Pool Corporation (POOL) — Q1 2026 Earnings Call Transcript

Welcome to our first quarter 2026 earnings conference call. During today's call, our discussion, comments and responses to questions may include forward-looking statements, including management's outlook for 2026 and future periods. Actual results may differ materially from those discussed today. Information regarding the factors and variables that could cause actual results to differ from projected results are discussed in our 10-K. In addition, we may make references to non-GAAP financial measures in our comments. A description and reconciliation of any non-GAAP financial measures included in our press release will be posted to our corporate website in the Investor Relations section. Additionally, we have provided a presentation summarizing key points from our press release and today's call, which can also be found on our Investor Relations website. We will begin today's call with comments from Peter Arvan, our President and CEO. Pete?

Good morning, everyone, and thank you for joining us. As we begin the 2026 season, the industry continues to work through a period of stabilization. Consumer discretionary demand remains measured while the installed base continues to drive steady maintenance activity. Q1 is our smallest and most weather-sensitive quarter and our focus entering it was on executing cleanly through the shoulder period to position us for the core season ahead. Our team delivered a solid start with sales growth of 6%, operating income growth of 7% and a 10 basis point operating margin expansion, exceeding our expectations for the quarter. Execution was steady across our geographic footprint with strong maintenance volumes and improving trends in several discretionary categories. A solid start like this reinforces rather than changes our full year view. We are confirming our full year diluted earnings per share range of $10.87 to $11.17, which includes the $0.02 of ASU benefit realized in the first quarter. Reviewing sales by geography, California grew 10% and Texas 7%, supported by constructive weather and strong maintenance demand. Arizona grew 1% and Florida declined 1%, reflecting steady maintenance activities, offset by weather and some softness on the irrigation side in Florida. Across the markets, our teams adapt quickly to local conditions and our differentiated product portfolio, proprietary brands, technology platforms and supplier partnerships built and refined over many years continued to widen the structural advantage that defines our position in this industry. These are not advantages that can simply be replicated by adding locations. In our other key businesses, Horizon net sales declined 2%, consistent with the broader discretionary environment we've seen persist. In Europe, sales grew 5% in local currency, building on the improved trends which we exited in 2025. By product category, we saw broad-based growth. Chemicals grew 8% on strong volume with standout contributions from our proprietary and private label lines, which carry structurally higher margins and are gaining traction across the enterprise. Building Materials grew 5%, continuing to build on our national pool trend offering. This, we believe, builds upon our growing share in this category given the backdrop of a muted new construction market. Equipment grew 7% on price and solid volume and commercial was flat for the quarter, largely due to project timing, but exited the quarter with slight growth. Turning to our two strategic aftermarket channels, independent retail and the Pinch A Penny franchise network. Sales to independent retail customers grew 3%, a solid setup as they prepare for the core season. And Pinch A Penny franchisee sales to their end customers grew 4% and our franchisees opened seven new independently owned franchise locations in the quarter. On the digital side, POOL360 increased to 13% of net sales in the first quarter, up from 12.5% a year ago. Our teams continue to make steady progress engaging customers through enhanced offerings and most recently POOL360 unlocked new capabilities. Between our digital investments and our distribution network, we are well positioned to continue deepening customer engagement across both professional and DIY end markets. Consistent with what we have discussed last quarter, we remain disciplined on our sales center expansion and capacity expansion and are focusing on driving more value from our existing footprint. We consolidated one sales center into its existing market in the quarter, bringing our total to 455 sales centers. We still expect to open five new sales centers for the full year. This is a measured, productivity-first posture, the right stance given the current environment. We have made several investments in our network, our technology and our people over the past several years, and our focus now is on leveraging those investments rather than adding to them. You should expect our expense growth rate to moderate as we grow into the capacity that we have already built. As we look at the rest of the year, the macro backdrop has not changed materially from what we described entering 2026. New pool units for 2025 came in at 58,000. While we expect 2026 will be close to that level, it is important to remember that the center of gravity of our business is the 5.5 million in-ground pools already installed. We serve that installed base with a combination of product innovation, customer experience and go-to-market capabilities that no one else in the industry can match. Our growth thesis does not require a recovery in new pool units. It is anchored in maintenance, remodel and share capture across product categories for the existing installed base. Our teams remain focused on executing the plan we have set out entering the year, maximizing share across product categories and investing deliberately in technology, private label and partnerships that extend our reach. Over nearly four decades, we've built something that goes well beyond distribution, an integrated platform of supplier relationships, proprietary products, technology, franchise networks and field expertise that no one can replicate. We have deliberately invested in that platform so that we perform in the environment we are in today and so that we are in a fundamentally stronger position whenever the cycle turns. The depth, the reach and the relationships that we have built are unmatched, and we are getting stronger and not standing still. We look forward to sharing more about our strategic priorities and capital allocation discipline at our Investor Day on May 12. I want to thank our team, our vendor partners and our customers for the work and the trust that underpins what we do. Our people are the reason we start each season ready to win and their efforts in Q1 set us up for the season ahead. I will now turn the call over to Melanie Hart, our Senior Vice President and Chief Financial Officer for her commentary. Melanie?

