POOL - Earnings call transcript Q2 2018

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Operator

Good morning, and welcome to the Pool Corporation Second Quarter 2018 Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mark Joslin, Senior Vice President and Chief Financial Officer. Mr. Joslin, please go ahead.

Mark Joslin

you. Thank and second everyone, call. XXXX to welcome morning, quarter our earnings Good statements, for would listeners questions responses forward-looking our to today management's our include I remind and that like periods. and XXXX future discussion, comments may including outlook to materially Actual today. those results from discussed may differ differ our the variables XX-K. to regarding projected results cause actual that Information from could is factors results and materially discussed in

measure make our of we may Relations references posted financial comments. our description addition, financial Investor in to corporate In measures our reconciliation A and non-GAAP our website is to non-GAAP in section.

over Now I'll turn our CEO, the Mesa. call Manny la Perez Manny? to de and President

Manuel Perez de la Mesa

quarterly Thank color color on everyone operations, sheet. quarter investor on Pete provides you, Arvan remarks on to balance while limited this Mark morning will prepared and Mark, the be sales call. XX than and calls expenses will good as provide the My more and previous the

after reverted May March the higher in a rainfalls due XXXX start terms to albeit June, on and and expected In to customer reduced constrained by workdays markets. season, of capacity slow the activity levels selected April and in

As expecting half is growth growth industry. we our noteworthy the quarter We're capacity. main customer a is sales strong which for had our first second and remains as benchmark, to demand in the ongoing billion-dollar constraint

started increases now increases the channel. manufacturer mentioned through given in have As to previous be materials pressures. calls, be greater are and in starting XXXX price Those on operating we than normal communicated expecting earlier passed were and and cost to

XXXX will months the some gross season be of some margins four felt primarily in there impact While XXXX. noise XXXX be and in the will the late on given impact on last sales timing,

and line impact but be beyond. sales For XXXX in it should XXXX mute add to our the fairly bottom should

at look better our the stronger and are business, across I we As Board.

in we have leverage incorporating higher fleet, the operating second in guidance EPS product our lumpy range. in These the investments investments subsequent for into ongoing quarter facilities, us result by in customer in due occasionally by XXXX-XX kept people, intact largely but been that's marketplace. pickup to the historically continues $X.XX that and end, separate technology, followed lines, To expense to marketing growth ASU Our service our years. XXXX

XXXX, growth X% Beyond EPS sustained model X% for operating growth to intact and growth organic solid with double our leading growth. to is profit plus mid-teens sales digit

Now the I'll over turn business to for commentary. Pete call his

Peter Arvan

to taking to everyone That all you, call. for time on Thank morning the Manny today. us and you good the join

introducing I might by pleasure of marketing I with not Arvan, Pool company of operations who the Corp. leading American Operating the along Officer and the North our myself those green been Let to businesses you of blue XXXX of and me ever and joined have January had since. meeting. start IT am in Peter Chief

you all on base from overall growth in revenue announcement, period. of had is X% of X.X% saw This X% the second business we with and same and for base As business. our quarter year's our growth X% a overall last top respectable

in the spring seasonal the up to than and but a in April normal markets continued weather markets our delayed mentioned, As that ramped in once demand seasonal overall the Manny into products our May, June. led for broke slower

are only from June. same largest a X% by on fact, reflects which collectively April markets strong. the in markets markets, our quarter X% growth In should four sales Arizona is second year. as followed estimate Of selling grew in normal year-round these our saw at basis, in base and business much days increase Texas again May weather half we California challenges, in the spring most Understand Weather markets Florida so cool in we that saw May than normal delayed X% spring and the weather which construction we gains while impacted demand the a very patterns underlying roughly June and further as Despite of Pool days the weather X% wet collectively. in solid South saw that share also for activity. for the make these growth unseasonably compressing this of

