POOL - Earnings call transcript Q4 2020

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Operator

Good morning. Welcome to Pool Corporation Fourth Quarter 2020 Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mark Joslin, Senior VP and Chief Financial Officer. Please go ahead.

Mark Joslin

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

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

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

Peter Arvan

enjoying but and the we not like and keep safe times our team while simply created to for of POOLCORP and the Never morning done Despite or COVID, imagination all as challenge prouder and grew be I that our have and living wildest billion, the unprecedented XX% things In for amazing XXXX. a particular business friendly our amazing you, everyone on $X.X quarter, any employees amazing great The our in is from to year created in up is new challenges the that or by an get results. demand capping opportunity a sales while XXXX. with a strong came brought at affirm pool, their I extraordinary, a proved good wonderful perspective, the year-to-date on deliver pools a insatiable on of seasonal measure. virtually only In once a safe a could base accomplishments the From our our family is with we an strength saw global outdoor they The in in of grow Mark, This interest both opportunities. basis. and pools in again impact XX%, pandemic my found products geographies the call. outdoor XX% remaining fourth The sales XXXX, in could environment. demand total increase markets. phenomenal uncertain outdoors unparalleled. our the combined quarter, Thank the was industry. remains XX% by to demand an way sales in noted thousands over best. enjoy to for envisioned all off innovative spaces, year ways families the heightened kitchen Demand with a patio existing

quarter strong before quarter helpful XX% played think For year revenues the as you any of I The started could of impact real may I be with the in felt. it year, COVID be in the up XXXX recap context, to out remind out. how first

family Distributors Jet we XX%. Horizon. for year and well. acquisitions, Tile, XXXX the front even better shutdowns with started accelerate effect quarter, acquisition busy business TWC we on as which are high quickly the and Swimming was Master three sharp addition fourth us joining up also quarter to Northeastern blue second off ended all business fueled one of and as continue The we up our completed XX% COVID the a Pool third up with the the integrating on Products rebounded, side as finished quarter took for demand the related was the Distributors, sales and strong reported up newest POOLCORP declines four execution and Line XX%. and by In

year. little business the a me how color our in let on for Now performed provide and quarter four for largest more the the markets

XX% the industry XX% XX% the still quarter, milder the XX% from California in country enabled Florida the approximately year-to-date round a for big markets year, Arizona quarter, gain builders which bringing markets to the in the demand favorable the by time. slow were approximately XXXX Considering quarter the in for up while XX%. quarter benefited market to for largest growth Overall, weather strong revenues XX% new and XX% imagine, year. can the construction XX,XXX the revenue saw XXX,XXX trends, grew all recover for up to in forward conditions. you strong XXXX, quarter XX% this Texas the the in for and markets As to the pools the step and and year. the late a XX% and as year we seasonal for make for the grew year. year, weather while in posted the about up from from pools All XXXX. XX% the new year quarter, was pool up for in XX% in year last and in by XX% our for for in shutdowns XX% starts and from year were grew believe by the the lost the benefited

Looking comprising total the pool of at XX% sales down our X% year, X% quarter for the the category for end our and was markets, commercial for company.

all but public Continued for is hand More continue and to to this on and strong increase includes cleaners to up the to automatic increase is trying XX% lack quarter, and the travel level, softness is were all in demand key and ground quarter, Retail pool quarter year, year. industry we behind is don't XX% the the weigh stretch our for other strong size pool in much maintenance a up which and products. were chemicals, spas and and There drive of the the in same, filters, some weather supplies see dealers and and up equipment installed season favorable XX% growth. travel starting in product story Retail to sales backlogs had XX% recovering equipment in pools sales slowdown fourth projects year. were XX% kept and heavily consumers for At in most strong, pool sales. demand sales in above which the season Due the are remodeling, larger the Chemical a usage the for heaters and and XX% significant XXXX. helped the pool conditions, building lights likely construction base. on market. bid, that the the the of pumps,

As diminished I mentioned, driven demand very and was strong consumer for - year, quarter sized a declined commercial the with chemical throughout but chemicals demand COVID the use. pool

the depending online Building bringing increase great the and strong. In play indicator import Material to to destroyed August, health construction on XX% the approximately be supplement elevated weather XX%, comes popular of the with saw in lost industry XXXX this industry's pool of season, I'd the role a exception. demand which but much notable accounted this to supplies be quarter grow year-to-date for sales was for expect case, tight of product. the manageable being Trichlor out a products plant the prices products by most a will XX%. I'd see In additional can balance how sales and product very in remodels supply. upcoming capacity sales Trichlor, how a sourced much For supply we the tight, chemical major XXXX the works expect chemicals. significant constraint production of fourth segment a be fire a and Certainly are for very supply the capacity how when determining of by to sanitizing

of given with quite results our from environment markets. in and construction this look it's to as in our and better the are season took some The than you at COVID and happy across earlier, and teams resources said start in industry. around categories, focused of unique delayed of significant We I and our the thrive us, that anyone to When evidence our in uncertain result contributions the utilizing the many the seasonal year we to allowed seasoned us XXXX. customer available the share tools adapt business

the we of year as sooner continuation shutdowns restrictions third and American a What experienced favorable Europe for during the the XX% a XX% contributed strong and impressive robust makes same well. execution of than our is this weather had more the is grew Europe pervasive Europe North for discussed continued and all that the this in again Europe, quarter, by demand, to even quarter result very strong update. and a once impact markets. year, virus quarter excellent revenues of great most more story the that felt and to Turning

gears switch to business continue like on our Horizon. We're and provide I'd some business green see to and momentum grow. Now commentary to this pleased gain

demand outdoor Strong that Horizon's was for year. For by and living the growth construction XX% round markets based in for the the quarter, we residential and up serve. year X% business fueled

