Good morning, and welcome to Fluidra's Q1 2022 results presentation. I'm David Herrerías, Investor Relations, Corporate Communications, and M&A Director at Fluidra. Today's presenter will be Mr. Eloy Planes, our Executive Chairman, Mr. Bruce Brooks, our CEO, and Mr. Xavier Tintoré, our CFTO. You can follow this presentation in its original English version or in Spanish. You can select your preferred option in the dropdown menu at the bottom right of your screen. Today's presentation will include live Q&A. By accessing the Ask a Question tab on your screen, you will find the telephone numbers and PIN codes needed to ask questions to management. Please feel free to dial in during the presentation so that the operator can include you in the Q&A roster. Presentation materials are accessible through our website, fluidra.com, and they have also been uploaded pre-market open to the CNMV.
The replay of today's presentation will be made available on our website shortly after we finish. Let us start the presentation by opening the floor to our Executive Chairman, Mr. Eloy Planes.
Thank you, David. Good morning to everyone on the call, and thank you for joining us for this Q1 result presentation. I'm very proud to present the results of this solid Q1 . As Executive Chairman, I want to thank our team, our clients, and our suppliers for these strong figures. Bruce and Xavier will dive into the numbers later, but let me make some comments before. Excellent Q1. Sales with a 31% growth on top of a 61% delivered in Q1 last year. Growth is mainly driven by the following three factors, a strong underlying demand, price actions taken to offset inflation, and finally, the run rate of the five acquisitions we did last year. Fundamentals of the business remain positive with the strong new build activity as one of the key factors.
Remember that the stronger the new pool is today, the stronger the aftermarket will be tomorrow, and the more resilient the company will be. We expect a good 2022 pool season in the northern hemisphere. We are still very focused on servicing our customers, which has been challenging since the start of the pandemic. These challenges still remain, but our flexibility and capacity increase have allowed us to perform well. On the other side, efficient capital allocation and attractive shareholder remuneration has always been a top priority for management. With our excellent cash generation track record, the increased liquidity of our stock during 2021, it is time to add share buyback as a tool to complement our capital allocation policy.
To be clear, we remain committed to the 2x leverage, and we maintain M&A and progressive dividends based on 50% buyout as our top capital allocation tools. In this sense, we are proposing today a dividend distribution for 2022 of EUR 166 million, more than doubling the EUR 78 million distribution of 2021. Finally, despite changing environment, we are maintaining the full year 2022 guidance that we shared with you last February. The healthy industry dynamics and the resiliency of our business reassure us in our commitments for the year. At this point, I give the floor to Bruce, our CEO, who along with our Chief Financial and Transformation Officer, Xavier, will provide a deeper look at the Q1 2022 numbers.
Gracias, Eloy. Let me start with comments on our overall performance and highlights for the Q1 of 2022, and then turn it over to Xavier to provide more details on the financial results. I will then return to provide some color on our outlook. The numbers you see on slide five are the 2021 and 2022 financial highlights for January through March. In the Q1 of 2022, sales grew 14%, adjusted for currency and perimeter, compared to the same period of 2021 to EUR 667 million. This sustained growth was driven by the new build activity and price actions. As Eloy pointed out, it follows a record Q1 of 2021. Adding FX and perimeter expansion, growth resulted in 31% from Q1 last year.
Adjusted for currency and perimeter, EBITDA and EBITA grew 9% and 6% to EUR 170 million and EUR 151 million, respectively. Both measures were impacted by extraordinary inflationary pressure, which is why we are taking additional price actions that I will detail later. Cash earnings per share grew 21%, adjusted for currency and perimeter, to EUR 0.52 per share. On operating net working capital, we ended the Q1 19% higher on a currency and perimeter adjusted basis. The operating net working capital ratio to sales improved 134 basis points to 25.4% despite investment in inventory. Our net debt stands at EUR 1.239 billion. Our leverage ratio reduced to 2.1x despite significant M&A investment during the last twelve months.
Moving to page six, let me share some highlights of the quarter. We're really focused on our ESG journey, as it is a key part of our values. We have reached a reduction of Scope 2 emissions in 2021 by 50%, beating our internal expectations for the year, and getting closer to our target of being carbon neutral by 2027. We're now using more than 80% renewable energy, having increased the ratio by more than 20 points in 2021. Lastly, as we shared earlier in the year, we refinanced our debt in January 2022, thus simplifying the debt structure, extending maturities, and rebalancing the currency mix. Terms are linked to some of the environmental targets of the Responsibility Blueprint, which reinforces our commitment to ESG. Let's move to capital allocation.
