Pool (POOL) 22 Jul 212021 Q2 Earnings call transcript

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

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

here as by we to section. and non-GAAP financial reconciliation our by to happy our today corporate addition, press our is measures I'm description President non-GAAP make Arvan our our Melanie A today say measures start website remarks usual financial in Relations with Peter comments. I'm Pete? In Hart. references by of included and may posted and CEO, in Investor We'll and very to CFO, in our our next joined opening release

spiked, everyone they as homeowners' realize most across pools, our Mark Europe, to patios, capacity. inground living living any friendly, the into led in quickly anything pandemic you, they its the continues that overdrive grips not at cases family, part, many morning everyday country Demand their and of right interest us and on as has creating and builders are good and years that XXXX. the in growth above for May to with swimming investing pools call. for outdoor up as Beginning and demand came remodelers This through soaked booked end that The on effects pools, and a are in people year North backyard, telling and builder last surged. year healthy today the through own surge into up and could ground America outdoor kick steady luxury Thank do available demand experience enjoy safe, with outdoor kitchens we've life home. over in in seen the

reporting our store level, our at of efforts that tremendous customers of hard helped of our From morning, following first came billion, over total record which ever products XX% is in enjoy that to quarter demand been is channel our network we times In have has the supply accounting This Our our perseverance XXXX, safe when manufacturing our robust over before. increase executing this, moving the year the customers the we quarterly our total quarter keep help passed shortages families an the Thanks has ease and this X% This this in to year more the an industry outdoor traffic allowing supply normally should is the with robust combined which some second as of business which increase industry. the balance above is as industry's for the are and -- earnings $X.X mentioned, of case. function have the second X% no from previously like team Overall, supplier enjoy are up chains backyard unprecedented work our as and had together, reported progresses. trending to strong we at centers, year. is the typically chains projects and sales the people with tremendous impact is a for forward, to retailers also base seasonality use execution through their in incredible that demand the and can quarter, living year our the of strained significant partners more manufacturers total. capacity average most so ever quarter and a experience and on support our the for large, XXXX. a exceptional sheet, was as plagued the seasonally XX% we year of ways acquisitions X% the increased escape. sales to largest By healthy, Inflation, well. sales growth. has quarter XX% perspective, to and than the meaningful finding This production

season Florida the markets Texas strong the business the and quarter. Arizona four Overall, sales markets in the demand largest round base is increased XX%. declined business a XX%, our saw by by growth increase increased sales entire at California throughout XX%, by sales increased while XX% This base our year to XX%, sales markets, testament business. saw the Looking of XX%, increased for

saw shortages sales chlorine have volume by for stockouts in Persistent most as represented across alternatives or two. stockouts In supply while swimming of quarter Now, pricing XX% following let quarter, Even some result year, X%. most demand network sales filters, and quarter. first our record calcium interruptions grapple which lighting, for Again, shortages industry such our this shortages. results most the for the industry in seasonally comps provide last in product and to driven an can increased which from difficult teams known and quarter own is equipment industry day the details which supply me automation, that occurred base most biggest about a been sales in up pools and used significant capacity a gain trichlor industry with liquid this strained network what our with when widely most in of is this that recently challenge XX% the business. the XX% XX% increased posted perspective. of elevated our increase, of intermittent it our include cases, dichlor the with sales, accounted and pumps, have heaters, the Chemicals, supply have the some seen as hypochlorite, remodel, in construction, maintenance of their chains, all across is a challenged in

demand as activity remodel expect As soon, peaking we is months. demand ease brisk. to is in and for coming seasonal the construction the situation remains Building Materials chemicals strong

the and although continue this the shortage chemicals levels, growth. quarter in first XX% as and here by products a number posted usage leisure Our pools in a following municipal product products reopen. hotel elevated other rebound sales gain, products and larger too similar to resumed and growth by pool driven quarter. installed in is travel category XX% limiting base has Retail the grew Commercial resort a in

blue sales the are maintenance being where XX% lockdowns. construction by and products them sales in as this traction just dominated to being sales XX% integrated in into and make increased XXXX large our are For completed projects second due will group in repair quarter get category have blue one beginning product Last by green quarter, we two four to-date and which acquisition. All well fell more the this acquisitions, network, COVID year, three even Currently, completed we weak off a are and again. coming performing commercial better. to

and blue the opened deal focus for a Year-to-date pipeline expansion the nine XXXX, two green we remain and seven robust plans and on on side. have locations, are side Our area new business. the

