POOL - Earnings call transcript Q3 2024

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Operator

Good morning, everyone, and welcome to the Pool Corporation Third Quarter 2024 Conference Call. [Operator Instructions] also note, today's event is being recorded. At this time, I'd like to turn the floor over to Melanie Hart, Vice President and Chief Financial Officer. Ma'am, please go ahead.

Melanie M. Hart

Thank you, and welcome to our third quarter 2024 earnings conference call.

Our discussion, comments and responses to questions today may include forward-looking statements, including management's outlook for 2024 and future periods. materially discussed differ may results from today. those Actual variables cause results actual regarding discussed the to could and factors projected Information results that differ our XX-K. in are from

may press reconciliation of Investor website non-GAAP measures we In release, non-GAAP our to key release presentation brief on included in investor points a Relations otherwise any from summarize within quarter references on all our will A and XXXX comments. call the be financial included prepared financial posted addition, have description we third in stated and website make our Unless in third comments. remarks, our again, to press measures section. Once versus to XXXX. corporate our our comparisons quarter refer

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

Peter Arvan

good our priorities. Thank in performance on maintenance-related today, everyone. morning, results, quarter you, highlighting our Earlier Melanie, progress third continued solid we and strategic sales and our released

this dynamic continue efforts as Our last the the quarter to coordinated results with expansive distribution peak market exceptional customers' resources our offerings, network, the our versus saw extra experienced during outstanding season. trends reflect year-over-year to our enhanced year and critical sales With ability ability tools deliver day expanded we quickly last. fulfill similar quarter, economic our outperforming conditions deliver declined and and service has experience during through product an team's total past we industry the and third customer our years. In the over our the few X% selling as needs an

a portion entry experience of steady see sales generated to while prospective hesitant pools our from buyers resilient. to pool demand mid-level consumer. continued business on while for We remains product discretionary the pressure impacts maintenance offerings higher-end Our growth,

several of to and on POOLXXX strategic label ecosystem. capacity and expansion, creation our great from our growing our sales increasing pricing have made adoption optimization priorities network progress private of We product

detail on finished margins in year, construction statement. our from income initiatives, progress operating $XXX.X her the XX.X%. on diluted of on margin of to in produced a We commentary. From product will of and earnings $X.XX Gross million structural and operating remodel. signaling ASU. drag we this prior headwinds $X.XX, more to income line down margin Melanie Moving our the per mix with tax go and generated considering financial a profitability renovation including new benefit from in share especially standpoint,

a as back and also positive showed base. is cooler spending respectively, in seasonal there. Texas post grow with signs sales Looking sales up by was well trend, which flat, at a is demand major were of is sales it This this is year market to cyclical geography, installed Florida first underlying from encouraging sales by we to standpoint holding first the saw in the areas very Florida's of encouraging. growing slowdown X% support one Arizona that a somewhat which look positive this in that needs I which during a business. experienced the quarter rain business business California helped temperatures down only Horizon they our XXXX. had overall also the created excessive pool X%, headwinds If [indiscernible] and at too were X% Texas maintenance for by discretionary that sales heat, July excessive impacted and Arizona, reflecting adversely weak period. impacting key

of of business, although makes XXXX. is flat. weak with of quarter with and a consumer is area commercial slightly This the sequentially. up been has maintenance a the to X%. XX% approximately down tough Europe's what finished spring the net improved construction XXXX. market it stronger, last comprising we of quarter business, challenged sales. Europe sentiment the Much remodel part since Horizon, business the reflect in remain quarter and cautious Residential seen the a in relatively fourth environment. year Horizon's pool consumer the due much season smaller For summer declined in the behavior third far sales peak to compared and so period to the X% challenged better Similar and the macro while third likely quarter construction demand portion more will have with results by impacted uncertain consistent usage and pool be

cleaners, projected market estimates recovery Turning design a to this by customer by increase with base. demand the exceeding tools past. Building our building a than than and Chemical of results X%, the environment, growth categories. this encouraging and our sales, reflective and products our with which increased market in and exclude the remodel relatively X% bringing product sales we finish bolstered consistent mid-teens over Chemical supported is broader our the private stable, decking selection volume construction of better seen year. -- in XXX lights, highlight unique dynamic given NPT showed customers. Equipment builds quarter, while decline ] the have remained products and last for which X%, of pool pool material and offering performed installed has building for of for the solid showrooms, pumps, better power increased [indiscernible] [ This a X% label our Materials quarter, chemical filters. pricing product to our electrical our market tile the and industry new heaters growth in overall sales in new tougher

in Some of is this nature. category nondiscretionary product

heaters be sentiment. and consumer and discretionary lights more by like However, impacted items can

value commercial As the combined season. these the retail X that summer, are and showing season. and support these in strength markets, represent holding strength independent travel realized from market, we discretionary increased sales equipment continued that the the have mentioned, quarter dealer been pool through serves what community the well X% market. sales we retail ] of increases declined The sell-in to installations wholesale up quarter, during which our have second our of DIY Xx saw Sales our product with X%, new lower retail the [ even price to the swimming products customers to end reflects in our service, and the ultimately trained aftermarket our construction, retail provide during pool channel, sales roughly improvement with our that teams offering spending. In the are

franchisee Pinch Penny, year-round a offering. For and flat, sales customer by boosted in product were strong premier to markets their service A customers store and end presence our

POOLXXX for Orders digital on to We our the of processed progress continue XX.X% our quarter. platform BXB increase through our of sales ecosystem, initiatives. make POOLXXX of application, total foundation the