Thank you, Pete, and good morning, everyone. We are happy to share a solid first quarter with net sales increasing 6% compared to the prior year period. The 6% increase reflects approximately 3% from pricing, 3% from volume in our maintenance and discretionary categories and 1% from customer early buys and foreign currency translation. Pricing contributed approximately 3% to sales growth in the first quarter. This reflects an estimated 1% to 2% full year price realization from current year increases supplemented by an approximately 1% incremental benefit from mid-season pricing actions that were implemented at the end of April of the prior year. We expect this pricing contribution to normalize in subsequent quarters when fully reflected in our year-over-year comparison. Within our chemical product lines, we have observed some moderation in pricing from levels seen at the beginning of the quarter. But at this time, we are not realizing a significant impact on consolidated net sales. We will continue to monitor market conditions. Volume growth was a meaningful contributor to our top line performance with our maintenance and discretionary product categories delivering a combined 2% increase driven by improved demand across equipment, parts and chemical volumes. The positive momentum we experienced in building materials during the back half of 2025 carried into the first quarter, providing support to overall sales growth. Building materials sales for the quarter increased 5%, and we are encouraged that our results continue to track ahead of permit data. Permit data remains lower than prior year levels through the end of the first quarter. Finally, the benefits we saw from early buys and foreign currency translation provided an approximately 1% tailwind to reported sales in the first quarter. We do not anticipate currency to be a material contributor to full year results as the favorable translation impact is expected to diminish in the seasonally stronger second and third quarters as the sales base increases. Gross margin for the quarter was 29%, a decrease of approximately 20 basis points compared to the prior year period. Primary drivers of the year-over-year change during the quarter were product mix, inbound freight associated with stocking levels through the season and increased early buy activity. Product mix was the most significant driver of the year-over-year variance. Equipment sales grew 7% in the quarter and, given the lower relative margins of this category, the strong volume performance diluted consolidated gross margin. We view this growth as strategically positive. Customer early buy activity also increased in the quarter. As is typical with early buy programs, these sales reflect modest discounts from regular season pricing and therefore carry somewhat lower margins than our in-season business. The increase in early buy volume is consistent with our go-to-market strategy and positions us well for the selling season ahead. Customer mix and chemical margins were also modestly below prior year levels, though neither represented a material individual driver of the variance. Partially offsetting these headwinds, we continue to realize benefits from our pricing initiatives and ongoing supply chain actions. First quarter gross margins are in line with our historical seasonal patterns and should not be viewed as sequential from fourth quarter levels. Operating expenses for the first quarter were $247 million, a 5% increase over the same quarter in the prior year. The increase was driven by the addition of six greenfields opened after March of last year, technology cost and overall inflationary increases. As discussed on our year-end call, our 2026 operating plan is focused on unlocking efficiency across the 50-plus greenfield locations opened over the past five years, combined with process improvements resulting from our ongoing investments in POOL360 and its expanded capabilities. First quarter results are tracking in line with that plan. Operating income of $83 million increased $5 million or 7% compared to the prior year. We realized a 10 basis point operating margin improvement. Interest expense of $12 million reflects the incremental borrowings associated with share repurchase activity during the quarter. Diluted earnings per share of $1.45 increased $0.03 compared to the prior year. Prior year included a $0.10 ASU benefit versus $0.02 in the current quarter. Excluding the impact of ASU in both periods, diluted EPS increased $0.11 or 8% for the first quarter, reflecting our ability to generate earnings growth with top line expansion. Moving to our balance sheet and capital allocation. Consistent with our normal seasonal pattern, we executed our vendor early buy programs to ensure appropriate inventory coverage heading into the season. Inventory at March quarter end was $1.7 billion, 14% higher than first quarter last year and an increase of approximately $200 million from year-end as product was received and positioned across our network. Our current inventory includes stocking for new locations and acquisitions added to the network, new product introductions resulting in a broader product range and cost inflation relative to the same period last year, with some opportunistic purchases made ahead of seasonal price increases. Inventory investment is concentrated in our fastest-moving product lines, and we would expect a normal seasonal reduction in inventory levels as we move through the peak selling season. We ended the first quarter with total debt of approximately $1.2 billion and a leverage ratio of 1.7x, which is within our stated range. As is typical, debt levels will increase through the first half of the year as seasonal inventory builds and early buy payments come due before declining in the back half of the year as receivables are collected. Net cash provided by operations was $25.7 million for the first quarter compared to $27.2 million in the prior year period, with the year-over-year change primarily driven by higher inventory purchases in support of the upcoming selling season. During the quarter, we repurchased approximately $64 million in shares, an increase of $8 million over the prior year period, with $271 million remaining under our current repurchase authorization. We will continue to execute share repurchases in an opportunistic and disciplined manner, consistent with our capital allocation framework. Even with our first quarter trends tracking ahead of our expectations, full year guidance remains unchanged. We continue to expect a 1% to 2% pricing benefit for the full year of 2026 from vendor cost increases and related price pass-throughs. Combined with growth from the installed base of pools and the absence of any meaningful recovery in discretionary spending, we expect top line performance to be low single-digit growth on a same selling day basis. Gross margin for 2026 is expected to remain consistent with 2025, supported by continued supply chain efficiencies, pricing strategies and higher private label sales offsetting the prior year margin benefit from mid-season price increases. As indicated at year-end, first quarter reflected the highest year-over-year expense comparisons. We expect expense growth to moderate on a quarter-over-quarter basis throughout 2026 as we focus on capacity absorption and a prior year new sales center opening. Incremental incentive-based compensation, if earned, will be recorded in proportion to estimated operating income growth and the costs associated with new sales center openings in 2026 are expected to be weighted towards the back half of the year. With the share repurchases during the quarter, our projected interest expense is now a range of $49 million to $51 million. We would expect second quarter to have the highest interest expense of the year following the payment of early buys. Our estimated full year tax rate remains approximately 25% with the second quarter rate to be approximately 25.5%. Our guidance does not include ASU benefits beyond the $0.02 recognized year-to-date as we continue to expect the full year impact to be less than prior year. We are expecting approximately 36.6 million weighted average shares outstanding for the rest of the quarter and the full year, updated for our first quarter share repurchase activity. Guidance remains unchanged with a diluted EPS range of $10.87 to $11.17 including the $0.02 ASU tax benefit recognized in the first quarter. The midpoint reflects a 2% to 3% growth over prior year. Pool Corp's first quarter results demonstrate the earnings power of our model even in a market that has not yet seen a full recovery in discretionary activity. Pricing discipline, supply chain execution and the growing contributions of POOL360 are working as intended and our network continues to expand in a way that strengthens our competitive position for the long term. We entered the peak season with confidence in our team, our inventory position and our ability to deliver. I will now turn the call over to the operator to begin our question-and-answer session.

