Good morning, and welcome to our Q3 results call. I'm Clara Valera, and I joined Fluidra earlier this month as investor relations and business development director. Joining me today on this call is our Executive Chairman, Eloy Planes Corts, our CEO, Bruce Brooks, and Xavier Tintoré, our CFTO. They will walk you through a few slides on our Q3 results, and then they will be all available to take your questions. For your information, Bruce is connecting into this call from a separate location, so please bear with us today if we experience any delays with the line. You can follow this presentation in its original English version or in Spanish. Please select your preferred option in the dropdown menu at the bottom right-hand side of your screen.
If you would like to ask a question, please go to the Ask a Question tab on your screen, where you will find the relevant telephone number and PIN code. Please feel free to dial in during the presentation so that the operator can include you in the Q&A roster. The presentation is accessible via our website, fluidra.com, and has also been updated to the CNMV. A replay of today's presentation will be made available on our website later today. With that, I hand over to our Executive Chairman, Eloy Planes.
Thanks, Clara, and welcome to the Fluidra family. Good morning to you all, and thank you for your interest in Fluidra and for taking the time to join us this morning. Today, we are presenting our Q3 results, and Bruce and Xavier will provide more details shortly. First, let me summarize a few points I wanted to get across to you this morning. As we communicated to you last week, the correction of inventory in the channel is having an effect on our performance in this second part of the year, and we expect it to continue in the first quarter of next year. I would like to remind you that we serve today a bigger market driven by an expanded install base with more than 1 million additional pools added in the last three years with higher value.
Despite the current macro-economic climate, my leadership team, my board, and myself, we are very confident that all our work to strengthen and position the group for long-term success is in excellent shape. We enter this coming period with precise initiatives and with vigilance, but also with confidence. Fluidra is significantly stronger business than in 2019. We have gained share in North America, becoming the number two in this market, and we have broadened our product portfolio. As a testament of this, we have been awarded Vendor of the Year by the three largest US distributor partners for the second year in a row. In Europe, the integration of Zodiac generated sales synergies above our expectations, and we have further expanded our distribution network organically and inorganically.
We operate today in more than 40 countries, and we are the number one or two in countries that represent more than the 80% of the global market. Additionally, we have strengthened our digital footprint and enhanced our scoping commercial pool. We are a clear leader in our industry. We continue to build a stronger Fluidra, making ourselves an even more reliable business partner, offering connected and sustainable products, becoming more efficient and reducing our cost base through our simplification program. Our ongoing efforts are focused on optimizing our performance for our customers, employees, and shareholders. We look forward to discussing our results with you this morning. With that, I hand first to Bruce to continue with our Q3 presentation.
Good morning. Thanks, Eloy, and thank you all for participating today in this conference call. Moving to slide number 5, let me start by adding details to the higher level update we shared with you last week, with comments on our overall performance and highlights for the first nine months, and then turn it over to Xavier to provide some details on the financial results. I will then return to provide some color on our outlook. The numbers you see on slide 5 are the 2021 and 2022 financial highlights for the first nine months of the year. Sales grew by 15% compared to a very strong prior year period to EUR 1,967 million, driven by price, acquisitions, and currency.
This growth more than offset the volume slowdown due to the correction of inventory in the channel, mainly in the U.S., and softer demand in Northern Europe. Adjusted for currency and perimeter, sales grew by 3%. EBITDA is broadly flat compared to a very strong prior year period, with an unfavorable product and geographic mix and higher costs. We are seeing an improvement in price versus inflation despite mix impacts in the third quarter as we accelerated price read-through in North America. Going down the P&L, cash EPS is lower year-on-year as a result of a one-off tax benefit effect from the Zodiac merger in Q2 2021. The slowdown in volumes is also influencing our inventory levels. Operating net working capital to sales in the last 12 months was around 26% at the end of September, compared to 15% last year.