POOLXXX metric a have of application similar this test meaningful retail independent POOLXXX in extensive debuted we expanded began. to year we provide with industry. this in brands before and that progress private the early label our tools, software tools, proposition time. Beginning service matched water innings of cannot incredible footprint, we in suite just most our the We is both which While product are a value our this in be introduced consider growing measuring inventory we our combined at the embedded our believe be year, customer-facing when last to developed customers earlier season and the that introducing

we early are As game. the I in mentioned,

add customers. provide We that be as hyperresponsive for adopters features our continue on support we commitments to early the sure to we deliver our and to innovative scale, that we

dedicated to team. the show, on our taking During we road a POOLXXX country journey directly tools markets POOLXXX our via around training and customers the a the in key embarked with quarter,

our and new with showcasing customers. bring the It's to many role connect see to their played and solutions. and incredible a and solutions, pool enthusiasm Our our employees' software crucial our awareness value to exciting teams excitement professionals positive in our innovative they generating responses so dedication around programs

us Combining the share trusted cases. for trust and customers and Our been with grow future. have decades introduce in to into relationships to customers are grow many is pool ability software capacity their while our with enabling relationships help supplier improve deep their innovation feature-rich and as strengthening knowledge we strong to our industry

track me goal let opened We openings year. XX to quarter, to centers our activities. X, our openings on sales well update you Now achieve bringing stated our this new year-to-date X of during expansion the network on

Our franchise with Pinch new stores. year their Texas the bringing franchise X to quarter network A XX ending Penny market, openings the in far a including so total and store strategic this of XXX stores, X added

swimming see performance. share our through shaping We in the of how be season we per Now are from $XX.XX, diluted ASU. of outlook, fourth the remainder $XX.XX share let expect and would estimated maintaining the quarter earnings guidance sales to Considering our me our full year range to peak line results including benefit we pool year-to-date the fourth updated quarter up. year with $X.XX

we the potential X,XXX new the still range. pool pools full impact quarter. believe XX%, construction last Florida, For the fourth construction on fall approximately were includes where to This year, built in our pool decline in within but year, storm closer forecasted could

We of for will remodel the of guidance would new the and activity, it Given construction not the repair pool be XXXX similar in new of line of Florida. in the the damage year. activity see markets for previous balance the with levels construction likely storm to expect for balance remainder and we is

overall and Florida, the repaired. are believe with business, be exception will it For be we of steady, damage where pools activity notable as repair higher the storm maintenance will

damage third We that ] will fourth in in Hurricane facilities quarter [ fourth Milton quarter our to ahead help season our minor we operations remaining quarter ] so Florida. [ created in busy sustained Given the the short-term the could of markets. in the Helene restored and business. maintenance seasonality, only the in quickly and repair our disruptions a normal to be less with the our [ contributor ] damage of customers Francine

gradual ahead, as factors consumer and home and continuing home stable Sunbelt values, interest a several encouraged record such remain Looking easing. rate migration we levels, economic by resilient equity

favorable pools with one positioned still broader and now the in desirable industry and the We outdoor stimulation for capitalize future. very living are dynamics housing market growth expect and years. Swimming correlation coming in setup better a is opportunities to healthy no in that and on the

is the we period history volatile than growth, been closer past have rapid XX% compared followed a bigger normalization. by XXXX. lower to discretionary Our believe with but to it spending, X to industry and in of The years coming XX% is industry

in an partnerships, the products, the and provide providing to to greatest product is variety business Our need the need, what our of customers and extension our innovations it they of as market. network integrated our when allowing latest the us customers' industry, to bringing vendor most cultivate largest, serve

of experience in and day. and believe business we are to with their market periods improve We getting best the growth we grow normalization. elevate us leader, to and the positioned share execution both stronger our efforts customer make are help operate clear Our every disciplined

did an Hart, our Melanie part to and call for could and extraordinary not Financial the over passion team. We'll now would I be be our experience call to her Melanie, Vice amazing, commentary. knowledge, Their over and dedication I thank I remiss Officer, turn be the of customer prouder creativity for detailed turn I Before financial industry and President Melanie? the if such not Chief once are and again to team. incredible

Melanie M. Hart

Thank you, Pete.

Third year were quarter a comparisons. in year-over-year to XXXX billion, see prior sales continue as maintenance $X.X improvement trends to decrease compared X% an sales

of As weather season the the year-to-date increased half. first through are comparative trend end quarter over warm second trends the improvement chemical and through an the with consistent the saw usage. The

extra The sales third changes pricing year. during decline commodities. quarter. lift quarter X% noted the X% second pricing as significant X% a an a by chemicals From in provided other product Inflation no offset the compared a saw we on benefit and from standpoint, included to selling that day was we a last quarter and equipment

to adverse impacts remodel margin impacted Francine X% quarter was sales as customers heavily and more our third the discounts. ] effect. and was sales when mix to declined Helene pricing lower levels building exit consistent occurred sales label volume-related by for growth the The higher in lower same favorable the of expect to seasonal our season. from and construction it growth pool and to prior annual we sales larger less approximately included higher and year. and sales New typically affected the third while [ typical Europe compared had volume-related higher-margin X% we offset the tightly from compared negatively No Hurricane season and have that the supply material special for X% purchasing controlling we were selling quarter. Gross who fourth actions, that of during quarter noted together levels, and sales managed were as for customer Horizon mix by year Positive increased wind our peak total year, costs with combined chain we customer had vendor as a lowest activity. Last material weighted last XX.X%, gross mix. Product down of $X conference quarter We was to year, margin on private third including with focus see incentives quarter as momentum operating year last selling mix million XXXX. expenses peak expenses product quarter sales in expenses by of a associated chemical patterns the occurred we activity

expenses those QX will to expense this compared year, result, year. last a an to QX adding increased expectation As impact in

