POOL - Earnings call transcript Q3 2019

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Operator

Good day, and welcome to the Pool Corporation’s Third Quarter 2019 Conference Call. All participants will be in listen-only mode. [Operator Instructions]

I would now like to turn the conference over to Mark Joslin, Senior Vice President and Chief Financial Officer. Please go ahead.

Mark Joslin

you. thank Okay, and call. everyone our quarter third Good welcome earnings XXXX morning to I that statements, our and remind periods. would to like listeners for and questions may outlook responses today our include management's forward-looking including XXXX future to comments discussion,

materially projected may discussed those in XX-K. results and is differ the results to today. cause that discussed could Actual actual regarding differ factors from results Information variables materially from our

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

Now, Pete? turn our President call to and CEO, over Peter Arvan. the

Peter Arvan

report third Mark, results morning Thank and business, that million, with the quarter to Corp good call. base our delivered $XXX revenue, grew a in record on X%. to strong up happy while XX% the you, everyone Pool total to I am

the in XX% the products day swimming X%. quarter, was by up third positively products in sales impacted Revenue landscape and X% while quarter the were of up versus were business XXXX. additional pool the for Base selling for quarter XXXX irrigation for approximately

year. pool recovered of from well of unfavorable weather and it markets around X% earlier base while with Texas the business gains, sales Our year each posted major the for sales as quarter swimming Florida California, X% growth, performed Arizona, approximately grew in X% conditions

markets. benefited from products pool of living markets nice and also gains for our XX%, base strong seasonal Our demand sales across remained and the pool the weather posted showing business outdoor

and sales important traction posting commercial to we year-to-date, growth the X%, were, X% in robust and for during rebounded year-to-date to bringing commercial, growth a retail gain recovery segment. late the gaining markets, year. in the sales a this couple up the at X% from also we retail in Looking saw our segment the and XX% start from Sales end a as quarter quarter earlier slower season, of continue

chemicals, an drove Strong had brought encouraging for demand weather and and X%. quarter, the favorable seen up with stronger we the solid across much sales, earlier year in trend, which product up chemical year-to-date X% categories growth than

by building were and showing the the quarter quarter demand increased material revenue sales X% reflecting and XX% sales growth and XX% activity. also strong year-to-date refurbishment X% Equipment and strong growth year-to-date, replacement for in

Demand remains well, gains the sales all Europe, to posted in Spain, for and local in growth combined as our currency. markets team XX% we currency; Germany solid the local with revenue solid grow in Europe of continues largest execute France, and XX% saw quarter three in

by XX% in in execution largely driven growing encouraged Moving overall year. grew that by same benefit over margin was in our the Horizon activity in onto expected quarter, rate pre-buy good the by The XX quarter, while profit the a inventory sales the the X%, to healthy second points decline gross our our profit reflecting half and we terms gross basis XX.X%, business market Horizon grew quarter of with the to declined when overall and a by gross of nice with third and business improvement the quarter team, margins, base our are XXXX. compared last XX% margin in second from gross

sales seven impact operating and strong increased of expenses increased investing even management to The generated new in after year. opening operating four acquired leverage, integrating execution associated business expenses and X% this Turning technologies new total operating acquisitions. locations expenses, while base enabling while expense with X.X%, so centers operating improved expenses the far excluding

into enhancements should improvements efficiency this continue on focus future. the ongoing and Our initiatives, service trend capacity creation, customer

points business, operating for to income the up total XX basis is operating that XX% and business. base points and quarter also happy in I'm both overall report in profitability, quarter the XX base basis at expanded Looking our for margin

customers and that us One BXB create leverage is operating to continues and for capacity help area at our PoolXXX. Xour

processing PoolXXX the operating As our order to time, time ordering errors eliminates continues customers it our fulfill for shortens and gaining adoption our improves reduces customers efficiency, their by order.

end of XX% revenues At compared QX, tool accounted year. the last of to this have PoolXXX XX% grown for using processed by our year-to-date,