a our greatest on For base share growth is products. the growth X% income weak the gross rate. From the start, gain base view, the April a In the business strength materials a the income. quarter Pool spring the as commentary seasonal market. for discretionary was slow and with demand business as chemicals grew as company total delayed same strong and that at the for in commercial maintenance business quarter. strength the for quarter. products the sales up outdoor at overall period of on Pool's demand quarter. revenue saw X% saw how up in grew warmed of falling a in spike profit weather May, continue area, again Operating period, product building green XX%. gross retailers total X% to Pool's experienced with and increased will X% the grew both in Despite retail of soon all for X% the Equipment The the profit, and Switching opened Mark we affected X% and we markets associated at the in were pushback living while sales as reflecting with expense operating impact organic. our provide growth growth which business of openings X%,

focus to update sales us. as on been I’d this our a POOLXXX provide has Now an area for like

specialty app the centers place year-to-date our our to equipment XX% site. leaving allows to our on higher up productivity, this we back proposition. the over even POOLXXX customers pick search are to platform sales shows and for without added inherent ever To job value them faster facilitate have service which and differentiating getting faster customers for their our time in further reduce job priority areas orders, value wait bills customers. product Sales and Our pay the their

I on transportation, I to relates to which Moving costs transportation that that job inflationary tight appropriate have on exist. environment two the today's inflation worked contain hard would pressures teams think on year-to-date pressures in areas to turnover. discuss comment to on, are On market been it a very like as are we've and that focused

In sales are the line our in costs third-party fuel growth. our net with transportation in and including increase freight fact,

I like would is to point Lastly rate our out in even job that market, competitive attrition today's down.

call the Our time for to today. to are commentary. team than chaise between the us financial more exceptional provide best I suppliers his has employer able unparalleled the to our will for Mark now team develop value of allowed retain we your Thank focus industry attract, and you our and to customers. XXX,XXX over in turn

Mark Joslin

results start variation some Thank any will margins. on I’ll detail a comment our Day in our as year-over-year with last margins you, quick normal reflect gross changes big quarter drive Pete. product year-over-year business discussed meeting, at in some mix will given for in which Investor

be annual However, should relatively margins on flat. basis an

acquired results changes change not Our for press with on our gross Note X a and the release. in that looking for margin this existing were but amount the your excluded year, business bit as a than just results in me profit business you June new so base five quarter seven schedule. reflect included financials million year-to-date opened when attention from acquisitions noise our driving minute in on year focus results of here gross business excluded With last quarter see new business acquired base let points in are base most, that locations like and and locations included can basis in this more which businesses we had XX locations quarter $X.X markets that no our added mix and since margin business results. our the lower the opened definition in the gross not expense. for These at operating five base addendum contributed

million So there quarter year-to-date. profit no and loss $X.X a in these contribution the operating was from

locations new quarter In in addition contribution year-to-date. negative results and a the the had also X

business and and year. As we've in a and expenses years are our were year-over-year dilutive new most Despite locations, past, the case base locations and grow number year-to-date. been as into sales the has from contribution of expected to the normally acquired short-term take flat the the discussed return acquisitions both for of as in a clearly negative quarter businesses operating this percentage new

did we normally would expect flat any we up operating this as not year-to-date XX.X% of operating year pick margins leverage and So last. and

help So to let bit looking that we’re business expense you back where for understand base me our and contribution margin outlook a at at fill growth improvement.

a there a was operating and as year-to-date. the compensation than now mentioned while to impacted The with year non-operating A our million press currencies expenses on to I our which wouldn’t against net. add to impact expense of and sits pool ago. no so approximately dollar The season. line ago, First, to year bottom although year the X.X certain to and in peak XXX,XXX expenses compared shifted the favorably greater This our made This our nonexecutive operating add weakened to some dollar U.S. quarter million to opportunity year. may of where was the margins the about the impacting for in for it unfavorably the release, substantial sales be employees major incentive $X.X quarter U.S. resulted QX in impact last impact we plan some. relates performance-based bigger growth additional quarter in expense changes contributions for

our to what for QX. expected offset Backing in new with be the base which the business We have locations the of FX would growth. up expenses comp quarter closer expect looking impact and this particularly for remainder approximately higher the X% in been of impact timing expense of will base given QX year growth than our is incentive line the more growth and cost sales business we're $XXX,XXX, operating more

up we’re on expense the months mentioned contractors backlog the expecting just positive the as With few recognition impact contributions and I timing. next catch from over sales their

points impact last cost which of cautioned to rates already now We other this I’ll higher us on levels million higher even currency $X we’re than million This in last XX line interest to year. the for We��ve see growth the exchange basis quarter QX. our our I the of debt year on get $X.X and about and margin contribution QX interest looking in operating expenses to higher non-operating in for the targeted the remainder XX leverage base should both more business added to comment call. which QX. related which the expect to some and with mentioned were increase