During for new accounted X% which locations [indiscernible] the a total X year-over-year the X increase year-to-date, center quarter, we opened for expense. in of a

see to our reflecting million, million more down quarter. Interest to X%. value-added [indiscernible] out earnings was $XXX during of down was with X% even on buyback income million compared rolled from down technology or share the $XX.X the year-to-date. continue year outstanding to this year. X% in investments quarter, million shares $X.X also down Operating $XXX QX due compared quarter $X.XX We share due expense with $XX outstanding quarterly XXXX, $X.XX, were primarily lower to activity of net borrowings income reduced progress Diluted our per prior to last million, features

the customers balance our totaled business. and support continuing days of efforts. we less turn accounts reflected X% cash $XX Quarter $X.X reflect year's XX.X efforts inventory with stated reduction completion our billion, their last flow, outstanding collection third quarter, to noted to from As excellent than last to inventory or million XX.X our sheet our work days quarter, that compared of end we as we to receivable which days,

product continuing hand and year, more cost conditions, efficiencies days in focus supply with inventory our our than our normal We inflation X locations inventory are added on prior inventory acquisitions. under days even lower new for current on trending and resulting

below a $XXX debt repurchasing of million our total $XXX while the a be million, we ratio We X.X cash We to debt quarter lower shares Xx. of leverage range compared year-to-date. to generator slightly target continue strong last as reduced with $XXX finished X.XX, million year, totaling to our to

date we our and extending XXXX. million amended credit capacity the facility, to our the During from $XXX increasing maturity quarter, $XXX to borrowing million September

strategic debt low capital working excellent significant arrangements current as of our reflects operating million management, borrowing capital year year-to-date million $XXX of compared resulting reduction cash net we from funding leverage initiatives. Cash through income we of from year-to-date the Prior from which end stated inventory have quarter provides XXXX, at flow in XXXX. XXX% cash third flow growth completed a third and benefited realized goals, reduction and quarter. to priorities the increased Our continue activities flows to capacity higher benefit operating inventory XXXX our of $XXX of allocation in

our part our typical under we receiving [indiscernible] business, our resulting with in As third a the of will increase quarter begin fourth an from expected in inventory programs inventory quarter, to quarter. in vendors purchase early fourth

be now have will by also payments quarter timing cash Tax for fourth impacted a December quarter, of third XXXX. payment a delayed are deferral that for those received also estimated flow We in quarter XX benefit income tax quarterly until The paid Hurricane September of February the Francine. XXXX. due would payments first in been

new network. our center date. fully expenditures, locations have to utilized added million have including been capital We acquisitions sales centers sales X The on opening X into integrated through the $XX

we completed As reduced million total still million under $XXX noted our year-to-date debt, share in $XXX share above, and buyback repurchase remaining have authorization. outstanding

pressure under wrap will seen quarter up we expect year for built trends still have fewer in pools versus expectations discretionary spending XX% year-to-date. Sales XX% similar top our weak full we from remain we to fourth as As as XXXX. new include environment continue the to line the XXXX, a

and in impact. quarter the net year on will impact much for be extra be activity for will weather of impact new activity to quarter. The fourth pool as X% dependent the down expected given builds restoration less labor lower as day the XXXX may fourth selling quarter range that in X full the than XX% X% the and mentioned, of sales of the be less and is have additional also year to a days Florida. in land Pete end As full Remodel a than the the can

so by For year, other to this an a benefit positive year, similar have equipment characteristics contributing ] overall far with seen approximate product what full providing on to have chemical continue at expect prices we categories, a deflation and the remainder levels offsetting we pricing of the selling be current second benefit and [ remained reflect X% effect modest X%. Chemical the quarter, stable X% but will this to since positive drag year.

will levels New impact total construction and for collectively, and lower Europe activities approximately Horizon for of X% the in year. are remodel negatively expected by to sales about X% sales affect activity

Having expect to pool gross margins. we similar For swimming will would should the to gross margins gross quarter full margins quarter, the season, year finished fourth year similar fourth be prior see that year-to-date higher year have on for comparison. been impact year-over-year negative the levels hand in our the of XXXX rate reflected the margin first third from inventory Any quarter cost last lower quarter. gross we

result provide expense the conference year-to-date expense in quarter, the approximately completed results fourth quarter, the be the more full POOLXXX X%. ] quarter expense for rate estimated develop Second in closer will to technology and XX%, average in rent to higher buybacks selling million. of shares $XX platform. this the third lower increase around center period. the $XX as shares impact the fourth includes sales costs far, our ASU current last during In the the to service expect fixed on combined POOLXXX XX.X diluted year tax of X% range excluding the the These and much implement provide versus of of in $XX and and future would weighted new million our year year productivity in gains. Interest year so X% to timing that benefit. quarter Combined peak share in shift XXXX volume POOLXXX The expected our expenses, relative sales the increase for variable with is third and for the year-over-year quarter, that quarter to test, expense growth for consideration and our be be expenses investments to million million full fourth sales are with expanded the be annual investments additional significantly full [ net-standing and opportunities for we spending focus water opening operating enhanced investments, will year this share a fourth million approximately XX.X technology After and fully year-over-year. Note expected locations for insurance, such expenses will year.

confirming XXXX $XX.XX, are quarter our $X.XX realized of the ASG We and the the year-to-date. in range diluted including $XX.XX to $X.XX EPS of third benefit additional added

During this management mutual committed weak transition, softness period and during spending of this team discretionary effectively period efforts dynamic in activity. construction our to and has and remodel business industry our manage extraordinary of renovation

franchise our We continue business growth with efficiency. new acquisitions and accelerated to our strategically in of network, both technology enhanced store our experience customers' invest initiatives, locations, improving operating and our internal

We positioning session. the well operator strategically will for us the it, finish now Q&A growth. I future started turn for better our over to call we will XXXX than

Operator

first Our comes today question Instructions] [Operator from from Scott Schneeberger Oppenheimer.