Our inventory doesn't age, and we'll correct it in the coming quarters. The ratio of net debt to last twelve months EBITDA at the end of the quarter was around 2.4 times, temporarily above normal levels. We expect to de-lever in 2023 once our inventory levels normalize. Moving to slide 6, you can see a breakdown of sales geographically, both for the third quarter and year to date. As you can see, following strong growth in the first half of 22%, sales in the third quarter were flat year-over-year, and down 9% when adjusted for FX and perimeter. In Southern Europe, softness in the French market is partially offset by the better performance in the Mediterranean area, where the tourist season has been positive, both in residential and commercial pool.
This region saw a 7% decline in the quarter, but a 10% growth year-to-date on an FX and perimeter basis. Rest of Europe is negatively affected by the energy crisis and the macro and geopolitical environment weighing on consumer sentiment, as well as the inventory correction. Adjusted for FX and perimeter, this area was 27% down in Q3 and 14% in the nine-month period. North America recorded a positive growth driven by the acquisitions made in 2021. Organically, this region had a tough comparable of 60% growth in the prior year period. With inventory correction impacting performance, this area declined 10% in the quarter and was flat year-to-date once adjusted for FX and perimeter. The destocking process is stronger in North America as we are pure manufacturers. Sell-through performance during the quarter grew mid-single digit.
The 2022 early buy campaign in North America is being finalized. The last full campaign was in 2019, pre-pandemic, so we're coming back to normal buying patterns. This campaign in the US is a nice thermometer for the next season. We're closing numbers, but the anticipated figure is positive. Rest of the world sales evolved positively year to date, led by Australia, our main country in the area. The Southern Hemisphere is now starting their summer season. Adjusted for FX and perimeter, growth was 11% and 18% in the quarter and in the nine-month period, respectively. With that, I'll turn it over to Xavier to explain the financial results in more detail before I return to share our outlook.
Thank you, Bruce. Let's turn to page seven and take a look at the P&L in some more detail. Sales growth of 15% during the period can be broken down in 6 points from currency, 7 points from inorganic growth, and 3 points of growth at constant perimeter. The organic growth is a combination of close to 10% price and volume going down 7%, as we are impacted by the correction of inventory in the channel. Gross margin reached 51.2%, 180 basis points lower than prior year. We have seen a continued acceleration of pricing read-through, with price minus inflation representing 220 basis points of increased margin, while mix driven by product and region represents minus 400 basis points.
Operating expenses reached EUR 551 million, with an increase of 22%, which is 6% if we adjust for perimeter and currency, impacted by higher logistics and transportation costs, as well as investments in marketing, IT, and R&D. Acquisitions represent 11 points of the OpEx growth. EBITDA reached EUR 456 million, with an increase of 1% driven by acquisitions and currency that offset the negative margin contribution and increased expenses. EBITDA margin reached 23.2%, which is 320 basis points lower than in the prior year. EBITDA achieved EUR 395 million, down 1%, and reaching a margin of 20.1%. Below the EBITDA line, the amortization increased to EUR 55 million, driven by the intangible assets from the acquisitions completed during 2021.
Non-recurring expenses of EUR 18 million are 48% down on the prior year due to lower stock-based compensation and M&A, and M&A activity versus a year ago. They also include around EUR 2 million of costs associated to the simplification initiative. Net financial results amounts to EUR 71 million, EUR 41 million higher than last year due to EUR 20 million of unfavorable FX impacts, mostly non-cash. The EUR 12 million write-off of non-cash fees generated in the refinancing carried out in January, and the remainder being higher interest expense on a higher debt. Tax rate is at 27% versus a 23% tax rate in 2021, which benefited from a one-off impact related to the Zodiac merger.
Net profit reached EUR 179 million compared to EUR 221 million in 2021, down 19% as a result of additional amortization, the higher financing cost, and a higher tax rate. 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 is EUR 260 million, down 9% on the prior year, which is better than the development on the net profit due to the non-cash nature of some of the financing costs and higher amortization. The following page shows the free cash flow statement as well as the net debt evolution.