My first question is on your ability to realize the return on investments that you talked about coming into this year. As the pool season start comes together, can you talk about your competitive positioning? What you're hearing from the sales centers and your customers there? And just how you're thinking about that overall positioning as we move into the spring and summer?

When we think about getting ready for the season, we think about making sure that we have all of the sales centers ready for the surge of business that happens during the second and third quarters. That means having the right inventory in the right location, having a staff that is fully trained and excited about the season, having all of our new products ready to be introduced to customers, working really hard on early buys to make sure that we have the product out in the field at our customers' locations ready to sell, making sure that we have explained all of the new product offerings that are available to our customers so that they can help grow their business and that our marketing programs are finally tuned to kick off the demand creation efforts that we do, which are very unique in the industry. And then it's a matter of making sure that in the sales centers our teams are ready for the surge of business and that we've taken advantage of the investments that we've made in capacity creation so that we get better every year. We have a performance-based culture and every year there is a drive to make sure that whatever we did last year, we do better this year, whether it is our productivity levels in the sales centers or our efficiency in serving customers and how quickly we get them in and out the door. All of those things are part of the overall customer experience that we focus on. And especially with the newer locations that we opened up in the last couple of years, the newer ones are the ones that we pay the most attention to, to make sure that they're ready to start without missing a beat.