Finally years, an excluding XXXX-XX, in EPS share the share. to for Including benefit increase $X.XX from per the was quarter per both ASU ASU increased XX% the XX% XX%. benefit

flow, nine an by delivered months exceptional increase we operating onto balance to flow the the million, year. Moving cash last same cash saw as quarter sheet, activities we in $XXX from compared

more remarks. exceptional for results growing comment customer All all, team have Pool focused and and markets provide healthy indications demand for service. solid are quarter. growth, prepared execution Corp will products living in on our All we the and a providing third strong in is outdoor his on is that this Mark achieved are,

range XXXX new and the two $X.XX to per are our from in for With $X.XX half to year, months raising $X.XX left share. guidance the narrowing to of $X.XX and we

closing, customers, to everything I'd do Corp bring like recognize In and our they and at living stellar outdoor the thank Pool for team to life. suppliers to

now Mark commentary. for his to call turn the financial will I over

Mark Joslin

Thank Pete. I'll P&L, you, beginning my margins. start with the on commentary

largely gains was us the and the of half As of I that in our gross call, second year for leave full-year. margin second we margin flat first stated on relatively quarter reversed believe overall the year the in with the our half

XXXX. This right impact will should in the QX QX forward well, of half with XXXX primarily inventory of expect guidance of from QX significant from we in get a margin decline into be to the the year-over-year second the line meaning pull margin us with purchases believe results were for you XXXX as year. that is result more level a gross and

as expense Our growth to business the day last as by QX the year. impacted total the quarter was quarter, addition operating in well X% in of locations, and the of new acquisitions additional compared

the new as well locations, the which added about quarter X% in growth of both Our X% impact additional growth was billing expense base our year-to-date, year-to-date, an to added also business expense the about and and the quarter day, expense as quarter. which X% growth in X% in including

operations translation on hand, resulting from expense gains quarter. currency X% other by On about offset little growth the our non-U.S. the impact with year-to-date

call. Given acquisitions, margin seasonal recorded our in compared from our expected will and a gains income have on operating as with we year which last decline discussed market to the the in large in-line off impact QX in decline, expect expectations in our QX gross operating season, last QX right losses the

track As operating basis with a difficult points comp to our XX targeted reminder, income of the finish so over XX% remain XXXX, full-year. improvement basis operating very range for grew XX the XXXX year. We QX QX our to year on business margin points base a this

the and Following half an of reinforces of the potential the year, creation think the year weather capacity our challenged initiatives. we be outcome first for excellent would this

Our expectations tax tax our rate an the and the finish XX.X%, to of line tax was rate benefit. effective excluding with us ASU on ASU excluding year XX%, just track the and also keeps benefit in with over

recognized year. a For XXXX ASU million be of benefit, million, $X.X quarter, to remaining $X benefit QX we benefit million the our reduced of which QX left recorded $X next leaving by by approximately

sales to No onto receivables as levels Moving X% our grew growth, flow. total here, modestly while balance cash below surprises sheet in inventory X%. grew the the quarter and the

to normal are normal most our since needs up levels our now last begin As we've been from purchases appropriate we but just levels vendors. to early aware, pre-price our you for carrying year, increase down support as of to are seasonal higher than gear business purchases inventory buy

we'll in of Day inflation As the commitments. expect a the more more range have normalized of Investor we mentioned and level levels we to therefore early for X% season, normalized event, at of X% our buy XXXX

which these we impact receive of early be will be the the before same there year is, shipments QX reduction at period $XXX for up our cash million that operating an done As terms purchases payment increase year. year-end. on The over last will cash buy $XXX anticipated inventory no flow in the was from million deferred result flow,

down end from quarter, been $XXX this the was of at time at million cash last debt, million Excess to has pay year. the which down $XXX used

basis X.XX XX-month, on trailing at measured end a the Our leverage QX. of debt-to-EBITDA as was

within X.X comfortably So X.X to target our range.

that revenue with which expect and so on in of XXXX, over Cart I of number made business This generated the be we last ago. would Horizon quarter from fourth profitable, million four $X in into we acquisitions to business the sold income. business million a operating you quarters, in years the a come the factored This September let Finally, of $XX know want projections. only it one marginally your non-strategic including Golf no was sale impact

the I'll to turn back our call begin session. With to question-and-answer the operator over that,