Florida. we Distributors locations of in acquisition market in Additionally, strategically important the central completed XX December, TWC southwest of with and the

growth future in We Horizon continue very green remain opportunities the optimistic the to business. an and in improvement about invest

in last year. saw the period to increased overall Moving basis gross same margin we quarter, XX.X% XX a increase point gross our margins, from to the

For the quarters. the bps full-year, lower decline by The product margin sales XX.X of year-to-date slight primarily at on basis big we down XXXX. as when in compared was stronger to we ticket a finished XX driven discussed prior full-year

operating of points XXX and of our by in the are we Turning in we basis business sales performance our saw expenses, to very improved business, a this quarter. proud over basis as total for over the percentage points expenses base operating for area as XXX

our order points the, points and in in base year-to-date sales basis, business XXX Contributing customers the to became for strong our useful On the basis processing. sales which our to COVID success was BXB especially tool restricted for onset continued centers of by and basis POOLXXX business. access we in growth through improved the XXX total with

team was work XXX%. saw XXXX. off. the million. a and increase focus I'm year, XX% we in the XX% sales is our to For that $XX.X hard an top This report our capacity is P&L, the up our paying amazing thrilled and on of creation increase operating for on quarter the of POOLXXX increase income Wrapping of Clearly, is this

Operating year, full for of operating were year margins million $XXX of XX%. million for income $XX.X to of and XXXX. compared full XX.X% the the was the XXXX year For increase

on for was As see, you all every can XXXX the incredible level. an year business

value on focus combined creation to concentration towards we're driven organic working all importer and of choice, capacity, second stellar while none. growth execution, team's being service on safety, and with Our the

what strategic we efforts. impressive open to their two most Greenfields an that's by enough, challenging humbled performed and level amazing team and are had operating the four and If Our we imaginable. year be added acquisitions not

we and operating S&P XX remarkable market the delivered time for the the conditions our in return XXXX public XXX. is being company to In we added recognized were shareholder and XX% the the but over period, unchanged. by addition total environment years largely in mirror, of rearview having now a growth are October, celebrated consistent

year the to in position builders of large continuation housing the and the carry desire you through the the backyard. and find the which XXXX, that for beyond. page the turn Strong to helping report strong perhaps and family first in work outdoor with market home, we public's The the and trends of Southern investments backlogs safe As market every entertainment virtually de-urbanization recreation XXXX us expanding half from home year. for another particularly trends as is to continue well spaces around bodes likely are migration

chains, certainly Our in capacity well up which stretched were XXXX. held supply to in areas many

Our us size challenging keep provide a to unparalleled scale service flowing product year. allowed to in and

year, as and saw orders. work by the As clear drop increase orders earnings we the our our backlog the to we exited back inventory and shift manufacturers

need. satisfy great in products construction As in demand mind availability in weather are the will the factors are in robust. indications that that shape most are are Early we the significant provide new shape pool seeing. remain activity season the Keep industry's the two the great increased to labor external are - and we we customers ability to our starts,

less to the on we of we of But in Lastly, year, the back first of benefit the of bounce be face no the year. saw favorable start half labor Energy's strong pump should of much potentially see of weather is In the applications industry seen will Department depleted. variable speed XXXX easier very benefit as constraints against this a as the doubt half half the our the in the regulation inventory second in channel will second will than half be up comps than we XXXX. will and and most

unchanged. allocation range growth double-digit range low remains to into into discuss We closed we acquisitions consideration, XXXX see - point pressure all margin revenues perspective, X% expect to and upper this on for margins to capital the Mark Taking to realize in overall with the XXXX. approach essentially year single inflation grow be our in our with also range. in gross operating from X% growing will an of improvement historical to a in some line XX as From XX basis expect

and increased need to these capacity, and here make important anticipate the $X.XX the from expect to platform, includes as our would with our centers additional invest to which and in We in provide opportunistically Green what Directors. cent business Blue in assumptions, continue eight growth and we and to ASU businesses acquisitions opening Europe. to to continue a shareholders EPS our from be to back key additional and to both add business line strategically to Board will $X.XX an and share for sales shares maintain our XXXX-XX. buy we Considering We locations benefit hunt we expect share between $X.XX per add authorization of the for both an dividend XX

Pool their Mark the I President Chief will to this XXXX customers for and team to our in turn the suppliers both Corp I XX% seven and In Financial commentary over Excluding and our dedication. benefit results. and Senior his over Joslin, call would closing support the Vice of especially is and like an perspective. strong Officer increase now for very thank to ASU years,