European you the Atlantic commentary business. Let strong. across and and our me growth take Sales on some remains brisk now provide

to bringing by sales saw XX%. we grow growth quarter, second the year-to-date the XX%, incredible an For

a from similarly be America. North Our customers are manufacturer, versus we a strong us seeing Being take significant supply-constraint environment. to market share. team in multi-line that has is in allows flexible This more and executing and level distributor us at a provide options more benefiting distributor the highest allowed to a

another pleased to very are we up business, strong Horizon quarter terrific be XX%. to continues report business our posted to the Turning sales sales growth with that as

For business sales the same XX% base versus last period, increased year.

areas. other while of in to growth we our continuing above opened have we Florida, strategic organic new As the and expansion in locations, Greenfield mentioned develop acquisitions our year-to-date, plan in one pipeline and execute as two targeted California

expenses, Let me operating gross income. switch to my now margin, commentary and

benefits, was mix. gross improvement margins, our product on provide of we point topic. from inflation execution, on very and color a will volume growth. a performance spectacular XXX Operating given gain pleased supply First, This XXX basis for quarter business. gain expense to base chain have the Melanie points by reported this driven and was the basis more are

operate. statement, quarter we delivered increase customers efficient it how to improved capacity tool the not income the has a for I execution of driven percentage was XXX income. be quarter XX% focus been the sales be last million by period team's our of for over of a as team in XX% enables prouder sales increase our creation and operating Wrapping activity. in both $XXX same Pool record for income this The and in by up as quarter. on our the and operating accounted year. sales by POOLXXX what Corp the importance a OpEx Our basis relentless points more the XX% for continues could of grew The to

the dedication, set apart in to to along This continue business is and challenging take model of from with to second our benefits Our competition to commitment continue share customer the to enable team us skill, experience us and this the environment. none.

this drive consistently benefit share, us, raising year-to-date we to are including the $XX.XX at that behind the guidance Corp. to diluted and $XX.XX half EPS is year team a and in to to growth per manage to our $XX.XX execution have here $X.XX year received. testament cost previously With through the structure organic ability Our Pool we and of for creation narrowing tax our capacity mind from and $XX.XX the the

give trends XXXX. several there continued factors and forward, for that confidence Looking us are beyond growth

first and housing all both the entering driven are very First, family -- the which the single the and southern millennials for blue family by for deurbanization, factors positive market strong, time, single migration, business. green the the market of housing remains

season, remodel value demand pool, states kitchen, for with which our patio, the they outdoor in a project, outdoor move products. As longer the to or people living see of is investing Sunbelt driving

will North that also across to change has work-from-home backyard This continue the swept luxury retreat. creating looks trend enjoy it time term. Second, more a is like longer America

Third, to grow going by technology. our adds and into to than that to -- and or automation this the is pool largest levels effect which higher opportunity were elevated industry. business increase are XX,XXX XXXX. new far year, more likely of as which maintenance this legislation the into new new us allowing as installations than that stronger builders this backlogs to become expansion products are relentless inflation, continue to normal sales forecasted Each every revenue Fourth, speed the take continue inground the user-friendly experience customer month going forward. market goes new part plans with as this share, simply year last our pump pools will people add our will is which into that Sixth, XXXX. with the Fifth, forward familiar pool variable forward. $XX continuing repair XXX,XXX million going are we our $XX connected on pool opportunity reporting of project and on significant Seventh, year see focus pools our our incremental such million new and as and