As we have demonstrated since the merger, the strong earnings growth and cash generation enables us to increase shareholders remuneration. On the M&A front, pipeline remains solid. After the strong M&A activity in the U.S. seen last year, we're now focused on integrating these new companies in an optimal fashion, and for 2022, our priority will be on Europe. In addition, we have proposed increasing the dividend by 112% with a payout of EUR 0.85 per share to be evenly split into two payments as part of our approximately 50% cash net profit distribution policy. Lastly, we have just revised our capital allocation policy to include share buyback as another instrument for shareholder remuneration. With our increased liquidity, strong cash generation, and recent market valuations, we believe it is time to add this tool to our toolbox. As of today, it's only a tool.
We will evaluate based on how we execute on M&A and market conditions, always keeping in mind our 2x debt to EBITDA ratio. Finally, as for business performance, we expect to increase capacity over the course of 2022 by 30%+ on top of the 70% capacity expansion of 2020 and 2021, to meet customer needs that will help us reduce our backlog, predominantly in the U.S. We have seen double-digit inflation in Q1 in key geographies. This higher than initially anticipated inflation led us to implement price increases in North America that go into effect tomorrow. We've worked with our channel partners to have this change impact the backlog as well as new orders, which we had not done in the past. This should allow us to improve the margin on schedule despite the continuous inflationary pressure.
Lastly, we decided to exit Russia shortly after the conflict began, and now we've reached a preliminary agreement to divest local operations. Turning now to page seven, you see the sales evolution by geography. As we expected, Southern Europe's excellent momentum continued with currency and perimeter adjusted growth of 25% driven by Spain, and aided by the recovery of our chemicals and commercial businesses. Rest of Europe grew 3% on a constant FX and perimeter adjusted basis with difficult Q1 2021 comps and a more volatile macro environment in Eastern Europe. North America expanded a solid 8% on a currency and perimeter adjusted basis against an 86% growth in Q1 2021. The region was negatively impacted by continued supply chain challenges, and the forecasted Texas freeze comparable, where we have a particularly strong share position.
Adding inorganic activity, North America delivered a 49% growth in the quarter. Underlying demand remains strong in the region. The rest of the world saw sales growth of 19% for the quarter on a currency and perimeter adjusted basis, driven by the strong results of Australia. This overall performance demonstrates the continued growth and strength of our market's fundamentals. Next, on page eight, we see the evolution by business unit. Residential pool is our largest segment and accounted for 75% of our sales, growing close to 10% for the quarter on an adjusted FX and perimeter basis, supported by continued robust demand and M&A activity. Growth was led by filters, pumps, robots, and heaters. Commercial pool recovered well on an easy comparable with a 26% increase adjusted by FX and perimeter, positioning us well for further growth.
Inorganic activity helped growth reach 59% in this strategic area. Pool water treatment grew 29% for the quarter once adjusted for FX and perimeter. This business unit saw a strong performance with both the water care equipment segment along with chemicals. The fluid handling business reached double-digit growth of 18% in Q1. In summary, our global footprint continues to play an integral role in helping us deliver strong growth together with excellent cash generation. Again, I want to thank our talented team of more than 7,000 employees and business partners for their agility, positivity, and sacrifices during these challenging times. Moving at full speed and keeping our customers and values at the center of all we do, makes me confident that we are ready to continue executing the many opportunities that lay ahead of us.
With that, I'll turn it over to Xavier to explain the financial results in more detail before I return to share our outlook and guidance.
Thank you, Bruce. Let's turn to page nine now and take a look at the P&L in some more detail. Sales growth of 31%, which can be broken down in 4 points from currency, 13 points from inorganic growth, and 14 points of growth at constant perimeter. Gross margin reached 52.8%, 110 basis points lower than prior year. As we expected, the impact of inflation and mix was not fully offset by pricing, as many shipments in the period correspond to orders recorded at 2021 pricing. We expect this pressure to continue in the Q2 as the first half of 2021 had favorable impact in the price inflation equation.