Mark Joslin

how Thanks, of at and quarter financial and high some the Pete. our for we I'm year, comment level. on and out results to rolling provide then a see highlights that going XXXX

wasn't the start about comments with our we Pete's it performance, First own felt perspectives. quarter, fourth from in clear my fourth case quarter I'll how

profit working that cusp from Phenomenal in a financial ROIC all helped expense execution meeting generation, to capital demonstrated. to as and the improved quarter the and the would sales Pete perfect supercharge operating end us, gross needs rest you to relative resulting a margin in to improved and conditions our all minutes. XXXX for mentioned appreciate confinement end stay low Yes, kind paint markets to results level team our businesses demand. as gross like strong in is in on leverage lower the we call focused and a these with to businesses quarter. somehow growth, line two efforts our a This of impact been hire execute quarter, able humbling truly significantly the quarter Michelangelo top and our frenzy fourth of of I of profile response in we of year acquisitions, remarkable. QX through double predominantly operating in of If cash to ago it income. to margin very couple least and acquisitions third A picture low challenges event. sales the a and added XX% the up last operating growth, has the relative long all our a I'll career X% adversity, have income of of year of the a lot was our said, expected were starting very margin, ability growth with once diluted gross And almost times a expect impact three had the on discuss and weather home year. is because our customer’s our strategic me and how has that to the that COVID inspired to on these Add as industry business. at northern year are highlights and favorable our on few management, focused acquisitions But they've of results on done team a look

quarter incentives year. manufacturers in up performance our base gross Focusing on earned basis which the given was primarily volume points our and the from result for quarter, results, based business was our the XX of margin

For lower discussed big margin the year. basis volume offset incentive gross of margins sales point were XX these from year, our by ticket items the as gains in we've for year, all in the resulting decline

and for Moving the year. past the the in year. to million results for release and expenses, we've and quarter impacted were based $XX for discussed performance calls, quarter our on up compensation to compared costs last million $XX as These year higher our significantly

and were up the which incentive both cost is sales increases growth. quarter expenses for X% given remarkable our business base our Excluding year,

the systems mentioned, of other times discretionary from spending and where substantial XX% important are in operating the employees is tough. compensation reduce this income BXB success use while Incentive-based proportionately. stockholders are providing business. model The XXXX Pete and well when on the shared we've leaving this employees, through employees earned bulk they create, POOlXXX, employees our the demonstrates apparent performance for culture our capacity the as success our part About for total incentive value the of had platform these in merits costs expanding creation initiatives company's As our by an trim items. in as in of of was the our of rewarding of for gains but fixed both keeping pay substantial XXXX,

employees and opportunities front work important XXXX award $X,XXX in an hourly all these maximum XXXX our the Our unprecedented at $.X.X our set employees and the of by logistics included year. customer for About challenges. incentive earned the very roles, half for in are of pay employees million fulfillment to are success lines cash in our levels. which primarily carried organization, on exist who And for of

climbed high to year-to-date operating is year more down than X.X% to last leverage the basis, income to a from new operating doubling we quarter year, operating which base business from in margin ago. our a a resulting the income, margin management us. expense points year XXX in X.X% of Moving of for generated XX%, resulted a this tripling a On from in operating our basis our

tax share the $X and $X.XX year. the benefited per we quarter, for million reduced option or by $X.XX from rate million our for line, or share per $XX tax the On that exercises

the was to for year our tax Excluding at in now we the what done the over XX% rate just what this, for least and we've past, similar expect for future.

and there flow things to point are a statement, few balance our to out. sheet Moving I'd like cash here

First, business throughout up growth, up additions with growth receivables in our inventories from year. and year XX% last operating course and the improved total net our primary over the of XX% reflects management acquisitions assets asset

growth, is of ended of a still that while XXX% we dividends, DSO an inventory returned XX% of year which XX year half year-over-year. XX% from million times net the with also of X% cash four XXXX last through last the year, with days year we share XX outstanding improved use shareholders for we highlights our was million, X.X which day money turns operations or over receivables improvement XXXX. on XX% in days, an sales times spent For last earnings of income. the in from and for us million year, flow we've we're on to year, X.X exceptional here our this we ROIC invested Other through ended capital compared Doing XX% $XX discussed. with up million time $XX $XXX were Combined which to high return improvements all achieve which acquisitions, cash these down We've was and include last debt, helped year. to the prioritization that up $XX for and repurchases, from businesses

remain compared a a leverage of range ago, our target and half to X.XX year of tremendous leverage allocation was Our being below priorities virtually year ago, for unchanged the two it times was of year one future. amount times foreseeable times financial our end a capital us what half giving to Despite flexibility. X.XX at

share share Turning fully any to for diluted by potential estimate our start I'll quarter excluding with expectations repurchases. XXXX, our count

give except estimates you followed quarter the the For by two each I'll first numbers for quarter, year-to-date. our

