform well. So overall when I look at, the performance of the class really nothing is warming. I’m actually pretty happy with the results on the greenfield especially given the number of greenfields that we’ve done.
But that really is — that’s a testament to the experience of the management team. So with these folks when we get them — or when they open new branches they’re not new folks they’re not trying to figure things out. They’re very disciplined. We have a quality management team. We generally see the new location with talent that’s ready to be promoted from the existing network. So our ability to leverage the performance of those new branches is still pretty good. So overall, I’m happy.
Andrew Carter: Thanks. I’ll pass it on.
Peter Arvan: Thank you.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Peter Arvan, President and CEO for any closing remarks.
Peter Arvan: Yes. Thank you all for joining us today. We look forward to our next call, which will be July 25th, mark your calendars for July 25th when we release our Second Quarter 2024 Results. Have a wonderful day. Thank you.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
