POOL - Earnings call transcript Q3 2021

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Operator

Good day and welcome to the Pool Corporation Third Quarter 2021 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Melanie Hart, Vice President and Chief Financial Officer.

Melanie Hart

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

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

our begin will President and opening Peter call We comments from our today with Pete? Arvan. CEO,

Peter Arvan

record XX% the results sales is of again and a raised everyone for team the very morning to a third Melanie, third This bar difficult $X.X on comparison quarter the you, from net morning once of We good XXXX up first increase POOLCORP and year prior XXXX, of to the proudly the quarter. against call. posted Thank half quarter which over the following billion, exceptional heights.

base in grew quarter with business contributing Our X%. the acquisitions XX%

and in living both comfort period outdoor from outside strong. and XXXX. very earnings of XXXX pool benefit XXXX. $X.XX, XX% quarter is the Our increase improvement the desire share when quarter the XX% People's spend period in The a third or were remain which time over ASU $X.XX, per diluted both earnings for to more their space per were the from strong or of a share safety the excluding backyard

and very XXXX through reporting season. and XXXX remodelers Our solid cases backlogs are the going some builders in into

demand lead are hours of elevated and Component where up our of may well for challenge up times normal service the to cases working elevated perspective, most above our From normal. logistics requests. crisis industry retailers are keep demand labor our a are shortages, keeping products above and supply Our still long the recording with and with tight global service a the some a vendors. in market just professionals

have options teams powerful and typically everywhere talented customers and mitigate balance providing products for scale our else. network Our of is supply our the interruptions sheet more available that the leveraged by to unmatched

have Our can of times most teams challenging our in we to tirelessly to customers. our worked unparalleled the environment sure service provide make

strong. is network Our

we are a tenacious we creative work and people Our are prove to competitors. capacity our us and again to opened during our best XX plan, In pursue as relentlessly and the two the completed skilled with has combination creation. take this once ethic new with as accordance have business strategic the in excellence and locations share allowed service we acquisitions continue from year we strategic

Florida which quarter, the XX%, for strong was favorable better growth markets. me to four compares XX%, this California continued from the growth of strengths we but and we benefit base the for business that slightly trends very reported markets. Seasonal year-round let of quarter the specific grew growth the quarter XX% year markets to same growth the base grew XXXX. our with from Arizona largest in third business in demographic a than reported In while of where had XX% share results is seeing XX% that XX% third previous quarter. XX% industry further base and respectively. grew total, proof XX%, business all Now major markets the Texas of

the For quarter. in most weather markets conditions for generally context were favorable here,

levels. to greater and than markets of excluding acquisitions, come at report to happy I Looking product the demand has impact am that pool pre-pandemic end commercial back

starting sign repair sales we COVID bringing the again. growth a demand automation. for growth shortages elevated a Retail encouraging quarter usage, more travel customer. rolling encouraging pumps, strong heaters, was the and XX% key have public projects stock a of more spend and as end this the reopened up up is sales this than with the the This pools was gathering severely period. XX% shortages reported to impacted of to product product product We quarter, the XX% are From rate XXXX. others commercial sales very in and restrictions. XX% driving this products. saw the during sales This the grappled key on to market gains maintenance were and managed total year-to-date For and flow same is that growth with the market equipment outs perspective, XX%. construction most the Chemical up XX%, impacted as which product compares Chemical were part lights, for business includes quarter a it as focus industry posting category for filters retail for with increased

a in capacity product. the BioLab the As inflation in reduction at after a plant significant net industry drove and on position on mentioned short left previously, Trichlor industry major last year available fire the

Fortunately, and tightness next pools elevated should industry substitutions to This price there to continue and product season BioLab In as in are rebuild at sanitize the a the from remaining the players, clean safe. and keep ways supply expansion pool chemical several the improvised albeit mitigate into effects levels. imports meantime, adapted capacity and its to likely plant. has is

grew remodel in is construction we quarter that strong third sales this were is very by On all in posted in up XX% of and we material XX%, a a XX% and top for remains on robust line growth of XXXX. market. product demand the quarter, basis, building which the year-to-date the Lastly, this driven markets,

the a a year-to-date for respectively the year-to-date remains European to America year posting was we business bringing same third the and and shortages grew quarter mind, difficult for bear sales in but very sales comp period and Horizon quarter-to-date here quarter. in the overall wetter supply Sales had team Base the revenue growth Like XX%. to XX% in cooler our to X% last and on impact strong, the XX% results. of North XX%. as quarter, growth weather significant but Turning XX% has the grew Europe. continues growth demand in sales accelerate

are very business the supply on continue challenge this business, continue and industry. gains a and our customer share invest to but Like their the lead we to in shortages pleased be team, blue how determination times have focus for We is this extended solid in the with platform. driven and great performing

turn let to Now margins. me gross

basis certain chain incentives, mix. gross volume-related our and quarter, driven is and point up this quarter, the which XXX a last a overall over last basis For benefits basis, improvement is we year product XXX year-to-date Like improvement inflation XX.X%, On XXXX. points. was margin execution, by supply are

addition, help which been us and strategic in going is In the and continue to focused we more have environment forward. will us on disciplined current pricing, helping