XX,XXX,XXX shares XX,XXX,XXX. for of QX XX,XXX,XXX for XX,XXX,XXX For for and QX XX,XXX,XXX, QX, and year-to-date year-to-date QX, and XX,XXX,XXX, shares, year-to-date XX,XXX,XXX for

me XXXX Now on some let color you guidance. added our give

fairly EPS year You the guidance and notice certainly reflecting ahead. have a that than more we wide uncertainty range in usual

was well through the very will remains optimistic First be some impact we trends How and those positive are of supply to the although demand season ending of throughout We at in our building well markets The business expect of list chain. back of business second dry to influence potential XXXX. strong on year. through evolve is managed stay of the we balance XXXX demand as continuing and consumer and seen minimize in the entertainment likely heightened similar implications COVID course given inventory start quarter to the peak conditions another home both midway weather, which are business. particularly the for on much The conditions as we headwind impacts with XXXX experiencing supply our to disrupt the where second suppliers conditions spending risk. which that to in most we a could including year seasonal issues warm trends, have on in home to for of and the COVID the a off XXXX Those XXXX concern into our XXXX half is living on long-term be the accelerated carry capacity out about work our and us from this our in Industry quarters. impact our given are on our year. help of of comps could and carriers mitigate in XXXX third the the and experienced started to and we

in these outlook, particularly of our back uncertainty issues year. All in the of create the half

of range weather upper expect impact the quarters. X% demand year. the year. in margins, sales particularly the the we margin particularly For Specific first half first three to comparisons greatest including double-digits year, favorable we expect expectation the first less add year. the a mix as there Similar for the the half gross the or greater Sales of low projected business for of year, single-digit items in big historical, normal half growth to in with flat acquisitions, if is the likely back issues not decline entire first we gross QX to lower base our year, quarter, last here, margin, with XXXX including is favorable our for growth Overall sales to which in expect three the growth in slows. to the or even which be to X% the of are ticket

lower big programs off margins be tiered year's reset volume Second, last volume in ticket some to incentives that a headwind in XXXX, vendor levels. are high XXXX incentive vendor likely as offset

than XXXX longer is existing to opportunity see basis our margin we with followed gains the which as with came we points business, margin gross term our us. an through gross Finally, acquisitions XX increasing for for substantially move by XX declined lower Altogether, declines year could margins early, the year.

Moving needs the down benefit a quarters. incentive of to and for should normal in to year, needs into in of our of have greater At as quarter, level work The activity decline declines expenses expenses the in from the time, have has deferral costs million significantly same well than expectation compensation costs season $XX on heading the XXXX we created XXXX here. the business staff season. some operating ensuing we of first the expect with in the hiring million forces throughout $XX opposing and experienced higher growth our based year-over-year XXXX, as

noted of if benefits don't in attempt quarter, exercised. tax in or options $X.X forecast for not that other stock the we release, benefit a million first As anticipate will expire to year. $X.XX also from and We the restricted our ASU vesting

spending, we for expectations are to In team returning to to parts respond of to answer over COVID, eight XX and there of XXXX. we year to you centers in moving development session. location our I'll X% will year. spending a turn execution question historical see to our Finally, for our adding are of new back early summary, response will range with in our the it last capital resume and after capital and we sales. But begin growth solid new approximately XXXX to pausing expect sales number confident Operator,

Operator

is [Operator from Instructions] ahead. Baird. Go Our Manthey David first from question

David Manthey

questions. just but Thank my three here. ones quick I have questions, you for taking

pricing each think the us growth give those? off of XX you you First blue for I based component the was the on said and growth base for What green. business could business

Peter Arvan

for on pricing Sure, the that. X.X% the green and you was in so range. for pricing pricing let on was X%. in not quarter, business the give probably for window green a was say that the year substantial, the the would total, answer me XX% it the it from perspective I business was And

range. On the XX% X% range. business last pricing base blue that’s business, normal was of And year so kind growth fairly the in was X%,

David Manthey

it then And mentioned Does high end worse? good XXXX? that end on as in you end your that the isn't I weather talk the does XXXX still and Or the same it's it's with and on guidance the weather on was the agree the lower that the that does as you - high guidance? of to the Can much relative assume component in the Okay. guidance just it that. about weather assume

Mark Joslin

sure, morning. Yes David good and

than normal would the XXXX, a little bit In terms favorable than but and the of the weather to low end little normal. less guidance and weather we didn't, more bit be in high favorable end a similar anticipate maybe

the normal usually for the the guidance So range I we or say the start - mean midpoint weather think. characterize of best would to our I anticipates way year, I year

David Manthey

pre-buy, quickly the just early into coming on the thoughts then special season? buy, inventory the buy, your on one And any Okay. last

Peter Arvan

manufacturers of mentioned the end right as year. Yes, I the through busy the were very

normally they shipping of that. and So quarter until have the kind very are in didn't of midst tail to midway would fourth quarter. earnest started shipping really the start in now of end through fourth the the ship They

end the will have by it the begin quarter, be we year, - we’ll the we February season So expect fully towards of stocked. normally complete January, first but this place in it would

David Manthey

it. Got

Mark Joslin

didn't at for growth, Pete follow-up a was on you the business, year-to-date Just think XX% growth your if XX% answered for question on the the you that blue part. I quarter catch