Okay. That's helpful. And then, I guess, given the geopolitical environment and the moves that we're hearing in consumer sentiment, what are you hearing from your customers on the ground? Has there been any change in how they're thinking about their backlogs or consumers' willingness? And what are you seeing on the discretionary side of the business?

We continue to watch the health of the consumer. We watch housing turnover and the age of the installed base; they all matter. It's early in the year to look at permit data and try and draw any conclusion for where we will end up because the first quarter is just so small relative to the full year. Builders are still trying to lock down contracts. I've heard everything from very optimistic—'I'm sold out'—to other areas where they're still trying to pursue contracts to make sure that they can lock up the season. On balance, I would say relatively unchanged with some green shoots.

Pete, as you mentioned, I realize the first quarter is seasonally volatile, but we saw a couple of decent-sized changes in some of the supplementary information you provided. So chemicals staged quite a turnaround here. Florida, I guess it had been growing a little bit; now it's down 1% and California and Texas are booming. I'm just wondering if you can talk about those to the extent there's any signal there versus noise in the first quarter.

I'd be careful about drawing huge conclusions from the first quarter, but a few thoughts. In terms of chemicals, first quarter is actually one of the quarters where dealer conversions and inventory loading happen for the upcoming season, so dealers typically convert after the season and then load inventory into the stores. With our private label chemicals—our proprietary lines and Easy Pro lines—which we believe are best-in-class, especially when paired with the technology tools and the water testing apps and test strips we have for integrated systems, I think we saw good traction from dealers and specifically on the retail side, which has helped the traction we're seeing on the chemical side. The teams are out hunting that business because we have a strong value proposition. Regarding California and Texas, California benefited a bit from weather: it was unusually warm earlier in the first quarter, which helped. The same was true for parts of Texas. But it's a small quarter relative to the full year, so I wouldn't draw too many broad conclusions. The team did a very good job of explaining the value proposition and winning share at the dealers in the first quarter.

Yes. And second, you've talked about growth in OpEx expected to slow through the remainder of the year, and Melanie mentioned that. Could you tell us, does that still kind of anticipate that full year OpEx will be in that 60% to 80% range relative to gross margin or sales dollar growth? I know that's a target. But based on your guidance ranges and how you're looking at the business, is that still the target for 2026?

That is the long-term target, but you should remember for 2026 we do also have that incentive comp rebuild. While we do expect to get some leverage for the year, some of that natural leverage will be offset by that rebuild on the compensation side. So it will be a little bit lower than our normal long-term algorithm.

And that comp reset was—I think you talked about $15 million. Is that still the case?

Yes, at the low single-digit growth.

What we're counting on is absorption as the new sales centers that we've opened last year and the year before continue to gain traction and the absorption rate on that cost improves. When you couple that with slowing the addition of new investments to the business—because I think we're adequately invested in most areas right now—the results for the back half of the year look encouraging.

I wanted to start with gross margin. Peter, Melanie, can you quantify the impact to gross margin from the customer prebuy and then also the higher equipment mix—and the reason I asked is I think last quarter you guided gross margin slightly up year-over-year in the first quarter. So curious what was different versus what you thought?

We're not going to provide a detailed quantification of that. But if you think about relative margins, building materials generally have the best margin, then chemicals, and then equipment. With equipment being a higher portion of first quarter sales and really outgrowing our expectations, that's where we saw some dilution of consolidated margins.

Got it. So in my own words, it sounds like the equipment growth surprised you in 1Q versus what you thought?

It was a very pleasant surprise.

Okay. Got it. All right. That's good to hear. And then second question is, can you just comment on what you're seeing so far in April? And how does that compare to March? I'm curious if March had a weather boost and trying to figure out if that's continuing into the second quarter.

We're most of the way through April, and I would characterize April as going as expected relative to what we contemplated within our guidance and plan.

I wanted to ask about pricing and inflation and demand elasticity. In the past, where within the mix have you seen this sort of effect first appear? Do you feel your private label offering is sufficient breadth to maybe offset a down-market shift? And would that downshift be margin accretive?

