POOL - Earnings call transcript Q4 2024

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Operator

Good day, and welcome to the Pool Corporation Fourth Quarter 2024 Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Ms. Melanie Hart, Senior Vice President and Chief Financial Officer. ma'am. ahead, go Please

Melanie M. Hart

welcome call. fourth and XXXX and earnings conference to you, quarter our year-end Thank

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

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

a included summarize from release have key We points comments. press on website our Investor Relations our to call presentation and

and begin our will Arvan, call our Pete President today. CEO,

Peter Arvan

morning, solid Melanie, sales results, XXXX everyone. morning, fourth we year our by reflecting and execution you, our full and earlier This released and our Thank expectations quarter than slightly better good teams.

], pressure, providing private of to label that activities ecosystem and our double-digit units especially equates spending We new POOLXXX on XXXX continues our believe remodeling in a and driving tools. to customer to development remain that while in requires consumer discretionary, and a year. growth decline compared still continued pool maintenance will which which believe business, focused and units land in for XX,XXX [ financing construction an headwind, we XX% remained new we preliminary, chemical construction growth experience, last our at approximately unmatched including As under deployment on sales

by declines remodel. the this, observed seen units we with in renovation new headwinds, the with to peak approximately most gain also a industry. the and From driven data, unmatched recent along a has economic it's have investment to pool in in declined we team, XX% in are environment. general and Considering construction our our believe position resilient by continued ability execution, value share tough proposition grown share We our best-in-class team's pleased with Pandemic-driven solid

quarter year full Now I recap fourth would like our and results. to

$X.X X% customer revenue, tremendous guidance down For full proposition. in XXXX unmatched an driven year, slightly we delivered our the and billion latest creating by value a team above in effort from

gross finished mix product year as reflecting which Our a gross in total remodel with represented XX.X%, her construction some at impacts, portion and competitive customer products the and margin of related weaker pressures revenues, Melanie margin higher smaller along mix comment will remarks. on our

of margin this margin a strategic line while XX.X% $XXX Generated $XXX XXXX million, of operating network expansion cost operating operating operating we flow inflation and over operating of higher consider cash and center investments, million, period. sales continuing in income our this technology overcoming our expanded with achievement solid

tax We EPS $X.XX share, a of generated diluted ASU including benefit. a $XX.XX

benefit. last sales total the million, quarter, throughout tax fourth to of ASU the margins of to compared the generated $XX.X share, diluted and For operating Continuing down were Gross to EPS year. margin of year bps the improvement compared million, X% operating year. per year-over-year including XX.X% sequential a we period X.X% income XX $XXX $X.XX demonstrated we same last and $X.XX improved

markets Florida fourth Breaking quarter flat, year in a the our came with saw full mid-single-digit for sales geography growth. the we year-round other in the decline year. down XX% and by while the markets. in resilience Florida outperformed showed other throughout

year-round activity. and Florida's in decline activity weather-related results, Hurricanes some following construction and the ranging benefit from markets likely to fourth Helene quarter. renovation the provided Remaining storms replacement Milton X% sales saw delayed some quarter X% and but Repair to

pressure, while particularly products and sales held saw maintenance-related year, construction-related well, the throughout California. observed we what Texas to in Similar up

sales maintenance-related commercial for sales quarter, improving X% irrigation fourth came X% Stronger we the volumes offset PVC for mostly quarter. impacts, year the net in which and Horizon the flat construction activities. with and for the an in full Horizon, trend. encouraging for declined projects, fourth softness deflation pipe Considering a For residential along consider

the fourth improvement for during X% quarter. and year declined year-over-year sales swimming in in sequential noted the full We X% the season pool Europe, For Europe. XXXX

and On product our X% for the categories, sales increased to Chemical quarter. in the fourth year X%

cleanup As Fourth our the Florida continued installed but label efforts grow across private to show quarter mentioned, by greater mid-teens growth supported sales the the to Chemicals overall than growth were sales base. in in Chemical our increase ability lifted overall post-storm business. in

XXXX will At for the introduced more which branding best-in-class marketing test chemical winter industry branded Complementing and plans, we new products. strips we demand our these even unveiled create also shows, work drive this, will the with which is dealers for growth to for allow proprietary will season products. new app, us our that private additional our through and consumer our label

proprietary These and declined fourth pool our sales our to decline -- expertise NPT results our tools finishes, expansive value indicators Materials offering -- strong builders. power provide for the to Building living quarter, XX% or the our and the the of pool support in superior and X% our outdoor XX% branded constructed. in tile new our full the and are model year estimated provide that units considering to

fourth the up Equipment year were exclude sales, which X% the cleaners quarter. and for flat in

Florida. and demand included period, activity but recovery in critical remained improve maintenance-related Not our chain to heightened throughout during vitality inventory on equipment year, the very rates steady, quarter reducing while worked this and repair with teams fourth supply vendors our closely and only fill hand. also replacement days As expected, the

solidify customer needed helped are needed will when effectively deliver they in have deliver better experience technology most. we invested We people products and and that processes and the confidence that a

Turning end to markets.

the to full continued with X% growth in fourth sales year for product both pool grow commercial Our quarter. and the

position in us take technical in invest to continue share We a capabilities allow very to market. a larger that

include which talent continue inventory commercial investments, will expansion us to in delivering recent and allow Our acquisitions, growth aquatics.