XX% our year while debt on basis rate points million which last ago. For the X.XX% XX up quarter was QX interest debt year average XXX was was average up a our over from

this will of year. the We for last see remainder $X elevated the year year compared cost million back cost adding in the to half roughly to line interest in the continue of over

and X.X two our reminder, XX-month We right at trailing a to so leverage debt we with ended a look QX to times. on leverage, line between As in calculated our basis EBITDA X.X target. keep as at

down Moving similar up we tax rate QX tax QX the in to accounting get XX.X% there quarter points year. taxes for benefit pre-ASU our rate. making by or XX.X% for rate up benefit we benefit note forecast slightly XXXX-XX slightly a to than the number to is and good XX% use higher for last the rate QX the basis slight was quarter that recorded a picked lower a will our was I the the rate year This you’ll with year this still higher last in discussed excluding ASU XX as we which from

X% this million year the XX% and reflecting from June. a bit million balance million line to month that discussed which deliveries grew receivables was midyear by sales Pete. of on purchases Manny increase total XXX XX right growth year-over-year roughly our increase to for sheet, last Turning a in Inventories made at XXX was with more year

at impact X resulting year seasonal our purchases that operations grew from how the you a year we use improved vendor at as for operations in that that Note payable by will our recover return our should that although the of in provided the income forecast flow the should XX is year-over-year on are of impact call. not year point with this from line million our cash significant last forecasted likely cash pricing XX% year that expenditure our cash cash PP&E million down will is $XX million, can flow that the year-over-year capital for statement which out given also cash million XXXX. and in flow XX year-over-year dynamics in year-to-date XXXX. the total I was from it for not million As accounts on from exceed operations our net expenditures I XX normal and see

an for shares price $XX share average repurchased the Next million on my at cash. which quarter repurchases were is in XXX,XXX of list $XXX using

in to return capital net million to leverage invested is calculated with at As to the a the million XX.X% quarter repurchases of basis assets. over a excess and invested metric operating the reminder, we our of the within of on at on income of keep to target levels reached mention for shareholders range. trailing finish last our new XXX cash debt targeted the return high year share XX-month I'll XX.X% XXX to compared end at a which June the after-tax year. end This our

I’ll to the turn over the begin session. Now our call back to operator question-and-answer

Operator

question from ahead. Blair. William with comes [Operator Merkel today Instructions] Please Ryan first go Our

Ryan Merkel

the impact the of gross gross price you to off year also on Want start supplier last be that new to months would date noise but margins said some from there on margin four the mentioned some of Manny, increases. you a

comment So mean clarify can that did by just noise? you what you

Manuel Perez de la Mesa

our being given just material one everything is profile and has the So the materials, example raw that raw prime given increases that on with steel else. primarily many steel cost factors incurring. tariffs cost pressures But

mentioned on place of some and As at the announced. what some impact least price well for I as last increases there chemicals, have three of two the are been them not taking if already calls on have

the following raise how As And and that the buy the typically to data are buy XX effective, on increases into our The in they much typically prices we those they much depends level. there will on on money. to are later. competitors is follow SKU are do XX majority being happens we cost marketplace days they a noise in terms it set how we increases cost - we announced that at great individual then follow passing how they that realize don't facility of the they higher it like or cost lead - not money if that they those cases just sense there's it increases. some when therefore and the price our The pass borrow on business have and money realize in - -

they increases have don’t to and therefore they on. don't to So pass that respond that. selectively have sense business And we those