Finally, strategic plan. acquisitions continue we our to a will in of deal continue part pipeline our role our build as execute and growth play as to

have As will you we about to Melanie financial have can to continue we track that success see, and call for commentary. Hart future years. I the the to of demonstrated expect her we be many now reasons turn record over optimistic the the over

some pleased second be to financial of quarter this all cover morning. will I am our the of joining details results. I very you

increased on provided gross I quarter with margin increases of will basis business of commentary my our sales basis activity gross expressed margins. in exceeded the As discussions expectations first call. on the margins some quarter, our an with begin Pete the points XXX during These Gross points. quarter base overview additional XXX has

accelerating possible initiatives, on we of which included chain increases a benefits limit in First, focus today's supply saw vendor conditions. purchases outs our were to tight price from stock supply ahead

earned progress. Next, volumes, vendor we expect rate also in with our the increased improvements purchase our under

year. bigger of we some from items the of margin improvements prior XXXX in second sales lower realized as during product a in gross ticket larger mix margin, changes quarter our Additionally, portion comprised was

Lastly, had a also the for quarter. on mix impact customer positive margins changes

basis quarter-to-date XX% those our operating basis quarter. year XX% margin below base Operating $XX XX% given are quarter XXX consolidated a to with like Interest levels The opened managed serve these team our past was year-to-date, and performance points well very represent freight Included five cost our second the is business over acquisitions time year we as from growth XX%. operating necessary sales our strong and which down last for for were of performed $X recorded contribution business locations as same over base the of related that of added expenses additional activity P&L locations business were time. during increased exceptionally have costs. margin. XX.X% borrowing since million or business compensation. to quarter. well over expense grew operating million We were and last new by acquisitions an expenses lower prior the declined in the additional margins year contributing $XX in The the our lower points underperforming Moving centers Base operating nine and the income base -- expenses increasing expenses, the percentage as debt such sales performance. these opportunity growth to XX margin from new overall prior operating resulted during in operating sales. months, million expenses up year XXX operating to based more expenses down quarter personnel Variable of business on

Our same period to million year $XXX.X debt second was for XXXX of the quarter compared last million. average $XXX.X

to recurring option the pretax reported rate continues benefit an ASU that earnings, move on quarter, to to our occurred quarter. balance $X.XX $X.X exercises the or flows. cash excuse We Our for I'll sheet XX% rate now during be tax from realized stock share tax XX.X% around per the and bringing additional million me.

Our from in by growth to XX.X days, in driven the in an net the including receivables of the total during made or Inventories XX%, we reduction XX% sales were up effect over quarter for outstanding or is last offset XX.X last acquisitions. a days same second the down XX% year. sales year inventories realize quarter year. We in days assets of reflects This in after by total last quarter of current not growth the strong acquisitions activity. collections considering added DSO increase

prioritize on demand is service strength sourcing trailing $XXX.X quarter end down the primarily increase add same customer four-quarter by year, We This quarter levels. scale a and of generation maintain we as support over inventory from Cash XXXX. million July to the in our inventories that for second in in our turns allowed to the us inventory expected was to and operations through year the X.X of also position leverage continue are last continue to share. relief Prior tax to shifted $XX.X to package. to as capital inventory from June X.X payments Cash strong, strong year may due investments. the COVID increased believe deferred XXXX flows June to from basis provided benefited gain increases Inventory of million. has part but to investments remain cash from we

$XXX we've For of May, shareholders. the year, buybacks Board the by on also excess the In cash authorization to returning been million. share increased focused

our XXX,XXX in million on million a to we year-to-date. almost of addition leaving first quarter the million $XXX repurchase of $XX repurchase average repurchases for an During the $XX in $XXX, returning floor, spent million paid authority. in total of to $XX shareholders price shares resulted acquired These total

dividend We quarter XX%. the by also during increase rate the quarterly

Our point capacity capital turn and giving targeted trailing expectations to ratio provide execute with of XX on the quarter end, and five our the the to us our comments to for a at remain support year. debt over of opportunities. substantial Mark month lower flexibility businesses range, investment our now I'll than remainder on call levels

results. second Melanie. some on you, today with perspective financial my I'll our Thank quarter start comments