Penny the the full but fourth year, retail their end up representing -- the XX% to Sales quarter. the customers increased sales and sales year in X% our for franchisees' A to independent quarter. customers retail in in X% for Pinch declined our were X% the fourth

pinch been Florida, where have the throughout customers stores amount end XXXX, storm-related in most to sales of repair fourth steady in occurred concentrated franchisees quarter. the activity a significant are replacement and While

Orders POOLXXX compared in the XX% fourth at application XX.X% last to through increased the quarter our BXB time to year. same

indicators product As improved we our most introduce of WaterTest success and POOLXXX consider we POOLXXX to the versions tools, of the private utilization new this early and be label sales and and adoption meaningful service in applications. metric ongoing of and tools these chemical

through in XXXX chemistry spa X dealers to over pool water recommended to pool and million balance noteworthy, our Also test consumers water. product applications our

we their service long revolutionary grow their term, the and ours. efficiencies as create Over productivity in customers our opportunity maintenance see and in operations and POOLXXX a to help business

acquisitions, focused added expanding new tactically through X XX remain more count opened XXX locations and our We to widespread fully our integrated on we almost sales and XXXX, total center sales In bringing network. centers.

network stores, Pinch added a stores. XX for of new Our Texas X year-end XXX total franchise in A network including Penny

for and developed capabilities, Sunbelt. With of end the first the our our store weeks growth this Penny XXXX, in both we and to support coming future expansion capabilities Dallas the in distribution Western as Penny points Pinch additional and distribution A network, in will market Houston. of operating our has Arizona the market open have franchise in growth continued specific and Pinch the of A added

our frame to view like outlook. I'd the XXXX Now of and up market

further a share and Our XXXX, capture experience. initiatives weaker our on grow work our and in available differentiate business discretionary results strategic new solid teams maintenance-related delivered environment, customer pool in investing remodel steady our executing both spending while that to capabilities in to our and

are Our the likely benefit our near no different rate term. dealers is expectations involved, industry we for in to But solid. financing to and remodeled when inquiries the discretionary new are The present consumers interest pool macroeconomic Having said XXXX remain current is outlook continue our communicate under construction tend believe not on hesitant. to conditions. this, projects

from In installed we we the some in growth steady, and in an customers XXXX, XXXX our unmatched aggressive providing to meantime, and inflation continued modest customer be market remain increase their offering in As product maintenance-related business the gains. share grow expect potential sales base, helping the experience.

our top expectations. Breaking line down

to sales slightly. components X%, X% benefits growth relatively Growth maintenance-related include from of sales total XXXX growth to and up be product market expansion. continued expect We flat some to inflation for share

we Moving of Currently, our units to construction relatively flat. expect business. pool new be the discretionary to in portions

to While remodel the quickly around market. in XX,XXX unclear units return and uncertain the dependent most bottom, the may to be it economic Renovation close be will entry-level markets. consumers stable should activities financing makes environment how

opportunity growth present X remodels we the project past of projects more highly lower remain the time. will separation scope, number have indicating comprehensive at in been projects the of a Deferred improves spending. economy pullback be cautious for likely and a featured remodel Over but years, as

is per plans per our assumptions on factors into in into these Taking share Melanie capital details estimated the an $XX.XX earnings prepared XXXX to allocation her for consideration, and our remarks. $XX.XX go remainder share, P&L ASU guidance will benefit. $X.XX more including of diluted

products our XXXX, new we're us those business. growing the for pools operate day. and developing new ground, and sales every our pools our and products to we differentiate into to Continuing in Looking upon creating go that industry the for grows value to that fortunate out footprint, proposition beyond demand itself. productivity expanding instrumental improve tools year, an customers our in Each technological sell are enhanced invest introducing growing in in creating our maintain

the pool continue on all through can focus base, and our service franchise, professional, cycles. DIY Pinch incredible grow our intense and builder the A Penny share dealer our through markets we serving economic to With pool

thrive. home position technological long-term shortage industry the population, a millennial support growing Southern emerging to a advancement long-term a as favorable growth ] and living Gen growing that and migration, [ housing outlook. Z Additionally, the outdoor factors buying continue

billion, a As its see our and of integrated their has of revenue base have the growth productivity. on to $X acquired that grown we technological enhance expanded increased the utilization accelerated post-pandemic, repackaging and significant retail grow customers service cycle emerged vertically help network footprint, develop company tools growth its by and plant, from increased franchise strategically a margins, I a reflect chemical and how I both

they with combined and them, their grow system unmatched us business. when differentiate us Our throughout ERP allow with locations need expertise products customers along fully and our they provide U.S. widespread distribution the to central integrated efficiently to network, need, them help our X shipping the with

anyone in the and integrated We are positioned more strategically else and larger than industry.

control thank POOLCORP want up, our to pride. propel As vendors. want also I the can gives thank Their I to adapt to I environment they focused ability great our and me to wrap dynamic especially what on team. forward growth their

truly Our we partnership. industry is and commitment value to unmatched, the them the and

want reap the to Lastly, of I for thank living. homeowners helping outdoor customers our benefits

call over her Senior Vice the turn Financial prepared Chief now remarks. and to Melanie Officer, will for Hart, I And our President