Scott Schneeberger

out, to that with you up quarter I Was quarter? permits? given what about would back And in they guess, into the Or in guess on specifically -- I'll fourth with third I through trickle a hurricanes then weather, -- the given trickle next come late since want ahead? seen could as to to quarter, how there. through And think is follow I there you've any a year wanted another. impact particularly I that Florida, look more have third the guys impact elaborated the start happened lot in you but from it

Peter Arvan

Thanks, Scott.

late happened, So that guess the Florida. for I They X here's was say. third were in quarter. would what back-to-back hurricane I The

kind days bit closed little X out. we -- other and for a during my from realized the of immediately each after probably we of a was onset there pickup storm, of So cancel the couple the perspective, of the But X were that. really -- a

third the a can't quarter. In So will hit. I real any storm another quarter, scenario. that in be say we similar had the it fourth provided It benefit

we're protecting -- then and a I we for their employees mentioned, homes days little close sustained families to of couple as the damage. and are shelter We relatively and as

triage, be couple that the effect a be balance in that that been for uptick pool water opinion. The to net demand from the there a my come important a repair, would in again. get damaged the and of a business of waves I the think most I going get is which on describe maintenance it water will more is as to initial will in has storm an the and clean, get moving thing wave, is and

flooding, have later that could now of on could will that and dealers circulating. be -- right impacted that automation, depending get the water so nature busy heaters. I just impacted lights probably think repaired have and Now heat the will pumps trying It to such the are because

So repair. I experiencing -- initial think now lift seen an and are and initial on we've an maintenance

I one the noncritical another construction and say, of some I same and will come in headwinds new there'll Florida in next new create back the year. I first on that quarter, go I'll be we're tailwinds now fix back think think construction going that on the have okay, to components. At quarter believe, time, fourth comes when they the

Scott Schneeberger

years said last of year, pricing, efforts. you certainly appreciate and season, And are Melanie, where think how to where you from inventories, just and I you happy then a you market? with ago as color, more? I'm I we -- clarification are? [indiscernible] are given down Pete. bit and [indiscernible] curious, particularly the thinking in from reduction that on the little X regard kind you the Is are prebuy there about completed

Melanie M. Hart

Yes.

sales. with are current from we where level, a our inventory we inventory acknowledging down certainly more are year-over-year happy that declined are So than

as efficiency that at on and look our prudent capital. gained management we working so And

continue that throughout work better inventory utilize developed network. many to that the we our so on path. We've processes new us to And allow

that the coming carrying have out with supply the chain for levels disruption. end. with that, we quest there inventory any were won't consumer efficiency don't major of as reduction our of we so higher we And had But goals

pre-buys, some to the to of we've X% in from the preliminary next year. relates the equipment are that vendors for X% increases seen it range As

that would in owe be would normally we payments buys. those would, So bringing to on we to where those those participate inventory early time that from we prior really prior that as from -- would plan we sell we would the

the So prior to some we vendors. of of having really portion to would payments the [indiscernible] cover kind the early

Operator

Our next Ryan from question comes William from Merkel Blair.

Ryan Merkel

I to for what seeing on I'm up point? are wanted follow you the from question. on at pricing the last OEMs equipment XXXX curious, this

Peter Arvan

would -- Yes. you as mentioned, Melanie it's Ryan, I that the in the tell X% to range. X%

are Some a more. items bit little

are Some we terms about items a X% little less, think in of to X%. it but bit

that through like just expect We normal. flow channel will the

So I don't really at point. see rent much this different

Ryan Merkel

Got it.

Okay. question on And margin. then a gross

year. You're XX% approximately to guiding this

I how think about. about quarter? should to but seasonally, us just think it's fourth if we there's So up typically, calibrate think the anything

Melanie M. Hart

Yes.

higher and throughout some seasonally quarter say, full margins, of higher actually chain level. When of opportunity this margins would is XX% the And really, I quarter which third on margins, margin first long-term similar you of would -- fourth it be guidance outside quarter the outlook supply the for know, we vary kind the fourth that third at last be where margin. we look see year, gross When our are year year's thinking typically second as the this up of will about year the inflation is So our disruptions. quarter from the back and the is think that normalized being you to levels in full the quarter. with we

talked XX% XXXX for back XX% and ahead at started so gotten third we've and outlook. to we've in our and to fourth are a how XX% those where So substantially is that normalized of if long-term quarter, on margins where our our And look XXXX of kind look. you margin bridge periods, we you we were of we our both about go

So all discussed. definitely we've historically we supply chain of that for things well the where ahead been have

for And gross know, would won't I is XX% a you really fourth we is are quarter And and of seasonal thing lot be year think guide, is not fourth then other full at have with mention the in because But we're alignment margin, kind efficiency quarter. [indiscernible] built when which year-to-date we where it quarter. standpoint for you of seasonality. would long-term growth margin It so sales XX% that a the there's about, just in quarter not the operating the impact because be smallest into of our because gross does leverage. the from our third

year things top so step impacting proud kind that the of with line this we're are historical levels. impacting normal are a said, of And that are we is its of that ahead outside very the algorithm being margins. But that that -- from also the

Peter Arvan

comment one me other add to let Ryan, that.

are being would performance and time where some we margin. team's construction I placed significant look we improve the of be bets as at are. at enhanced helping of So construction pool for reflective pool we with below when margins, gross and actually a on this driver where margin we when wisely and gross gross our said, margin new the gross period, I the thought pretty in Melanie well the When we consider is look with to of happy and we're -- think renovation that us you reduction impact remodel. effort and mean, new is investments that

the we've the what happy consider margins range work So team's gross being -- XX% comment able with and remodel I'm the and on new the actually construction, been when long-term to when we pool you and impact accomplish. renovation in of pretty

Operator

Maklari Our Goldman from next comes from Sachs. question Susan

Susan Maklari

My first on question is demand.

thinking trends? the projects. Can you those is in talk ticket and contrast positive to more a Florida the some Arizona in that what as which drove relates would generally, bigger And some consumer, the could what -- had discretionary to suggest out? to quarter, I more saw during especially the you little about that comments it look what as hearing trends relates as about we we're of You it say, how bit about you're

Peter Arvan

Yes.

those it's gain the things strategic and a on the been helping last our years, think specifically would had areas several priorities I for couple broadly. Number one, even, in I are share. focused frankly, that, more us we that of say things

growth teams been of competitive very, that we So in we the Florida, a very tough how Arizona were nice the by those saw market. knowing see, especially hard working and level and very have are encouraged to in very

proposition, a I a of a that. made favor ultimately, number that efficiency, two, we I efficiency So our investments that customers' customers. of our couple value -- we a one. the continue for upon have and normalized, a that take things. It's the improve the is of our function garnering Number think to our disproportionate continue think And markets to out think share function business are customer experience I are build of and it's becoming there, the more to with