Free cash flow for the first half has been a use of EUR 175 million versus a use of EUR 288 million in 2021. However, the components of this cash usage are very different year to year. If we look at the operating cash flow, the company has generated EUR 63 million versus EUR 317 million in 2021, mostly driven by the increase in working capital. If we zoom into it, this is entirely driven by investments in inventory, which is impacted by perimeter, inflation, longer in-transit times, as well as the impact of the volume slowdown generated by the correction of inventory in the channel. We estimate that the normalization of our inventory level will now require approximately three quarters. On the investment front, we have used EUR 392 million less cash in 2022.
The key driver of this improvement is the inorganic activity executed during 2021 as we completed the SRS, CMP, Built Right, and Taylor acquisitions. On the financing front, we have used EUR 26 million more cash than in the last year, driven by the increased dividend paid in July. I would also like to point out that we completed the 3.5 million share buyback program last September, investing EUR 60 million. Finally, net debt reached EUR 1.325 billion, up EUR 391 million, driven by currency, the investment in inventories, and the acquisitions completed last year. Our leverage ratio is 2.4 times. That compares to a 1.8 times in 2021. With that, I will give the floor to Bruce and Eloy for guidance and closing comments.
Thanks, Xavier. Moving to slide number 9, you can see the full year 2022 guidance that we already shared with you last week. We expect current demand trends to continue into Q4 as the destocking peaks and continues into Q1 next year. Helped by the positive price read-through, we currently expect the gross margin will recover to more normal levels despite the high inflation and some product and geographic mix dilution. We continue to work to adjust the cost base to the current trading environment. Q4 is the seasonally weaker period in our business, and revenues are expected to be lower as a result of the inventory correction effect. All in all, we're expecting a level of sales around EUR 2.4 billion, EBITDA over EUR 500 million, and cash EPS above EUR 1.30.
Moving to slide 10, as we shared with you last week, we wanted to provide some color as early as possible, albeit in an environment which you will appreciate has less visibility than usual. As you know, we'll provide guidance in the full year results presentation in February. As we have said, Fluidra is a stronger company than in 2019, despite the ongoing inventory correction in the channel. In the last 3 years, more than 1 million pools have been added to the total park. As you know, a new pool today will feed the aftermarket tomorrow. Our broader perimeter, together with the more than 25% of price implemented in this time period, provides us resilience even with a weaker demand for new construction next year.
Keep in mind that there is pent-up demand for remodeling, and the backlog on premium new pools is still good. Moreover, commercial pool remains strong as a result of recovery of tourism and pent-up demand. Thanks to the good price read-through, we expect gross margins to recover. Remember that in our industry, demand has been historically priced inelastic. Pricing for 2023 was implemented October 1, with mid-single-digit% increase for North America and low single-digit% for Europe. Last but not least, as you know, we announced in our Q2 results the implementation of our simplification program that will deliver savings evenly split over the next three years for a total amount of EUR 100 million through capturing cost benefits by redesigning our products, which will enable greater specialization and globalization of our procurement model.
Streamlining our operations by rationalizing our footprint and reducing structure overlaps, and simplifying our organization to adapt to the current business outlook. Now back to the Executive Chairman to wrap up the prepared remarks before moving on to Q&A.
Thanks, Bruce. Moving to slide number 11, I would like to summarize a few key takeaways. As we highlighted last week, we are seeing the short-term effect of the inventory correction in the channel, coupled with a weaker macroeconomic environment, which is impacting our performance in the second half of the year. Nevertheless, I would like to emphasize that today we are a stronger business serving a much bigger market. Fluidra has a strong balance sheet, and our capital allocation framework is consistent. We are taking focused action on improving profit and cash generation. We have an experienced management team to lead us through this phase. The company today is well-positioned to lead the pool and wellness market, delivering improving returns on capital over the medium term, thanks to our customer-centric approach.
