Fluidra Sa

Good morning and welcome to our full year 2023 results call. I am Clara Valera, Investor Relations and Business Development Director at Fluidra. Joining me today on this call is our Executive Chairman Eloy Planas, our CEO Bruce Brooks and Xavier Tintoret, our CFTO. They will walk you through a few slides on our results and then they will be able to take your questions. You can follow this presentation in its original version or in Spanish. Please select your preferred option in the drop-down menu at the bottom right-hand side of your screen. If you would like to ask a question, please find the information and instructions in the Ask a Question tab on the webcast. Please register to receive dial-in details. After the registration process, you will need to press star five on your telephone keypad to ask your question. The presentation is accessible via our website, fluidra.com, and has also been uploaded to the Stock Exchange Commission this morning. 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 Planas.

Thanks, Clara. Good morning. Thank you for your interest in Fluidra and for taking the time to join us this morning. Today we are presenting the full year 2023 results and Bruce and Xavier will provide more detail shortly. Let me start by summarizing a few key takeaways. Performance in the year was within our expectations in a challenging trading environment. As you know, 2023 was a year marked by a correction of inventory levels in the channel as the sector normalized. This process was not unique to the pool industry. We are pleased to leave this behind us as we start 2024. New build demand was weaker, while demand to maintain and repair the global pool install base remained resilient. We recovered margins despite declining volumes and inflation thanks to the implemented price increases together with a diligent execution of our simplification program. In addition, working capital management has been outstanding, reducing net debt during the year while we complete a couple of acquisitions and pay the ordinary dividends. Our capital allocation framework remains unchanged, with a continued focus on cash generation and deliberating while investing in organic growth, a creative M&A, and maintaining a consistent dividend policy. We are introducing today our 2024 guidance. We expect margin progress, although also recognize uncertainty remains around the macro environment. Bruce will dive deeper on this. We are confident in our future. We continue to enhance our leadership of the pool and wellness market, delivering improving returns on capital over the medium term in an industry with attractive structural growth. Next, I would like to put in context 2023's performance. Fluidra is a structurally stronger business today compared to four years ago. We have grown revenues at a compounded average growth rate of more than 10% and expanded EBITDA margins by 200 basis points. We are a more reliable partner, outperforming our peers and having grown our share in a larger industry. The installed base has expanded underpinning of the market demand for the future. Our work to strengthen and position the group for long-term success continues. We are committed to deliver the perfect pool and wellness experience responsibly, offering more connected and sustainable products and creating value for our stakeholders. We look forward to discussing our solid results with you this morning. And with that, I hand first to Bruce to continue with our presentations.

Good morning, Eloy, and thank you all for participating today on this conference call. Moving to slide number six. Let me start with comments on our overall performance and highlights for the full year, and then turn it over to Javier to provide more details on the financial results. I will then return to provide some color on the outlook. Sales declined by 13% on constant FX and perimeter. to 2 billion and 51 million euros, driven by lower volumes, more than offsetting higher prices. This performance was in line with our expectations. EBITDA was 11% lower, mainly due to the effect of lower sales, but supported by higher gross margin year-on-year and the contribution of the restructuring initiatives within our simplification program aimed to reduce the fixed cost base. Going down the P&L, cash EPS was lower year-on-year on the back of the operating performance. Importantly, we made outstanding progress in terms of inventory reduction during the year, which is reflected in lower operating net working capital levels. We reduced net debt, which is a testament to our strong cash generation profile, and our leverage is stable year on year despite the lower volumes. Beyond financial results, page seven, We also continue to strengthen our global leading platform, which is recognized by our customers. Let me share some of the highlights of the year. First and foremost, our customer centricity. We improved data connectivity and intel exchange to better manage our supply chain. We reinforced our sales and distribution network with seven new pro centers in EMEA and two new distribution centers, one in Europe and one in the U.S. to bring us closer to our customers. I'm proud we were awarded vendor of the year by the top U.S. distributors for the third year in a row. This was possible thanks to the effort of our teams and to our focus on tailored innovation. We continue to develop cutting-edge pool solutions to strengthen our product offerings and reinforce our aftermarket program across the regions where we operate. We made progress to be a more efficient and effective organization, executing our simplification program, which I'll speak a bit more detail in a moment. We are investing in our business, both organic and inorganically. The integration of Meranos is going well and we'll continue to evaluate opportunities as they arise. Last but not least, our responsibility blueprint is foundational for future growth. You can see on the slide some of our 2023 achievements with our efforts being recognized by well-known rating agencies. Turning to slide number eight, let me share in a bit more detail our progress on the simplification program. As a reminder, this program is delivering long-term value and enhancing our resilience. It is mainly built on two areas, one focused on improving gross margin and the other focused on reducing structural overlaps and streamlining our operations. It's also underpinned by our drive to foster an agile and dynamic organization. In total, The simplification program delivers around 100 million euros of cost reduction between 2023 and 2025, with total related one-off costs of approximately one time. The expected savings in 2023 have been delivered, following our actions to lower our fixed cost base by reducing headcount across the businesses and simplifying our organizational structure to become more efficient. The program is also on track to generate more than 30 million of savings in 2024, driven mainly by global strategic procurement efforts and product design to value initiatives. We will continue to provide you with regular updates as we progress. Moving to slide number nine, customer-centered innovation is core to our success to deliver long-term growth. We have balanced our cost restructuring initiatives with a focused innovation approach to enhance our offering. On the left-hand side, you can see a simplified product development map to illustrate how feedback from users is properly taken into account in the process. Our innovation efforts revolve around three focus areas. Digitalization, which helps connect with and create a simple, more enjoyable pool experience for the end user, while improving pool management and business efficiency for the pool pro. Sustainability, where we continue to develop solutions that need less water, less energy, and less chemicals. and incorporating new design or technologies which make the product easier to use, install, and service. You can see some indicators on the right-hand side of the slide. We allocate 1.5% to 2% of total sales to R&D, and we continue to hold three times more patents than our next competitor. In 2023, the ratio of sales from new products launched over the last five years to total sales reached 19%, an increase versus prior year. And our sales of sustainable products were more than 51% of the total, on track to deliver our sustainability commitment. And last but not least, we created Fluidra Ventures, a corporate venture capital fund to invest 20 million euros in the next three years in emerging companies with unique technologies to reinforce our leadership position in the pool industry. Turning to slide number 10, without going into detail, here are a few examples of solutions developed with specific benefit for our customer in mind, be it the pool owner or the pool pro. Moving to slide number 11, into the details for the full year of 2023. On the right-hand side of the slide, you can see the positive contribution of price to sales performance in the year, the volume decline, and the negative FX impact. The 13% decline on constant FX and perimeter follows a flat 2022 and 36% organic growth seen in 2021. As mentioned, sales were within the range of our expectations. Unfavorable weather, especially in the first half in the US, and a tougher global macro environment were headwinds during the period. We saw lower demand for residential new pool construction, while as anticipated, repair and maintenance demand was resilient. Commercial pool grew slightly above expectations. The adjustment of inventory in the channel was broadly completed in Europe by the end of the second quarter and in the U.S. by the end of the third quarter, which supported a good finish to the year with significantly easier comparables. As a result, the decline in sales in the second half of the year was 4 percent, lower than the 18 percent decline seen in the first half. the development was as expected, with the exception of Northern and Central Europe, where lower consumer confidence continues to impact demand. With that, I'll turn it over to Xavier to explain the financial results in more detail.