most work master. which real the modern is of I of In QX the of peak a is demand day our this needs each have work alluded like For master. and think urgent I've some last greatest, hindsight, effort for results high saved our incredibly results is of kind is Renaissance of are At most two of chain of our demonstrates this superlatives I Delivering to the exceptional embodiment the the the my execution. looking our quarters, achieve level results, should truly the and sort supply we the the of when quarter stressed. customers' season, an that team

a that showcased team of industry of Our second really the frenetic quarter pool combination the in our talent as model. was business as our well a of year the value

months our XXX remarkable $X.X of a return points delivering financial invested of margin highlights basis year, results. XX and while basis sales operating margin expansion, of XX back XX% included revenue gross of points the growth and capital of XX%. Looking on last billion, cumulative trailing over expansion, All

repurchases. a technology of evenly had and share with dividends and we deployment investments to split to balanced support nearly used five new invested in And addition, In PP&E, million companies XX-month we over primarily capital returned capital period, this million locations. shareholders $XX in between million in to $XXX acquire and $XXX

XXXX in supply $XXX best ahead peak We business the constrained possible customers of our also in in just position million be seasonal to throughout working environment. capital serve over to invested our our

share outlook has and share guidance a range of the evolved the be At continues a our for stick of growth As a into $X.XX in XXXX. our benefit in when guidance that ASU last and for the our range; gain the see previous total our million expected of comparing better the year quarter billion better of $X.X was range. rapid This higher very company second course factors; with was the gross sales for of than year. the our future, gross range year growth positive. bigger a has which that just previous Clearly, last in expectations the Using is included at by we notes, measuring and matter performance the our bit range. sales factored gains and new pace our factors more from and performance for of point, new to in higher raised some QX sales had as year; margin sales insights the than remainder three margin over I'll or our result marketplace than our can old, a the overall over the tax somewhat joined you XX% the I our not midpoint and growth expectations this back $X.X to we into lastly, performance our

growth anticipated the range previous in XX%. year Our for had excess of sales

as has of in QX course greater growth which QX increasingly XX% range difficult. baked new anticipate the growth Our become with for it into QX of in than year sales excess in path

include XXXX while acquisitions favorable which As a was XX%, reminder, very growth our and weather lapped be was growth XX%, sales by which year. QX this sales will conditions XXXX was aided QX a

year While favorable we whether us for weather $X a rest range, the full could fourth our quarter this year normal in for of guidance assume of see the milestone year. in reach revenue the billion

to to and begin XXXX the in operating majority question-and-answer the expect basis XXX back As gains, quarter well, margin manage our business QX margin as achieve for recorded to improvement gross XXXX of given gains to improvement much margin continue me have QX. points gross additional have we the over on third our could less I'll I expense of and inflationary of improved both we XXXX. remainder excuse that noted, for margin in over year gains basis XX discretionary and expenses Despite operator addition as in our of turn costs the quarters, in also expectations pandemic, of as year XXX fourth -- operating the call to now the coming pickup though anticipated the With year-over-year in much during the with majority session. the the pared back the back been in pressures with certain of that growth our points fourth half

Please begin ahead. now with go question-and-answer from Your will session. first comes David Manthey question Baird. We Instructions] [Operator the

All Good morning, right. everyone. Thank you.

morning. Good

run. fantastic. congratulations. Yes What That's luck. Mark, -- been and a Good

you, David. Thank Yes.

Yes.

is quarter good the as the far to goes I as here, margin think place start. So, gross

quarter. basis versus at how I of the that you business, clearly of sort of you business points better much structural if that same no of XXX a that continue overage, typical the back can transitory second assuming fall you than I band the the level guess quarter, jumped But off major think do the five-year activity? sort average, you outside look look implied is of higher assuming half would in be to This And for year-on-year. at when

guess, phrasing guess I'll transitory, I take structural that interesting I way versus Dave. that's it. the

bit A as I year through you when think, kind pressure in have first we of gains margin last them, didn't benefit all, had the at second going frankly, of of forward. look margin year. from we little some went quarter got Melanie in lower that margin we this that quarter, the tickets, don't the bigger sales from second and we expect -- the

