FLUIDRA - ENTREVISTA A ELOI PLANES

Yes, I clearly think so. In the end, having the family component means there are people risking their own substantial assets in each decision, which, whether we want it or not, always leads to a somewhat more medium-term vision, ensuring consistency. You value value creation, but the level of risk taken should be appropriate. This could give an excessively prudent profile, but I don't think so. I believe that in the end, companies like Fluidra have demonstrated the ability to take necessary risks at opportune moments for the company to evolve. For example, the 2017 merger is a clear case of a medium-term bet with some risk, especially in execution, but we took it because we saw it would generate much value and create a more balanced company geographically, by product, and in size. To answer you concisely, I do think that having significant family ownership and this long-term perspective is really important and provides security.

I think there are two very key aspects that are part of Fluidra's DNA from its inception. One is internationalization; it's an element that from birth, in 1969, during the Franco era in Spain, a company dedicated to pools could not survive only on the Spanish market. So the will to expand from minute one was there: we must open up, and the limit is the world. That's part of Fluidra's DNA from the start. The other element is having a broad vision of the business. We aim to provide solutions to the pool professional, the company managing pools, from maintenance to new construction, trying to meet all their needs. This gives us a wide view of the sector—we handle almost everything around the pool except water itself. Fluidra has products to provide solutions for all these needs.

These are two key moments. And you mentioned in your question that people often make two big assumptions about pool businesses. The first is that it's a local business—but we're not; over 90% of our revenue comes from outside Spain, and the Americas represent about 45% of our business, making us essentially an American company by geography. The second assumption is that it's mainly about new construction—but the big business is against the existing pool park, worldwide over 16-17 million pools needing maintenance, replacement, and upgrades due to aging and new technologies for connectivity, safety, and comfort. This makes the sector more resilient, with stable growth around 2-3.5% annually, and with our market share gains, Fluidra can achieve consistent 6% annual growth, which is hard to find elsewhere.

The recurring business of pools is constant. From the first year, a pool needs chemical products like salt, pH regulators, and cleaning robots. Over the years, maintenance increases: every two years for robots, electrode replacements for salt electrolysis, and every 7-9 years for filters and pumps. After 10-12 years, you consider upgrades with new technologies like internet connectivity for remote control. This business starts from day one with maintenance and evolves to repairs or redesigns. As a second-generation family, we see this sector as providing great security through recurring business and growth from new technologies.

I had two comments. First, a well-maintained pool is simple with high returns; for example, investing in a variable-speed pump pays back quickly through energy savings, and salt electrolysis improves the pool experience significantly. Second, from a business model perspective, Fluidra provides competitive advantages. The pool professional is typically a small, family-run business needing four key things: global solutions (we offer the most extensive range, from A to Z), fast service (we have capillary distribution with pickups or deliveries under 48 hours), quality (we own seven of the ten top global brands, ensuring reliability), and after-sales service (with over 50 years of proximity to clients). Fluidra addresses all four needs.

I'd say three completely different elements. First, we are essentially industrialists with a product and solution vision—that's our main position. Second, we adapt to market rules globally; in Europe we play soccer, and in the U.S. we play American football, so we adjust to each market's dynamics. The U.S. market has consolidated distribution, and manufacturers have strong positions. Third, in integrated models like Europe, we dominate everything except manufacturing. In the U.S., through distribution channels, we maintain direct contact with clients via loyalty programs, so while we adapt, we keep a strong relationship with professionals, which is key in our sector. Our sales network in the U.S. contacts clients directly.

The capacity to improve efficiency at Fluidra is enormous. We've grown organically and inorganically, building complexity, but we see layers of improvement. With EBITDA margins over 20%, we aim for 30% by 2030, as the sector allows competing on range, quality, and service with high margins on increasingly technological products. In the last few years, market growth focused on supply, but now with stability, we can improve efficiency, hence the 100 million program over three years. For concrete examples, after the merger, we realized products differ but components are similar—like LED lights—so redesigning products for scale in component purchasing and simplifying commercial structures in untapped markets will drive gains.

Looking ahead, I see the pool sector becoming more technological, with connected pools, energy efficiency, and sustainability. Pools can reduce water and energy consumption and even become positive-impact elements, like water reserves and solar energy generators. Fluidra will remain a global leader in residential and commercial pools, with a broad vision, strong cash generation, and constant margin improvement. As a long-term family investor, I believe I won't find another sector and company where I can speak about its future with such confidence.

Chlorine has decent margins as it requires logistics, but it's true that technologically advanced pools offer users and professionals advantages like lower consumption of chemicals, electricity, and water, providing high returns. Such pools are more complex, leading to higher sale tickets and better margins.

Yes, sorry, I reconnected. I know you have something at 5 PM, and I had a couple of important questions left.

We have a very clear capital allocation policy. First, we're in a sector and company with great cash generation, allowing us to bet on inorganic growth while returning capital to shareholders via dividends, our policy. We work with 2 to 2.5 times EBITDA in debt, ensuring a healthy balance sheet, prudent but not overly so, aligning with our long-term family vision. This debt level lets us invest, acquire, and pay dividends. We believe shareholders should see value appreciation and receive returns, hence the dividend policy. Additionally, we add share buybacks when cash generation is high and acquisitions are limited. We've done this consistently, pausing dividends during major operations like the merger, but buybacks provide returns too.

Markets tend to exaggerate both upwards and downwards during euphoria or uncertainty. With high inflation, the Ukraine war, and many situations, markets overreact. Intrinsically, the company has much higher value, even in a scenario with 12-18 months of challenges. This resilience of core business and margin improvement capacity, when laid out, shows the company is undervalued. We even restarted a buyback program recently, as we see this as an undervaluation period for a global leader with above-sector growth, large margins, and cash generation. The market might not be listening or is overwhelmed by uncertainty.

We've experienced this before, like in 2009, which was deeper. Eventually, the market turns, uncertainty clears, and things normalize. Another advantage is our longevity—we're here today and will be in 5-10 years, seeing long-term value much higher than current screen prices.

I'm delighted to thank you for your confidence in Fluidra. It's a great sector and company, the leader in this sector, dynamic with growth ambitions. Beyond organic growth, we're always seeking opportunities, and in uncertainty, we'll be ready to take advantage. Thank you very much.

Thank you very much, greetings, and apologies for the interruption. Best wishes, goodbye.