Melanie M. Hart

a our I'll and you, Thank today's XXXX fourth Pete. start environment. highlight XXXX based then quarter with plans for of our discuss on accomplishments results quick our to recap

Sales reflecting fell X% into down beginning in decrease quarter, the a therefore, December, year-over-year the quarter having where in quarter. little year, the included and quarter impact overall an X% to continued improving were show the second, on third an for of trend X% Fourth in the additional from we selling the first which X% results fourth quarter. for day,

positive prices offset the to a was approximately and X% in we net which sales. quarters, and by third benefit, lower maintenance on primarily contributed commodities in lower an estimate levels X% products. and Florida, by X% we commented Pete last comparative in be of Similar and quarterly decrease inflation had same sales, Sales impacted chemicals year. outperformance realized selling saw repair an pool second to weather-driven, volumes positive pricing the remodel for which the construction benefit new to estimated by the continued over in mitigated activity, quarter

of mix year, from with centers sales XX.X% of during costs to dilute expenses year lower of to increased by continued year-over-year have throughout seen improvements certain sales Building the and the from by million, opened over supply third our Including Product what Gross margin quarter Materials operating pricing and last the of quarter X%, prior were chain fourth year. we new was investment. margin XX to similar XX.X%. XXXX, timing Fourth consistent related shifts actions. year or incremental the technology quarter of $XX and balanced

quarter in margin million. was Operating year. in $XX share $X.XX of was for year operating to compares fourth of prior XXXX. per income income X.X% X.X% $XX to Diluted compared quarter, Operating fourth million of the prior earnings compared the quarter in the to $X.XX, the

lower a We year managed are spending. levels full outcome pleased pressures of our in and with that results, year with the the macroeconomic of consumer XXXX and business continued we the way have discretionary

to our significantly footprint of to to by sales This up and profitability and compared historical and commitments long-term expanding We choices continuing maintained even the the customers. on stepped results, technology contracting our services make to operating margin, to XXXX right accomplished the our company. to was growth our focus

in Solid generation with working capital earnings, reduction management, our million. to almost inventory, excellent $XXX flow million propels combined a operating $XX cash including

centers. Our dividends stores, capabilities capital sales and increased ecosystem, allocation greenfield to Penny A debt in reduction and sales included X million Pinch POOLXXX returned acquired repurchases. XX the year $XXX share franchisee a through shareholders for in $XXX centers XX and our new million outstanding

and X% over the Net represent our decrease and $X.X space. approximately billion of sales primarily pool decrease the estimated spend. new living renovation decrease leadership remodel to in XX% in outdoor in The full XX% by continues driven units, position sales construction was

sales top of around or pricing of in the product by X%. impacted by overall of an from pricing growth the with pricing Maintenance have very and X%, pass-through volume X% benefit. held and realizing increases. offset ahead up positive net installed base Chemical X% these impact commodity line pricing improvement vendor overall the Collectively, about well pools, cost

where overall Europe the weather and around for the at has and quarter resulted new XX% closer X% that full construction. additional fourth Unfavorable Horizon compares offset items, new product sales an an been to XX% the Lower our estimate than year. remodel, in in This year sales and XXXX, products, construction part for renovation renovation pool and XX% first full of was for the X% of to XX% were projects. maintenance the maintenance We less breakout XXXX decrease. used remodel for XX% XX% pool in for during impact

in Our the construction XX%, we a our finished sales for pricing. less for as market, Building in negative product the and new year remodel decrease overall products track saw of even pool including Materials of impacts down use

seasonally. gross margin approximately XX.X% to believe XX% realized XXXX, achievable expect to vary is and continue year. long-term achieved gross environment in a We that would industry in for of We XX% a the normalized the prior our target margin to of compared growth that

offset our of increased to levels new to compared incentives. mix product impacted from customer customers larger a represented reversal Specific positive by and pricing better smaller return volume related margins. normal XXXX, XX% mix realized of were taxes, product the for recorded overall XX% benefits, In fared sales, import and our fluctuations mostly lower contribution XXXX of purchase-related in private our customers label where negatively Materials changes, to construction than gross chemical mix in These XXXX. a Building to sales as percentage sales previously of

levels much to in managing XX This after consistent comparison of XX.X%. margin impact of at profitability operating maintained in cost XXXX margin is while was sales basis points includes higher our XX.X% incremental a we the contraction of have with Our technology, or operating through XXXX. period investment important The here that inflation.

or approximately a million, and $XX XX future technology, much million to the the Included levers was expenses million, The gain comprised $XX expenses, where $XX to $XXX X%, efficiencies utilize increase, able remaining for million capacity than related represents X.X% increased million addition operating inflationary operating expenses lower $XX our of in of significant creation of in to to around greenfield to the centers. operating million. cost increase footprint, increase total and the or volume-related control control impact the rate new Our gross sales we efforts business. were the the $XX

the or ASU added diluted million, which an $X.XX full quarter. per of the was had benefit for year, fourth of $X.XX in We $X.X share

the XX%. per We've earnings $XX.XX finished of our Excluding with year XX% which reported tax year full XXXX, for share prior year rate than was lower EPS $XX.XX. was ASU, of

compared benefit, Excluding to $XX.XX of the XX% our a was ASU EPS $XX.XX. decrease of