Operator

is Company. question Anthony & next Sidoti from Lebiedzinski Our from

Anthony Lebiedzinski

And morning. taking you good thank the Yes, for question.

remarkable were remember, a actually in I you for fourth years so losing six yes, money ago, the quite quarter So still quarter guys sure.

gained you the can or share, either market Pete, that to the market think do you much you give a sense gain you you for as mentioned can year? share us So - you quarter perhaps for how quantify

Peter Arvan

for hard us morning good Anthony point, haven't year. final say the results good to Yes, seen production the for we because question. this it's on At

much So of quarter, I we a the end first by should the mean, have feel. better

So right number want hard that tell without in quote but I But I final comfortable the that give pool count. to saying we're you you for in the to number wouldn't the it's me can now. a year, gained exact we share

Anthony Lebiedzinski

mentioned concerned constraint difficulty] as [technical perspective? supply a there for You - is guys supply else anything chain from some you far constraints about

Peter Arvan

ship the early buys. Yes, right. still to going All is be tight, think to demand mean, I manufacturers robust. is very the everything are I trying busy very

difference this of time seasonality its - is the beginning in up, by the replaces caught the comes start they've by tight. be they going But quarter, across shipping, on orders they is can't third business, kept the chemicals The shipping. equipment essentially strong. early year the side, fourth with are quarter normally on very is So the to everything were it sales I board. really and around,

So buys we everybody before season is diligently warehouse working have into starts. early our the the get to so that them

Anthony Lebiedzinski

it. Got

acquisitions is side of growing there Okay, us a any [technical can from far or Difficulty] this sense give through M&A? blue and as more focused And one on you of [Technical geographic green so focus as for me going last forward? difficulty] particular the side

Peter Arvan

of up a were XXX% through Anthony, got repeat? you Could not the so of sure I'm lot I that, question. breaking you quickly

Anthony Lebiedzinski

yes sorry sure sure, Yes, about that.

for side particular side there is forward, acquisitions? or as as So focus and on are you geographic acquisitions going blue the or more focused far any green

Peter Arvan

Yes, sure.

the we both a pipeline acquisitions, active have On businesses. for very

getting markets. the business, As in that don't basically the in I will I And geographic green and the we're that's side. markets as breakout of green focus at into continue. our where seasonal us see year round look

that is have are round year On some us in would the we you tell markets. I the targets markets, obviously the in sweet for spot the blue but that seasonal side,

Operator

is from Our from next ahead. question Blair. William Ryan Go Merkel

Ryan Merkel

So this level a first high with to normalcy XXXX the off if some all? question. the business how of vaccine, second a returns impact half If at your in world might

Peter Arvan

mega they're with the say. I does that the to here which you what at return would out vaccine. But comments, think the world if Guess is normalcy in I my Hopefully look think trends, called I intact. I some

see with home, and people very I living. for backyards, to demand continued outdoor work continuing more going you're I which to think think bodes for us well from

Southern of is the I things are going for to very think think to the is going market and all us. I continue continue, housing those migration strong positive

labor. calmer and and a a see to the think backlogs going vaccine, I limiting factors business. about the two on. changing remain much meaning, the good and we're going little as is, have that I biggest everybody there going strong. to really on The assuming don't bit gets industry what's So biggest is it weather affects limiting are two Again,

Ryan Merkel

of half yes, so of follow-up, right, in because of my the answered it like second seems maybe sort XXXX. you All kind

weather in or You're labor XXXX guiding like too low that's single-digit that themes organic that's and just really won't XXXX. one-time correct? it's growth, But guidance. of in nothing is these baked some happened in that. Is secular, something are if There repeat your that

Peter Arvan

Yes, we that okay. says was cliff that fall wow, anything a see That will off. don't we

those as things - from year, they This what opened likely which it people open that robust, year same normal is the investment past certainly also But was think And market, going you'll the to in repeat. as have when the more again, bodes think earlier. backyard. to home, I I a in think well year, compared the is demand different pattern about did are right. working for is last normal, So I future soon pools wouldn't season was extended

Mark Joslin

I'd last add by acquisitions Ryan thing fourth One is, done we did there, year, quarter. three four the were

a quarters So those X% contribute And fourth lap they in of acquisitions the won't as component kind the growth basis, three they get that from we the year. last year-over-year on to for all will quarter, growth. X% first

that the the quarters of is year. quarter of fourth versus little difference other the in a So bit

Ryan Merkel

XXXX then is in outlook the And for do yes just just it. XXXX? outlook business the you landscape in irrigation this themes the lastly, as the same did the what did business continuing pool - or is my blue Got same think see boost And guess?

Peter Arvan

time pandemic every Yes, faster so is both change is tied right so, In the in environment closely more new new housing of so remember construction earnings Ryan that. things businesses to in remain perhaps strong. those construction, the market really and there no that

demand think the good. of remodel maintenance there, renovation So robust and fix be in and continues backyards is wanted housing out but construction that for I for the market as to to we

prospects growth the like for we XXXX in So business that and beyond.