Operator

William from Blair. question-and-answer We [Operator session. will question Merkel now Instructions] the Ryan with comes Our begin first

Ryan Merkel

Hey, thanks. quarter. nice Good morning,

Mark Joslin

Ryan. morning, Good

Ryan Merkel

estimate impressive that had for really of business though, questions; the XQ? this the by curious, and base do the some what this for we quarter, first, it's I'm sale maybe was couple weather favorable growth X% you catch-up also boosted lower from but all So detail. this thanks

Mark Joslin

Ryan. Yes, good question,

look I we of of compared that it's bucks quarter, – good saw off a half think combination and first it, would probably the that really. it's we million million way the $X $XX to to weather at catch-up in the

Ryan Merkel

Got it.

is sort growing what still blue X% market Is that blended kind the of of in sense of this your then year. and Okay, range? it

Peter Arvan

that's a think I number. Yes, good

Ryan Merkel

think we then based forward Okay, the think have understand can bit models, and half XQ, work? little half, but to Should on maybe how second we better comps just XXXX first we if I all of sort about a flat And with a for look moving gross margin, just I right. the then a lower just

Peter Arvan

That's just You it, Ryan. we've got modeled. how

Ryan Merkel

here, capital debt-to-EBITDA, years. a Okay. it's of that pretty What And sort maybe lastly, in for plans low the just noticed the I lowest allocation? few

Peter Arvan

allocation capital there. Ryan the our changes is Well, no same really

and at revenue. need to capital that X.X% of the invest So in that everything we business includes X% to we

to of a range that debt. have over dividend which middle time, program, And on earnings so with close really will the then grows We we're continue. our

a where we cash and we don't which do means of terms that over so quarter-to-quarter excess times, use opportunistically. we repurchases, that we chunky for opportunistically be be, share do And on basis. want then can our same to little a In

over execute we'll we that. on sure So have we and when time do make we'll opportunities our

no our in changes capital. So allocate how overall we of terms

Ryan Merkel

Very good. Thank right. All you.

Peter Arvan

Thanks, Ryan.

Mark Joslin

Thank you.

Operator

Our from next Manthey with comes question David Baird.

David Manthey

good Yes. guys. morning Hi,

Peter Arvan

morning. Good

David Manthey

calendar what what But the it quarter, what I'm might like as year, a are will reason would will profit due that targeted for to versus, change as more SG&A you year, that be? of growth we First of that's the dollar for saw that the XXXX hit you you base or – that in XXXX roll into the if business off, XX% forward to little base get looks in next your variability this comfortably not percentage be it range? short. growth a sure that sales full target factors but business gross there

Peter Arvan

there end our may referring to the at profit expense a And gross said growth. XX% and I growth you and short up assume little just bit Yes, you're the it there. end

a result it operating So at that that guide necessarily points basis is the range, we're use to should points range, that be the And improvement. now as we expect for high of end in that, shooting we but we to do really that of of XX in XX and range. be basis be margin won't that the

little for expected year, the don't next reason, and year, sales of a the of our a year. the really to some of part is for quarter, and year, up of bit from terms I little although the that's year, in in the third we because a perhaps that was this than of year into lower the going we've first the growth our expectation, little down of well half start because see the but made bit bit less So

the looking give should we XX points, year XX targeted So operating and assume that to improvement. basis doing opportunity expense for next range going and us get points us that of in year, that margin we're operating keep into normal always leverage the our basis weather

David Manthey

overall the And to looking past been your seven profit years, But going there quarter. the quarter factors? the you loss there, the modeling revenues or averaging Or several past But think the relative we're talking several for seen volume the go at looked as helped I and fourth it. fourth through something first has for what you you've with third. went for outsized a Got geographic seemingly fourth surprisingly fourth I'm in growth an operating the obviously gains and just growth from we're eight you strong that's at outsized just curious quarter fourth probably drove when at and back in that double-digits years. quarter, mix on to in look profitability that Was situation. quarter the factors, do growth the the past years? rate overall