We are confident on the results of our pricing actions to recover the gap on our guidance target over the second half of 2022. Operating expenses, which now include provision for bad debt, reached EUR 183 million, with an increase of 31%, which is 14% if we adjust for perimeter, impacted by higher logistics and transportation costs, as well as investments in marketing and R&D. Acquisitions represent 17 points of the OpEx growth, as acquired companies have a higher expense profile pointing to the synergy opportunity as we integrate them. EBITDA reached EUR 170 million, with an increase of 26%, driven by higher volume, a small margin contraction due to inflation and mix, and a very limited operating leverage. EBITDA margin reached 25.4%, which is 110 basis points lower than prior year.
EBITDA achieved EUR 151 million, up 26%, and reaching a margin of 22.6%. Below the EBITDA line, the amortization increased to EUR 17 million, driven by the intangible asset amortization of all the acquisitions performed during 2021. Non-recurring expense of EUR 4 million, which is 44% down to prior year due to lower M&A activity in the quarter versus a year ago, where we closed the CMP and Built Right deals. Net financial result is EUR 26 million, EUR 19 million higher than last year. Extended maturities to 2029, rebalanced currencies, and locked interest rate on our Term Loan B. At the same time, we have simplified the structure of the net working capital financing facilities by upsizing the RCF to EUR 450 million and extending its tenure to 2027. We are now well-equipped to execute our plans.
Tax rate for the quarter is 27%. Net income reached EUR 75 million compared to EUR 67 million in 2021, growing 12% impacted by margin pressures, and the extraordinary non-cash refinancing cost. As you know, we track cash net profit, a good indicator for Fluidra, as we have a very significant amortization, entirely purchase accounting related, that impacts our net profit and EPS calculation. Cash net profit for the quarter is EUR 103 million, up 26% to prior year, significantly better than net income due to the non-cash nature of the refinancing write-offs. The following page shows the free cash flow statement as well as the net debt evolution. As you all know, Q1 is an investment quarter for the company as we prepare for the season in the northern hemisphere. Therefore, our free cash flow use has been EUR 150 million.
This is EUR 216 million less cash usage than what we did in 2021. Key drivers of this improvement are the EUR 219 million coming from less inorganic activity during Q1, as during Q1 2021, we completed the CMP and Built Right acquisitions, and also EUR 29 million of less investment in treasury stock. If we look at the operating cash flow, the company has invested EUR 60 million more in working capital, which are partially offset by the EUR 38 million of incremental EBITDA. If we zoom into the investment of working capital, this is entirely driven by investments in inventory, which is impacted by perimeter.
Inflation, longer in transit times, as well as investments to protect service to our customers in this supply-challenged environment. These investments are partially covered by an increase in payables and continued efficiency on receivables as collections perform nicely around the world. Finally, net debt reached EUR 1,239 million, up EUR 262 million, driven by the acquisitions executed last year. Our leverage ratio is 2.1x . That compares favorably to the 2.4 x in 2021. With that, I will give the floor to Bruce and Eloy for guidance and closing comment.
Thank you, Xavier. Moving on to page 11, let's talk about our outlook and specific guidance. As discussed in today's call, we saw a solid start of the year, and we remain positive for 2022 and beyond. April's performance was aligned with our expectations, taking into account the tougher comp due to a COVID comparison, the Texas freeze, and a lower number of working days. Momentum continues for new builds. Builders' backlogs remain solid. As I shared before, we have taken additional price actions to offset continuous inflationary pressures, and thus protect our P&L. We still face some supply chain challenges that are affecting our ability to ship our clients. For this, we were unable to materially decrease the current levels of backlog. That delay, together with continued inflationary pressures, will have an impact on the first half margins.
This will be fully offset over the year with first, the full read-through of both the October 2021 and the March 2022 price increases, as well as the additional pricing just announced. Finally, we're happy to share that the integration of our recent acquisitions are on track. We continue to monitor the market for additional accretive M&A opportunities, and the pipeline is still positive. In summary, 2022 will be another strong year for Fluidra. As Eloy shared before, we are maintaining our full year 2022 guidance. We anticipate sales growth from 12%-17%. These growth rates already include run rate M&A from 2021, which contributes mid-single-digit . Secondly, we now estimate a high single-digit price read-through. Thirdly, we see volume growth for the full year from new construction and the continuous expansion of the aftermarket.
Lastly, we adjust for one-off impact of the Texas freeze from last year that we will comp through May. EBITDA margin higher than 25.5%. We are committed to deliver margin expansion geared towards the second half of the year, largely driven by value improvement and lean, while we begin to look at longer term opportunities to simplify the company. Cash EPS growth between 10% and 16%, driven by a return to normalized 28% tax rate after Zodiac merger-related tax benefits. Our highly cash generative business will see us continue with our policy of accretive capital allocation. We see ourselves as market consolidators through a disciplined process that delivers value on the capital employed. Now back to the chairman to wrap up the prepared remarks before moving on to Q&A.