inventory, than income. even off sales a XX while flow locations. Coming We for providing activities in cash a XXXX, net achieved new XXX% the reduced flows from stock $XXX percentage we decrease, cash of record of our million XXXX larger of of operating

by flow timing which for for by be the period. cash the million Cash Francine, of deferred first tax without the income XXXX $XX.X quarter and of exceeded benefit, net operations cash flow that flow paid impacted in will includes those lower from Hurricane XX%. payments tax XXXX in Even

of key Days million, our from Next, outstanding to year. by or days was prior areas receivable compared I'll compares recap on million sales XX.X XX.X favorably sheet. $XXX days. favorable balance $XX when Year-end X%, DSO of accounts XXXX of

to chain in was supply as changes decrease days a related billion $X.X of The balance prior Days of million billion. year less inventory X efforts reduction from than the was X% of continue initiatives to $XX our Our add XXX, balance $X.X sales exceeded inventory prior value. year.

million, funding operating locations, the X% outstanding Xx. $X.XX by purchases $XXX million Total with funded our of for billion, reduction even was target technology The reduced achieved ratio existing acquisitions, was debt X.X, quarterly by to $XX a year million. share was and flows million of of and debt repurchases. increase dividend, capital cash from and X.X finished new with below range $XXX $XXX over in in We the initiatives, leverage a our to leverage of slightly

to was share shareholders returned almost share have million reduction year-end. average including million, business of in in XXXX. total second a and repurchases dividends compared shares $X contributing Despite completed we to the the including through outstanding, full and a years. year, earnings, share billion X% environment weighted repurchases the dividends returned fourth to past million, X We to only $XXX to in challenged $XXX shareholders The $XXX quarter, total and for pressured amount XXXX repurchases

At interest continued and possibilities XXXX. we standpoint, and of are consumers return in this quick more trends. entering From for recovery outlook the pool higher than increased cost of an spending XXXX time, not inflation for sales irrigation a rates, impacts space. macroeconomic with discretionary Turning normalized path unclear historical to levels we to anticipating to a in our are

Pricing in construction to the and repair proven will product quarter benefit year, a As and on have vendors drag maintenance with new XXXX, and to business blended in chemicals based our X% meaningful to added pool without from a continued even in X% expected first continue our during prior commodities. remodel updates from new benefit steady for pools activities. improvement portfolio is some across season

low for a range XXXX single-digit flat to outlook sales Our is increase.

The we As currently for not amount tariffs enacted vast China however, the purchased increases sales may material portion imports, of Mexico some be of if or that impact could a have have additional see majority on do domestically, of from our from not direct do products further anticipate we are significant cost tariffs to goods Canada were will XXXX. a include passed. that

include effects. guidance future when impact will from can in estimate cost any we potential tariffs We receive and vendors our estimated increases our reasonably the of

As expect historically, these additional have we price. as pass we increases would selling to cost through

positive margins. not remodel import gross in on included activity, mix product positive margin significant range increase XXXX have expected gross XXXX trends expected not be a of our from exited supply and target success to is and for management, Our our year, label XX%. private XXXX comparative to our guidance we are benefit contributions as On tax long-term we chain Based gross XXXX, anticipating the offset the construction in to basis of significant to is expected pool margin in a and new are the increased within thus sales XXXX. a in pricing

of stepped-up on with a rent team On in in XXXX, the to investment value improved continue as the we wages part similar will operating and focus efforts. management other expense considered see to these customer costs a continue focused technology XXXX, that increases our higher-than-normal to cost level side, at will core offset continue growth creation is productivity. The of in level and

of continue our We costs to million new expect expansion an with sales and XXXX add incremental as distribution we $XX associated network. in to

some in result in expense. line incentive-based compensation, where would top million growth, of see incremental we line expect start we incremental single-digit around a As to low recovery market $XX top compensation

and $XX million expense excluding interest the in We season. build range is on any quarters repurchases. million support as X, will X we typically to expense based swimming that share from pool $XX current expect inventory Interest and rates to higher

XXXX is The at lower improvement current debt rates. by driven primarily levels from estimated interest average expected

$XX amortization and around million million have depreciation our to We included estimates. $XX for

cash X% million capital into on on center business, Capital X.X% including approved, of Once for the between of net sales plans million to openings. million. sales around allocation We $XX of utilize include dividends use reinvestments cash new plan our $XXX around $XX acquisitions. will of to

As expect shares to continue would repurchase to opportunistically. we

quarter expected in payment XXXX XXXX. $XX.X million between of Cash income net first and the to be is impacted tax will deferred the XXX% be XXXX flow in related made XX% and by of to

approximately annual quarters closer Our XX%, estimated in ASU. X X rate tax excluding This is to during and and typically rate be runs X, QX. XX.X% to lower