Peter Arvan

A go it's I good year you of and a little terms to that's pretty and lot at it seasonal difference, years great quarter, this some markets. variable Yes, do so good smaller question, quarter. the in do a look in we weather, and if we has some of it's the fourth bit big do makes because particularly a whether with it, a back Dave think in

our it first demand to when of quarter. which So weather quarter demand that fourth or the is in customers demand, better favorable, allows on catch-up fulfill to grow opportunity both the and there, the is that us gives and to more the

So weather-dependent. it's very

and early, And is quarter know all I it's but weather like it's from going standpoint. the obviously when look said what to done a

the at you too even the so. of full-year and get growth, it's about a year terms in enthusiastic weather good look So when a so even seasonality in we still quarter marginal the don't

Mark Joslin

think us I think is, range. revenue The the of long, to year backlogs markets trying looks is able biggest is I working how and a work they in seasonal so year we very that work, be specifically about the in last they're was it are that for factor to are in and hard you face seasonal the it still get total catch-up. strong good the know, having to we as with this There of is done. to Dave, But that markets. XX% similar news builders lot a that long followed

if sweater say for New walking gloves, a we bit if shorter. it Christmas if it's really good it on as on you're around, shopping, a So a we got with be call, York, quarter, fourth be will boots always this and – little will

David Manthey

and out further else a of change Okay. because it's something give back full-year discuss I and you XX% change, a just XX% can more as just like wondered, to it now, was But XXXX, point go that's sales than if or structural seems was it XXXX – conditions. it right if of there a just we of think weather string I I offline.

Mark Joslin

that business less Horizon Yes, has seasonality one is quarter. point fourth there the generally other in

And so of it's you're that change, probably thinking remember, percent, can't now something bit you where about downturn is business that. a that business right back after plus, it's X% maybe smaller our I go X% that. if was of like a the little so structural And a

David Manthey

Yes, helpful. very that's much you Okay, thank guys.

Mark Joslin

Yes.

Operator

from Jefferies. comes question next with Our Stephen Volkmann

Stephen Volkmann

guys. morning Good Hi.

Peter Arvan

morning. Good

Stephen Volkmann

look? quarter and you're that lower little quarter trend sure in It's you're but might make some guide for was looks to or that else, This bit tax obviously I is the somewhat been want probably it what just focused fourth rounding, based of business but account of, kind than works with probably it a third little kind just rounding the that that, question and be more is just fourth of seeing how looking slowing like timing is higher. and sort had than your on bit lower guidance anything we a in the so particularly, nothing something of that there just forth. terms for It quarter on may base

Peter Arvan

all. is to and at We second our things playing at really what kind for change not in go of expectations look year, when looking are terms rest and as it the quarter Yes, the expected. of at no back our then, call we we're out of

kind what you guess it's I rounding that thing. of said and So

structurally changing. So there's nothing

Stephen Volkmann

thought. may to about how well, would debt bit, to curious just repurchases. you. be keeps particularly much you'd may you mean, low back I Thank come is if of would cash much I I back what How That's just levels to share of know allocation that, good us let debt picky or course, like a or a forecast capital be around of do? little think kind of sort how this stock too time. to – the before paydown sort none how go working? And I not you you I'm you the of able But then mean,

Mark Joslin

it's I a of up the a got can we've impact earlier, reiterate I run full long what know a been answer specific who there. could We've But our coming you Yes, just that have repurchase, that election question, don't a here. in year, knows good which opportunistic on in I next we're kind the point give Steve, made market.

want and make available, a certainly repurchases. cash we'd place, have there that we'll market be we sure to to is So takes participate in if correction ready

So, we'll just over see get and next repurchases although and our we how the things play share opportunistically. several out quarters will

Stephen Volkmann

at more, of disagree a of not how and as is into as lot are necessarily of and mix a going know then looking high-end it I'm of the of, maybe at low-end build don't new part of, the follow-up, with that like the is And you. huge seeing builds and market, Thank maybe theoretical, Understood. thinking kind housing But I'm see quick of but we're and I your this feels just that it's But kind that I you should something kind just about? those natural curious one you the XXXX know is Pool multi-family, the in strength how whether customers kind business. kind curious new we in maybe that and that. be are