Operator

from Our Berenberg. ahead. is Go next from Alex question Maroccia

Alex Maroccia

and the into like do sales maintenance incremental see the market you last seems guide the we Tacking you would municipal just could a one second standpoints? at repair be that on in the see of it explain and benefit. from about construction at if because commercial It the Could levels, least to year, new from half pools conservative, standpoint? a normal bit visibility an more

Peter Arvan

of It's small of the remember less Yes, business, on right. total. It's very portion than X% a our commercial side? the

at we’ll benefit even So area. a in point. don't this see - a big that honestly, which if I think is see commercial, in I increase don't there that

did on So to the small, I it’s the XXXX so that biggest it just it, the way will see think limited. impact I come relate about season would be I if that The think impact weather. it's back,

good. have many is days projects the those It to all done. teams demand how will get think I working So depends on

Alex Maroccia

And based pool Okay, overall ticket up these expect larger next for portion of the years, as in understood. term five then industry we gross big margin new should medium projections the the in mix? make items builds a secondly, some on headwinds

Mark Joslin

talking so the the more Yes really, ticket Alex, It's big when items we're above construction some not and pools. and much ground sales it's spas about of related. equipment

be after an driven going get of much of forward big return more shouldn't COVID of see It’s on of to of gross more So the type demand and the year. as margins impact demand we we kind don't ticket impact. this kind environment a of through normal same accelerated

gross after more year-over-year anticipate would flattish year. I on margins So this basis a

Operator

from Jefferies. Stephen next Volkmann question Go from ahead. Our is

Stephen Volkmann

you side own I'm you the Pete, trends strong. of think was versus been market sort of contractors. people mentioned the guys pools kind I think care end in curious consumer or of if hiring taking that business And the their of people change quite there any has

would be there great? color any Just

Peter Arvan

dealers talked as busy, - is talked Sure, we it's to, to everybody we as right.

So trend that the an on increase by think guys the increase. just the think that really just I have their done the for usage usage. do retail pool says demand big increase think in at seeing that driven routes, they're that I don't seeing on more busy, side we're the they're is I it's going versus level. driving it retail that I'm it me. myself pool pattern a an to that's the having there's increased

Stephen Volkmann

blue than great, XXXX? helpful. faster that's Okay the green grow in And

Peter Arvan

blue than a of simply factors. is I that would of the going to grow because the green, couple say business faster

than we're is in of what pool seeing in. think euro the in play seeing we're the construction new in markets that we the business I seasonal terms stronger markets, backlog the in that

our look our contributes think I of the to business. the acquisitions, side of acquisitions blue that more if were at most plus, robust in market you

Stephen Volkmann

final I Okay, tight thing I you is all said right understood, thanks. this then Pete everything year. mean, quickly And think

And sounds sort of guessing availability wouldn't and margin? that's that share. like extra because have of you this year to Why than of you're I'm the price be an gross push move gaining of of part a better little bit some. kind through point

Peter Arvan

competitive. have to Stephen, that's we a remember, be really good question. But

we're in but that markets we not in to competitive. the be the market, So in today, we the play cheapest have

acquisition, - to evidenced do at premium else we doing. better by time we is everybody we as get services for that. We believe need what an our So every look a already

but day, have there we to end is competitive. be a premium, think I the So at of the

Operator

from next from Our Longbow is Research. Go David MacGregor question ahead.

David MacGregor

non-discretionary if quite to does to that consolidated all XXXX Good expanded just the morning, the impressive. growth execution the we consumables for I guess everyone, revenue base? XXXX? contribute and congratulations install isolate sales and on What the

Peter Arvan

that think be by consider of XXX,XXX new end it pools, the, so I the the Yes, year, will right.

pools. in to $X.X and So the install $X.X was million the million base

So in talking almost of growth. X.X of install a what you're increase base X% the

marker. at and that look would I So, inflation as your

David MacGregor

what's growth I what quarter? fourth the your in weather And okay. contributed of guess best it, guess Got to

Peter Arvan

quarter? fourth The

Mark Joslin

Yes, I say to X% X%. would like Yes, something sorry.

For significant the a builders, backlog remained guys, markets both mild, of have most you the in seasonal certainly open year, from shutting seasonal there's and coming where freezing remodel the of fourth in of and This year, markets was the weather throughout most much fourth down. particularly, more quarter normally, the because big markets and weather quarter.

a very significant to hard so it's weather builds specifically was strong, but par also contributor. with So, because much demand

David MacGregor

you there can from or conclusion and any look of way us? Is to like come sort workable that to just number of Is at help there and look at isolate days? metrics those any that way the December compares,

Mark Joslin

call. here Not the on

David MacGregor

Okay.

Mark Joslin

so but to East. educated year a dug of question some by we it, last could much Midwest, it we down year, If Northeast, Central varies into guesses and not probably markets really market make round

guesswork lot that. that educated a there's into of So, goes

David MacGregor

if baked Okay. into can guidance extent not into maybe you've Then additional about you stimulus just to the your which touch or stimulus guidance? big talk the

Mark Joslin

isn't The not large, stimulus really buying are so customers and per se. in a Yes, our big their by products baked part stimulus is that of spend.

our impact much what terms we in have business see that'll think this don't So, of to year. on demand

David MacGregor

in was You a factor above don't think that ground pools?