ASU are in an We projecting XXXX. options first quarter for the stock X% restricted share expiring from in benefit of impact and vesting the expected

income We be the to quarter, attributable the at shareholders of end the expect outstanding quarters net before share approximately additional common that shares remaining buybacks. XX.X applied and million of weighted first of any for XX consideration to million shares average will

for of standpoint, estimated the the excluding $XX.X tax the earnings X%. results, $XX.XX, an From operational XXXX be improved XXXX around midpoint an the tax guidance at the EPS to on $XX.XX of benefit. would $X.XX benefit million diluted range is ASU Our our import including

less quarter seasonality for day Easter falling will From to year a include pool for later X year compared a of standpoint, openings quarter would than X in First in year, typically selling shift some markets. quarter less XXXX XXXX total selling to day from the first second full this prior XXXX. with

a of gross would we seasonal will XXXX import expect for QX. normal negative for comparison related to taxes. $XX.X margin a the benefit margin provide included This million Last gross year, first quarter to as

we and share prepared our capture to forward and look is will market. economic continue be changes and business we remodel season, to business, XXXX necessary return grow historical to portion to team new of will the market. continue overall As investments capitalize have we outperform stable on made construction levels, our activity market normalized to the maintenance as position incremental than the more the that ready the adjust us When to faster to the

participating call. I appreciate today's you in all of

open We line will the now questions. for

Operator

Sachs. the come first And Instructions] question [Operator Susan Goldman from will with Maklari

Susan Maklari

then to in of investments I initiatives bit up think of her coming Can comments Pete, momentum that contribute seeing how should approximately and the mentioned want about Melanie that flat year-over-year, those terms you we will this a for and of flat some you to expect the how spend POOLXXX notable sales aware talk initiatives I about And that in year? you're the your anything there. be about to within of be to they're outlook some through? on but key talk

Peter Arvan

we're that parts. seeing And the on POOLXXX. with traction Yes, has remember, many we're the very pleased ecosystem

to we're our -- in will construction comments, early I we where flattish. this point, really to tell we that are very So now, end mentioned it's new at right assuming construction up. kind considering of don't flattish. new But be

we into label And play business. large that. lean our is portion of of private our our chemicals a So -- the business maintenance role the in maintenance portion

mentioned, POOLXXX private label see our is the what's of as increased can we of effectiveness a So sales, happening measures to bit. that the and of quite you they've chemical one

continue pay to our prescribe and remodel that renovation of dividends. the going is think to proprietary environment, construction regardless that and and tools we we think chemicals the what that's So

the number pool of weather a largely length season. the swimming the and that's of will the determine ground of in function pools Now

of very So what which POOLXXX think the the is the we proprietary the are their WaterTest with software we companies it app, new to software, our them our new at stores maintenance the a Or think the consumers drive effective using run running way POOLXXX either have efficiency using we that at or allows that that stores. service, for will provides dealer which business. the

think them it we efficient. base. of it products not only stickier the overall, more recommends us because And think them it proprietary sales else's. of drives We to products, it So customer makes anybody makes in we our terms think

Susan Maklari

That's Right. And A color. maybe shifting to great then Pinch Penny.

the business that there's and backdrop a in the or at on to all that? you the growth shift of consumer seeing that Given macro are pressures all under, continues side be the DIY any

And what their margins Pinch for the gain the Penny, ability and that that? for means a to share implications as result A of

Peter Arvan

to of kind flop maybe people forth. a companies amount professional DIY. and Every customers of year, hasn't of ironically, a there Yes. will certain flip away back been shift turning from service big

say, people the -- Some the try do it use can and have, I over do -- be do don't they can problematic. and about some uninformed this well, themselves. to that If it and how then they're they if they take it with of apps like we it

and So say would and not do-it-for-me a back lot overall, I of between shifting DIY. forth

independent stores, customer the tend any that Pinch owner-operated like experience. store I which just value proposition mean a the is to customer provide has retail our providing a great experience. great best customer experience. A overall They're provides Penny

and make pool. They the the should trouble-free to So where consumer stocked. They're most fully that they right are. software customers have area swimming ensures the effectively the shop. for have pools which technology, the easy in They're it located the

growth provide. they independent the in store with do retail A experience a that and to well-run has customer the overall, Penny But Pinch overall

Operator

question Blair. next will Ryan The from Merkel come William with

Ryan Merkel

Congrats the guidance. on finish strong of questions on I year. had couple of the a

units Pete, interest pool I And to are surprised still was new construction a permits good And environment. I the bit. rate flattish. see outlook we've a So believe the the got down I for little think, high

is is be Should second more And the flattish out then weighted? outlook? right think you down half why about talk the it in first still it Just half?

Peter Arvan

Yes.

I think that's right, Ryan.

of the you is season and activity I good. it's in so Our of dealers we know in first the dealers you show what we've a would that earlier tell their that interact And reporting year. lot -- activities to the year, spoken X with is weeks

of small of a time this Now certainly winter. very year, the Northeast, -- there's in they got is which portion the market

Louisiana. last mean winter we everywhere. came It's quarter year, their and beginning the first in Now later get year. in was this cold good of how in pretty snow the quarter snowy the I and

you're they going in The think me to that half. the but to you're economy getting sense better of the I half that get sentiment the the to it's than like that right, worse, from the right. I feels dealers it's that in first is any So think not do is general it think be probably second going we're

Ryan Merkel

then me. gross Got for it. that And was on surprise margin, a also Okay.

