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Good afternoon and welcome to the Latham Group First Quarter 2026 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Casey Coterie, Investor Relations Representative. Please go ahead. Thank you. This afternoon, we issued our first quarter 2026 earnings press release, which is available on the Investor Relations portion of our website. On today's call are Latham's President and CEO, Sean Gadd, and CFO, Oliver Glow. Following their remarks, we will open the call to questions. During this call, the company may make certain statements that constitute forward-looking statements which reflect the company's views with respect to future events and financial performance as of today or the date specified. Actual events and results may differ materially from those contemplated by such forward-thinking statements due to risks and other factors that are set forth in the companyís annual report on Form 10-K and subsequent reports filed or furnished with the SEC, as well as today's earnings release. The company expressly disclaims any obligation to update any forward-looking statements except as required by applicable law. In addition, during today's call, the company will discuss certain non-GAAP financial measures. Reconciliations of the directly comparable GAAP measures to these non-GAP measures can be found in the slide presentation that is available on our Investor Relations website. I'll now turn the call over to Sean Gadd. Thank you, Casey, and thank you all for joining us today to review our first quarter results and discuss our business outlook. Our first quarter result represents a good start to 2026. We are especially pleased with our performance given the adverse weather conditions that plague most of North America. There are several key takeaways from the quarter that are worth noting. First, there was another quarter in which we saw year-on-year sales growth in each of our product lines. Latham's category leadership position across our product portfolio and our geographic diversification are key competitive advantages for us. Secondly, we continue to effectively execute our San State strategy, showing double-digit sales gains in fiberglass pools in our priority Florida market. We're taking further actions to accelerate our growth in this region. Third, we expanded our margins, benefiting from operating leverage inherent in our business model and from the lean manufacturing and value engineering initiatives that continue to yield very positive results. Oliver will provide additional detail on this later on in the call. And lastly, we are pleased to confirm our 2026 guidance, which anticipates significant sales growth and even stronger growth in adjusted EBITDA within a challenging macro environment where pull starts will be about flat for last year. Our guidance includes moderate increase in transportation and commodity costs due to today's high oil prices, which we are mitigating with temporary fuel surcharges. We are closely monitoring the dynamic situation in the Middle East and the potential impacts on costs and consumer demand. Taking a closer look at our first quarter results, In-ground pool sales increased 3.5% and virtually all of that growth can be attributed to the one-month contribution from the Freedom Pools acquisition. Adverse weather was definitely a factor in our organic performance, keeping organic in-ground pools sales steady year-on-year. However, April sales trends were in line with our expectations and we are on track for fiberglass pools to approach 80% of our full-year in-round pool sales in 2026. The Freedom Pool acquisition we completed on February 26 is integrating as expected. As we've noted, the acquisition expands our presence in Australia and New Zealand. Markets where fiberglass pool models have a strong foothold and borders our reach into new markets in Western Australia, including Perth, which is the fastest-growing city in the country. We recently spent a week in Australia bringing together the Norellon and Freedom teams. In addition to this transaction being immediately accretive to Latham and giving us a market-leading position in the country, we anticipate achieving considerable revenue synergies from this combination over time, as well as gain first-hand experience from the direct-to-consumer business model. Cover sales advanced 6% in the first quarter, driven by growth in order cover demand as consumers increasingly recognize the safety and economic benefits of this excellent product. Our industry-leading auto covers are compatible with all in-ground pool types. In many parts of the U.S., they provide the homeowner with an alternative to fencing while delivering additional cost savings from reduced evaporation and chemical usage. Educational marketing campaigns, including our partnership with Olympic gold medalist and pool safety advocate, Cody Miller and his wife, Morgan, promote pool safety, have served to build consumer awareness and increased attachment rates for the covers to new pool installations. First quarter line of sales were up 9% year-on-year, reflecting increased demand and buying in advance of the pool season. We continue to gain traction with our same-state strategy in the first quarter and are moving forward with plans to accelerate our growth in this important region. Many of the investors and analysts whom I've met since taking on the CEO role in January have asked me where I see the major growth opportunities ahead for Latham and what our playbook is for capturing that growth. Let me start by saying that the