Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Pool Corp (POOL, Financial) reported solid performance in maintenance-related sales, indicating resilience in this segment despite broader economic challenges.
• The company made significant progress on strategic priorities, including network expansion, capacity creation, and pricing optimization.
• Sales in Florida grew by 1%, marking the first major market to post a positive sales trend this year, which is encouraging for future growth.
• Pool Corp (POOL) continues to expand its Pool360 platform, with orders processed through the application increasing to 14.5% of total sales for the quarter.
• The company opened three new sales centers during the quarter, bringing the year-to-date total to nine, demonstrating ongoing expansion efforts.

Negative Points

• Total sales declined by 3% in the third quarter, reflecting weak discretionary spending and economic pressures.
• Sales in Texas and California were down 6% and 3% respectively, impacted by weak discretionary spending and adverse weather conditions.
• New pool construction and remodel activity negatively impacted total sales by 5%, highlighting challenges in these segments.
• Gross margins remained flat compared to the prior year, indicating limited progress in improving profitability despite strategic initiatives.
• The company faces ongoing pressure from a hesitant consumer, particularly affecting the discretionary portion of its business.

Q & A Highlights

Q: Was there any impact from the hurricanes in the third quarter, and how might this affect next year, particularly in Florida? A: The hurricanes occurred late in the third quarter, causing temporary closures but no significant impact on third-quarter results. We expect an increase in maintenance and repair demand in Florida, which will come in waves. Initially, the focus is on getting pools operational, with non-critical repairs following. This may create headwinds for new construction in the fourth quarter but could lead to tailwinds in the first quarter of next year. - Peter Arvan, President and CEO

Q: How are you managing inventory levels, and what are your expectations for the pre-buy season? A: We are satisfied with our current inventory levels, having achieved efficiencies beyond sales declines. We have no major reduction goals moving forward. For the pre-buy season, we anticipate equipment vendor price increases in the 2% to 3% range and plan to participate as usual, covering early-year sales before payments are due. - Melanie Hart, CFO

Q: What are you seeing from OEMs on equipment pricing for 2025? A: Equipment pricing increases are expected to be in the 2% to 3% range, with some variations across items. We anticipate these increases will flow through the channel as usual. - Peter Arvan, President and CEO

Q: Can you elaborate on the demand trends in Florida and Arizona, and what might this indicate for the future? A: The positive trends in Florida and Arizona are encouraging, reflecting our strategic priorities and market share gains. These markets are normalizing, and our investments in customer experience and value proposition are yielding results. We continue to capture a disproportionate share of available business. - Peter Arvan, President and CEO

Q: How is the Pool360 initiative progressing, and what feedback have you received from the roadshow? A: The Pool360 initiative, including the water test and service tools, is progressing well. Feedback from the roadshow has been positive, with customers appreciating the value and efficiency improvements. Adoption is gradual, as expected, but we are focused on delivering quality and support to early adopters. - Peter Arvan, President and CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.