Susan Maklari

helpful. you the then about Can is did? progress think got that give how on hows noted That's some just lift the in coming Okay. the the And on you other POOLXXX Any you're there. feedback that from seeing roadshow that the more initiatives together. thing we further going sales forward? us you that color And you should

Peter Arvan

we improve said, business our completely we remember, them grow. was can value -- looked POOLXXX, ecosystem, to rebuilt this, okay, It's and We then Sure. experience, debuted complete and that a help when it's So their create what their built forward just do a hopefully customers, for improve system. our we and which BXB upon right? we

So we couple of different a areas. in invested

goes was primarily hand-in-hand chemicals, first [indiscernible] Clor test, the spa brands pool business. Regal, private which POOLXXX and The one our water the with E-Z on our

been on It chemicals. for the reception their stocks to bring they to helps uniform helps that homeowners figure is test software we've pool. It The developed what store retail the need that for the water provide is a that for water in when prescription very has primarily out prescribe. gotten good. So the our

your with is for and in they really associated -- chemical line it's big it's have specific years. decision many the that many store, very As you dealers chemical their imagine, a can cases, retail brand make for a been because a carrying many, -- brands

So changes nature lightly. not of that taken are

material dealers application, have but use, if continue pool add our The not of where are are store, at largest expand as it show continue all to because that, with very, the our certainly, more a adoption. you was dealers, been And retail you it that to line we that almost much we of look that of dealers know, can group were will, something we That We all are which specifically consistently upside as dealers of feedback efficiencies that make the to on today that rolled broader have efficiencies feedback that service getting. is procure by was also tool think we a but the the to we and be good. customers to all for companies. their that. If in our create that they side business tie able feedback service, to and sure to that. going POOLXXX we gotten very has We being designed to business, road to the We've knew wanted digital dealers have we'll So fast. slow got lots edge create our from them we're -- right tap how on out, that proud -- with with we and a and was into improving them to professionalize very marketing has their their to a grow I marketing of of help than programs.

too business. is that a going again, But well. as seasonal we're in So know, you

So the selling season, beginning just the season. selling we're really

of something at you're that most selling the for And then embark into end So out are to the tool going XXXX. rolled season, that's season on. right we that once the not companies

good, process a be that again, tool seen customers we So that of we've say, I backlog nice But that or should the have being onboarding. got opposed to and of to are great, interested we're in are and as the fast. trying

benefits allow about. care feedback well that that for their will know will that importantly, I are use talk to And we that people it, extending to as will the And which them allow business using really the will hyper into grow So new we is customers it the customers. And again, that kind as our see those operating are marketing more good. the them gain it to tap programs, efficiencies. digital of

Operator

comes David Baird. question next Our from from Manthey

David Manthey

change X X% long-term algorithm acquisitions for X% a X think about X, to X%, X%, puzzle industry out to new giving years, of that formula? growing variables pieces growth any those your there to tweak X. And then base growth, pull historically, was at to you you the X% when X% with of Or to to growth those X, all would to First want by all? installed X be I to to to X that's off, Pete, pools, and X, inflation X next you believe reason any guess, that do

Peter Arvan

Dave. to can there a No, the business acquisitions were harder. much smaller of much The us is so. which aren't we thing a don't one X% from when lot X%. I think I out a become get tell going There was would easier is you that number acquisitions,

we so will the inflation So gain, installed most come products, such. new will get from growing, the growth share base of and that --

and grow. predicated us customers, industry efficiencies when for don't us any to from the to be get upon, construction. be the cadence prudently happen. our X.X gain to on to in when pool look we'll pool are pricing to on continues year, the installed cycle value to X% a changes -- cycle things and those see and remodel, business to the us model, additional will share new going how X.X% need both in help perspective. I base operational renovation to both So or which drive of new grow should algorithm growth. This it's net from growth on it's to major share return closer operates, that we've But which one, I to base. installed closer We to normal for back our to return we X% a to We normal the a back construction, which believe to I Xx our provide to for you normal at believe going invested allow to customers, continue our continue to long-term

very I So would those front. intact. caution term, much think only long The acquisition is I are the on you give

David Manthey

the price, looking retrenchment has or time. wondering, whether you expect Or that stair-step pool ] of ] 'XX [ prices Yes. XX was continues at during COVID, the to you back do [ or been I'm Fair if it closer of XX,XXX I February, and ], coming new XX,XXX all look XX in was a said in just And And there [ just value average to to the you up. kind COVID, down, X color. at years then mix? that's anything? pools, second, is running content that XX,XXX enough. mean new year we 'XX, Thank before you ] Pete, this think? higher, for in number XX [ XX average any that component moving to to do does that

Peter Arvan

in I because obviously, things think is, and component couple that biggest economy, driven change dropping really labor. anytime inherent see wages the cost a been that's near is nearing drive I of there's construction essentially could see of entire I through of We're that. inflation future. a One labor cost at employment. the really full in pool new the don't don't the

that So would looking it's lot this -- drive not potentially for case, I for of certainly, that work of like there's work. are people wages. the that a think could is that that down don't type

also, the or not, cost on you or steel commodities, components -- in on of the see but of I the are of small the or total materials deflation is on I of of see might major the pool. might see some cost inflation much. pretty sticky. terms inflation down relatively If inflation those PVC, coming think you any I don't mean think, I the

in to that construction, many XX% going today, seeing pool would we're component You the we that to us years. is A haven't is, a built range, $XX,XXX mentioned mix end the you our number pools. pool new many, tell is being to cost seen XX% versus in and of we pool higher-end features. What I lower which be that believe, off brings

cadence, pool to you more -- down the if more have overall mix could which logically than cost, defeaturing. just total that's level speaking, to cost you're construction will, going entry pools, of the but new a normal if, mid-level simply average So returns or if to mix function a