opportunity is substantial. We do not need to wait for the recovery in the U.S. pool market to drive growth. There are enough pool starts for us to go and attack the San States now, given our relatively low penetration in that region. The key here is that 5 at last is a growing category, and we are the number one player in it in the U.S., and so we are best positioned to gain share. Barbed glass pools are an excellent fit for the Sand States for many of the same reasons that the category is growing nationally. Fast and easy installation, lasting durability, low maintenance, and we have an exceptional design range of sizes and options to choose from, many of which are smaller rectangular-shaped pools with attached bars that are perfect for our target community. Latham has laid a good foundation for growth in the SAM states. There is definitely increased brand awareness among consumers and dealers in Florida, thanks to several high-profile marketing campaigns paired with local activations. In 2026, we plan to build on that foundation to set the stage for accelerated long-term growth. As you know, I have many years of experience successfully selling against the standard in the building product industry. When I applied that experience to Latham's current position in the San States, I have identified several actions to capture consumer demand and provide additional value to our dealers. First, we're building out a commercial organization with the key pillars being sales strategy, sales operation, and sales execution, with responsibilities to design and drive sales plans, product leadership, and self-effectiveness. Our goal is to provide a world-class commercial organization that supports our growth not just in Florida, but across all the sand states and all of North America. Second, we have introduced a new market development framework and approach at Latham that I believe will make us even more effective at capturing share. The key element of this framework is segmentation, meaning that we'll be very selective with our targeted sand state markets and determining the specific sections and neighborhoods that offer the greatest opportunity for us. In essence, it's all about neighborhoods. We're looking for neighborhoods with a large number of homes, with home values, lot sizes, and household incomes that fall within our parameters. These can be in, adjacent to, or outside of market-paying communities. Third, we'll be adding sales resources in the field to make sure we stay close to the consumer throughout the pool buying process. In this way, we'll be able to assist our dealers in converting more leads into sales and getting a greater understanding of the consumer journey. We know that consumers are looking for designs that fit their lifestyles, and we believe that Latham has the best range of products to meet those needs. In 2026, we are increasing our investment in branding and marketing in a very targeted way to capture greater consumer awareness, together with our network of trusted dealers who are able to fulfill the demand we generate. In support of all this, we are revamping our marketing and advertising campaigns to give homeowners a full understanding of the true benefits of fiberglass and why it is the right solution for their backyard to enable their dreams of creating wonderful memories to come true. With that, I will turn over the call to Oliver Glow, our CFO for Financial Review. Oliver. Thank you, Sean. And good afternoon, everyone. I am pleased to report on what was a solid start to 2025. Please note that all comparisons we discussed today on a year-over-year basis compared to the first quarter of fiscal 2025 are less otherwise noted. Net sales for the first quarter of 2026 were $117 million, 5% above $111 million in Q1 of 2025, of which 3% represented organic growth and 2% represented the one-month benefit of the Freedom Pools acquisition we completed at the end of February. Organic growth was led by the continued strength of auto covers and increased demand for our pool liners. By product line, in-ground pool sales were $60 million, up 4% from Q1 2025, with virtually all the year-on-year growth coming from Freedoms fiberglass pool sales. Cover sales were 33 million, at 6%, and liner sales were 24 million, a 9% compared to the first quarter of 2025. We achieved a first quarter gross margin of 32%, reflecting a 220 basis point increase above last year's 30%. This performance is primarily due to volume leverage, along with production efficiencies driven by our lean manufacturing and value engineering initiatives. SG&A expenses increased to $37 million, up 20% from $31 million in Q1 of 2025. This was largely tied to strategic investments in sales and marketing to accelerate fiberglass adoption, digital transformation initiatives, and acquisition and integration-related costs, which includes $2.3 million of performance-based compensatory earn-out expenses, related to our CoverStar Central acquisition in 2024. Target synergies have been realized for CoverStar Central, and we are pleased with the contribution from the acquisition which has exceeded our initial expectations. This earn-out will total roughly $9 million over the course of the year, with similar impact in each remaining quarter in 2026. Net loss was $9 million or 7 cents per diluted share, compared to a net loss of 6 million or 5 cents per diluted chair for the prior year's first quarter, primarily due to the aforementioned increase in its T&A expenses. First quarter adjusted EBITDA was 12 million, 9% above 11 million in the prior year period, primarily