Quality and service are key in the industry, and they are the reason our clients choose Fluidra. We have the broadest product portfolio and geographical footprint with leading market positions in the most relevant countries. We decided several years ago to put our focus on sustainability, efficiency, and connectivity of pools. We are a global leader in these critical fields as well. Thank you all for your participation. Now we open the Q&A turn. Bruce, Xavier, and myself, we are ready to take your questions. Thank you.
Many thanks, Eloy, Bruce, and Xavier for your presentation. We now begin the Q&A session. Let me remind you.
Thank you. First question.
Oh, sorry. Go ahead, Harry. Please go ahead.
My apologies. The first question here is from Andre Kukhnin of Credit Suisse. Andre, your line is open.
Good morning. Thank you very much for taking our questions. I'd like to start just on the inventory normalization. You said three quarters to complete. Could you give us some numbers around it in terms of how much of that inventory buildup was, how much was worked through during Q3 already?
Andre, are you talking in the channel or for Fluidra?
In the channel. Sorry, I should have specified.
Okay. Yeah, I can help you there. I think on a simplified kinda high level basis, we have estimated the effect of the built-up inventory at the end of June was around EUR 300 million-EUR 350 million. EUR 200 million of that really built in 2021. Another EUR 100 million-EUR 150 million that we were calling at the end of July, which was really built inside of 2022. In our minds, some correction has already happened in Q3. With the visibility we have, we expect the stocking to have the biggest peak impact in Q4, and into Q1 in a smaller effect.
With all the caveats that come with a really high-level estimate, this will also depend on how demand develops in this uncertain economic environment. What I would say is we think about EUR 100 million came out in Q3. About EUR 150 million will come out in Q4, and that would leave between EUR 50 million and EUR 100 million or about EUR 75 million in Q1 of 2023. As you could expect with that as the ordering pattern normalizes Q1 2023 as a really tough comp.
Indeed. Yes. Thank you very much for all this color. That's, it's really helpful. Just the second area I wanted to dig into a little bit more is on the cost side. If we think about your energy cost inflation and labor cost inflation for next year, would that be covered by the price increase that you've implemented, that you just talked about, low-single-digit% in Europe and mid-single-digit% in the US?
Yeah, Andre, let me take that one. Yeah, I think as we look at 2023, with the pricing read-through impact, remember that we didn't reprice the backlog in North America, plus the incremental pricing that we're implementing for 2023, with the current inflationary environment, we believe that the energy cost, labor, and so on will be well covered.
Last,
Andre, just to add.
Uh-huh.
Andre, just to add a last point to that. I mean, this is with all the information that we have today. I would just add on that, this is an industry that takes price. If we're off for some reason, might have a short-term impact, but we'll take more.
Right. I was just trying to think that is there a scope for pricing to offset the new inflation, which is energy and labor, while raw materials are coming down, to help that kind of gross profit margin rebuild, or is that too ambitious?
Well, I think like Xavier said, we feel like we're in pretty good position on this, based on the inputs that we have today. We do expect our margins to recover over time. Our margin percent
Uh-huh
to recover over time.
Thank you. Very last one. Hence, just carry on from that, the sort of one-third of the EUR 100 million of simplification savings that you target for 2023, that should then be incremental, right?
Andre, that's certainly gonna help us increase our margins. Part of that will go into gross margin, and part of it will go into OpEx as well. You know, the combination of the increased expected gross margin as mentioned by the pricing implementation and the simplification effort on top of that should help us recover our EBITDA margins as we look at 2023.
Very clear. Thank you very much to both of you.
Thank you, Andre. Harry, please go ahead with the next question.
Certainly. Our next question is from the line of George Featherstone from Bank of America. George, your line is now open.
Hi, everyone, and good morning. First question for me would be on the visibility that you have with your channel partners. I just wondered, you know, if you could give some context in that, certainly the relationship with PoolCorp, 'cause it would appear looking at, kind of their messaging that inventory levels are still pretty high. Obviously you talked about normalization, but how does that conversation happen with Fluidra in practice?