allowed From industry-leading Our leverage been capturing again POOLCORP XXXX great expense incredible differentiator a season. This has us our a has and strategically greater is an factor balance ability key XXXX perspective, start in us the our while the for to customer and provide a XXXX to the team positioning success season. service to value key and for delivered both sheet it results. in

hard operating and our PoolXXX leverage. business again, cornerstone up be expenses operating our XX% quarter for to execution, in quarter. work to creation were the achieve of continues a comprising XX%, capacity focused allowed Our quarter. Yet and the on revenue growth initiatives revenue of XX% outstanding the XX% given levels is which of our growing us is for team the record

further up think We the platform will are of could performance reflection generation our in announce the help that and customers out to the POOLCORP. and strategic we increased to measure, be income a true more excited beginning the rolling we I of operating incredible be $XXX.X not will masterful Wrapping that team our to be and report drive efficient. By this quarter quarter, fourth capabilities pleased million. statement, a next more the any that unmatched XX% adoption at income in

three behind XXXX full share balance and the of $XX.XX us earnings a guidance quarters very for of with per for we updating full-year the $XX.XX share. to favorable year, to outlook our are the per Finally,

to benefit, Excluding per $XX.XX share. the range $XX.XX ASU the is

a let year-round move continue furthering desirable behavior our to desire our retreat. created We of Beginning pools the environment. When in are from for prospects X% pool significant backyard a use pools is Hart, enjoy feature people allow in To and living their like for businesses we expand for the Thank to and area years, performance. environment X% our that adding X% albeit of and and lifestyle. with through growth them more market a inflation outdoor are continue our outdoor equity supply trend X%. is where it saw now tremendous tubs the with capacity living increase those and believe pools, Realtors, demand. many strong, kitchens. Vice the that will pool-friendly some will confidence previous levels see challenging estimate We over Inflation as Melanie Officer have year now enjoyable more more to bring as you given a we to products will very or to housing the the to President a turn industry we patios, focused expand vendor call for long-term range issues. start also closing demand by the to to again that without global in team living From to regarded higher to to costs this manufacturers outdoor simply to next offer life. highly be to our looking over year call and those time in Financial and markets, last in customers, furthers away working to industry been the capacity, should began add the closely lifestyle. Southern suburban feel turning of endure onset me own to the will outdoor of that National them in living giving migration industry. future commentary. of supply date, this the chain. labor foreseeable the her I build their in And temper looks to as Before in for XXXX, the Chief housing people chain encouraged invest likely affordable in has of with this done Demand customers well perspective, continue will benefits people elevated incredibly Further, to it capture work-from-home seek and and couple areas supply outdoor their living from All-in-all, a We Association an for a consumer have very believe up increased hot Melanie, according the in you. passes little this the their this our which will the nicely positioned our arrangements pandemic, healthy to someone with people of thoughts. them demand a urban repeat we recognize flexible change the continue as

Melanie Hart

on morning, commentary thrilled results. quarter Thank you, to provide I our good additional Pete, exceptional some third and am everyone. financial

We to quarter product basis call Consistent address we high areas our margins with purchase X% from from inflation chain quarter positive and up saw to basis constraints, during have our gross discussion than in continued quarter. in realized again see continued growth in anticipated the took sales demand. where opportunity with the on supply increases of points. trends gross margins. gross XXX margins. the and the sales normal XXX Gross X% related points in third approximately forecasted growth base the our net acquisitions Net quarter ahead We to to second an business once higher both margins benefited earnings we increase

strong do chain has us high gain Our in inventory position share service and to demand environment. tight provide and to exceptional allowed a continue supply

the more in changing we have to we pricing systematic established environments. updates have past, increases to more ensure product we come the seen As cost adjust frequently rapidly quickly than

capital able we taking to amount specific us Additionally, from to strength judicious that is materials with the into the to place apart customer. forward in in a move pricing, of sets cost the our have an evaluation chain increasing all many consideration of a each be customer to focus on competitors. serve the strength for supply ongoing of process confidently Having POOLCORP

purchasing for gross vendor higher volume-driven quarter. also resulted the in benefited which Our higher incentives, margins levels

gross of XXXX results, now Given quarter point of XXX the margins end the margin the the the improving third basis we improvements full-year points than growth results better than portion XXXX expecting anticipate for improvement the versus our more a tell expected we quarter. basis at to were gross the XXX quarter. second story sales and only for Record compared of of

consolidated excluding net Base net XX%, in the growth percentage points. XX.X% grew expenses as sales by have consolidated a for at recoveries expenses the while quarter-to-date basis XXX XX%. of operating points were XX% These XXX operating sales We basis up quarter a sales of our net expenses also of reduced down were quarter. sales business net and the

seen inflationary the healthcare, increases of freight have cost areas and rent. We in compensation,

creation effort generated in strong operating our locations expense leverage. on capacity Our has continued existing

the margin compared Interest strong of million Our prior has gross expense at in margin allowed XX% XXX compared to in quarter quarter million net expansion of management grow to to $X.X third third expense basis and coming prior up sales our by year. operating for operating XX.X% slightly in points, is of year. $X.X

compared $XXX.X was debt to Third $XXX.X quarter million for XXXX. average XXXX million