resulting from volume leverage and efficiencies gained through our lean manufacturing and value engineering initiatives. Adjusted EBITDA margin was 10.4%, a 40 basis point expansion compared to last year's first quarter. Turning to the balance sheet, we continue to maintain a strong financial position, ending the first quarter with a cash position of $27 million. In line with our expectations, net cash used in operating activities was $48 million, reflecting a seasonal increase in working capital needs ahead of peak food-selling season. We ended the quarter with a total debt of $311 million and a net debt leverage ratio of 2.8, also in line with our expectations. Capital expenditures were $23 million in Q1 2026, compared to $4 million in the prior year period. The increase is primarily due to the purchase of four key fiberglass manufacturing facilities in Florida, Texas, California, and West Virginia for $18 million, including a $12 million deposit made in 2025 that was settled in Q1 2026. Additionally, we incurred $5 million of capex relating to ongoing projects in line with our expectations. As a reminder, we expect capex to range between $42 and $48 million in 2026. This includes $25 million of maintenance capex, expenditures related to the purchase of the fiberglass manufacturing facilities that I just mentioned, and investments to upgrade our newly acquired Freedom Pools manufacturing facilities. While the beginning of 2026 was affected by adverse weather conditions across North America, we are encouraged that April's sales trend has been in line with the historical seasonal rise. We continue to monitor geopolitical developments and their potential impact on our freight and raw material costs, but we believe we are well positioned to manage effectively through this pool building season. We are pleased by the steady progress we are seeing from our fiberglass awareness and adoption initiatives, highlighted by strong consumer engagement with our branding and marketing campaigns and continued gains in Florida, our initial same-state target market. Based on our performance to date and our current visibility into the remaining season, we are pleased to reaffirm our guidance for 2026 revenue growth of 9% and adjusted EBITDA growth of 13% at the midpoint, amid expectation for new U.S. full starts to be flat with last year. With that, I'll turn the call back to Sean for his closing remarks. Thanks, Oliver. In summary, we are pleased with our first quarter performance, encouraged by recent order trends, and excited by the growth opportunities we see on the horizon. Latham is firmly on track to outperform the market for new U.S. pull starts again in 2026, and we intend to take advantage of soft markets to accelerate our sand state strategy and strengthen our execution. I see tremendous opportunity for Lathham to drive market penetration in the sand states, as well as the rest of North America, Australia, and New Zealand. And with that, operator, please open the call to questions. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. Please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. Our first question comes from Ryan Merkle with William Blair. Please go ahead. Hey, everyone. Appreciate the question. I wanted to start off with sort of the fiberglass backlog and orders as you enter the season. How is that looking? And then have you seen trends pick up now that the weather has cleared? Yeah, thank you for that question, Ryan. In terms of backlog, I think we've seen what we would have expected to see coming out of the first quarter. The order file in April looks strong to us and looks like it is picking up per the season. And we feel good enough that we obviously have reaffirmed guidance. But generally, we are seeing the pickup in orders, and that's all pretty good trends. Got it. Okay. Thanks for that. And then my second question is, the fiberglass conversion is key to the story, Sean. You know that. And you're adding a bunch of resources, it seems. I'm curious, what are the biggest tweaks that you're making to this strategy? And then any early results, or maybe it's a little too early? yeah we are definitely making some tweaks uh it is i will tell you it's too early uh the main thing and i talked about it earlier on is we are segmenting the market a little bit differently to how we have done it in the past uh we've got our criteria now built up where we know we feel like if a neighborhood fits that criteria the likelihood of them going to lathe them and into fiberglass is higher so we like that we started to test that and if we get those right with the right dealers we'll be able to start building out more and more neighborhoods and so we're early but I feel like that's definitely on a good path for us the second thing we're doing is adding heads and really I'm trying to organize the commercialization into sort of three areas sales strategy which is really just understanding where's the opportunity doing more of the segmentation becoming a little bit smarter around sales and then then sales operations which for me is really about converting what we think in about the market into real game plans that the sales team can execute then measuring that sales team and then sales team to go and execute so just getting a little more organized so that we get the most out of our sales organization and that's really across the whole u.s but including the same space that's great that's interesting okay appreciate that i'll pass it on thank you our next question comes from greg palm with craig hallam capital group please go