Sure, George, I'll take that one. Visibility with Pool Corp is really strong. We get sell-through data from them almost real time and get a pretty good look at the inventory. I mean, we get data, you know, week to week, but really on a monthly basis. I think the feedback that we're giving you on inventory in the channel is pretty consistent. With our other distribution partners in the US, the data doesn't flow quite as quickly, but we still have pretty good visibility. What we don't see is true sell-through to the user.
We see it to the pool pro if it's through distribution like Pool Corp, but we don't see that sell-through to the user. What caught us off guard a bit, we talked about last week, was just that to protect the business, a bunch of the builders and really everybody along the supply chain tried to protect themselves because of the volatility in the overall chain. We saw inventory pick up in areas that we didn't or historically wouldn't have had any. That's in North America. As you go to Europe, being a distributor, we have excellent information on the pulse, you know, kind of market by market for us.
We're in a similar position to the States where we're the manufacturer and therefore don't have as high visibility to other distributors or retailers or additional pool pros. That answer the question, George?
Yeah. Thank you very much. I'd just like to turn to drop-through on the declining volumes. Clearly, it was quite severe in the third quarter. How should we think about it going forward?
I think that based on the guidance, you can see that the Q4 impact is also, you know, on a standalone basis, I would say, severe due to the magnitude of the correction in the top line. Clearly, we haven't been able to act quickly on the cost basis as we were taken a little bit by surprise. Now, as we have indicated, we've increased the size of our simplification program, and we are taking action within the quarter. You have noticed that we have indicated that part of the one-time cost associated to the simplification have already taken a hit into Q3.
I mean, over the medium term, we are confident, as I have said earlier, that margins will recover and will look to a more normalized pattern.
Okay. Thank you very much. Then my final question would be just on leverage. I just wonder if you think the ratio to EBITDA has peaked at this level or given that we could see some further headwinds in EBITDA in the coming quarters, and you also mentioned the inventories. Fluidra might take some time to unwind and convert to cash. Could we see this leverage ratio extend further? On top of that, what would be the outlook for distributions in that context?
Sure. George, you know, as we have indicated, we are going through some temporary, you know, inventory correction effect that will take, I would say, the next three quarters. Therefore, I think what we will see is an increased leverage ratio in the coming couple of quarters. Although, again, we believe that this is just a temporary situation. Our inventory doesn't really age, and it's just a question of time to go through the process of adjusting the balance sheet. In terms of, again, distribution or capital allocation policies, I think we have a clear financial policy. We're working towards that one. This is a temporary situation, and I would say that our policies remain intact at this point.
Okay. Is there a certain leverage point that you would maybe look to scale back the dividend?
We don't see that at this point with current information that we have. Obviously, as you know us, you have been following us, and we have acted accordingly to protect the company in situations like that in the past.
Okay, thank you very much.
Thank you, George. Harry, please go ahead with the next one.
Thank you. Our next question is from the line of Miguel Gonzalez of JB Capital Markets. Miguel, please go ahead.
Yes. Hi, good morning. You said at the presentation that product mix and region represented a negative impact of 400 billion basis points, sorry, year to date. I wonder how this could affect margins from now on, more thinking of next year. I mean, in the last two years, I guess, you had a higher demand for high price and high margin products, as pumps, heaters and so on, coming from the new build, basically. During a recession, what is gonna hold up better is, I guess, maintenance, so demand for low price and margin products. I don't know if maybe based on your backlog or maybe your experience in past recession you could give us your view on a potential decline of I don't know if the average ticket or margin in the coming year because of this product mix.
Miguel, yeah, I think we are seeing this significant mix effects due to the nature of the inventory correction. Also a very high, a very long, let's say, summer season in Southern Europe, which has increased the level of chemicals that we have been selling that, as you know, are a commodity and carry lower margins.