just guiding product a talk mix it flat you think and because then that got the I achieving will you're to accounting negative, how You're you've up. headwind. Can be about

offsets the are what to So items? those

Melanie M. Hart

working Yes. that I mean on. the offsets are the we're specific actions

the develop things supply coming into we see future have that and place So several benefits put to we some in XXXX. chain side in XXXX, continue we on in that

then out products. several private And label categories of Pete we as mentioned, new rolled

both as the And attending the that been early so that conference we our as internally trade year. did in we've shows that at sales well

supply the It's and And private in efforts label on the side of so be focused going really pricing it's increase then continued that on to to we're well. kind chain. going making be as

Operator

will Schneeberger question Next come from with Oppenheimer. Scott

Scott Schneeberger

you course back of how customer over upon, competitive you, and that entering the mix? the of the both for you, Could Melanie year? you're go thinking those touched over and also the And probably pressures about year

Melanie M. Hart

Yes.

pool the the the and swimming year the private industry have the entered XXXX, in across into of kind throughout of equity growth kind seen seen really industry, the kind in overall. with we we've as starting kind of avenues So of market different in

seen is where some national our that so there. consolidations we've of have in growth we some And things seen one accounts the

to those because within of a share And their are they there overall had market reputations what the able is better larger individual markets. capture so seen we've customers

of those And customers. focus because a see market are avenues so serving better really we from allowed to standpoint those share our further improvement serve customers. to one national we that in able as that's us the And on

Scott Schneeberger

what the hearing specifically And saying assumption in you interest -- are remodel. for you, homeowner? as What rates implied how your on you just customers and about guidance Peter, for for are about What thought that? is far as what's the your -- are

think the hearing And year, you the just in we housing this you're behavior from market? What are anecdotally, where what homeowners there? the given be will

Peter Arvan

because remodel to when depends -- comes you you, tell would really you the and the to it I customer speak, to market, Sure. bifurcate really so type. it on have renovation

they have is it So if and ready to make pool contractor and a engage a the then they out customer, you and go happen. remodel cash

a of talked on remodels previous have remember financing, portion we that because Ones about significant calls.

price too. that up know come a also quite have bit You in remodels

could a depends $X,XXX, finish could the be for couple be on a a decking. decking, pool, thousand dollars. -- $XX,XXX. A really of the pool new it small And equipment pad, So $XX,XXX, Tile, size $XX,XXX. of

more could many that to that. get And will part projects consumers happens, of finance pretty more So when remodel and seek large.

-- to not it, has is rate because it okay, So repairs current to I I its getting do for to anymore, may done do somebody environment, in will asset, where the want the remodel a life, the but finish meaning somebody to aren't preserve that because and to beyond it speak. have say, do interest useful that's so but

So think buyers was it is it it buyer pool similar new the I okay, okay, is that cash okay, construction. for to cash that market,

I we don't that. dealer is I it remodeled I believe years down, mentioned have I rates, renovation And remodel be that semi-discretionary. forestall eventually, year. should remember, that I to have or do but our this do probably for in expect it to come have get can it, base but and and that would of for to year the a a to will have interest believe Perhaps source done. I and say, delayed should rates X, it couple last because comments, really people in Meaning consider I renovation will of elevated once my be remodel growth with see I What to

we move age base lean an area be into growth. So that for I given as will I continues rates, year to regardless think the of installed every we'll forward, this interest that think

Operator

from The with David next will Baird. Manthey question come

David Manthey

in How X are First R&R the on wouldn't comp blue business, normal, weather. is else much a 'XX, throughout capacity question season weather thinking record and precipitation there and a areas good for construction May a but a April, Because temperatures in positive And levels. I June the in wasn't was both understand weather you but situation the of green the the for generally all be equal? XXXX and pretty all . new overall? for season about as pretty the were XXXX mild

Peter Arvan

Yes.

David Manthey

Okay.

incorporated your in but tougher So comp a little into 'XX, that's guidance? bit

Peter Arvan

long wild Weather some Yes. affects I is for this been more it's us pretty much you of mean Weather especially time. into is, the the a in covering season, generally, -- the swings. us normal. shoulders business, Once get has year know, you've the in we early pretty on year.

David Manthey

Yes, got it.

like? XX Okay. green Are looking what the looking business Horizon. your does on mean, Sunbelt? look deeper Are I to thoughts X you to the years, And nationally? then around expand just maybe recalibrate us looking get you you could in to strategic out

does a Horizon then Or capital priorities -- the as have in fit range you allocation secondarily, of that and where company?

Peter Arvan

question. Great

construction, Horizon of business. specifically, that is on much than construction, more dependent So business is rest new our new heavily home the a

know all shortage. that that has underbuilt new we is for home there many a construction years been and housing So

is net So a new need I is now there think spot that Horizon perspective, for from homes. in a right a cyclical

a that interest the But that think and business that should I and bit. locked I the market will environment. believe long-term continues type outlook -- rate market to the come will I in of will and that think they population housing has housing up business that is down overall thrive that on grow, the unlock, rates given

frankly, Horizon residential. than today, my I The environment we're shape and because as comments, commercial in the mentioned is in in business better

So from a we're not allocation opening a capital perspective, branches. of ton

capacity, we expand competitive We Sunbelt. need and/or some markets the we where are we protecting but may position to focused our in on largely remain need

we that Sunbelt to good, have, business. to It take given And our capital I run point, into the competitive this a don't of the bunch footprint of in new footprint our a key -- want of put locations. don't capital horizon. that to need for markets business most is really at lot outside pretty of doesn't

home the home add may market the the taking new Now then see to But don't of market Sunbelt. -- the if we the outside footprint. I largely, years, future construction off construction the takes market yes, off new in

a to chance follow. be in would the think growth best see that is I in would Sunbelt we and