right was quarter around at ratio leverage XX-month trailing X.X end. Our

our During to favorable our The to $X our balance we lower and the structure amended capital credit provides from rates for total increase also sheet manage $XXX quarter, renewal million and billion. covenants, available efficiently the and forward. to strong us going maintain terms agreement capacity on revolving capacity and liquidity third substantial interest allows borrowing

coming the tax third annual be for the at earnings is on full-year XX% around for XX.X%. Our excluding to pre-tax ASU slightly benefit quarter lower expected the rate in

quarter ASU million last This or or was per same of million third the Our the quarter realized share. in benefit less year. $X.X in was $X.XX tax the than $X.X $X.XX

forecast based timing additional of not that stock fourth at and should in included between expiration options an that and stock difficult have $X.X on benefit the stock until realized. occurred these calculated of XXXX guidance million our ASU XXXX result date current to the first related As employee range therefore be benefits recognized exercises quarter the to quarter and price. is do We from quarter, option during

our in Next sheet net and quarter. total balance XX% of our Increases the reflects flows. sales I'll in discuss our cash receivables growth

of the XX.X outstanding down XX.X Our from sales end days at days in XXXX. the quarter was

base Looking to inventory a supply an of XXXX serve we on at business our XX% compared better and to chain comparison customers increase manage inventory disruptions. in as reflects efficiently or XX% invested

season. since added of opened have coming of less last We inventory were the strong our new support September Inventory would virtually to XX XXXX also than locations liked year. and off flat have at we XXXX levels selling with

Our growth was XX%. third quarter two-year sales

into improved basis positioned XXXX. is purchasing from support actions Our deliberate to $XXX well made million saw to XX.X We the by and have also our us XXXX year-to-date XX.X into a inventory. days investments inventory growth Cash ongoing in strong earnings turn sales XXXX. driven contribution activities reflecting in from on operating

benefited of XX.X% XX.X% on impacted capital. of year from tax Ida. income those invested for and return Our highlights flows took payments we of is prior deployment as by IRS for up sound relief the of cash quarter deferred Operating capital Hurricane the advantage from our the

by payment quarters have of tax XXXX. of quarter third to of the third we course, the employees’ are million. have fourth to any would our support established and quarter our are teams natural major impacted thank ordinary want We made our be employees of disaster support impacted fund without as support to by first the until the to that products generator customers our our fields. federal relocated operating on estimated repairs our payments pause to of of flawlessly Many recovery quickly our XXXX they plans possible. begin disasters. we In centers were would Choice our Employer to Ida. so In typically defer area as $XX were of could to of all in in operated initiatives, that continue serve POOLCORP made that able disruptions our customers. the during power January teams of to sales I get out Certain and to Overall, areas

buyback repurchase far our in so on authorization. continue of of shareholders So combined of as our and authorized add million have value strategic part we to and Share available XXXX the $XXX the repurchased in leaving $XXX XXXX under executed exceed million an be in overall area amounts XXXX XXXX, far plan. to buybacks, our share

year-to-date We added Acquisitions for have results. XXX,XXX for of an the X% price growth per our the year-to-date $XXX sales repurchased average shares at to third quarter share. X% and

as quarter, impact. we the acquisitions However, larger impact several the to the fourth expect growth our as We acquisitions of sales we fourth results in not completed begin the XXXX, X% would the move significant an to lapse into for so remainder will quarter. the acquisitions add the on to only about have in year of of of

year, we the that to from at look shown continues the out strong. has growth think close demand we expect we to As be momentum quarter sales third how

XXXX, fourth have did we than one quarter the of we For less in day XXXX. selling

considers been the improve and basis our while strong. remain by historical results points. to quarter of improvements what XXX of of margin for we of year. fourth will net one included We the achieve year Jet Gross to a of expect expense XX% year in comparable projected XX% Normal second of growth, outlook well in should sales are business. in rate over underlying topline less prior with favorable gross management this investments year both have and it growth growth last positive ability to acquisition improvement to the this our results fourth and Fourth the our operating weather quarter day. both remain improvement from may time quarter bolstered our able a margins and quarter full-year. Line as principle sales were This was for over inventory result the growth is with range a This Purposeful for for base compared assumptions full-year exceptional weather with our periods. moderate allow in third excess quarter selling margin sales

range consider full-year third the of to from for the back including positive $XX.XX $X.XX operator $XX.XX for trends an have and updated provided ASU, quarter increased for session. to our I have share. will XXXX over the earnings call turn guidance We the expected additional question-and-answer now diluted to our results demand per

Operator

begin the from question-and-answer Please session. Merkel Our now will question from go Instructions] We Ryan first William Blair. ahead. [Operator come will

Ryan Merkel

Good morning. everyone. Hey,

Peter Arvan

Good morning.