ahead yeah thanks you wanted to piggyback on the first question a little bit since a lot has uh happened uh in the last couple months since you uh since we were all on the phone together uh It doesn't sound like demand environment has changed all that much, I guess, relative to maybe what you would have thought a couple months ago. So maybe you can just confirm that again. But from an input cost side of things, you mentioned freight. Wanted to get your sense on how you're dealing with that and also anything else that's on your radar, whether it be increasing resin prices. Are you seeing any availability shortages of key inputs like that? Anything else that should be on the radar? Thanks, Greg. I'll start by talking about the market a little bit. We still see the market overall for this year look likely to remain flat. Our assumption for that hasn't changed. But we are seeing some green shoots coming out, and we feel good about that. So, like I said, our order trend for April will look strong, and then this is the start of May. So, we feel good about that. PK would have indicated that some more growth is starting to occur with cheaper pools. Again, we like that. That's a good sign for us. Obviously, pools are getting smaller, so that is good. Obviously, the volatility is not helping, but I think we have a sound game plan. I know we have an approach, so I think will work through that. and then from a from a dealer perspective uh you know when we caught up with the dealers what they'll tell us is it's pretty competitive uh four or five quotes per job which is generally up but from what i from my take is you know it's certainly uncertain but but i believe um less people will be traveling the price of gas doesn't help and so they're staying at home i think that's the opportunity i think that what the green shoots are where we're seeing that people we'll rather now spend time at the home and hopefully let's have full the pool and greg let me let me address the second part of your question with regards to the conflict in the middle east and some of the updates here on import input costs um let me start off by saying we don't see availability to be an issue as of today um and then partially that's due to our supply diversification coming out of covid a lot to be multi-sourced and be as diversified as possible but we are seeing um obviously headwinded costs right that comes in in two forms one is transportation the price of the pump and especially in the world of fiberglass um we we are um obviously incurring um you know transportation costs it's expensive to ship those fiberglass pool across the nation um in terms of mitigation what we've done on that side is to to introduce temporary fuel surcharges that um we plan to to um fully mitigate us when it comes to the transportation cost i think it's too early to tell what the impact is going to be on on the commodity side obviously suppliers are reaching out we are exposed to you know the again the conflict in the middle east as we consume a lot of oil derivatives in the world of resin vinyl and so forth again i think it's too early to tell um certainly currently in in discussions with the suppliers um i think we're making the first purchase orders as we speak under a slightly higher price levels um you know we left to see our the very dynamic situation evolves but i'm confident in the playbook that we have we have applied that playbook during in COVID, we have applied that playbook last year, and I think we have confidence that the playbook will also work this year as we work through commodities. Okay, great. And then, on some of these initiatives that you talked about, you know, resegmentation, adding sales resources, I'm curious, you know. How do you feel about your current dealer network right now and how important of a lever can that be, not just, you know, adding, you know, new and more dealers, but also leaning into some of your more successful ones. Maybe you can talk a little bit about that as well. Yeah, sure. I'll start with dealers are very important. They are obviously the extension of us as they sit across the kitchen tables. And so we need them to basically close the sales. Now, what I will tell you is I believe we've got the opportunity to get more out of our current network, which is goal number one. So I'm talking really about our core, whatI would call our core markets, Midwest, Northeast Canada, and that's really about account management. And we're going to be defining what account management looks like for Latham and making sure our organization is trained around good account management, so I expect to get more out of our current network. Then I think about adding where we've got white space. We're always going to be looking for dealers to take on white space if our current dealer network doesn't get us there. That is going to part of the strategy. And then when I think about the sand states and material conversion, we have a good network of dealers there right now that we are going to feed as we go into these neighborhoods. And they will be able to get the benefit of referrals and everything else that comes out of those neighborhoods. So we're good about the network in the same states, particularly Florida, but our intention will be over time to grow this. Yeah, fair enough. Okay, we'll leave it there. Thanks. Thank you. Thank you very much for having me here. Our next question comes from Timothy Boyce with Baird. Please go ahead. Hey, guys. Good afternoon. Good afternoon? Maybe just first question just on the resegmentation of some of the Salesforce and things