Operator

will question Stifel. Carter with Next from come Andrew

W. Andrew Carter

kind the Just first commodity about ask to of pressures. wanted

getting clear, just chemical You set you've did PVC, chemicals, of Can in Building be Materials. level say, you kind terms lumped where the downs but taken seen steps Home Leslie about under out is Obviously, incremental? actually there's points. -- there anything now. you obviously more SRS just Have right price talking of pricing? on any you sharp plus Depot's bonus in ownership to

are just we kind kind So the guidance where set in considered level and now? of right what's of

Melanie M. Hart

Yes.

in both a building to So on expect the PVC, and to guidance, extent, do continued materials. some pressure lesser chemicals right see now the and we

do XXXX. materials way through worked think that have So building its may I out primarily

but end On quarter. quarter, less our little the chemical selling they first were were XXXX, a at side, the exited we bit where comparatively first pricing different from of they in than where

impact So quarter we're that in year-over-year. have first definitely going to

the by last door It's season on normalized And anymore. because typical really, in seeing we standpoint, and to year. year, competitive with that inventory not weren't do hit, for selling is prices chemicals quarter of quarter, the to in try pricing time to those first generate first different need to those As offers in saw people of the leading in from the kind a we're lower much people cash that get this to we than out the cash see into first turn quarter. market that come

similar what 'XX of So for the a to to for, that be assumption it of kind that. would rest relates would as we look

Still XX% recovery point. not the significant piping, one business some. part full we're was that this our PVC seeing overall, down but is any On It to at XX% in that for year-over-year down continued Not of year. a under pressure.

it on year. a slight for impact be the the deflation So rest could of

W. Andrew Carter

coming like a there's the that there's And you mix Second feature to question, back. increased that, -- the think on talking guess entry content said a construction I that's about the I a second positive on which pressure is rich, at for certain you're tailwind. year. flat full the new point predicated levels rich, not

Materials down Building Your XX% last were year.

was XX%. construction New down

a benefit? any okay, I guide that in see pool like continued? want? to of of a I that pool, Do upside to have are pools any you sacrifices is Is have back, there are you providing being that I'm have or Is the a your i.e., and healthy the go kind what that And higher the want that the if of seen build any build going built build money to by end, as, I just to guide?

Peter Arvan

Yes.

think that's right, generally I Andrew.

have available today. more the than the a a money to pool, If technology want pool, to you you're likely you build put in

the that And wouldn't You're try and do back older builders not an of go to going anyway. most platform. quite frankly,

skewed I being the as the pool, So it's think far couple by as a of of things. overall price

built. of One tools is are is type content two just being the and that

-- Continuation larger, average being on pools or continuation, of say. more I being level. more should pools think we're seeing and more I than built the feature-laden of number the entry

healthy there's for think demand entry I level.

new gain customer our in share. when these then essentially, that for back And expect cycle investments a the that's quite our been made why experience. we're paid when in don't going when some get We locations And to at in the -- turns, cycle, to realize we've it to turn to point. continue we've be that's we it's turns, want we and cycle we to business frankly, other because invest continuing and investments

Operator

Grooms question will with Your come next Stephens. Trey from

Trey Grooms

So expenses. just operating real quick, Melanie, on the

several about timing of talk year? the that. pieces you we cadence several You expense year. and through the there's we factors, how of some or moving puts clearly, about of takes went move the these Could maybe And operating as around should through this maybe think

for And call details any that. I my broke I sorry, missed if a just disconnected -- for on second. out just

Melanie M. Hart

I appreciate No, question. the

$XX centers that we investing spend going number of the addition is So for similar X a areas the sales new of be that and to we in XXXX. million. about specifically expect are One to

come season. the see majority through will that before kind of we of So

We of far over -- in little a April, are along fairly before half opening so up season, in that May. before

fall quarter. fourth first anything of will We So second kind the up -- heavily middle the of in of of rest it And you'll to season. kind weighted into the open the see quarter don't that quarter. then typically

So expenses. I those split that's how would

side, comp record operating then on And income proportion that incentive actually we we it. when the to our earn in

income. would our it have So overall a operating to seasonal similar spread

Trey Grooms

it. Got

Or on similar Okay. the timing. I to some it up you lend about in those thinking also how of from rebuild question the Florida timing had come through you And guess hurricanes kind are could But Have demand expected. then mentioned yet? maybe there? this

little typically in even a side that the and that normal or expectation see? then half the should also maybe for we And seasonality back improvement a with leveling new maybe R&R, impact

Peter Arvan

rebuilt, than not so pools right? place people possible, Florida, them. to Related where a rebuild can Florida still -- So that when pools, we're then as put they're need is that significant habitable work going homes were of there's online would there what was -- to Yes. home as areas use those aren't still that in still the the back say I the any amount quickly

are There's those homes us There's Florida, fair elevations pools are lot to versus to will And built. originally in rebuilt. have and the rebuilt a work those just amount pools which uninhabitable. and that of get those still of raised be homes are for a fixed the or going repaired of be future given once homes when homes