Operator

comes question next Longbow Our David Research. from McGregor from

David S. MacGregor

private up longer ask you about POOLXXX. about wanted line about stand that of also, Any narrowing on Or private kind they with Are any while margins about we're I And in the to thoughts and talked that contribution? it, label the just expanding term line label better? this or that do around the talk are offering, helpful. Could would seeing be you've on in offering? of your you plans investments color you how environment? leveraging in kind getting that some

Peter Arvan

our we're you strategy. very is I that areas. But few question. private would go-forward focused for in good tell label the David, us very of Sure. part a important a

be that XX% the a as is largest equipment. to to category instance, business comprises product we for our company -- which So, is going XX% of have

So perspective. label getting the I don't equipment into see a private us game from

A complete the Penny, they chemical world-class essentially and refresh allowed Regal they With weren't mean, but and a we our Pinch which and packaging of frankly, lines, had We facility, the were had a outdated. time, bit brands. acquisition our ] to chemical Clor us for E-Z has we proprietary Life for longest acquired brands. I [

the on great. They They been into with They we those of chemical that Penny refreshed. Pinch heavily we to acquired those. and we're look have brands, have So knowledge and been the leaning acquisition refresh rebranded. the A side, able were

or And We any we as when frankly, to And have chemicals, in other side. it line. allow the service continue retail it's to more space. Because in share much the will product on that you the important they're gain than a market. that complete better us brands about as than think think is on side good on

market compete net it, is is side, are ], nice which portion right, and unique, component On filters for work where, has we bigger Pool of which long availability component have a provide it, day share, best a talking to pool us Pro is they're that works, every brushes we which to management the bit an brands and the that cartridge was that and on those again, component head-to-head more is industry, side, the opportunity the service also servicing really us footprint. there of weaker in some with There's are the and just all tools, can for parts a the a a of continue brand it [ in about product poles, to provides right is the are continue that grow selling grow. that complete, and to historically being opportunity to retail something a well. Where great part product Price is us a big -- as on very our our bucket products, chemicals side, that those or a bring in such, it, you're independent side refresh of and maintenance we essentially industry take that. now the of some checked to thousands were allowed boxes the think stores we whether product leveraging buying big as of and location not retail of is biggest

talking enhance From have enormous with help in tend X very margins to transactions into almost, grow other our accretive. margin face-to-face the branches, than better the we total, are have which and provides transaction you So line we opportunity almost XXX a about the had customers' we very an when forward. And selling we so certainly, through -- in customers locations. opportunity million business see because that for a From heavily alone over then side, when that a we're brands, products. good time. a our They're same count on going when lean the August, curated business very us at rich as our to you're product

that, for too, the business. is a win So

the to August, And to will, combine million-plus come. nice for on & transactions, and years marketing only you focus X provides that opportunity management that enhanced you many Maintenance. and we've product us had development, you through side at and product for real programs, on when then was So look chemical grow that across if a it the the Tools

David S. MacGregor

of thoughts preliminary level potential just Got where XXXX, year? million to of as aggressive going $XX it's this a the with respect early of I it. guess think next a that follow-up on question, directionally I to spending there. guess on goes? but year. just technology to spending more technology your A we spend about Are lot

Peter Arvan

technology -- it's a went never right, work bunch -- technology business year. next And did the We Yes. that different, be in think [indiscernible] the to now. going have we much we in business. year believe I to this It's of you're technologies I won't done. because don't do we're near

So accretive tools invest we our and have continue to to to customers and current us. value our keep to to

it's given would look our -- settled that major and budget you size as in a the money. our but a haven't XXXX it's early, on frankly, lot I that of number. yet, obviously I and early any tell spend scale, change not And don't So we at I see

Operator

] Patel from Our next Jefferies. [ question Chirag from comes

Unknown Analyst

Just wanted to any you're early just kind of cover if know competitive from the seeing landscape it's the business. your actions there's I SRS, of still sort that specifically, an currently, days. impact in

Just trying we go kind sense as for forward. of how to that get lays a out

Peter Arvan

Yes. it we the obviously with Thank new seen now The tell we've and competitive is changes normal market. a renovation haven't you. is would than be any experienced what I smaller side more -- really on the pool and been industry that hasn't remodel report because from would in construction past. industry really you, nothing new to

be never price value. on be and the customer on So the terms We top to to We So right? you value have the of providing on price game intend in leaders never of sell we're not leaders. sell price, your best experience.

on price. Some only the that on of Nothing with can our in they price, new competitors, is way us compete regard. that

and It will pressures be before. to demand flow competitive to the than would seen nothing abate continue but industry competitive We continue, haven't that improves, probably some. expect would expect contracted, that pressures to say robust. it's then If we the will with I I industry stays in demand as ebb

Operator

Stifel. question next Andrew from from comes Our Carter

W. Andrew Carter

storage, guess question facility. now of on believe past in about disruption. question chemical kind I volatile not don't Chemicals, to ask Biolab is There do of you imagine was years, kind next I chain. wanted it's obviously I going been supply pricing your is whatnot. kind plant There Atlanta, I giveback Do a see any manufacturers? And second fire of the you price skirmishes the couple or first question. Number the it much one, then see Where year? it's comprehensive into of from a the your

out. it to than supply have of called is are diversified? could speak -- kind different chain, years as our you ago? chemical But one much risk you You you how Are procurement just your now do Or around X supplier? much more haven't you

Peter Arvan

-- product Andrew. supply a didn't sources. diverse procures The from own was Yes. is packaging have have we for it Thank chain facility much of that our than that couple multiple more we chemical you, our reasons. Number one, today

ago. we're position perspective, supply surety few than a much a a in we years from So were better

at the by pricing, tell is mentioned down. Your changes there's to with see don't stable. any had part comments, as this some overall pricing. in that, of that you major up, think do question fairly that. point, in first question large, chemical -- I would pricing my chemical now there's the and And But I I I some first

this As far at fire impact as on the has in on And industry. it think disruption the would limited really Georgia, the tell no point, from impact no I us. you, I there's to

no major changes. So

W. Andrew Carter

of question, And at we're about we're the of second -- kind a then I know end the of thinking construction. year. that XX,XXX kind of kind new units

I where think guidance your that's is.

couple next next you any look consumers now still of helpful. capital on these need rate in make grow year, are early rates need high and months your digits that to to how whatever of year, pool but kind into Going anything hit improvements of high, long-term still costs indications that single for I that decision at you longer algorithm. Do lag to it see Or or of know down in help that a next the would could side costs be piece are high, just come or in of kind be you market some next summer? to business easing

Peter Arvan

Sure, Andrew.