rate. that I facilities not there compression of capital. to The of are but our will we’re that be doing realizing our we are inflation those only replacement Ryan the September talking and the the again there which cost more it prices the in timeframe fact of compression X% how is that noise in - have could been expectation premised cost. of norm The business So we Overall we then those significant may that’s X% inflation certain terms company have than side some the to about following come markets, is for to depending sense rates - the or and although any we and for really therefore in them but we XXXX that cost some And dynamic. start and cases have products on hold may a noise a on accounting of the average don't the through gains the how last there on margin trajectory that quarter. be move about we is point costs a in long-term we impact competitors capture price in going certain on some also number the and may see markets as fourth is and then the react the our from fact that's business normally years. place is SKUs And on talk when price on you've margin same they have inventory that not bought certain in largely higher competitors

been the growth will very so. will to to transfer of X% one higher six, As a that XXXX we’ll seven, if you of that. where like that’s all eight itself of well for past know this sales inflation which years kind be normal closer And blip little years those logically is one have than and - those

Ryan Merkel

offset about you it Would be price worry along XXXX? competitors and fourth supply the on inventory to in quarter will but smaller or pass about worried costs into with it be issue timing just little profit price XXXX what as a with might would the the So cost relates point? they price eventually some be be

Manuel Perez de la Mesa

that out around By business. haven’t XXXX those passed of be will

that happen from is it��s date. logic would the XX that up is we the So XX may course the in to period and normal that days transition effective usually typically - go in

XXX higher or some already at very XX is. do days as to marginal start it inventories may point but they’re their they as in replenishing costs, Some days it time

quickly. just will order on go very they to So

Ryan Merkel

like Moving you little to should also hoping slowest of give calibrate sounds what growth have on of the third OpEx to the just models? be growth operating just going the then and am expense growth, the fourth us is year-over-year I the to it quarter a color range so our fourth quarter OpEx year. can in quarter

Mark Joslin

in And XXX specific I rate XXX or in points quarter down will to but points of that growth second really come more the basis in fourth quarter. we of by couple third quarter. not the similar experienced quarter basis half was the then be couple And which too a year first that couple would the I the second in would say say

we’re headed and some incentives differences with So kind just there. of has a general to of of I’ll other on you, timing give the And expectation some where lot do costs. that

Ryan Merkel

clarity third dollars go fourth it so are actually little the and that down is there, quarter? comp going incentive just quarter to And the a in

Manuel Perez de la Mesa

yes. Year-on-year,

Ryan Merkel

good. Year-on-year yes, okay,

Mark Joslin

we quarter that's the story. a good of part so and comp year fourth last Remember change very incentive had

Ryan Merkel

just about I'm I don't days. on, a color expecting things but you would of still know be on it July solid are bit most of market, still comment you sounds a helpful you wondering pass the that, I’ll there? excited like if And if had you're end normally do second-half. just just it it and strong can little lastly you're

Manuel Perez de la Mesa

Yes, at were say a similar it’s and and I at very Ryan the tracking June rate would we’re strong Pete still are backlogs that we consistent mentioned in in nine what May July. and

Operator

The go question with next Please comes Manthey David ahead. Baird. from

David Manthey

First so the X higher of the the mentioned year. other second take of or house assume for being each that’s you full give half X in I in expenses million it's million roughly off this quarter? Mark,

Mark Joslin

that's and so interest expenses other really non-operating income and was specifically Right other interest.

looking So bit at course the repurchases, expense on on a looking for that second rates higher higher depends just levels debt of share roughly at timing whole higher interest of it and and execution $X that this half. million

David Manthey

And then saw you you on price then increases. the price last talk topic from said what quarter could, you quarter in expecting about benefit to price you X% the of sales And specifically. X% second increases Manny were

longer two you in think it XXXX, expecting closer out it than you’re I you no And are to XXXX am right? the back sounds said for this of one year. reading I pushing it but like half that