Peter Arvan

the think year. of our I capacity. be for then about more based much will capacity portion we top question, pools the in the underlying And what way Good bigger that is prior range do a in new there overlay call of demand labor that downturn, just Yes. the business. constrained it built of a on were that the XX% on it's builds Today to to is it the in XX% guess I

that the Texas, very sure I construction So are and markets factor markets. us. you're very is new Florida pool good housing look the in I and which think specifically it when if big don't very, at overall, really agree geographically, it's a where strong, not for even correct you shift I'm with

labor Just simply system we demand factor you there I had all goes year to I to more view pretty them. to before, is is said as is. it underlying is The back this being build know what that the weather more the in as biggest demand it but than the have as is capacity than with pressurized contend there

Stephen Volkmann

you. Thank Okay, great.

Peter Arvan

Sure.

Operator

Our next is with Stephens Hirschman Blake question your comes muted. perhaps line from Inc. Blake

Blake Hirschman

muted. was I Yes,

Sorry about that. Good guys. morning,

Peter Arvan

Good morning.

Mark Joslin

Good Blake. morning,

Blake Hirschman

growth you your think top I now? upon X% and don't top I year. for if they've I were X% those as kind to to year kind thinking into of something believe line, the here explicitly line both have, of are next this you kind On the X% been like expectation going of X% sit they yet, typical apologize. still But of touched

Peter Arvan

that Yes, correct. is

Blake Hirschman

it. going gross to thinking little basis in up margins that mean, this decline that expansion entirety XQ bit just be is Got frame quarter, the on a saw gross greater we what then XQ, than XXX last that of to point more? year-over-year margins you be I just of Or about that kind And the we should given year? saw up trying

Peter Arvan

kind with the to basically fourth year flat significant be in quarter. looking compared last decline the saw us earlier, year. last margins the overall third of to gives we this quarter, in said for what fourth you you to that more just that reiterate gross the giving gains I in, model and year that we're Yes, quarter And if that margin

Blake Hirschman

it. Got

Investor like to from the you're of business lastly, then M&A. mean, most hear pretty that interested are it makes now. focused Day additional sounded That curious kind you on just M&A, And sense. in where Okay. green I

in That Just of those if terms be you guys kind you commercial, for now? and wanted could of priority to great. rank M&A areas would ask just international about

Peter Arvan

Sure.

I that's growth think certainly way look on it about math. during If at So of at you the at and M&A, we I as look Day strategy. said business part green our our the Investor

Pacific So where California, is presence the weakest from coverage one us, we have have the have perspective, in that to of would we a but Northwest Texas, areas coverage good the we Southeast. good very in be through interest density of

by so specifically that priority area that achieve that could doesn't on green greenfields an would sense a we the certainly that's our make – be on it goals would the doing for business, that simply be green really us. side, So

When commercial, On us we've we've that I'm regionally in past do, must more now are at a in nothing we we're there this had the that it side, entire been across large, opportunistic, area. nice saying, – is our M&A looking commercial some be that a the deck given would interested, platform. the able really in what's that would I think leverage done there have, to platform commercial the no about well, players participate large great would for is there we very we and that are that so acquisitions

the Germany. side, the primarily what Spain And I in is market Europe would then being – international say on the is and France largest,

very a have presence We in France. good

Germany three grow as I in think we look at be Spain, look we but specifically opportunity exists have for would opportunity look us looking that all if those I I same areas should in I those large well, relatively if are I percentage But of Europe you our to to and but as making and you countries, density, total that to acquisitions at shift tell at of our it, small at the looking look but to business mix pool. acquisitions very of of going Europe, significantly we're in when part certainly by be makes. a not are the overall grow that they

Blake Hirschman

sense. lot Got it. Thanks Makes guys. perfect a

Peter Arvan

Sure.