So here's our what from we're hearing dealers.

are Our ringing, that refreshing because where they still in want cases the dealers underlying asking Their pools. past, us the phones want pricing had there's people some swimming for are budgetary are pricing pool. the the they've still are pricing they telling people from demand,

So that is environment cautious, the demand demand. I there would but tell still overall you still is

the lower and were happen, going down we're going I year, the market and to that's a -- XX,XXX order be back new not market, in is XX,XXX pool an XX,XXX to loosen a to more go to during about to, the for obviously normal movement But to on kind bit, we're pre-COVID which the was call, going little to much is build you side. pools you this rate -- If days, would than happen, housing of there's I to it have peak. return think little until up the talking

the the think first attempt cut I So with Fed's rate is good.

still it's again, think that. have going equity values our been I strong to that's never very home take than very levels more higher. home the But encouraging are thing from is and perspective,

the borrow. So to ability have people

a isn't and a overall living little of going more to is need to say, there on I probably sure relapse that inflation to increase. a wait I mid bit now country that in want of overall at pool the end think combination it's people are and the a would right that the causing to specifically the conditions just economic lower cost our side make

we wages -- they've time, to think seen consumable goods, if you think and accepted I significant had up. catching I over all absorb will. are And for pricing

would new to we followed I we and by probably policy continues one see would think Fed tell construction. the pool moving, monetary see we you first that would things the I thing market the is housing of first get that remodel then the if and be the loosen up, -- the pick renovation

Operator

Our from Trey next Grooms Stephens. comes from question

Trey Grooms

line of the Q&A. dropped during My middle off the

you of mostly through making pool XQ. well the October, of EPS to assume we're Melanie, through the $XX.XX So please you've typically I We're strongest forgive which through in mentioned, the reiterated on our way pretty $XX.XX. range, me you touched this. But if any the is season, month the as most

good So end you I end items guess kind of really year. some -- here. where the get could line or But range, the in this on either is, high pretty of into given question we what some just the especially low are and the color gave of us

Melanie M. Hart

Yes.

in weather -- within long So how fourth impacted open. to has the fluctuations seasonal going stay pools certainly, the the markets are quarter

of extend quarter. of back half kind the fourth will that not into or the whether So

to new pool the other rate The be is construction. going the of thing

So actually converse relates of how depending then significantly of kind the in is and pools to And construction. of labor many, impacting upon Florida that were it to to be as market in Florida. new the how going some much, those that

end be be So lower. pool kind going certainly moves low when I of end the down -- to it we're at the number of could the if on we end, low on that to look new low construction

And kind we of as We would the up market Florida, from then but of will within recovery count same speed the time to that make at building not higher see could dollar the that skew us impact ] it's the frame. of repair some also the to that in end. to increment [

Trey Grooms

Okay. was then I Got to X it's and is but I X% was the [ slight splitting kind it's And small same drove it. kind change here X%, is this and commodity with just the on think note then on of the inflation But year? of for cutting bit inflation X% to maybe there maybe the the and hairs but X ]. Again, in And change, guide anything X what the as -- that headwind hairs. [ guide. commodity, guide to That That's a follow-up, pricing overall. now was of for it to here ] know helpful. getting prior now maybe little overall versus X% headwind or X% a on X% kind a into prior that

Melanie M. Hart

slightly. significant. building nothing components The the Yes, some Also of in captured the were commodity volumes material that in impacted that pickup chemical level.

mix that's products it. impacting just then And of overall. So really the

Peter Arvan

mix Melanie in going impacts factors that trying the many a thing inflation. the of impact overall to as the involved And lot that said, so business just that be from to biggest is there's factors pin of Just down.

Operator

Our Loop next question from Shmois Garik from Capital. comes

Garik Shmois

about here. ask the to some of smaller I markets end wanted

an off you can up XQ, in positive. of you. First the broader quarter, been down it's commercial still on some speak growth maybe deceleration area nicely considering from the think the was on XX% wondering up maybe just I But X% side in trends and for commercial, if to it in focus

Peter Arvan

is too Yes. things. I and maintenance repair There's kind wouldn't two and that. read What would there's I projects. of commercial the function on into of much say

projects So imagine, the as commercial can very you large. are arena, in

if it So timing. of a is lot

invoice. work. And then the of And backlog then look when large when and they a at look the a like there's out, focus further does we it's for we're for looking us. So projects when hit commercial function -- area what it's

things by customers. our value for gain share that in to continue we creating investing in So area

I the into contextualize it's because too at read just wouldn't for versus when to projects on and that, construction believe -- I side more of that opportunity large when but it's relatively also the small. portion in small project-driven business looked there's in I It's So there that total. actually it, in still building mostly remember, much XX% a and just X% the projects, than also residential investments it's certainly encouraging terms is pretty invoice. And of there new

too. you dimensionalize kind to So of have it,

Garik Shmois

the were Yes, business, end of markets of smaller course. rate actually think, at softer I your bit Penny's, but Pinch last end in And the of focusing a then than Than But on I quarter, the guess the flat into the again, just improved secondly, just of call. apologize some on little maybe sequentially. retail I the sales here growth. retail the retail A for of part -- QX,

So anything diverging kind glean to out of of trends? those

Peter Arvan

nondiscretionary. what retail think things But That such, side. about No, perspective to on retail to that stores toys retail perspective from are good. this I side, is area more part the we things like when chemicals, our tend as a the is which the a the cleaner the to of from And business consumer, been has and Retail biggest are headwind right, store robotic discretionary. year have games a think going much cleaners, headwinds going on seen some be sell like overall so sell.