like that. Is the plan that there's incremental investments in terms of dollars that's going into some of the initiatives, or are you just kind of reallocating what you have? Don't do a little bit of both. We are definitely going to get ahead a littlebit because we need more people on the ground and actually thinking about our game plan. So that will be added. But our intention will be, if you think about sales as a, sorry, SG&A as a percentage of sales, over the medium and long term, that should stay the same. So we will continue to fund that as we grow. And then we will look at opportunities to sort of trim back on the back side of the business to give us some space to spend on the front side of the business and invest. Okay. Okay. And then, Oliver, just on the price-cost question, I guess it's not totally clear if higher resins are kind of in the guide or is it kind of a wait-and-see approach right now? And if you do see higher reslins, you guys have the ability to, you know, take costs out or improve efficiencies or pass them on price. Is that kind of the main message? It's probably more than that. I think transportation costs, it's relatively foreseeable what that means to us, and that's in the guide, right? With commodities, I think it's too early to tell. Okay. Okay. Sounds good. Thank you, guys. Thank you. Our next question comes from Andrew Carter with Stiefel. Please go ahead. Hey, thank you. Good afternoon. I wanted to ask and just double-click to make sure we understand exactly what the pricing is for the year. You are putting in temporary fuel surcharges. Can you give a magnitude of how much that's kind of incremental to the old guidance? You are not taking any price increases on products for resins. Just want to make sure and triple check that. And I think you said we're well prepared for materials during the season. so I'm guessing is that a comment that everything's good for now and you take a price increase later? And then kind of finally, if you have to take a price increase, can you take one mid-season or does that mess things up? Or just how do those dynamics work around when you have to make a decision on pricing? Perfect. So, Andrew, I would say the transportation cost and the temporary surcharge i'd say for the years probably worth 60 basis points but again it's very it's very dynamic and volatile right and you know obviously as the headwinds change that the temporary surcharges can change over time as well right but that's just out of magnitude right i think again for commodities too early to tell you know quite frankly we haven't even ordered or was just about to start ordering materials that would be subject to a change in in pricing um so it's really early to tell and then you know obviously the materials get shipped to our sites work their way through inventory ultimately as they consume in the pnl um but we'll we'll again we'll have our we have our playbook and we'll react in in time as necessary and if i remind you last year we actually did do a mid-season price increase catering to you know, the environment last year that, yeah, that came in in June. So it's not preferred, but it's also not unheard of. Thanks. I'll pass it on. Thank you. Our next question comes from Scott Stringer with Wolf Research. Please go ahead. Hey, guys. Thanks for the question. I'm just wondering if the adverse weather mentioned in 1Q pushes some sales into the second quarter. And the guidance obviously implies some acceleration through the rest of the year, right? So I guess it would just be helpful to know the tailwind from sales being pulled into 2Q, if that is the case. I would say the adverse whether really means we had a lot of snow, ice on the ground in January and February. If you think of our annual organic growth rate, of six percent we certainly didn't achieve didn't quite achieve that in in q1 was probably half of that and i would attribute that to to to whether um if you translate that to shipping days that equates to about a shipping day in in today's seasonality so you know i'm not reading too much into that the season is young q1 today is a comparatively small quarter again translating our underproportional organic growth in q1 vis-a-vis the annual guide into shipping days it's one day i think that's another way of saying you know we put in the prepared remarks that really the trends and in april have been um have been as expected um we are seeing this seasonal ramp um whether we'll you know catch up on that one day in q2 or in q3 we will see it early in the quarter but certainly nothing we have seen into one engine our rent in in april that would make us change change our view on on 26 and the guy okay got it and then um i think you guys talked about this a little bit earlier but just curious on the visibility into 2q and 3q um for in-ground pool installs is that pretty much set or curious you know how much variability is there over the the next two quarters for that segment. Thanks. Well, I'll start and then I'll hand it over to Oliver. I think from a Q2 perspective, we're all but set, I mean, based on our lead times currently. So that looks like, you know, as I said, we've started the quarter really well. Q3 is still obviously, we've got orders that do fall into Q3. It's probably too early to tell, but again, from what we're hearing inside the market from what we're seeing we still feel very confident of what what uh what the order file looks like and uh and then we'll be able to go continue to hold guys and if i compare today's audible versus versus prior years really nothing that would you