As we look at 2023, we clearly don't see those mix effects continuing as we expect a more, let's say, natural geographical mix, a natural quarter-to-quarter situation. I would say that as to new build and aftermarket, there's really not a very significant margin differences between new build and aftermarket, as you are, you know, pointing out in the question or as I understand that you suggest in the question. Actually, if I look at the overall aftermarket, margin is slightly higher than new build. So from an overall perspective, I think as we look at 2023 and beyond, mix shouldn't be playing a negative role, maybe a slightly positive.
All right. Thank you. This is very helpful. Just another quick one, maybe on my side, on working capital. Working capital, I've seen overseas remain high, this quarter because of higher inventories. We think of this in the mid to long term. We expect to come back about 20% historical levels or maybe below this threshold?
Yeah. We are having, Miguel, as I pointed out in the prepared remarks, that we are having this temporary effect due to the inventory correction, and as well as the fact that we wanted to protect our pool pros in this you know supply challenge environment that we lived in 2021 and early 2022. It's a temporary effect. We believe it's gonna take around the next three quarters to correct, and therefore by the end of the next year, we should be on a normalized level that would be around the points or even a little bit slower than the ratio that you highlighted.
All right. Thank you.
Thank you, Miguel. Harry, please go ahead with the next one.
Certainly. Our next question is from the line of Christoph Greulich of Berenberg. Christoph, your line is now open.
Yeah. Good morning, and thanks a lot for taking my questions. The first one is regarding the 2019 to 2022 sales bridge that you have provided in the presentation. I assume that the volume part reflects the unit growth, but also the increase in the average ticket size, apart from what is pure price inflation. Basically, the shift towards the more value-added products like the variable speed pool pumps and the IoT-enabled equipment. Just wondering if it is possible to quantify how much this trend has added to the volume growth since 2019. Do you see any risk of a reversal next year due to downtrading?
Hey, Christoph. We don't have your appreciation. Your appreciation is right. I don't have the full details between the breakdown of those two components that you're pointing out. We don't feel that there is a risk on having this downplay that you are suggesting. We believe that the mix will continue to be as consistent as we have seen over the last couple of years. No major change there.
Yeah, just a reminder, Christoph, on variable speed, that was legislation that went into the U.S. in the back half of 2021. Frankly, that one is gonna continue strongly, and we continue to see strong demand for connected products.
Great. A question on your general commercial approach towards the pool professionals. Now that you expect a stronger, more resilient aftermarket next year compared to the new build market, does it change in any way your commercial approach? Any kinda new initiatives in order to try to capture market share, specifically in the aftermarket?
Well, that's a good question, Christoph. It's actually maybe it's a more emphasis put onto the aftermarket. But after we went through the GFC last time, it took us a few years, but we could see that the companies that had a higher aftermarket percentage performed better. In 2015, in North America, we put a specific commercial approach there with specific resources for the aftermarket, et cetera, et cetera. And it's proven to be very beneficial for us. And we're gonna continue to lean in on that approach. You might say double down on that approach, because clearly the aftermarket is key during those times. Now, our strength had always been new build.
You know, we didn't really change our ratios in the last couple of years since we were able to, I think, pick up some share in new construction. Aftermarket's a focus. Aftermarket's an area where we've picked up about a point of share a year for the last several, and we'll continue to push there.
Great. Just a quick one, final one. On the quarterly cash interest paid, so that has basically increased quarter after quarter this year. Is that purely FX, or is there anything else that we have to keep in mind?
The P&L FX is the most significant driver of change, Christoph. This is just, again, a temporary effect. You know, if you look at the overall cash interest paid, it's increased a little bit, basically on higher debt and also higher interest rate. But not material. The biggest change in the P&L is just FX.
No, I get that point. Still just looking at the cash interest paid, it seems like still a bit of a step up in Q3 compared to what you reported for Q1 and Q2. That is driven, you're saying, by higher net debt and higher interest? How should I think about that?
Higher debt and higher interest.
Perfect. Yeah. That's all from my side. Thank you.
Thank you, Christoph. Harry, please go ahead with the next one.