Ryan Merkel

jumped Pete, XXXX? should sustainability How off off, the up for about margins really full-year think XX% gross page. first roughly we about we as of So the margins you put think

Peter Arvan

for is to XXXX, you my that Yes. It’s obviously strong. said a demand can tell guidance comments little I provide but as in early I

a are is as position investments supply a customers they made chain. with inventory really; to make very from We've and pace certainly orders and need we one fill two do good most sure that We in importantly, to in sure serve can continue things to inflation. and keep make

and a some we've lot analytical processes and I – pricing and that discipline secondly, horsepower our we've think too help put around rigor us. added will So more

we So XXXX. about to think in comments you again, early But a that guidance margins bit little tell I what you that the my sustain. gross on can give things outlined for should we

Ryan Merkel

That's fair. Okay. Yes.

price of so be with since dynamic can that But to mentioned in play? half planning you going margin nicely in certainly are that that XXXX? next helps. a Is the you enjoy inflation that first up mind, again in normal is bigger little than You pre-buy year, lift a to winter do

Peter Arvan

Yes.

considerable with product demand. just pace down a keep amount trying throughout have to of year and to order have had we really the So

of typically would that the be on on amount today have order So have tell we we product order. more than you would that I would

Ryan Merkel

Got it.

little if get higher relative then little let going should last that seeing. think granular, just more X% about X% good the But and some with XXXX, a there growth, Or you're believe we remains everything a I XXXX comments one, off back And I you say we backlogs elevated a know it about think can I as Okay. history? reason bit the to about is base? to made industry normal to

Peter Arvan

Yes.

And I the bit would question, elements, at unpack think that I look a that's right. right. I an and interesting little guess

be little is XXX,XXX, year elevated. construction We effect is total going which a XXX,XXX think inflation, pool for but will puts be to inflationary pool early what units, new to you you XX%. certainly XXXX, bit So be between to this again new have up construction going tell the which inflation

So still has installed of couple the grown demand the come are the is base business strong, has years, last good. backlogs back and commercial nicely over

again, I look back not would demand. driving the we and we're to for that at think XXXX are I number, – So it elements ready would go call but say just

going I to think in the dynamic is place. stay work-from-home

I think Southern place. housing The market in is migration stay shape. will in good

if similar another have we'll M&A And in a a results. number drives we the you I this for so going, should by couple said a year, opened it's – locations good year, have encouraged we XX we our next elements we're pipeline think this the we have year. good what breakdown So of place are acquisitions year, for growth, –

Ryan Merkel

All pass right. Well on. said, I'll it Pete. Thanks.

Peter Arvan

Thank you.

Operator

will come David ahead. Baird. next question Manthey from go Please Our from

David Manthey

Thank everyone. gross you. morning, Pete, first as on well. margin my Good is question

can it You you've should next have have it, enhancements forth. year, expect clearly now? to are that it that here. hey, had pricing or How maintain the so think to things gross function But you but you not think relative five about also margin recapture some today the and is we've what to new we Is nice XX% the just here half seen? of optimistic some relates changed step about that improvement you XX% do the from we of years mentioned and thinking or too we tailwinds as

Peter Arvan

at a what incentive execution is drives gross factor. the volume-related inflationary margin, I programs play, discipline think in is a effect factor, is a When are pricing there's a factor. right. and look you mix of a huge lot things The factor,

that, robust I anything all thing. think and like kind we're we this just you But of of what out a element demand the environment the attention positive basis but is it think soon So certainly by is, way I me is new to very Certainly hey, that sure – five really think I make call the floor. way on on an it's very can executing it, about you is we're too those. and tell for years. paying close for to tell that to element

David Manthey

Right.

forward conditions or price or as what you, then give lower, that going the us costs you whether have and idea variable beyond And can that's whether naturally just Okay. flex an change you the if key are in the sales that What point profit would the to moderately to levers what gross have lean pull future? into? of factors are some dollars you or down look at economy

Melanie Hart

Okay.

of First compensation. incentive our mentioned you all, performance-based

And so $XX had in actually coming fact, of XXXX, year expected out be into going we’re were $XX to we And million number down we thinking to than that to around XXXX. going now, we're mentioned million where be that $XX our million projections for in this higher that XXXX. we

So outside into to the really that, take us side. flexibility direct more I factors gives want account. incentives compensation a you range that of there's But that would on of quite

serve market within fact that know through the the the I has work share to and share really the we've additional so we've from So customers, in ability gains of that come covered hard a these creation, of but other talked because capacity a lot that gotten that But have we've numbers our team the this that those not put not about a doing is the is historically. cost. lot of our thing that's evident without environment lot

us our in more in an to have current we that things year. the order the out product and we've other from move customers had serve around has door So cost do where the to operating expense opportunity side had

next out the is costs the base those in to expect supply chain more of we when so And year also line. come

David Manthey

right. thank All Congratulations and you.

Melanie Hart

Thank you.