know cause us to think differently about the seasonal pattern vis-a-vis you know the last year um again all all confirming um Got it. That's helpful. Thanks for the time, you guys. Thank you. Thanks, Luke. Our next question comes from Matthew Bowley with Barclays. Please go ahead. Good afternoon, guys. You have a link on for Matt Boulay today. Good afternoon. So for my first question, good afternoon. For my first question, I'm just curious, like, what are the top concerns you're seeing from buyers today, like between rates, economic uncertainty, you know, just the need to step up more consumer awareness of fiberglass pools? What's kind of the biggest challenge today? From what I've heard, you knows, the number one thing would be, which is tied to interest rates is, you now, basic financing is difficult to get. So anybody who hasn't got the cash or is able to get, got a good FIFO score is unable to get financing. We're hearing that a fair bit, which isn't all that different to what we would have heard last year. And then I think the other part would be the dealers are saying that they're having to fight for the sale a little harder than they were previously. So when I mentioned 45 quotes, it's typically two to three quotes. So everyone's fighting for the business pretty hard. Now, reality is we feel in an environment where things are tough, I actually feel good about fiberglass pools because obviously pools are getting smaller. That fits our trend. Pools have low maintenance, so the actual cost on an ongoing basis is lower than the alternatives out there. So the expenditure on chemicals and, like I said, on evaporations is lower, especially if you have an auto cover. And the dribbling of the pool means that there's no ongoing expenses going with the pool. So while we see the market as a little tough, we still see it not adversely affecting us relative to last year. Got it. And in terms of your increased branding and marketing spend, can you walk us through the cadence of what that might look like through the year and its impact on SG&A? And also, you know, what does this sort of look like? Like, is it a targeted brand program for dealers? Is it more salespeople on the ground? Or is it more on, like, the ads and marketing spend? Thank you. Yeah, it's a bit of both. We've got it. Right now we're running a national campaign. The national campaign is good because, you know, it lifts all markets up, which is great. The other good part of our national campaign is when you think about the sand states, There's a trend of people moving from the Midwest, Northeast, into the Sand States. We like that because fiberglass is the standard in those markets, so they know us. So we like the marketing campaign being a national format. The increase, and I'll just talk about the timing. The start of the timing is when you set for the fall season. So we started sort of February, mid to late February, and we're moving all the way through to sort of July, August. That's been the timeframe for the national campaign. And then when I think about my neighbourhoods, that's going to be way more tactical in nature. So I'm talking about things like digital marketing. I'm taking about door hangers and marketing around the homes. I'm talk about doing events at the home to inspire the neighbourhoods. So those are pretty tactical small expenses that we'll run in every neighbourhood. so when it comes to the increase and the cadence of the increase um you know as we as we said earlier on i think over the foreseeable future sgna's percent of sales will will will roughly be flat um it was 22 and a half percent last year we expected to be a similar amount this year um and the the majority of that is spent as you heard from in in the sales organization and marketing there's a little bit of digital transformation in there and obviously in inflation on the on on the core meaning gna but again the majority is going into into the sales organization and marketing um there's also a little bit of increase in in the absolute dollar numbers as we bought freedom and freedom and that comes with about three million of sgna so that gives you the 20 to a half million but i would like to remind you that in addition we have the earn out expenses for coverstuff central that is about nine million it's tied to um 2026 so it won't recur in 2017 neither did it occur in 25 so that is a a earn out expense that is tied to 2026. so with regards to cadence it's it's roughly the same as as usual you you will see that q1 and q2 are a little bit heavier and that is because we are we are running our marketing campaign, our national TV campaign, earlier and longer in 26 versus 25. Great, thanks. I'll pass it on. Thank you. Our next question comes from Susan McCleary with Goldman Sachs. Please go ahead. Hey, everyone. This is Charles Perron. And for Susan, thanks for taking my question. First, I'd like to shift gear a little bit and talk about the auto cover and the opportunities that you see in this market. Considering, you know, the changing macro dynamics, is there any impact you're seeing in terms of the adoption and any efforts you can do here to, you know, further expand the penetration over the coming years? Yeah, I'll start with that. I think, so the answer is no, we're not seeing a decrease in adoption. We have a pretty good quarter in auto covers, in covers in general. We think we should – I mean, we had a very large growth last year. We expect it to grow this year, and we expect it to grow in the coming years as well. It's really about awareness for us. The reality is most people