Manuel Perez de la Mesa

basis closer two mentioned typically ago a X% a and backend as No, it I was announce impact announced. of being all inflation the years in They what will that that year third the expectation X% will price the and them second started to look many increases all they but effective been for run price at the were first of mainly long-term to few this To-date on X% closer to in the be starting to minutes No, in terms its in in starting where no weighted. second to-date. quarter one factor and we started given in run increases be communicated on third. quarter we the most the year

for normal, for than you year closer the two the two it it very low part and in those be full terms front the of half be to a year the but no So the pretty to year weight XXXX will much of back XXXX. as will certainly inflation, was greater

David Manthey

that operating January When change, expenses So a X change? a bit. the plans about comp let’s the talk did was for here

Manuel Perez de la Mesa

changed when March probably on all the and tied and X,XXX year more about then we from more people was And the year longer to call in profitability are same employees granular programs five But decided monthly to to of we it, focused which what guys to change this the be did months and change did when just through interested the are we sales we were No, bonus in. months that you it’s XX metrics August. is year busiest essentially five is those obviously where of biggest that's months of are stressed. hours the which April working what

David Manthey

So let so quarter expenses second see are…

Manuel Perez de la Mesa

quarter of for employees the the the XX% year would annual XX% years. This X,XXX prior bonuses represented So represents bonus. in normally that second have those of

David Manthey

the quarter is than of quarter that lower year will I they then even XXXX first change year see be right? first than the the be of a third fourth and of rollovers and ago so quarter this were that will both XXXX lower because quarter

Manuel Perez de la Mesa

Yes.

David Manthey

with but then I'm the new correct? finally trying any happen aligning think program trying that explained a you you're just closely to when not I it bit And to so sales drive the behaviors understand same it's to more that you’re is the behaviors just little stilled tied

Manuel Perez de la Mesa

And hours. working the are when longest people

Operator

question next Anthony from Lebiedzinski Company. Please Sidoti with ahead. go & The comes

Anthony Lebiedzinski

way have midyear So just said you Manny this this is as wanted increases and of may price you this? may the there a vendor can missed extent the I quantify to far as have follow-up,

Manuel Perez de la Mesa

from equipment and is this zero range side. about SKU they to Well level on at XX% the

it’s to X%. side chemical the X% On around

Anthony Lebiedzinski

be And it far to for range may inflation would greater as XXXX? like are specific be give X%, us as than reluctant sounds your said you XXXX it you more you expectations for but

Manuel Perez de la Mesa

communicate the that the That’s typically typically reason have for increases price in fall. in extent true a business, and they the to vendors them the is that

mature we for to total the to-date it will to next for year? what seen have So me be would pretty the of only as price speculate increases and some be

Anthony Lebiedzinski

that are ahead would to safe price And of additional increases? it if is you those inventory there assume price purchase increases

Manuel Perez de la Mesa

and the the increase the Yes within of on depending stakes amount available facilities. our

Anthony Lebiedzinski

to just $XXX so share for year million buybacks buyback it still million the if it sounds targeting I as as right? $XXX like the And you share heard of far about correctly

Manuel Perez de la Mesa

Correct.

Anthony Lebiedzinski

the guess half you in I good catching I back and all I do had guess have so up luck. that’s some okay thanks to Right,

Operator

comes with Shmois from Garik question Please next ahead. go The Longbow Research.

Garik Shmois

can I’m to of first of comment be your low think you closer year the expected the quarter base I the end X% if base of this rest growth just you for to for business full coming had to on growth out the wondering expectations range. X% business year

tracking now You’re first in increases through. half in price line that and with you got the coming

you So up the the some so very a you and year. actually provide on several for if color had just could wondering last months of strong end how that tracking should remainder

Manuel Perez de la Mesa

very way on June vendors, this of We feel we’re seen the be the than are there Garik first for - by July. to-date and call is all which year. the from year And X but feel range it still only quarter fourth I we to what I affects month price percentage May the impact the will and we the a quarter impact X diluted, X. fourth sales about it weighted fact at a in fact and did that a ago certain set months it of for I on us quarter will is the given the kind of I the the three the of where soft that X increases annual virtual of obviously think better to

Garik Shmois

July. specific call Anything on the that’s that follow-up you pickup? to I can the saw that here the acceleration in trends, that June you in X% did May driving growth recent want continuation out and the