Peter Arvan

you. Thank

Operator

Susan from comes Maklari from go question ahead. Sachs. next Goldman Please Our

Susan Maklari

Good Thank you. and morning a great on quarter. congrats

Peter Arvan

you. Thank

Susan Maklari

your that next supply is we you about having imports can base question mean logistics? growth supply you year? Are as first of the and obviously that ability in the those perhaps might labor think support expand to incremental little that the some we global and XXXX bit My chain, is to think and more about tightness further talk and to markets all as what rely on a supplier's

Peter Arvan

would really – to is products the think you I have Susan. good Yes. about. have it Very way think question, we're to about talking consider And you what

next – suppliers better at they look in questions, would But them won't you'll for I that ask started the based I'm to if shape same seeing, they are with. North what be in So you going they equipment have the they're on America, the Certainly think major sure. COVID we hangover year year. the

the we are I inventory production So rates, that at it much getting than better was. think least is of amount

fire, Trichlor which better, for be little be in to the as situation BioLab going the a to because chemicals, I think feel good a I us would product. again, huge going about exception, with they'll notable I we starting better on two, the the comments creates their with exception season, of and that XXXX breathing room is them. that be to And the our in pace So number ability that was number my One said season of – mentioned chunk position inventory capacity XXXX able one. industry's and that into

being couple ways. a is pool of that So up different made

So better the is domestic longer gets But producers think the domestic that import it snarled remaining know I with expensive supply – as in that it's taking are also more case when the a in some And a you here. coming think product is in. there product. I it's then And chlorine will chains, a and system salt in also be position. there's position sanitization, to to provide from going which liquids, more primarily perspective better be which again, chalk, alternatives capacity be is for or – either

folks very hard. think But all-in-all, see I very ramped our suppliers worked major this in We position and the So landscape. our has I with have ramping think and hard forward. we'll mentioned is the working going very, supplier industry be hard trying equally pace industry. up in as year, I up better worked the a keep changes really don't to

Susan Maklari

into quarter. the Okay. of about into has is, heading XXXX? backlogs as think end talk on very that fourth the especially color. and and level my And coming markets seeing the of in Can then seasonal you That's any obviously the weather comment this next very the we question the construction been helpful year about favorable into new you're

Peter Arvan

also to and are Again, right in labor having have having comments. I they dealers that's to one in And our world I of capacity. looking things expand market Certainly. our mentioned very to robust now the We've encouraging very obviously But of I see their to the many think the with is is spoken where tight dealers of the to virtually that all through manage dealers positioned it the that mentioned backlogs. of entire all they're own geographies contend now. the are

up. we basis, So from new think going to construction new a that pools be are

a could I little the fourth the XX% strong. on what be in or mentioned, activity or of bit minus the months quarter. But more about depending As very in shoulder is remaining happens plus

going to a leave them very it's start the good to So with season. backlog

construction, equity of from strong our and out I and work remodel market projects. Remodel housing is we are many of another renovation also and remodel strong also dealers the which the continuing. is pending So values, with renovation plenty feel and of a that home area, good about big is our and market think portion many booked months for and new good there's with business

for again, gives in confidence further us the just So the outlook industry. long-term

Susan Maklari

Great.

that all for luck. color and you Thank Okay. good

Peter Arvan

you. Thank

Operator

ahead. Noah from from comes Our next Stephens question Incorporated. Merkousko Go

Noah Merkousko

Thank good you and morning.

Peter Arvan

morning. Good

Noah Merkousko

has later of these be? think really think maybe year, how sense you capacity XXXX. that a least be. gains understand you're allowed some give little sustainable going see others got? to that just to start gains like share might when chain does secure to you'll any to Or might sounds next continue the supply you do share into mentioned how some maybe maybe improve But So of to bit these you're you size you've at trying of your as able are the – share continuing issues haven't gains up you sticky about product If

Peter Arvan

of insightful I that's all, first – can tell you very a question.

So I tell it. you very for you thank we asking What will on customer experience. focused is the that are

So need we is busy. We are that also we people But granted. and don't recognized for demand product. that we take that recognized elevated

best for to make that tirelessly sure works our team our So the provide we value customers.

business, dealers the and and tools expand to in competitively priority dealers it's tools which remote whether their they order it's product productive, available that things can priced digital up be our tools put PoolXXX, that the about can the having they look just schematics, it's programs need grow can it, it's or having the access, whether when it's parts, product, and our other it's whether pick. more they about to So allow they marketing it's or and allow marketing the allows not

can And for I counter. our most So measure tell critical that the you is things dealers, of speed their like one time at resources. we

serve at approximately as at we have just it's as because the dollars we like the been. time XX% business measure at look to customer transactions not of We cycle don't a So – still just in ours, take a counter counter. busy sales even our place

out. wins long will But share So of sure way the my remain us. is through providing customer you the in gains that best with all the team the entire run can that down nobody on right how think experience. for employee that knows very POOLCORP And in much I tell very every we focused

located expanding So if locations, we're conveniently right footprint dealers you we're programs have and our we're product, the management and the that's that capacity have for we that have – we so have robust inventory we why that place. our in right

we best that we try than have as think and the the us for gives of technical in don't appreciate us in them the in and have end that and at chance centers serve that available, get ever out take that and We anybody going we the retaining that's granted our the as programs have time them quickly expertise, as the we gains received. quickly that else that possible. to share we best more we and sales marketing So that have with that product

Noah Merkousko

into are you're helpful. here, see of Thanks. it you And them that I where follow-up sounds where then you year? of XXXX. do demand But as most or next channels possibly a all cautious signs you any across into the off you different cooling guys and looking guess, looking like demand look when as sounds across is That's in, strong certainly operate like