Mark Joslin

great. business. there Well the growth, less yes, are than above love part I and sure, it's our mean of see it's We pools X%. a ground but to but such demand small the

us. to impact big a not So

David MacGregor

from me ready situations and accounted or sell people from - for valuations XXXX throw question dealing changed on of in in with acceleration? Last just we acceleration towel you is in were just to the some M&A. as turnaround what saw terms And what the

Mark Joslin

Go ahead.

Peter Arvan

gets, to is then I it everybody peaks, good Yes, their they business and a strategic year, to do. think, on start explore very what want as options having they

that we and when folks look to on buyers. I when own strategic wants sell all work my most that to certainly is at business everybody at a sell. it the like I'm comes you of are to the and guys plan, peak. one would right they're So, going now, to that succession through tell options what's going right time, They

look what's on at the what's look at we So past. going now. We in on going

think seen that So valuations we've buyer sense. makes we disciplined acquisitions we're not for a I skyrocket, look strategic

got areas, pay at else. the most in We've look doesn't it go great so our buy footprint most a in side footprint. great particular, places market huge and got a in we've somebody to us premium If justify you to blue share

So, is you movement? some really would upward but there nothing it's tell Yes, notable. I that's

David MacGregor

four? still you XX% for looking Are ROIC pretax or three

Peter Arvan

Yes.

Operator

Ken Zener KeyBanc. Our from next Go question from ahead. is

Ken Zener

guys. you to okay My be with questions than for that's two going here apologize question if first Michelangelo. is be more to going I

mix give mean, I to in in you it I the bit, help of or that's thinking midpoint. a kind second is us your per through help? think of guidance front little XX% your your a first at Usually about just earnings XX% half. walk You half would the share do us sense half

Mark Joslin

of terms per in Yes, we earnings share? see how

Ken Zener

second exactly…. half first half, Yes,

Mark Joslin

Solid growth by quarter?

Ken Zener

And No, different no, just I you not your that's to XX% usually to the see interested costs given dramatically by but of just do be earnings going half. COVID about guess? if first quarter, I’m I in

Mark Joslin

that Well the point. going in for the Weather said, a quarter. benefiting fourth as don't expect this mean, what's so we - quarter trends the similar happen but be we sure, is to relatively very rest We growth. been first to higher has mild first saw I different. know from, strong we it quarter, will for of quarter,

looks very half as going quarter the the of back certainty good less into Second year. well,

third, So in fourth fourth. biggest quarter, quarter terms the second, is of quarter our year, second quarter, quarter, first third

Ken Zener

Go it, okay.

Mark Joslin

So take… if you

Ken Zener

I mean, I Let me yes, no it. get

returned you seasonality to right. versus is another there to seem another normal way. XQ about ask XQ, XQ, think Let cadence, your predictable that to think me meaning is it? very, seasonality business a you This Do way - has Because normal? have

Mark Joslin

sorry, part last again? say the I'm

Ken Zener

make those about sense sales trying versus seasonality way it and that your XQ where to it? prevail think are, we so I'm is XQ right, would Does running to? that just normal point, versus that are, XQ is XQ another wherever where at June/July? seasonality business in

Mark Joslin

Yes, yes normal seasonality.

So the season. obviously COVID extends

benefited last that into they pools conditions and chemicals a fourth longer. keeping the from season same So we this that And pool their expect know year. third maintenance. going We the that and sold certainly in drove using we quarter of lot heaters the open were year owners the pools

back back and season Hopefully and go so that is earlier third clear. openings, half - seasonality clear season, school. probably year the what's this the happen of with extend and the year, kids man not So will to to to as extended the will going there quarter be benefits the

Ken Zener

Right.

demand, - is system. pent-up clearly a in is a lot the of So lot the is there despite there sense of my demand like, all still

a might can part are talk which you. that? accelerate or for are that construction that innovations if So maybe of If demand, in can little Peter, labor think side mitigating - you you the give you this could and do bit? What how labor is I about side new that service obviously some picture about a just big could is intensity? ease business, But that there are some perhaps on the the industry occurring the us innovations be

Peter Arvan

new Yes, construction construction, on many difference biggest the differences, fibreglass. affects still in total new the aren't but small side, as that percentage it there such it's a is

fibreglass sales, makes the a it reason double a terms small in a up And look our of basis. faster the because year-over-year but pool, is pools a vinyl if install than to also of very almost So they're percentage on I units too total. at and dollars certainly pool fibreglass pools much and got

when I for build isn't you pool, of that a a set same innovation goes can mean, number lot on. before still days of it. finish there whole the So it to has you concrete

you So the of the speed curing can't product. really up

into don't system, that really takes construction see say I stable. I I coming time see much build to new it the a fairly don't a amount changing labor ton more and would the So so pool in of

And On be out you for professionals clean things like the more the brush to still from strainer and there to such. there things they do monitoring. maintenance visit a side, that you pool there the baskets is still to the are physically rudimentary, and do, pool package the the remote cleaning although still pool have have is can the not more monitored monitoring, remotely that remote a complete perspective,

Ken Zener

my organization have sense, this I is you've demand, a while, outside yours that market chains Excellent. of have supply to warehouses, type then good last you an lot my obviously And share meet you for people. a like there other gathered think pool is of question better activities because

I'm very recently, got, delivering employees it. renovated really is credit but through I But levels? occurring much. sure what local all you about know, you is And wouldn't those give little bit much, so just for NPT how a pool like you of can how that's it you granularity, you into little I've team You're talk talking a I a mean, that a little working negotiated detail all very just had you're collectively. about Your since the the this? us take Thank can more you well bonuses just go mean, at please.