It grow and to continue were continue So get that work, move for will right. as be damaged going us people is rebuilt. that to just future the homes to Florida to

of that thinking flattish. year, certainly, half would we say second I that question -- is current half new on I say -- half your I versus as the the our construction first the second far half overall the believe As mean, first

first very the to level early is predict bit we the right second uncertainty now half But given optimism than with we currently based We're that is what the It's in season, stronger. sent the the very a that's weaker thinking. half. of on will little the that half in dealers, the that still the are amount economy. that there think to tough anticipating be second going I be of

we're weather, stuck know actually where or the first last And of around at our beginning seasonally significant first few said, When came the getting to year, quarter. second end first of I quarter. as of not weeks into beginning going the of for us, the time as a the weather year of is end quarter, as most was beginning very far looks in of the weather But quarter We I north. like look first then for year, quarter first real up the -- don't a patterns, good the we're and fortunately winter but this for consider the the it year. this the I winter and year quarter half,

Operator

The come with will from Capital Shmois Garik Loop Markets. next question

Garik Shmois

The wondering $XX if that looking $XX for the budgeting M&A. million to you're could million talk to you at? I was of opportunities you're some

Peter Arvan

Yes.

at I invest the really it's point, that in. to think in this same area we continue

as opportunity there's as there ago. consolidation, some albeit X for much continued was, not think I nearly or years say, X

with work anything have we point people, the continue that of ordinary. we conversations wouldn't have deck to So expect out but and an I M&A at this

Garik Shmois

availability new hearing from I on half view was labor if then availability administration's What side. XXXX. there's growth? speak you to We policies the if future second able immigration, the given initial see to being any in contractors whether in this And of and year maybe construction Okay. on on get hoping, and could you the new to are to start growth, it's

Peter Arvan

pools started, we stronger home XXX,XXX migrants, then. reverse But this are before will. back built they're to the That's if if you okay. general, recent Yes. targeting I a migration that go trying and to new was elevated think And few the I what you more you is administration if targeting, are things tell at look question gotten in would times. I we've now, a people the mean of construction Because that

So And target to build the homes. X of pools assumption years that there and more any are folks people my not here is policies. build administration was and of ago plenty still the more are those or X of back

large, hearing our So labor changed from that their not pool significantly. has of by any builders we're and

Operator

Our Sam Wells with Fargo. question will last for Reid from today come

Richard Reid

needs the line? especially terms of get XXXX. in that to That Peter, algorithm, I appreciate your to the you on to we you color really all drill back gave to X% could on X% for top outlook what level down kind high-level said, beyond of your happen

how lower persist is XXXX of see is, if of approximation Or the be I getting good terms X% not, kind would a rates? trend? let's at rate I'm environment absent we this in achievable to will here, X% say, guess what in business perpetuity

Peter Arvan

you we order in access and form to of people's the If don't home expensive, very call the up you back down. to us for remains that I rates I algorithm, guess, think normal, would different X%, there, need tell in need long-term to growth to question. to equity stages. that rates to a if we to for loosen capital I'd view new couple X% the and again, I come Thanks have move market the that get housing

for now the not expensive, wow, several a normal it and then you is of -- much shock flat have If it this of, and normal, then and is as sell, have it that a I going back really where think pools new it's therefore, years is becomes on, go or it's something pools. out meaning new how product would we follow matter desirable to that to I Are of of affordability? well, favor the are stays

up. rates that living stay because rates if algorithm and are I those to think if elevated to believe to I the go growth. would rates high that down time eventually we swimming So on, as back and And some said, still as come get would rates think outdoor I growth down, I and don't that demand move. maybe and pools I in And stimulate that and it should would I we wages come remodel. will is in, naturally, product market the believe then involved some expect just open continue for renovation up are on demand, move, the pent-up the goes there's which housing

hard back in if to term, very will the pool flat new construction get to X% short it to units. certainly, X% at growth XX,XXX be But the stays

Richard Reid

one Peter. Melanie, helpful, for you. And it. quick That's a then I appreciate

categories through to know into new going deeper several just the What's account private talked You beyond those on private COGS strong getting in private for? you're isolate that? products side, benefits 'XX? that really maybe you're of I any you then could are into. doing label gross mix the already chem dig And new label you're what label margin

Melanie M. Hart

Yes.

business. side be the initially on So our really XXXX maintenance the main focus of continues for to

we're the kind that positive kind really won't And taxes recurring. to related from that that that we expecting, overall benefit, to got in are be import of benefit of maintenance offset portfolio we products that various an of some to the XXXX all So Ryan's adding side. as question, back the cover an from

that full year, So XX for was the basis points. about

also we're private products. to NPT to then label And continuing add our

really On renovations as that of to which a XXXX, and benefit future for we'll new pools the in pool continue finish tile side, poised see increase. and benefit some but the

Operator

ahead, question-and-answer sir. any our turn Please session. would concludes Arvan, This over and Mr. I the closing like CEO, to conference back to remarks. Peter President for go

Peter Arvan

you all for We a XXXX Thank next our April first when Have quarter look Yes. results. our which on will XX day. to will Thank us. be call, we great forward release you. joining

Operator

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

now disconnect. may You

Pool (POOL) 20 Feb 252024 Q4 Earnings call transcript