Peter Arvan

exiting fall our surveyed would we to that and in back are more outdoor that, can that very conditions and them or an as of and the office. have time I commuting less because home booked home right. to on of at We to they're we you mentioned, amount result. a think have I out cost they're tell And suggest you I at coast, now, customers, then an a frankly, of exiting in think when people driving shape. the for being living the time the – time we certainly that would amount gains living patio coast enhanced those talk each of We day. of the they spending they're But or dealers that the areas, car really with the good in nice And people's the they every very kind this work that has dynamic And work-from-home equity. we are right tell they're to desire macroeconomic pool high moving or – areas. talk for leaves I

remodels new good cases happens armed many markets. living area. year-round they're can a more lower home they very In that So payments that for and the on in down with purchased to use in renovations they be that cost

of encouraged So look is say that underlying to as a and we're gain, a We things very lot good at quite the don't are now fundamentals look housing tied that at outlook. we frankly, the it that the market. by short-term

lot whether think patio spend hot legs or continue. housing desire that will market and then living housing we think has the of – on improving or money a to the So long – good that the feel if as the a condition outdoor people outdoor kitchen, strong, or financial experience, is as it's an stays we tub outdoor and market pool their

Noah Merkousko

taking for questions. there. right. All leave Thanks my I'll it

Peter Arvan

you. Thank

Operator

go ahead. Our Please from Volkmann Jefferies. next question comes Stephen from

Stephen Volkmann

Hi. morning, guys. Good

Peter Arvan

Good morning.

Stephen Volkmann

home prove to I'm your today point. working from help just

So thanks I'm may. percent if couple build as faster guess, of describe of question. growing how market a and remodel of of It rest the questions, I curious, end materials, sort I little quick the than the a for you building my taking new like business. would bit has been A days? seems total these

Peter Arvan

Yes.

frankly said new Last year Stephen, more XX% XX% I as you, think that is of think on of backlog new capacity there's and there's and that I caught we've historically remodel, XX% and independent gotten it's construction up think and renovation still – which I would desire pent-up been lot for than pools. think remodel where XX% the remodel. in focus I in I the some markets, have probably to for build added of in builders range. think would new desire tell demand is range. is renovation a in to be we the kind But saw the some a I still and bigger

that shifted can would I that I both I have they're much, tell they – both So don't say all backlogs. you percentages but the think that that have significant

Stephen Volkmann

mentioned your well. that that prepared adding industry you think as comments I And was capacity thought the Okay. in you

So could What in could do what do think the do? you be you think XXXX? new industry builds pool

Peter Arvan

A that we've little incidental heard that will XXXX not too and But challenging a – tell soon labor been it's that several so to they're you time to for than it's very – spoken tell that heard be. environment. comment. told what dealers it's that we've an me it's since can me I crews, you again, long more times, adding I've

give our late the is estimate crews. can heard can So for their But that's tell and adding a when provide guidance give of on of that are you one XXXX better most I the on I we think things wrap that we encouraging you I've to really XXXX. dealers capacity that

Stephen Volkmann

Great.

at sense. whack the Makes take if margin I And a question, may. final just then maybe different one, this Okay. I'll

sort long-term Do mid-teens seeing? just think over think think margin of I some thought your of of dynamics the we that's incremental changed algorithm, sort period. you given a long I of the we're

Melanie Hart

Yes.

and certainly still new long-term basis basis points standpoint, see a going XX our of operating XXXX. on an to of we're margin from XX XXXX. seen higher But standpoint, kind should expected base we've that XXXX from reiterating numbers improvements So accelerated points the growth into we in

Stephen Volkmann

Thank you, guys. Super.

Operator

question next go Research. Our from Please comes David ahead. Longbow from MacGregor

Joseph Nolan

Joe Hi. MacGregor. David on Nolan This is for

Peter Arvan

Hi, Joe.

Joseph Nolan

hoping just this I just there cash areas update be is point? at at Does your other to purchasing best continue current you Hi. or was might allocation to share for cash that use want share prices. allocate of capital where a

Melanie Hart

Yes.

first allocation turnover overall capital a support from standpoint, standpoint, do look very which we we that current from So well. an done the to have business,

level. acquisitions. expand spent We year, invest so than a additional look spent we've This new also We've this XXXX $XXX a past and far, year. bit traditional and completed about we've is We acquisitions four in completed XX quite and also million, added so locations to which higher more. two our

increase dividend certainly earlier to And long-term the adding benefit increase we a our acquisitions. also we from year rate that, including perspective, see so in we back once policy to after to network and a kind And the did our those continue then to dividend the company. that is to believe look at taken that benefit of shareholders. a we're various And giving share we've then very the of those accretive opportunities, all do the buybacks

that as increase mentioned, dollars share look it I in that did continue at and the buybacks we've so the current to on makes total as And going actually we'll spent year, forward. we sense

Joseph Nolan

of a you said next then PoolXXX the was I in the as believe mentioned, that generation quarter. Very rolling you. Thank of just follow-up, you out the And fourth helpful. platform, the

going Any be Just provide can you are to any that on details features that? added?