Operator

Our next Company. Sidoti Anthony from question with Lebiedzinski & comes

Anthony Lebiedzinski

thank and morning you taking the for Good questions.

you look at your of base to So a I overall, sales better guess, get I when sense business first, kind wanted just breakdown.

but I you just versus pumps unit new us of know modest – some kind were, into expectation are inflation, play as your variable I color you come to said give that some far of into coming as equipment new some you pricing, speed where next can, and Just expect be year, there was how volume know if more regulations play. terms in

dynamic? So should that about we think how

Peter Arvan

Sure.

to back we inflation. when let's So tell at question look volumes, your unit about go original I you, would

X% the So say range. inflation, it's let's in

demand is good. volume good, is the business So base unit

a And being are we seeing, we is driven legislation not So coming, is volume that's pump about what then growth our it's up. overall inflation talked take we're pump be – will is about variable and by pump nice in like the the a single by between a unit speed encouraged for Because be Xx. opportunity us. effect which variable that'll price speed XXXX difference that will speed

mention at you are today there look a is versus being that more years done the done lot ago, pool a even if pools of, bling We more becoming that part automation pools five package. standard were is or of made also and XX

So lot growth past, I a seeing automation. we're base lot business the the there like things we're the more things for as seeing more lights, make homeowner. help trying of – wasn't those they the seeing We're pools are user-friendly were drive in UV so overall think automation, a of so to will those

Mark Joslin

they’re time one variable to in of the just go on clarify mid-year speed the And to timing legislation, Yes. and it's place that thing XXXX.

slow you most really into over the function but So it's cut speed through it's XXXX do speed, I what likely so And a been with to decide XXXX from and shift really event. as on like XXXX variable it's think will time then see mean, that, over variable in speed. when from late And they mid-XXXX. we speed single a happen manufacturers to of nothing what just there really a to don't XXXX, any impact has single

Anthony Lebiedzinski

there could Are other is the guys that one? there potentially regulations in that help only you future any out the or

Peter Arvan

major is electrification instance, that California, an California only think will – the help, – has there that's the one trend. for a is take I I think

West one So the electric, variable traditionally trend, been more that things speed to pumps a heat and I be know and legislated is I nothing Coast, we will the is going will one the think see you're seismic. it. opportunity mean, but heat hard – gas again like for that's have opportunity only slow heaters, see is just the which we'll to on I a that which start has more

Anthony Lebiedzinski

any impact And to so not okay. Got to are meaningful XQ? switching as just I just gears, far from clarify, just guys ASU as XXXX-XX expecting XQ you so it, – wanted for

Peter Arvan

don't have of benefits $X not we're as much that million including No, quarter any said, quarter. that between in how that our unexpired that forecast. we to have recognized We we're forecasting I would fourth first $X when or the be of and so million, in know

Anthony Lebiedzinski

your early lastly, it, is Got okay. in XXXX industry read expectation And for for any the for construction now XXXX? and what pool overall perhaps

Peter Arvan

that number. Yes, don't good a still really can give you hard know I to tell, I

really so think everybody think Again, you will in is it but weather XX,XXX of it's in I slightly, I happens demand I'd a function me in And be, last maybe there, quarter year behind, with probably really would on market. fourth was exactly good, got backlogs be weather the what about overall, flat, units. seasonal the will are depending forecast again, the it it – to be and have tell for what the tell order you for to able to – quarter. fourth down

quarter, that very hard catch-up, probably are would you which they the number flattish. makes to tell fourth I normal So working

XX,XXX some Next I range, pools year, X,XXX pool in mild we would so expect just the guess, maybe to to growth, it's see maybe year. next XX,XXX

Anthony Lebiedzinski

right. All

very luck. and Okay, thank best you of much

Peter Arvan

Thank you.

Mark Joslin

Thanks, Anthony.

Operator

Longbow Research. comes with Shmois from next Our Garik question

Garik Shmois

couple of up me. for A thanks. questions Hi, follow

should the weather of market lot there the maybe that the is just or first Is seasonal we to? is geographic quarter, and XX% pay growth or that and Just off, that in that was my right items any a attention some really mix assumption favorable catch-up.