I wouldn't want anyone to position our private label as a down-price offering. We've intentionally focused on making sure it is a very high-quality product. We're not selling it as just a cheaper offering; it's an offering that has tremendous value and is very high quality. Regarding inflation, it's most prevalent in discretionary when you get into the cost of a new pool. On the maintenance side, there are some semi-discretionary items: a pump and filter are nondiscretionary when they need to be replaced, but heaters and lights can be discretionary. In some areas we've seen some decline in demand, and that's already in and baked in; we're not seeing material changes from what we've seen over the last couple of years.

Okay. Got it. And thanks for the clarification on the private label. I guess second question is just on equipment sales, which obviously look encouraging at this point. Any sense of how much deferred investment may be in the market there? Given the rate of catch-up following prior downturns, what could that contribute to growth over the next year or two?

There is some element of replacement as products with longer life naturally shift replacement timing. When the industry moved from single-speed pumps to variable-speed pumps, variable-speed pumps often last significantly longer—sometimes 30% to 50% longer—so the replacement cycle is different. Those early variable-speed pumps from the transition period will now start coming into the replacement cycle. The same applies to LED lights, which outlast incandescent lights. As we work through that cycle, you'll start to see more replacement demand, which is encouraging for the future.

I'm going to focus a bit on pricing. Melanie, you discussed that we're going to be lapping the tariff pricing that started in April last year. I'm just curious how we should think about that. Did that ramp much in the second quarter? Will we see that as a comp in the second quarter or not really until we get to the back half? Just curious how we should think about the cadence and the impact of that since it's a full point in the guidance calculation.

When you look at full year pricing, we are at the 1% to 2% range based on current year increases. In the first quarter we had that incremental 1% that was really the tariff price increases that we saw last year. In the second quarter of last year we did have some benefit from those price increases, so we will be lapping that. For the remainder of the year, we would expect pricing to be more in that 1% to 2% range, reflecting the current year cost increases.

And then with this solid move in the first quarter in Chemicals, and I think one of you mentioned that there was some good private label, which is higher margin activity there—could we see upside this year given the strength there and the possibility for persistence and also the margin element of private label with the chemical impact?

We're very encouraged by chemicals in the first quarter because that's the nondiscretionary part of the business. It goes in two channels: the pro channel, which is day-in, day-out foot traffic into branches, and the independent retail channel where retailers take the product and put it on their shelves as a go-to brand for the season. We're encouraged by the results in the first quarter and think that as the season progresses, chemicals will be a good tailwind for us.

Just on the expectation that you have for operating expense growth to moderate—you mentioned improved operating leverage on recent greenfields—I'm wondering if there's anything else besides that in the calculation? Are you expecting certain cost actions in addition to better operating leverage?

We are focused on ensuring that the greenfields we put into place continue to reach fleet average, which drives operating leverage at those locations. Along with that, we are constantly evaluating from both a seasonal and a market standpoint to ensure we're operating effectively within our capacity creation efforts. We are leveraging the benefits of POOL360: as we continue to increase sales through POOL360 at each location, that gives us the opportunity to evaluate and optimize our operating model in those locations.

A follow-up question on chemical prices. You noted they moderated in the quarter but you're not seeing an impact to sales. Is there a risk that it becomes a bigger headwind in future quarters at all?

From where we sit right now, prices are fairly stable. That could change market to market if a competitor does something, but we don't see any structural setup for a meaningful change at this time.

Just wanted to quickly dive into the inventory comment around new product introductions. Any specific examples? Also, are you doing any more white-label import product? I want to better understand some of the nuances on the inventory line.

Our job as the distributor is to make sure we have the best product offering for our customers, no matter where it comes from. Much of our private label product is domestically produced, and some of it is imported—that has always been the case. Our view on new products is not to seek lower cost for the sake of lower cost; we look for products with new technology that help expand the market. We focus on highest quality features and benefits that our customers and their customers want to drive demand. We don't go out looking for the cheapest pumps and filters; if that were our goal, our product mix would be very different. We focus on professional-grade products that help our customers grow their business.

All helpful, Pete. Maybe a quick one on the prebuy activity during the quarter. You did break out the prebuy contribution in your bridge. Roughly what is the gross margin for a customer that prebuys a product versus a non-prebought product? That split on gross margin would help understand the impact to gross margins in Q1 from prebuys.