Peter Arvan

have year. very function first functionality is friendly that upgrade tool user used, and the the available that on fourth we've frankly the in the roll start much over in the we've out have started, full more We'll Yes. customers robust customers, be we already for there. already to of It's of after – the rolled it beta quarter the a will we out force in and traditionally right – search now, really

of able we're be with suggestions also We're use tool with out BlueStreak wrap goes We have actually BlueStreak captured customer, and voice application and they're to the to ideas kind the arming of really and them using. kind of kiosk kind our it the that the and counter our customer. hand-in-hand when concerns into or BDRs of a tool

investing technology. nicely the So as it are relates to customer in of experience whole we kind

certainly make suggested things and user more I So customers inclined be tool them friendly more will we them and think pleased to make to with very improved listen they the very that use happy it. that for them and would the functionality with

Operator

comes Shmois next Garik Capital. Please Loop Our from ahead. go question from

Garik Shmois

thanks. question. Hi, my taking for Thanks

on freight Just wanted to inflation. off ask first

think how freight outbound to it on But forward at it's up really fleet, if capacity moving if own or own drivers order this side. set and whether you've your managed curious respect that correctly, like I your just impacted handle recall you the I well, is demand? particularly seems all fleet you're to

Peter Arvan

it over fleet. seen where the We've we Certainly fuel driver inflation are increased from is a the it to up relates on as immune considerably Certainly, and was ago not the vehicles even Yes. was cost and our initiative year in – things But few a truck of started key creation of the the of ago, is remember, one one of we utilization. earnest if elements capacity that you cost up. years side.

still So which the the key operating but us actually to operating rates for us allow higher in on the cost, the truck. create is truck, leverage with getting absorb increase utilization

pipe favor, has delivered on our worked a team the our most our to with transportation and of driver hard on in down fuel So rate very are because cost of associated the trucks type environment coming what's products as we own know other we're that and delivered execution repair. or the that given and works in actually truck relates so overall that utilization in maintenance that and it very, the

Garik Shmois

this for the algorithm? OpEx through operating just on be leverage margin managed then gross next is should incremental normal thinking we how today any of just drop there's it And year? the to you've how just start Okay. given Clearly next a margin. about to I into going question around into just on lot strong focus with Or But leads guess it next curious Should year? there change that year. consistent my be

Melanie Hart

Yes.

the the to finally allow do to to the the compensation. see do creation that about drop sales. would margin X% be basis year XX benefit we overall on to we to work But return capacity growth to we through, reduce we our we us we've to some we normal of that percentage in growth to a have in year within to normal a basis would operating our a operating expect in expenses XX historically our of similar incentive we've will the as point would continue that point kind as And talked expect improvement. that to what continue that also of on seen where a leverage So normal event would from or return X%,

Garik Shmois

your maybe Got it. some capitalize incrementally on like players full. it or or compete looking in year? scale, activity is stepped And sellers pipeline lastly, finding on maybe just a is pipeline smaller the themselves just just with are – so bit M&A unable even maybe the it to wondering strength more are seems curious. the just activity But just remained if I'm environment, up you're full market Has seeing throughout the on to

Melanie Hart

the seen the much have step coming. certainly that some changes interested because tax a of We gotten Yes. are pipeline from of of more them up perspective. seller's pending have A lot

come statements through. do they we them evaluate a to And add strategic believe would value of standpoint, consolidated as ensure any opportunities going focused that we on and from do those the take continue look a We so those that acquisitions forward. to financial very overall

we some evaluate we at So that acquisitions. criteria do as we have look specific those

Garik Shmois

luck. Best of again. sense. Thanks Makes Okay.

Peter Arvan

you. Thank

Operator

from next ahead. KeyBanc. from Our question Zener Please Ken Instructions] [Operator comes go

Kenneth Zener

morning, Good everybody.

Peter Arvan

morning. Good

Kenneth Zener

be time kind interesting Pete, to I So asked a about quarter, last you stockouts. could distributor. of you talk this

products, around. you lot a move can You have give to of a context. want you products I little just

that's paint. They and they constraint. put to single-digit, chemical get material very couldn't sales the they missed said right, [indiscernible], sure make let's So into clear high in their

about was kind material, think trying market as trying think that very got of business it grow the business there they're your but have? share, had that's is strong question from of sales And right, the market mean nuance delivered, for the you reasons. you had So just and the so And couldn't that grow? did owing stockouts. really, lost any into business have think I two as could parlay the working I'm versus market what much to how to One to your you you might the I'm

Peter Arvan

vary It's stockouts – Okay. Interesting question. a by product. really

would tell different So answer. a you it's – I

instance, we for relates chemicals answer different talk we it as to a stockouts. certainly if So talk Trichlor, there's

rolling didn't as facility fair allow anything of wasn't move As as took many stockouts they other. we And that net of as we to customers have I to mentioned the had and had We there the I the if Trichlor, around it had. with choices, customers go of care product, we – they a) in and cases, have from had, to to my we tried to relates was be were are down… which and We people customer product the one we then just take stockpile most see the move in else answer else nobody couldn't a in can it comments, had, case it didn't has short. they but then we couple whatever if they situation, Trichlor, In it. someplace

Kenneth Zener

you to guys? from on really basically else, it In filters, to be out my it, or else it But was could were someone neighbor could different. Right. someone you? issue to because always Like, or that Like, different. I have you for [indiscernible] explain anywhere? just to equipment, example, very pumps they that you it broken if could so had didn't was so but an Was his sounds not just pump he go But it get for loud.