So don't have I most market, a the do. expensive. pools be cleaner. but but just have is quite to in best cleaner, the happens to cleaner It downside a you to have don't have robotic they're the

or high-end to idea a going cleaner, necessity, the So retail if would which normal of flow more to struggling than with luxury or is $XXX for down plunking than $X,XXX a that is is during have and $X,XXX more cash a impact a buyer robotic of the you consumer it times.

So good. business retail the I is think

our independent more value love the more the to are consumer, to I have I going think But for deal I also the A going retailer. value share. Penny proposition Pinch continue pressure. we to to come take health proposition. with love and the of the we're too, discretionary items under

Operator

next Sam Reid Wells Fargo. Our from question comes from

Richard Reid

algorithm, So question approach from your this a time, on ask a near-term more follow-up perspective. but wanted it

obviously it of tailwind. sounds the like less got XXXX from then XXXX. So fewer entering to will be a you've new acquisitions base pools And

contextualize dynamics the anything maybe you XXXX of to two in I think else those just might X% relevant to want plus So algo? X% context your for that be

Peter Arvan

I would would if missed number. and I I'll and on say, let I called I new in pool chime again, XXXX we -- would construction, say something. haven't Melanie

you which -- that that new yet actually think think a I'm going So pool pretty have it's acquisition have is me we long-term the And I X% we're size be things construction that we comfortable reflective hard in to when said don't to what too on what look for certainly, more the enough our XXXX over have move time. going speculate But with range season needle pipeline, terms our I at for what really new frankly, just to of pipeline, the at is it's them just I in me the certainly and see to given none what our acquisition, I it's algorithm are to be. The on and big can't to enough of is consistently don't to just very construction. normal -- information. really because back for tell to happening, XXXX -- fact return I pool of that soon

Melanie M. Hart

Yes.

we're being So kind the relates far from we're to specifically the year, where new very the to of that portion the algorithm growth of construction, out to finish going normal.

the algorithm. be to made XX,XXX XX,XXX be that were The year, around finish current this in slightly range. if X long-term to growth the So X there we Pre-Covid, get we in of would that new could to that's ahead order pools. XX,XXX us up

Richard Reid

No, And maybe and touching then QX. gears switching that's on helpful.

year-end. wanted quarter-to-date the -- in sense go for implies quarter-to-date quarter. sales to guidance this those seeing above into to September a to want the down Are I or get you below? say that for as to the fourth head that want sense those specifically, get around closer you're at number levels we for I something a levels So Just X% October tracking

Peter Arvan

Yes.

is can [ a quarter. October above is X And cited. As that you October critical of more you the the imagine, month tracking ]

renovation is seeing pool on. in as the now we're as goes strong So the that the that not on for we're is the The sure remodel construction of of new -- repair their right quarter. what sorry, offset I'm impact work demand remainder Florida

-- October the country, biggest good. think -- is the I is I But October So -- in -- the there. I I the look quarter don't think it's as wildcard going we're performing And rest fourth for well around us much pools in the to of Florida and made or that on up work. in that be impact repair the is can we the by what think the get fewer -- how be to will going built fourth quarter be

weather the far pretty so has October Now in been good.

as So well. favorable that's

Operator

from Calnan of America. And Bank from question our comes final Shaun

Shaun Calnan

on Slide the a margin X. bridge I on just had gross couple

level? And it you of improvement XXX Or expect that at basis over kind mix, then is having something we to you So a like customers improve? bunch expect that normalized that Are point supply on from after smaller the customer you is chain time? customer talk reverse normalized just you COVID? more benefits. looks Can of during had to a like this to continue a whether about mix guys

Melanie M. Hart

Yes.

conceptual is versus points, as far included as basis that the XXX it bridge, quantitative. we on more So specifically

period of through kind that I intend taken to that to initiatives, that to the as that our forward. place relates private in several actions years label, have question, from But see volatile answer the us improvement as we to to pricing the supply relates that, going continue wouldn't it an to to And our will the that. equate last we CSL initiatives standpoint. expect have that had So to take it over points we basis further do have benefit this related XXX your we benefits, chain continue

our the to be this larger we your are of question have built to where seen jobs. those market more customers customer, fewer pools Specifically in on are there winning that

our that standpoint for into have that we on so smaller And to come level those getting get with start tool customers. When we will is to more putting pressure the [indiscernible] built up pool more market. back some pools margins larger pricing normalized allow programs back do our from builders and a XX,XXX that customer because

balance so more that our put will And some into margins. gross

Shaun Calnan

line other then And the than the quarter, in were was came on lower margin on consensus beat it at just it. Got in we're I and guys the is drove sales looks think do you a so or but like see this What least Did any one on difference had us gross pricing the margin? -- you between sell expecting you it were kind increased projecting. competition? we of just gross side you that? were expecting Or what

Melanie M. Hart

relates second be that look When to last time, did, the it commentary the to as would year. quarter, similar when projects fourth in Yes. our for and quarter back at we you -- third both at that point we margin

any we expectation. that to And made changes so haven't

Operator

floor for be turn President today's we'll Peter remarks. back CEO, and I'd our concluding Arvan, to like that, closing question-and-answer the to over session. with Gentlemen

Peter Arvan

our season fourth time for you and We reporting enjoy and the Until Thank XXXX look to us quarter forward all have I XXXX. you guidance joining new holiday for initiating for results year. support. XX, and happy a today. take February then, on all your and to healthy some full our Thanks year hope

Operator

And for thank we'll with today's you that, conclude ladies attending. and call. gentlemen, do conference We

lines. your disconnect now may You

Pool (POOL) 24 Oct 242024 Q3 Earnings call transcript