that's So, sales. customer benefit one relates we are mix The transitory. that internet to really mentioned not

not So, come continue pace in retail. internet prioritize have didn't and that and and necessarily we on do next margin the see possible, the future? given the revenue to in our store-based Is the higher much to the term, the more store-based retailers have over in supply as and as It's to going retailers internet sell but I growth store-based growth need that longer outages, being there lower we we year of given perhaps to industry, us. or for sales back

that we this kind we've seen. in those rest of supply that expect Pete chain inflation as year initiatives have discussed, continued comments, mentioned as move his And and also year. the through involve of we next we into the inflation which We

that something being to long-term working as I through vendor not this don't that predict an forward. see won't issue may Melanie well, looks that want next and issue. well incentives, of to like XX terms that point. don't with XX the be certainly So, And what at then be vendors going try over to -- our a mentioned that that's in I we'll And months.

see we'll think happens a the positive continuing this But there's year. that. through pretty what into I of next and about certainly gains, And I margin combination year So, the rest after feel there. then

to So, little you your insight. question. a question hopefully, of bit and Good answer gave long

your is probably well. and which talk chemicals' I maintenance minor the And repair I we that if about fairly that you the growth. think XX% business, kind that's correlates deconstructing about Yes, Pete, that mentioned helpful, of second for which could like volumes up X%, of think unit sure. were

new you're year, like and to the growth XXX,XXX being be XX,XXX refurb from to which the pools pools grow. teams talked you've from about kind seeing the outsized think this is up and coming new I year So, of has last

So, us of pieces refurbishment driving we and as when see of on the content in just do And what factors? you are with of Can see pools. sort aren't that touch this the that growing the how at growth those? know leaves XX%, you you those well kind as outsized sort sustainable those pieces

Yes, good question Dave.

when we and think I XX,XXX. on the chemical of commented try couple the you're a deconstruct volume, growth, from things, you you construction zeroed going on in new the

year, last construction So, was new XX%. up

we think to this number So, be new going year, is the XXX,XXX.

So, when lot different you new groups, of play that product pool have construction right. bringing into you're a

from bringing country little essentially you're building in materials, had the construction to of second because of restrictions COVID. remember, to perspective, year-over-year last due markets many no which year, So, in quarter the a across comp we

So, that has certainly rebounded.

new got the going into the lot that's the It's see remodel. of market So, me, be a share which portion XXX,XXX it's where remodel, it's in as of in lion's function we're all the places, is of going XXX,XXX, I on a driving is building far we XXX,XXX, construction is and to new construction mean, good, but is that product and the lot whatever. that folks, well -- zero of sales activity To growth, right? materials a two materials, bigger into by seeing construction or market.

one more, are the and used drivers is -- of our the growth right. the major being at pools looked I of growth when A, So,

install products, a us. more or those technology go maintenance general ticket do the adopt for a or way structural is for tiles, of good. a resurfacing very are opportunity thousand few good. then driving as is for piece the all changing the and the smarter when homeowners a equipment very adding seeing in patios for piece project, the So, the around pool changing of is features technology, pool, which value of equipment decks it, you from two of which products, remodel and that just again, can of And all age given the and high-tech more dollars that the opt new base we're And up to again

guys. very That's much, the best. very Thanks helpful. All

Thank you. Yes.

from Ryan question William next ahead. The go comes Please Merkel Blair. with

everyone. Hey,

morning. Good

morning. Good

on yet some incredible numbers Congrats again.

Thank you.