Manuel Perez de la Mesa

pools certainly. us two in continuing obviously things of May and they the grown their materials happen. fundamental maintain fact were rain their grow spending still both in the we so customer the pools faster I money On always to they XX%. still No, been would to mentioned like and I probably continue up they’re those constraint, top it have owners and pool that it's they’re about in those X% for board of growth mean share capacity to not and mentioned lot that. that have and of building we have feel renovating than Pete frankly Florida that’s case. a is months is June, The cases some across Pete

and do to there the can in constraint a capacity as given a So is the certain much fundamental there customer day. they limitation how

Garik Shmois

And a you piece installations labor new then the constraints constraint day just well? the well seeing is on follow-up beyond maintenance the are normal just for on this constraints just as to pool as day

Manuel Perez de la Mesa

the more labor-intensive business. constraint portions of the No the on weighted is primarily

other open because since of the demands with for example given And flattish it comment the in just you So be that the very start may this the the new well pool year. given because year the labor when do could isn’t pool it constraint late jobs. door be window to new construction the impediment a of builder typically example particular you replacement And of general it's available actually look the like labor represents at of you materials that really that pool our proportionately are cost aspects no lot a cases that at there. new we In intensive XX% Whereas when to pool for those our of provide look of pool. that products typically XX% to less there's equipment. of total the

Operator

Please question The Ken comes ahead. KeyBanc. Zener from with next go

Ken Zener

a obviously XQ bit the talking also up clicking to back the back you're Mark expense, half. about but Interest

are what I front put FY half it the back than the trends the half and half at perhaps front us would kind rates seeing the can versus XXXX would of year? for we’re Given in would of higher XXXX of obviously rate assume just mean a XXXX given think million where help about doing it more look the X you to be like wise that

Mark Joslin

going have up debt kind so leverage that are call Ken certainly you maintaining to of will so the it be to question we yes model is leverage And it’s XXXX level of a Well both be out let’s what rates. and half How first so middle X much in the would it's debt into the rate that of the both million sure you be factor I’m level. leverage. in got translate and to of our when more than the year range X.XX interest and debt

Ken Zener

the And curve? guide debt of much – of have apologize how tied your to kind quickly but end you probably what just of your the is I it front

Mark Joslin

to Well both and again share we repurchases. is debt it’s debt capital working use related fund

place So repurchases on depends the on the when number that share take timing one.

Ken Zener

Okay.

Mark Joslin

the front definitely spring. working on mid loaded It’s end investment and capital

Ken Zener

I’ll that. All agree and right to

this with the these Now more something years? questions there been and certainly before year the out is market. that and this experience versus But for Manny about to of on in whilst Price to components. for guys general in really put obviously has different it chemicals year some that from XX trying is it. all your the consistent context unique your you with highlighting manufacturers last it’s higher Are the other than or price there to increases you last

Manuel Perez de la Mesa

is kicked here typically happens overall every XXXX that something increases there and of like level was a price often happened than unique inflation the I or that normal this are of XXXX in. either in events things. higher I was scheme But in time the think think where this pretty muted and Ken triggering are No, is last there what so

happens one So when is two at one right. five this we or what and and we what range this there to look is - really the five maybe that’s years is expectations four, why talk of long in one about of

Ken Zener

Yes.

Manuel Perez de la Mesa

any vendors depending if on of back And of rest looking we the announcing be half at what in changes happens the the that’s what the year. with could their

Ken Zener

I de the fine that and going April comps, at the for have percent just country the just to mean look a kind for and weather house you’re May Then and then June. amazing see it’s mean weak temperature of novo

running Is part to those cetera, et chemicals is to assume pools I pumps weather discretionary it up component, that to the relates your that we of related much? cetera that because talking the business weather as I there I et As as that. business obviously are the took it understand some commercial mean influenced the impact by different relates landscaping and/or and the patterns