Peter Arvan

and customers value the values may we would in of the our provide Ken items short – say had that is were in I is, not have one just it What we is from the that in biggest vendor. it some short we manufacturers Yes. those is early certain in that were that in the or the net supply I may another key one another. it's on season alternative location, another exist generally it doesn't then products in and And like but industry have cases, there if

and pump, may pump So C you, frankly, like asked you said – and you, have I not but you excelled it chances market that use which the multitude than of of the that in we in up running we the didn't we in vendors still unable And with we the said, a) but that wanted available, have can those was wasn't was had will and anything pool. that and that you facilities need you D – to A, it offer item to have we we area general. B, because were it and cases [indiscernible] offer we us have the virtually produce water because to backed then you your on it's the A, out we for another get get that's your don't product. sold better particular hey, a up have anybody having But we compete and if vendor in pump wanted

there you like were some wasn't it cases. and I an have we we were our time was cases sales have So nicely not we kind said, the we growing that had same have better I'm offer in may have that but alternative, to fact the specific given you the up where anything in a the that product don't solution and flexibility customers. so the offer a shows inventory to at power of market to sure most

Kenneth Zener

be enviable very a in. That's to position Yes. Right.

As your like to we you that and heard mean I rebates rebate moving cost, to are the obviously or any you're it given your there stronger? – you'd dynamics also that large part you getting reflects your things. partly volume much me, should but Is are reflects said guidance, call cost of through your having? how margins you that sell, out

Peter Arvan

are for certain think of business calculation certainly part I programs. volume-related gross the the margin

So year. very are good having a we

to the gross So margin that is part reason it stands of that enhanced.

there's year have we work next the starts again a next through that. new program Now again year to and year,

Kenneth Zener

human busier supply Right. burning of handling How pool high your probably not all kind the handling them? you very the here, because rate. market? facilities are I wonder are one they're the you going the down given in your level out to of How operating are now the elements that on at right chain of a employees demands

Peter Arvan

team operating met, four really If and so safety, anybody important you that you growth, from employer the of you value that is It can't there's And those buy profitability that create My those the from choice. that I told are is around they four what can else. things that there's that you get me we other nothing – simply employer of and difference. remember, products folks from makes first choice principles can buy the makes when you proposition things. that

appreciative in they've and and of are our to dedicated that have to our And customers and of the to couldn't an what be order fortunate, prouder facilitate team. frankly, extremely results very blessed hard more We they and very results the accomplish for in, to put I ability done. us have the to work accomplish dealers

So very we we strive of to employees good have. our care take

we were well – the incentive I telling mentioned significantly that is think some bonus compensation, which it want year program, this savings, our compensation, year-ago, could of be whatever you operating up to source Melanie and incentive call sorry, will up. our a cost be our you

taking that more not the together this of to it's have, we've engaged. the think year the bounty And money, and of So are workforce and it's recognition with us sharing we than and of it's it the folks, I has about about have us something behind And we're we efforts. we done keep that terrific done. basically that their appreciation just ever results but allowed

Kenneth Zener

target expressed much. if i.e., signal not you that which rate, survey give the a chain, we're when a units. you XXX% Can for backlogs why stronger pool you is want very a conducted, right, distributors dynamic not the ordering context little Thank just question. the everybody you're perhaps also through everybody feeling be for With and XXX over look right, for XXX, think little really they the that's manufacturers that capacity Last they're way get are a that little wrong smaller that. our your Thank ordering bit, meeting through you might seeing manufacturers not we to sending over there. distributors you from

Peter Arvan

Yes.

to pointed it in a have context if her is up are that down. is dollars days, inventory Melanie out in of keep But I think actually you the days bit. what in inventory look you that, at our quite comments in

sure and really true that getting around have what the So making is about is place. we it wrapped signal demand head your in products

from amount you at a through and doesn't all at every frankly, wow, have XXXX, product we're just on you the the give so really crank the the because simply if at very the to XXXX point, flexibility have it forward terms concern much time me product balance customer of, too on we allows the amount going going because moving all of the season, our to order I'd in how have through strong, air keep sometimes of much side really on the this season, that and high product, to it they side it of them that has on the the rather one that needed the work of our is the huge of productivity needed. to they dealers back That because good right, or complete and turn to much look is them. that they job drain part on maybe XXXX need the demand have mentioned, whole that simply a didn't they is go for into way Now backlog, signal work as amount today market they I the

worked that keep have rate as a we So make going. we've fill very sure of that time to them first hard on to product to much allow

the dollars, seasonality again, up is time be the given prepared So from that and for we year the that this to should XXXX the ramping given season. inventory start be of

the So product it. because that's amount go certainly with through I'm not of concerned really will order on we

Kenneth Zener

very Thank you much.

Peter Arvan

you. Thank

Operator

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

Peter Arvan

holiday we everyone, together will all you, We your be will support you that hope because and you a happy and season have XXXX the full-year we be day. for And for will XX, XXXX. guidance where for for thank on Thank and we February you. wonderful all fourth quarter talk today. the XXXX, time our and Thank safe a have outlook results next us and you hope joining reviewing on providing

Operator

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

disconnect. now may You

Pool (POOL) 21 Oct 212021 Q3 Earnings call transcript