Peter Arvan

The weather the the was work seasonal everybody conditions to markets, great in in very had quarter weather in. third good

Garik Shmois

should of to the – the weather. but we harp really high-end pay on is quarter the the Is then volatility variable again lack really fourth around that guide, visibility just there And just, low weather, from and else around mean not to Okay. the anything attention the to? just the

Peter Arvan

No.

what's builder of are backlogs said, is behind good, in and I good because the the everybody encouraging got year. demand As beginning is

and working there, it. to done think lot they they're very I a get work So hard get to to have of

Garik Shmois

you Okay. the lastly, forward? and right much do in to have you're And How just the X% you on just do side moving just it's the more think much the commercial, growth outperforming because think how year-to-date. the outperformance I legs of this commercial on is market now kind XX% quarter,

Peter Arvan

X%, I I very I probably say about after teams but – XX% year at a this year and guess, month. that every we're I the we're about it I quarter, tell are Xx, I it think very think would getting were up I gaining traction would good last we about year, strong for on and up are we're Xx we think we're our think you,

Garik Shmois

you. Thank Okay.

Operator

Our Zener Ken with KeyBanc. next question comes from

Ken Zener

everybody. morning, Good

Peter Arvan

morning. Good

Mark Joslin

Good morning, Ken.

Ken Zener

year, should I as So just we thinking think I for the tax rate, we past, mean, about look be into years? using you'd next next in XX.X% that your mentioned

Peter Arvan

is you right my Yes, That with XX.X% in Ken. a estimate recall. a and good good have expectations, line is

Ken Zener

Okay. enthusiastic volatility year I not apologize What an of the sales, all are election more seasonal percent this of at quarter Mark, or and about that if you the as the that's guess, told markets you're aside. for interesting, really a found generally Analyst the Day? fourth that I total prospects speaking,

Mark Joslin

a XX% XX% look markets that four at markets, that's is better the when and you Well, little now seasonal, top are than all the our maybe XX%, year-round of prices. so is year-round not

Ken Zener

Good. Okay.

price I my versus equipment. the and the equipment XX%, it you first is on If et year-to-date, can there, it's drive this how out Chemical volume categories. hone compares the we chemical laid mean, really X%, is question? how appreciate the just chemical, driving up is cetera. I equipment I up Now X% is similar it upside might to what that X%, guess

Peter Arvan

you the account at if equipment look for No, I certainly pricing difference. say, would doesn't

how is year-to-date chemicals I the remember your use have in think you using a basis is you amount you function burning that that with chemical, of often a much are how of sun and chlorine. pool your pool on

and use, to So unseasonably was start the many markets, I of year had didn't chemical. open what fact the cool traditionally that's strong down that that late kind the and get because slow our tamped lot a of it we pools in the of think given

at too. it's If strong look other of the third market. you there if look bit specifically, a catch-up function And renovation that's remodel at and the on in – there equipment a a of you side, is quarter

Ken Zener

Right.

about a mean start probably regulation the it's you know that loading adopted is variable this not terms So, of refresh, mean you is quantify of not assume. well, of inventory state, that what would Thank could buttresses but is in or okay, you XXXX this perhaps, speed. – it and I you speed penetration just kind event, are your the of I variable year, think very rates, an FYXXXX at pumps much. I – maybe market quantify is that – it end next you federal speed how you Could that pump could state and number of the in realizing as growth variable perhaps,

Peter Arvan

When not very good, that about very happen, the all think so I mix have it's will to shift pumps. good Okay, question.

the still So speed the that thing you have in to pumps single pools, in-ground small remember smaller to above place. in ground are specifically the very is some pools be going

entirely. not go going they're away to So

speed the larger So is pools variable the a really is be for and going nationwide to it program.

plants. and inventory we'll to that to there'll sold And the selling going so to function in cut full-year see XXXX to I inventory, a put manufacturers to flip to suspicion much be channel. – my going start the and have of then they're XXXX that think over impact decide are that's won't when is you really the how until is a start going have inventory be into gets through

If difference I two variable speed, one. single it's between at to price speed, about look the

pumps second in the equipment equipment, So overall so... are our largest category. as I item Yes, far think as our

Ken Zener

non-variable. differential, a And to sense what above ratio or us be XX% it the of sell-through, would you just pools, you mean cost closer of variable, mean, I I these that… it it what electronic Can is you is I give today? doing that when I would electricity figured XX/XX are ground thought, excluding XX% the because

Peter Arvan

dollars, in of they're XX/XX – terms the because of right. lot expensive, more about It's

Ken Zener

Right.

are two-thirds non-variable means, that unit-wise? So actually speed today pumps

Peter Arvan

Yes.