still don't know that auto covers are available. Auto covers can fit on every pool, so it doesn't really matter if it's a fiberglass pool or not. So the market is actually very large for us, And we've got our value-added resellers set up to take advantage of that. And then we're also now getting our sales organization, latent sales organization around that product. And it's still early for that to happen. So we see that as more upside as we go. But the product is a good product. It does what it needs to do. Consumers who have it love it. And I think we've just got to make sure we continue to drive the awareness, and I don't see that trend changing. Got it. Okay, that's helpful, Sean. And then switching gear, I appreciate all the callers so far on a call on input cost and inflation, but should we see more unfavorable dynamics coming through from a cost perspective? Can you talk about the opportunities to further lean on your lean in manufacturing and value engineering initiatives to further protect your margins? So I think, you know, lean and value engineering continues to be a key contributor to our P&L. Like you heard me on prior calls, the contribution is about two, two and a half million per quarter. In Q1, it was two million. And that's just because Q1 is a light quarter and lean and very engineering programs go up and down with volume. I think as some of those programs mature and you'll see the tailwind that's really now getting into our DNA, this is how we lead our plants and factories and you know it's part of the everyday cadence so you see a lot of a lot more programs maybe not of the same magnitude because the lowering includes you know being being cleared here and that's more common for you manufacturing whereas value engineering they're really in the beginning of the journey I think there are still some low-hanging fruits foods out there that our team of PhD-level scientists is pursuing. So, again, both initiatives under full steam and certainly in Q1, delivering what we expect them to deliver, and there's no change in our thoughts for the rest of the year. Got it. Thank you for the color, guys, and good luck with the quarter. Thank you. Thanks, Sean. Our next question comes from Sean Callen with Bank of America. Please go ahead. Hi, guys. Thank you for taking my questions. Just first, the double-digit growth in Florida was quite impressive. What do you think has led to the success in Florida versus the other sand states? And can you talk about what lessons you can take from Florida to apply to the other sand states. Yeah. I'll start with, it is obviously our largest focus of all the sand states, we are set up quite well from a sales number perspective we're working on dealers now over the last 18 months so we've got a set of dealers that are really the right dealers for us to help fulfill the demand that we're creating we've been running our marketing in general campaign uh for now 18 months so we've seen the flow of that and then we have got i mean we've we've got a really good strong proposition very proposition relative to concrete and i and we're getting deeper and deeper into the market and getting being able to communicate it um so we are seeing good growth and we feel good that and i feel good if a homeowner understands the benefit of fiberglass over concrete there's a really high chance that would go with fiberglass we're just very early still in the adoption curve so our mission is to make sure our awareness goes continues to get driven up and that we have the connection between that awareness and our leaders positioning at the kitchen table and then i just remind you at the end of the day these while we are very pleased with the numbers we look to accelerate that and and in reality we're still working on pretty small numbers when we think about florida okay great and then just one clean up question on the air charges are you aiming to offset the higher transportation costs on a dollar basis or a margin basis on a dollar basis so you know the headwind is you know as we as we we incurred is being passed on with the temporary search process okay great thank you thanks John our next question comes from Andrew Carter with Stifel please go ahead. Hey, thanks. I wanted to double click and make sure on that incentive cost. You're not backing that out, so if you were to put that back in, the incremental here is still $28,000 to $38,000 in investment year. I just want to understand that. Double click. Thanks. No, it's not. I'm sorry. The earn out around CoverStar. My fault. Right. So the earn out is included in SG&A. It will be sitting on top of the 22.5% as a result of revenue, but as it is an expense tied to an acquisition for EBITDA purposes, it's backed out. Okay, so it is just not excluded. It is within guidance that expense. Just double-checking. Correct. It's an aspect to EBITD and it is in SG&A. Okay. My fault. Sorry about that. Thank you. Thank you, Andrew. This concludes our question and answer session. I would like to turn the call back over to management for closing remarks. Thank you very much. I just want to thank everybody for getting on the call. We felt like we had a strong quarter, obviously marred a little bit with weather, but the momentum is there. April looks strong and we feel confident about our guide. With that, I want to conclude the call, I look forward to seeing you again next week. to seeing all the folks on the call over the coming weeks and months at different types of events and again thank you for everyone for attending. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.