We typically don't break that out because there is no single answer: it varies by customer, by the products they buy and by overall mix. So we can't give you a precise number delineating the gross margin impact for prebuys versus in-season purchases because it depends on when they buy, how much and what they buy.

I wanted to follow up on the equipment and the replacement cycle. Can you put some numbers around the useful life of equipment now? Given that useful life, do you see a replacement cycle in the next couple of years because we're coming up on five or six years post-COVID when there was a lot of demand?

Expected life of equipment varies based on product, operating conditions, seasonal versus year-round use, maintenance and weather events. Variable-speed pumps tend to last longer than single-speed pumps, perhaps 30% to 50% longer depending on conditions, but it really depends. Filters and heaters have different life expectations; heaters are especially influenced by water quality. A well-maintained product will last longer. Since the introduction of variable-speed pumps and LED lights, we expect replacement opportunities as the earlier-installed products reach their replacement cycles.

Just want to come back on inventories, 14% growth. You mentioned the broader product range and service levels—how would you characterize inventories where you want them to be? And on broadening the product range, can you give examples of the new tech or expanding-market products you mentioned earlier?

Inventory is up in dollars, but the profile is very healthy. Our buyers are astute. The dollars are concentrated in very high-moving items—not a lot of new products with no sales history. From an inventory perspective, I spend very little time worrying because the team controls inventory well. On new products, examples: within our private label we have an 'Extreme Tab' chlorine product that includes additives—algaecides, inhibitors and clarifiers—that distinguish it from a standard tablet and deliver better pool quality. Another example is a proprietary pleated antimicrobial cartridge filter that is faster to service and has a very low micron filtration rate, which helps produce clearer water. That clarity complements brighter LED lights; when customers upgrade lights, better filtration helps avoid visible suspended particles, so those product pairings matter a lot.

Those are great examples. Just on pricing, you mentioned you expect it to moderate. Are you hearing of any potential follow-on price increases, whether it's freight inflation from higher gas or oil-based products? I think we heard about some pricing actions in steel and aluminum related to Section 232 tariffs. Any chatter of follow-ons coming?

There has been some chatter. When we look across product categories compared to this time last year, last year when we talked about the impact from tariffs we had an incremental 1% that we added to pricing for the forecast. At this point, some of it's noise. We've gotten some notices from vendors, but it's not as widespread as we saw last year—around 30% of our cost of product had announced price increases then. We're not at that level now, so we don't expect as much impact, and we're watching for vendor reactions.

This is Jake Nivasch on for Steve. I wanted to dig into POOL360 a little bit. It's nice to see penetration levels continue to increase as seen this quarter versus the prior year. What is the expectation for the year for this platform from a penetration standpoint? And as a follow-up, what does customer retention look like with the platform? Are newer branches utilizing it more than older vintages, or is that dynamic unrelated?

We're very encouraged by POOL360. We think it is a structural differentiator for PoolCorp in customer experience and cost-to-serve, which is why we focus heavily on it. There are regional differences in adoption: some branches have very high utilization—well over 30%—and others are lower. Some of that is regional, and some of it is opportunity on our part. We continue to improve the tool daily, adding features, communicating those to customers, and training branch teams. Last year we ended the year at 17% penetration. I don't see any reason the company couldn't ultimately exceed a 25% target and perhaps go higher over time, but we remain flexible and do business with customers the way they want to work with us; we don't force digital adoption.

Just first, do you think early buys were better this year because customers were more worried about potential price increases? Or do you think this is a view that they're more optimistic on 2026?

I don't think it was primarily fear of price increases. Early in the year there's often optimism because customers don't yet know the season's outcome and our customers tend to be optimistic. Early buys are also a function of our sales efforts, the quality of our products and how well we serve customers. Customers aren't buying a year's worth of inventory; they're buying some inventory to start the season, so there's limited risk to them.

Okay. Got it. And just as a follow-up, you had mentioned being able to get some discounted equipment last quarter—did you pass that discount along to your customers? And was there any change in the structure of your early buy discounts?

Early buys are part of the normal course of business. Pricing on early buys depends on the customer, the product mix, how much they buy and other factors. There is no single formula that applies universally.

Thank you all for attending today's call. We look forward to you joining our Investor Day webcast on May 12, when our executive leadership team covers strategic initiatives and our long-term financial outlook in more detail, and on July 23 when we announce our second quarter 2026 results. Have a wonderful day.