Peter Arvan

at lot our I in local the level of a Yes, feel the right. for years capacity couple last work we've creation, of done

at we median the our time customers We and that equipment the to changed serve measured to branch. pick processes we've So our - actually of used orders. some

orders That's So use. of helping POOLXXX technology increase remodeled focused them, a those have walk for innovation. process the everybody has is that to on use showrooms, that they wait where certainly down. and people time warehouse pull they on put rather can very counter helping with day-out and our than maintenance grab tools, to some That the them basis in is innovation. having the in, somebody items walk day-in, POOLXXX sign is have It's form, to we seen we a a nice some bringing in

their which they - to the come the designing would app our blue come if So get with it if NPT the a do an they lot normally streak, when delivering backyard their they lot they before design There center, use, they app. pool in app, NPT NPT envision of are a they augmented the them. of even and place customers which work certainly speeds orders app which entering even basically center, because do reality can pool that they're counter, to to come is allows another we the the more folks are a before

things delivery also improvement truck helping. been So the of is routing is and we've on host software it side, our a that really doing. And utilization

there there they hard of is whole going Ken So team. we what XX one all frankly, probably to by but a just things, our on have contribute plus, lot not thing, isn't work

Ken Zener

it's Yes, amazing. really

Thank last was That's it. you. tax Mark, question So, rate.

Mark Joslin

guess? think tax is, I be what Question I on I briefly. is to covered rate the it going that

a our tax over XX%. is rate Just little bit

the So out XXXX. expect that for we'd benefit rate the that's XX.X of base to ASU close it. back when you And

later quarter. $X.XX benefits ASU in the then And just change. So the no in first

Operator

Garik Instructions] ahead. Loop is Capital. Our [Operator Go Shmois question from from next

Jeff Stevenson

Just on if Stevenson for is to taking XX Thanks My branches questions. my This is year? Jeff new payback this on looking Garik. period to X open you're reason of first the turning to environment? the profitable a demand for part have that's seen wondering quicker due - one robust you greenfields

Peter Arvan

good Yes, question.

open time well, is expand, So market our has to last proposition dealers creating continues the to our of with value our to because lot year we X location and for the had as to planned branches. XX of and do that a

we up soak paused Last during you locations open up on open time the as early the don't season the has - new and new year nobody really add can't up for locations. we as have, So in we we to want the locations because season that markets grow, capacity you that.

driving if the are season not So muted. really chances season any during benefit, time by the the you're set the opens of

to went the from X we pause, would we we to that add when XX and we So the tap took brakes, two. a normally down really

So you the know, is back profit, open the in management, basically XX. going that X payback tied that you us the a the to, growth can better, which on imagine, to to takes to market, really certainly gets as branches, and back faster the and grow. on robust certainly, gross And revenue growth you very expense trail

Jeff Stevenson

question realization pricing second is color could in got I'm just you and the wondering on expectations provide half for pricing, makes the in any if that on of XXXX? year, you My now, chemical sense. chemical any your Right price back

Peter Arvan

the back the chemical that XX% in Trichlor, is, is half happened time by which product. for our let's of XX% the in that, Yes, on sales of call in the to because that year, instance, fire

were but in some time of not there the of by down, realization half for demand much, because the So the back terms much was the in the supplies price season. drawn year, wasn't left there

XXXX that of season, increases in on inflation, the the rest in particularly maybe the could going we're to up item, will that go XX% for chemicals could area item the price, in that to see that XX%, up. see increase see think that alone price I

think chemical it to our is we about that upper-end. overall side, gamut. guidance talked to really on for the price X% runs I And X% the closer XXXX the

Jeff Stevenson

you in Right. And just I'm plans that if lastly, a your XXXX update then you on could Europe, growth provide an region? wondering in great and got

Peter Arvan

amazing start. year, it. to Yes, a happen They're off great have doing Europe is amazingly. to They another off they're just to

And we're But service We we're in have Europe happy mean, is our has challenged we're terrific. and for else. I doing better chain supply with are outlook the up great most that, our the like performance we a everybody the than chain I team. Europe. for held on And And very being rewarded side. well. supply think

Operator

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

Peter Arvan

Yes, thank April be the results. you. Thank XXXX we thank all Hi, us. you XX when look joining releasing listen, our on quarter first of discussion We you. forward for to will

Operator

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

disconnect. You may now

Pool (POOL) 11 Feb 212020 Q4 Earnings call transcript