Certainly. Before we take our next question, if you'd like to ask a question, please dial star followed by one on your telephone keypad now. Our next question is from the line of Alvaro Lenze from Alantra Equities. Alvaro, please go ahead now.
Hi. Thanks for taking my questions. The first one maybe a bit tricky, but since the profit warning, there have been a couple of peers that have released their Q3 results, and they have mostly reiterated their guidance. Their outlook seems a little bit more upbeat than yours. Whether you could comment. I know that it's difficult to comment on other competitors or industry peers' views, but if you could say whether your more cautious view is due to a different impact of the inventory correction in Fluidra or maybe due to geographical exposure, or you think that you just have different views on the industry.
Yeah, I'll take that one, Alvaro. I mean, first, as I read, let's call it the largest distributor, which is PoolCorp. I think our comments are very similar. They just impact the different spot that we are in the process. You know, they don't have the same impact on margin. When price increases go, they go straight through to them. Their benefit in the first half of the year, when it took us a while to get the price through on the backlog, then turns around in the back half of the year. From an inventory perspective, I think we're very consistent.
I think from a new pool construction, we were pretty much in the same neighborhood. I actually read that through as being very similar. From the other peer that reported, again, I felt like the look at the new construction, the aftermarket and all was pretty similar for North America. Again, I don't know what their backlog is, so maybe that impacts a little bit differently the timing of sell-through or sell in. I think your last point is also the right one. Clearly the geography impacts, and I do believe that we're looking at a tougher position in Europe economically than in the States right now.
Okay, thanks. My second question would be on the inventories. You mentioned that you have seen already some reduction through the channel in inventories this quarter. I know that information is scarce given the fragmentation of the distribution channels, but looking at the PoolCorp inventories and also your competitors and your own, they are all either flat or increasing quarter-over-quarter. How confident are you that inventories have already decreased significantly across the distribution chain? Because, is that on the end of the pool professionals that would have reduced their inventories, or where are you seeing this reduction?
I think it comes from a couple of spots. One, I do believe that there's some reduction of the inventory levels in the pool pros. Further, the distribution channel has taken down their coverage ratios, and so therefore that reads strongly in the orders that we saw in Q3 or the shipments that you saw in Q3. I would say those are the primary points.
Okay. Last question on my side, you mentioned that the feedback you're getting from the early buy for the next season are positive. Whether you could elaborate a little bit more on that, because we have had a couple of years where the early buy has been not normal, so to speak. Whether these positive messages are regarding the pricing, the feedback from the pool professionals or in comparison to 2019, if you could add some more color, that would be very helpful?
Yeah.
to look to 2023.
Sure, I'll take that one as well, Alvaro Lenze. Early buy season is almost done, really ends in North America at the end of October. Early buy is much more a play in North America than it is in other markets around the world. First of all, it does return us to a more normalized cycle. As you hinted, we didn't have a full or even an early buy to some extent in 2021 or 2020. We're pleased with how it's going so far. Now, we've given you some early thoughts on 2023, and we'll provide, you know, more guidance, obviously next February. With that caveat, if you adjust for perimeter and price, we're actually nicely ahead of 2019.
I'm encouraged by that because, you know, especially when you consider the destocking that we're going through. I think it's a nice, positive signal as you look forward.
Thanks for all of it. It's all very helpful. Thanks, Bruce.
Thank you, Alvaro. Harry, I hand over to you. I believe there are no more questions.
That's right. We have no further questions being registered at this time.
Okay, great.
Can I make just one
Oh, yeah.
Can I just make one closing comment, I guess, before we go then? I mean, clearly we're in a tougher economic environment than we've seen in recent years. As a management team, we're confident that we are ready for it with our initiatives and vigilance, and we'll of course keep you updated of progress and if anything changes. Appreciate your questions and your attention today.
Thank you, Bruce. This marks the end of today's presentation, and we thank our speakers and participants. As always, please feel free to reach out to the investor relations team for further queries.