Gracias, Bruce. Thank you, Xavier. Let me summarize what I see. Solid Q1 results and confidence for the rest of 2022. Our customers' backlog, our price actions, and the run rate of M&A all in give us a solid foundation. We are expecting another strong year for Fluidra. Our industry prospects remain strong, driven by demographic trends like the outdoor living and the migration to the south and warmer regions. The larger number of installed pools will generate value in the aftermarket over the next few years, and those pools have more and more connectivity and sustainable products, increasing the average ticket. Finally, there is a pent-up demand for a model that hasn't been serviced recently. Fluidra's platform is ready to leverage on these trends while improving our efficiency and margin in the medium term through simplification.
In summary, our fundamentals remain strong and our strategy and investment thesis remain unchanged. Thank you for joining us today and for your continued interest. Now I will turn the call back over to David to begin our Q&A session.
Many thanks, Eloy, Bruce, and Xavier for your presentation. We will now begin the Q&A session. Let me remind you that you will be able to ask questions to management by calling the telephone numbers on the Ask a Question tab of your screen. Seb, please go ahead with the first question.
Thank you. As a reminder, to submit a question, please press star one on your telephone keypad. Our first question today comes from George Featherstone from Bank of America. George, please go ahead.
Hi, morning, everyone. Thanks for taking the questions. First one really is, I guess, a point of clarification. If you're raising prices again, what was the reason that this didn't increase the top-line guidance for this year? Also, I think I heard you say that you were going into your backlog and implementing new pricing within the backlog. If you just talk a little bit about the details on that'd be great.
Okay. How you doing, George? I'll take that first one. As far as the growth and the guidance, Q1's really strong, and we're very pleased with the performance. Let's face it's Q1. This is a seasonal business, and we're just getting started. We think it's better to be cautious right now, before you know, let's get into the real season, get into the meat of the season, then we'll look at the guidance longer term. In addition, just to remind everybody, M&A was a nice contributor in Q1, and that was a material advantage for us that will diminish a little bit as we go forward.
As far as second question on price, I think the change that we've made here is we've gone from kind of mid-single digit, mid to high, to high single digit. We are expecting additional read-through versus what we have seen so far in the Q1 . Let's face it, the inflationary environment hasn't totally mitigated, so we'll have to keep our eye on what's happening with inflation and see if we need to do anything else.
Okay, thank you for that. Maybe just talking about the consumer more widely, coming under pressure from inflation in a number of geographies. How should we think about this balancing act that you might be facing now between price increases to offset costs for you, but also any potential demand destruction that might cause?
Yeah, I think that, I mean, George, I think it's something that we'll continue to watch. I guess what I would remind you is that three-quarters of this market is aftermarket driven and is not really discretionary. They're one-off prices that the consumer doesn't really make every year, right? You know, they don't have a huge sense of comparison. Secondly, we've been watching the builder backlog closely, and we're just not seeing cancellations. You know, we feel like we're still in pretty good shape for 2022. Certainly something we'll continue to monitor.
Thank you. My final question would be just about how your backlog compares at this point in the year versus last year.
Not sure exactly what I'm allowed to say on backlog. Usually not a whole lot. Let's say we were disappointed with our service level in Q1, and that backlog is still more robust than we would like, George.
Understood. Thank you very much.
Our next question comes from Andre Kukhnin from Credit Suisse. Please go ahead.
Morning. Thanks very much for taking my questions. I'll go one at a time. Just a quick kind of follow-up on that backlog margin impact, that you mentioned with backlog having risen and raw materials have risen and hence, will weigh on margins in the first half. Do you expect incremental pressure in Q2 versus Q1 or are we seeing kind of the full brunt of it already in Q1?
I think the question is, Andre, just to be clear, were we going to see increased inflationary pressure in Q2?
Yeah, from that kind of combination of, having grown the backlog, with, I guess, fixed price and, raw materials have gone up. I'm just trying to figure out whether that already had the full impact in Q1, or will it have a bigger impact in the Q2 ?
Andre, maybe the way to answer the question if that's what you're looking for is we expect a better result in the Q2 of this price versus inflation impact on the margin. I don't know if that's what you're looking for. Than what we had in the Q1 .
Uh.
