David Manthey: Got it. Thank you very much.
Operator: Our next question comes from Scott Schneeberger with Oppenheimer. Please go ahead.
Scott Schneeberger: Thanks very much. Peter, you talked in the past about maybe a handoff from new pool construction where there was a backlog and then folks moving to remodel and we have heard your guidance on it. But I am curious just to get an updated commentary from you of, do you see that trend pursue — occurring and likely persisting? Could there be upside as you enter 2020 in the remodel category. And in that question, just what you are seeing with higher tech offerings and discretionary purchases there and propensity to pursue those items? Thanks.
Peter Arvan: Sure. As I mentioned, we believe that the renovation and remodel business is holding up better than new pool construction and that’s for a couple of reasons. People with pools tend to be more affluent in general than people that are deciding whether they want a pool or not certainly at the entry level. So our survey of the builder community would say, builder remodel community, because most people do both, right? Most of our customers that are builders are also doing remodel. And I think there with probably very few exceptions, our builders would tell you that their remodel business is better than the new construction business. I think there was a bigger backlog in renovation and remodel a year ago, 18 months ago, because of people that were focused on building new, new, new.
I think with new pool construction being down 30%. I think the backlog of new pool renovation and remodel has been worked down. But also remember, we — the industry kind of views renovation and remodel is about 10% of the industry, right? So if you have 5.4 million in-ground pools, there might have been a little more than 10% in pent-up demand and backlog that today may be back down in the 10% range. So that business is good. It was probably a little bit ahead of itself addressing the backlog, now I would tell you that it’s probably back down to more normal and I think that’s good and that’s healthy for the industry. Your question on the technology adoption, again, it comes down to, I guess, during the height of COVID when people were home and they said, hey, I am spending a lot of time.
I am staring at a swimming pool with no technology. I want, I want, I want. We saw a big request where I want technology, I want technology. We see with new pool construction, the trend towards higher ticket items and technology is still continuing, right? People are still — the pools that are being built today still have the new features and the new technology behind it. Oftentimes, when there’s a replacement necessary, again, it is an opportunity for an upgrade. So maybe during COVID, some of the upgrades were pulled forward, meaning the time clock still works, but I’d actually like to do this from my phone versus going out to the pad. So now when there is failures of equipment we still see adoption of the higher tech product, because frankly, it’s just — it’s a better experience for the consumer.
When pumps fail and they are putting in a variable speed pump, there’s still a lot of single speed pumps in the industry that we are working and people weren’t going to change them. But when they do change them, because of the DOE regulations, they are going to variable speed and they are recognizing a significant benefit in their energy cost. The same opportunity exists when it comes to the heaters, high efficiency heaters versus standard efficiency heaters, and cleaners, there’s types of cleaners that are far more efficient. And again, the consumer trends for those products continue, they are — when people are spending money, those that are replacing most often are replacing for the newer product versus looking at old technology.