Ken Zener

you. Thank

for Sorry that side conversation.

Operator

Instructions] question Our from [Operator Alex next Maroccia with comes Berenberg.

Alex Maroccia

morning, Good guys.

driving I NPT recent tech front, POOLXXX And then the biggest can one, the I on any would Thanks. of POOLXXX. can number in So touch is, and NPT app the on process Backyard app. store the started traffic? follow-up be revenues quarters the you that's guess you adoption discuss, see going the next of and items you the if new guess through couple where

Peter Arvan

Yes.

that, you make POOLXXX, repeat want I that? the question on Your sure I can to understood

Alex Maroccia

revenues said QX was – Yes, revenues through of about right? processed in POOLXXX, you XX% so the the total

Peter Arvan

correct. Yes,

Alex Maroccia

Okay.

you that year, want the to you be XXX% what years, couple et do in next So next the two cetera? in want I of mean, quarters,

Peter Arvan

our our the be happen XXX%. in that never of XX% will it mean, No, at transactions consider a I business about counter.

pick So retailers. a many there walk because to order. large have the POOLXXX, up XX% Yes. it above think of them Do lot But are to for they that on is revenues our segments it customers advance revenue? maintenance and a our basis – and be branch, into our our ever of to portion business and I or of such not. daily double ordering think coming in for use construction of Do I up counter of a they likely to lot of folks those tied our the business come are because and can XX% projects that the a from to they're chemicals will of just XX% very

very of Your we've Backyard rate app, your a introduced couple number and encouraged conference our sales that we by downloads the second the our weeks sales ago. are far. it of The international about at had part we folks, of so question adoption

it with out just to to familiar customers. out and roll they So it are take getting it

and – passive what seen you remember it builders. a tell So to with and But homeowner the it's the kind allows is. can’t of the we've tell the pool get and too specify is impact as spike pool of – I design envision sales which because soon that part well, of it's it. to tool I then a

is have want. this process I've what want, that's I look So start on pool not I a a the interviewing this Then the is I that go to – builders. designed is immediate, cycle exactly

spike think and I the that then So demand fuel of just a see. because look growth We for should it. to that we pull-through wouldn't big continue we'll something market that's

Alex Maroccia

on versus the then in seeing product got what we're be a now in right would give question just split And resi to you versus able Okay, are what it. the us of backlogs, equipment? second the on backlog is commercial. side, materials And then

Mark Joslin

I that that terms kind is is, and to them as about really way is to formal what they're resi we basis there are busy us busy busy. very a can But hear is contractor it, know so be and much in tell of tracking Yes. versus as no how allows backlog it, weather more of, – a but that commercial, track about they customers on be. mean, customers and our all of

see in are well as what we best much, coming the they're tell So say. the that, year as optimistic are can not they about that ahead other that's can it and you, we we than

Peter Arvan

that stock. it's built-to-suit our Yes, on those of are we expected residential, a business, we that consider commercial, of have in projects, have but better portion visibility because on product some are to

So weeks a and They if to a day be have they're couple they month or in the on just they us stock, expect it basis. pool, advance it build advance. going needs order a up by it pick don't to to of come next or need in in delivered to so

Alex Maroccia

Okay. That's a lot guys. great. Thanks

Peter Arvan

Sure.

Operator

remarks. to the I session. to Peter over any turn Arvan question-and-answer our like conference would back for concludes closing This

Peter Arvan

where The for all XXXX, cover call results again, we have everybody our Yes. we will Thanks and Thank and expectations the great you discuss XXXX for will a speak next be this February XX, XXXX. full-year time morning. attending day.

Operator

is conference presentation. today's for concluded. attending Thank you The now

disconnect. now may You

Pool (POOL) 17 Oct 192019 Q3 Earnings call transcript