Obviously in the.
Yeah. Yeah. That.
Uh.
That's it. Gotcha.
Yeah. Okay. Then obviously, as we said, in the second half of the year, we expect to recover and get back to that in terms of margin. Yeah.
That's very clear. Thank you. On aftermarket growth, could you give us an idea how much your aftermarket grew in Q1?
I'd say it's impossible to break it down in a quarterly type of fashion, Andre. For sure the driver in Q1 was new construction. New construction remains really strong. As far as aftermarket, I mean, it's really.
Okay.
Guys just getting ready for the season.
Right. Got it. For the backlog pricing adjustment, is it just U.S. specific that you've been able to do that, to go into existing kind of custom orders and price up, or could you do that in Europe as well?
Yeah. In Europe, our price read-through has been quicker because we don't have the kind of scale of backlog that we have in the U.S. It was a U.S. particular action.
Great. If I just may squeeze the last one. On the capital allocation and bringing buyback into the mix, should we read anything from that kind of as implications for M&A, asset availability and size of opportunity? Or should we just think about it as an incremental and M&A story remains unchanged and intact?
Yeah, I think you should probably read it as incremental. I guess we probably would have launched if the M&A pipeline wasn't good. We still see M&A as our priority. We'll continue to deliver on our dividend policy, and now we add this tool to the equation. Let's see what the market bears. As far as M&A, we certainly think the valuation's attractive.
Got it. Thank you very much for your time. Really appreciate it.
Our next question is from Álvaro Lenze from Alantra Equities. Please go ahead.
Hi. Thanks for taking my question. I wanted to know if you could provide some more color on the evolution in Europe. Southern Europe, of course, has grown a lot organically. If you can break down that for volume, and whether this is also driven by the strong residential new construction or whether that's most U.S. thing. I don't know if you could provide just some additional color on Southern Europe and the dynamics you're seeing there and if customers are showing some signs of being more sensitive to the issues with the Ukraine war than you are seeing in North America. Thanks.
Yeah. We're really pleased with the results of Southern Europe in Q1. I would say first off, the residential new construction phenomenon that you're seeing in North America is very similar in Europe. Most of the builders that we talk to are pretty well built out through Q3, some all the way through the year, some might be a month or two shorter than that, but the new construction business is really strong. Of course, price reading through is helpful to that growth. I would also point particularly to chemicals, which would have been in, I guess, limited supply in Q1 of last year, and then the return of commercial.
We're really pleased to see commercial start to really grow off of a softer comp in 2020, but not a bad year in 2021. Really pleased to see where commercial is at this point in the year.
Thanks. Another question, if I may, on the expected price increases and the impact it should have on your accounts. You already indicated that you expect a better result from the price versus inflation in Q2 than what you have seen in Q1. My question would be whether the price increases are just enough to cover the markup in costs or this should also allow to maintain the margin level that you had last year. I don't know if the price increases are targeting a.
Specific target of gross margin. We guide to the overall EBITDA margin of the company, and this pricing is going to be, you know, helpful in offsetting that inflation impact, and deliver the margin increase at the bottom line.
Okay. Thank you very much.
Our next question comes from Christoph Greulich from Berenberg. Please go ahead.
Good morning, thanks a lot for taking my questions. Yeah, four questions from my side, please. I would like to start with a follow-up on pricing. Could you give us an idea of the proportion of the Q1 sales which have already reflected the October price hike, and maybe also on the magnitude of this new price hike that you're implementing in the US now?
Okay. As far as the October read-through, I can't get into those specifics, Christoph. What I would tell you is that the price that we saw for the Q1 read-through at kind of mid- to high-single-digit, okay? That gives you a sense of where the read-through was so far. Let's say that the price action just taken is about 5%.
That's clear. Thank you. Maybe on the regional growth trends, it was quite interesting to see, especially in Southern Europe to be stronger than North America in terms of the organic growth. I mean, it's quite different to what we've seen from some of your main peers who reported Q1 numbers. What do you see as the key reasons why you see a different growth trend there compared to some of your competitors?
We're really pleased with the performance of Europe. I do think if you look at the competitive base, they don't have the same level of participation in chemicals or in commercial. Seeing that bounce back in an area where we are strong in Southern Europe was really helpful. I also think we're just in a pretty good position for the season. Nice job by the team.
On the pool builder backlog. You're mentioning that they, yeah, remain very robust. You have a good visibility there. Do you have also any visibility on the current order intake of the pool builders? What is the intake trend there at the moment?