So pool a that I have Pete, guess like normal it suburbs, now fair industry work-from-home, new off, has evidence you statement? Is to entered the say the migration sounds to enough a migration first with south.

the when started listing purposely is a Yes. did change that for give driven said, comments, is are it, reflecting of -- mentioned, short-term as what or numbers, was sitting bubble. continue those when I my a end the driving end We're -- longer-term industry, thing, in towards I upon and the as back, a I it whether that growth is out, you why great it which factors, outlook the our several I will that there and just the us confidence COVID trend wasn't

Right.

year-over-year up put I during better like the that basis on XQ not just the and sure maybe to Okay. points XXX And XX you but here, points something ballpark? then in year-over-year in up a that view get want in cadence the was maybe Mark, XQ half, the spot margins, basis gross second to want make on message. to I just the of

send your just I you. want me can it fill model, You to and out for

in next as continue the quarter some or third. the said, the of so. good in little second for maybe us, You see gross margin a what we the would thinking bit bit exit that and/or quarter, tougher. know, I better say we I I and the quarter a more opportunity then about benefits you're year But as certainly expect to feel fourth little third

Okay.

then you your And obviously, scale And increases also still still? inventory the But shortages? good. levels year-over-year, buying using to buy lastly, up price Sounds are demand just part inventory you of ahead massively also given just is that. a of big are

Yes.

where this product like of for actually we Pool But to think of look a company sure in three we're at sheet excels, inventory, because So is Corp our are in there's down. the it the lean is terms make right? of to available in really strength builders. balance where we -- of that kind environment inventory dollars days I We when factors, this up. you have use

of periodic a what is So it known fact. that at that's but product part products total, missing inventory and are complete. there's every balance But product, the look of in could that, a be could couple still is, widely ship if right? it job happens one to shortages it of -- for So be a I

go. will when that and One, factors. So in, is comes a up. couple large, it's it of by business But

much can. the as we to up re job. days items of our We're with be that of And shipment the ahead, specific make then may of certainly of shortages. dealing complete inventory So buying still are sure holding product we're have because a shortages we as down intermittent that

Sounds for the comments. the best. And good. all Mark Thanks

Yes. Thank you, Ryan.

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

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

morning. morning. you. Good Good Thank

My whatever about mentioned more is lift to fact of you terms is I new on. normalization refurbishment, compared lot a seeing from still question ground, back mix going margin. shift. you that going the the know you're know gross what's I that to guess, definitely think of an of some of when the mentioned you improved time? first pool that How it we were today over kind saw you does construction you period XXXX, there more where to normalized go going And in XXXX, lot mix that was? a a that in on

Yes.

In terms activity, construction increased of impact that? the saying of kind -- as you’re

Yes.

the are that… of sales So what

know… you mean, I Yes,

Yes. Exactly like that.

purchasing are to just focus they're a one, lower XX,XXX well. power, more of let's materials, of other growing with one XX,XXX, on And are if is it more we selling margin bills part that's margins. generally mix from are those more just story that's There's that have customers construction. larger category you because and things XXX,XXX, to just margin on little kind margin of categories is as call speaking. are bit building lot buying and that's XXX,XXX, a construction, higher and the the a a overall And question doing have -- so …the XX,XXX higher us. going typically customers, pool going complicated but that for little growing, product other We're there. more a But which

really if because of of very gross and piece margins even over construction, the stories. through a look from very on it just with time, you stable, back -- margin XXXX growth focus managed construction. our wouldn't I We've have up that XXXX stable been has So,

that So, your question, Susan? answer

And like just has piece construction how the said, does. But last, to it pieces tough, know, the relative a really that that new before. we significantly I were think in lot moving to now, year definitely and about there's it's it about two half, was No, because to that risen means Yes. there. fact I years what I pretty of trying think call where and a

Right.

around, quite bit maybe gained it's ability to through. is And continuing other it can seems question obviously to and that around of share. kind you've sticky My rates like historical customers of, forward? talk market come or know, a really there whether retention Yes. to of your second don't in you keep that's anything these initiatives I terms going businesses that how Is engaged

Sure.

time. consistently If you look we share over at -- time, our over gained have

share, that consistently last given to focus we -- make over -- tremendous we that. on out. -- back to a that every But historically, our as sure opportunity maintain we look And if -- market tend now. back time, those been with growing new the golden customer. are on a treat that we be if time get we year, circumstances have have certainly customer we the that grown experience. we've think customer, you And that relationships sticky very you the I it's a have look faster, played In a So our been

like that that not service as Over best them, we focus demonstrate we've with of we business, come their to they care it's come execution, So able us, jump take them, time, that as with and we work can us, engage on we stays business to cover back. they been us. people to generally