Manuel Perez de la Mesa

is precipitation okay, is parts factor seasonal Part that's round in there and the what Well is of next is bodies - markets two the there terms in markets is markets weather. certain work. pools are seasonal opened when year one. part One in the on of two the

or building pool. new a For pool renovating a example,

also that and to You need able reasonably to irrigation. be dry do to be that affects

yes of it's body that business, it if too work. our the aspect typically - on it wet So side - irrigation delays of that

as very in quarter a on for us, the business. side have we were irrigation our of Pete still Now organically mean X% up strong mentioned I we we the

of As side on as a we basis are business. well on year-to-date that like the X.X%

the So the markets along markets we’re Pete weather again quarter. other mentioned up biggest we were as across board in the biggest X% four still well four in clipping some despite challenges

speaks volumes they can business. is the soon about and that well demand there work. customers So speaks also fact as that work we’re how It our about transacting

Ken Zener

price is effected talked things you what I Yes, given we've the adding wonder very commodity. If seen XX. price building in it material other obviously chemicals that just prices 'XX it’s other tariffs, about the the back to because are and underlying categories tight. going to in by

what Thank subside components what potential retreating? half now can go tariffs talk right the up it you. right you But on as these to front seeing back goes relative to XXXX. other tariffs were mean the XXXX when So half up, what might - your we’re deflation about prices of for not the is that that inflationary pricing steel not perspective of

Manuel Perez de la Mesa

manufacturers, depends It the on lot on it of depends the order depends of on it variables. a magnitude,

So difficult for be to it me speculate. will

Ken Zener

mean just and or three they margins that Pentair, a I the level then context to for there a higher they’re are much getting Hayward retreating of need and realizing private? two Is - holding prices is then at

Manuel Perez de la Mesa

question, for costs. Well oil part now no lot their cost the affects is not their Zodiac costs. But is back factors of there to two now steel are the and a into to some public example of plays are of Fluidra going the other plastic that because public. certainly and answer of But

salt used salt or actual our up gone the example specifically. for that’s a lot materials raw chlorinator of cell, in Some

do are there put call go has effective what independent other some therefore profile a are lot which was may that So up a that pressure materials of they by there's tariffs elements prompted and as is doing essentially of has down. well factor. underlying them higher them to cost labor on certainly the But or steel it

Operator

Matthews go with ahead. from [Operator Berenberg. question comes The Instructions] next Brennan Please

Brennan Matthews

on on efficiencies ask mean, with to forward savings app, I - labor quickly that, coming about tool? up year-to-date. think this said on we any like going which any, wanted into POOLXXX there real I XX% of Is was more use play? I kind as you that the around should believe like, people

Manuel Perez de la Mesa

growing it’s be some, to but going is a small there certainly still rate. it’s relatively XX% Sure, at so

it the small. in be total impact, our percentage is of short-term suggest future would the So but going that the would a in larger have rate now overall impact to the

Brennan Matthews

products is tightness think just new related more higher should is more that is labor that issue I mean, future? the And there and think - you just cost of getting inflation on a side, put so an but of where installing near kind the then, about it's understand be and and and there demand a to so you for pool the this kind pool? that inflation, higher, I people off Or where not great when that, maybe construction. point on then labor the

Manuel Perez de la Mesa

they expenditures, pool still XX% much outside in is look a at discretionary new And Yes, every the second from new look is home labor very improvement. And financing. home key something if there in and the the And I XX is here, when do day. of years compared pool plant lending reason like perspective not new still availability is, other - have And in a building pool factor so pretty basically capacity And work two you manufacturing can for at view Since that. if case protected are improvement a is recovered you're your think the than or when depressed. you is you has. construction about we you’re a faster down have environment, pool a and reasons fact One space. it that's you construction was what to ago.

for constrained that's that terms expenditures. together like So a other the of ability been in to ramp with the up discretionary

Operator

our closing now Perez turn would conference to the for session. over Mesa like to de I remarks. This Manny any question-and-answer la concludes

Manuel Perez de la Mesa

Thank for joining thank us you you, today. all and Anita,

XX, Thursday, will and third we’ll our have be on when call October discuss next great Our quarter you day. XXXX a Thank results.

Operator

you attending This conference today's Thank concluded. now for presentation. has

disconnect. You may now

Pool (POOL) 19 Jul 182018 Q2 Earnings call transcript