Don't have a lot of visibility there. In fact, most of them have kind of turned off their marketing initiatives because of their capacity. We're not getting as much color as we used to on leads. Right now, they've got enough work and they're happy.
Okay, last one from my side. Regarding the buybacks, yeah, can you provide us with any color on the potential size and timing of such a program?
No. What we're announcing today is just the policy, the fact that we are adding this instrument to the tool. We like, you know, and we will continue to assess our M&A. As Bruce has pointed out, and within the financial policy of running the company around these two times, then we'll, you know, figure out what amount of cash we can devote to the activity. We'll stay, you know, vigilant on the situation and we'll launch a program when we see fit.
Great. Yeah, that's all from my side. Thank you.
Our next question from Miguel González from JB Capital. Please go ahead.
Yes. Hi, good morning. Thanks for the time. Most of my questions have been answered, but I will ask a quick one. You say in the presentation you will increase more than 30% your current capacity, mainly in the US. Could you maybe guide us to the increase in CapEx this might require and how much this might deviate from the historical average CapEx of 3% of sales?
Yeah. No, it doesn't imply any deviation over our traditional policy of spending around this 3% of sales on CapEx. We did this capacity expansion last year, and as you will see, you know, we were around those numbers, so we will continue to perform around that 3% type of range.
All right, thank you.
Our next question comes from Luis Toledo from ODDO. Please go ahead.
Hello, good morning. Just a final question from my side. It's regarding the M&A pipeline. I think, Bruce, you referred to the focus on the European market. I don't know if that's a change in strategy because you consider that you've reached your market share target in the U.S. or you see a specific opportunities in some regional market or some segments. Thanks.
Okay. Thanks, Luis. I don't see this as a change of strategy. I see it more as a reflection of our capacity to take on. I don't want to say that if there wasn't a great opportunity that we wouldn't do it in the US, we certainly would. Making four out of the five acquisitions that we did last year in the U.S., we want to make sure that we onboard those appropriately. We had two which were, let's call them mid-size, so bigger scale than our normal bolt-on acquisition. We think the priority is to get those businesses integrated and running properly before we open up. In the meantime, the pipeline's still strong.
It allows us just to leverage the footprint that we have around the rest of the world by the way that we do M&A. We're still pleased with the opportunities that are out there.
Thank you very much.
Our next question comes from Manuel Lorente from Mirabaud. Please go ahead.
Hi, good morning. My first question is on the Texas freeze impact over the Q1 numbers. If I have understand it properly, I believe that you just said that the impact of the overall Texas freeze should be roughly EUR 30 million. I was wondering whether the vast majority of that has been already taking place in Q1 or we just have some costs on Q2 as well.
Okay. Manuel, good question. I will remind everybody that this is not an exact science, but our belief is that the Texas freeze added about EUR 40 million net sales to us last year. We think it is pretty equally split between Q1 and Q2. It started in kind of mid-February, and we think by, you know, mid to late May, we'll start to see the wind down of that impact.
Okay. Just a follow-up. I believe I have missed the numbers that you mentioned about the exact impact of the M&A on Q1 numbers.
You mean on top line?
Yes, sir.
Yeah, 13 points of growth come from M&A.
Just my final question. Q1 has been strong or even pretty strong and you're sticking to the guidance, which probably is the correct things to do in the sense that we have just started the year and the best of your profitability comes from the portion that we haven't started yet, right? Going into the pool season, what is the thing that worries you the most in terms of delivery? It's a matter of how builders are going to react to further price hikes, to supply chain constraints, to labor market in the U.S., cancellations from backlog because of demand erosion, a little bit of everything.
Interesting question, Manuel. I would say from my perspective, a couple things that are top of mind. First is, I hate to say it, but we're back to a more normal seasonal business, right, is the weather. Let's get the sun out and the temperatures warming and people into their pools. That's the thing that drives the most in aftermarket behavior. Weather will be the first one. Then I guess one that's a little bit more in our control, but not totally in our control right now is supply chain, especially as it relates to PC boards or chips.
That continues to be a daily battle that the teams are fighting against so that we can give the smarter products to our customer base, Manuel .
I see. Thank you.
At this time, we have no further questions on the call.
Okay. Thank you. Thank you, everyone. This marks the end of today's presentation. We thank you, our speakers and participants. As always, please feel free to reach out to our investor relations department for further queries. Have a great day. Thank you.