That's Okay. you. luck. Thank helpful. Good

Thank you.

next ahead. Company. Sidoti go & The Anthony with comes question from Lebiedzinski Please

Mark, Good morning, the taking again on And retirement. congrats impending you thank your questions. for and then

terms So creation I expect? guess in capacity should first, we of Difficulty] [Technical how

and of terms capacity creation, broke you you was Anthony All up. then broke up. in heard we

Oh, sorry.

So let me repeat that.

of few how you? to the we years So should capacity next in expect over terms evolve creation, for that

my -- it's dividends forward. for mean, focus going areas, several one and for a of think It's the as paid it's you know, I great years. been I personal it's last focus area us

labor capacity within -- you I there creation within There it, -- right? within our are the various parts it productivity. is think of and fleet facility, truck

better. we've think I gotten

across the as for add not customers opportunity there in and us, value in see only as consistent still well. for still POOLXXX application. this those but I that Meaning network instance, as our for see like. are to We we not We is area, would our grow BlueStreak continuing

area to we anywhere dividends we extract for it's out don't focus. I very, are of of very So and paid I think a us end the great can important and has that close think what

that? is Can pool And it. in been been you your to but Got your I months seen the much whether you capacity a or any there have or for customers, of it's so? for on them, changes from labor that just -- see there have while, last just know increased or has over constraints it comment wanted been customers? I terms if few remodelers

to our the living industry. pools I the biggest think question. teams. this over you add the single I'm Yes. are the they're the builders of to is they confident and expanding I I their and times And labor starting which I desirable more customers our talking labor space given many of that the expand think was That's field in heard and know growth and from think patios outdoor to But industry And crews cases, such, to weeks been adding in a factor more comfortable as last -- capacity labor limiting their great are and growing on over couple time. our by And and has opportunity, folks folks I how for is that. several going encouraged about several

increase can very not year think Now, expanding. some a that tell been area. signs step positive thread five that I But hasn't year-to-date see crews in a in that's we've But there we I yet. almost been this are seen that common been function for here what having years, you

Got it.

Okay. And then the last question for me.

you In increases? I think as just of in release points greatest pressure is terms of than a wanted better terms higher costs, get in I know there are seeing your that, costs other you where -- sense freight, anything the to I that to basically mentioned

of is that our fleet. perspective cost and typically perspective, own of is of area this captured freight, outbound fuel, of that, an freight capacity again, freight in that as of happens product component and our freight area most it's our we on in Certainly, inbound advantage creation, an our Sure. part From actually line. from a an have an

the and the an we have that years, with the warehouse better we to such, have we truck the by areas, issue Other minimize the happened all space real is in able industry. over routing, on of face So, working for couple is been last going some that done things and estate demand loading smarter up. utilization, that have effects that of

in labor every an that's And lease, seeing been time been some is there's well. inflation renew we has a as always area late there or So that we're inflation of as well. on

it. Got

Well, thank of Okay. and luck. best you,

you. thank Yes,

Thank you, Anthony.

ahead. comes next Stephen Volkmann question from Jefferies. go Please The with

Mark, my here. taking guys. Thanks morning, model my question. And morning if it. want for to good do Still I appreciate Hi, too, you

do. need something I to

it me future. You send can in to the

Just kidding.

model. my you, send Seriously. never would I Understood,

another lays I to but I'm question. has your is lot think guys But and a sort model term. think guess don't financial trying lots this what pool you I of you presentations a this, out of maybe just peak longer in this slide, of been asked, have you of what I is include model process? is what margin accelerated changed, wrestling over long-term? this point? we to I where at kind you kind I'm of do X% this Have the has that in is. you with Or gross revenue the stable the to is, are growth of And this X% level guess think this think

yes. Yes,

do like or. you would question party to it your As

to. happy be I'd

I -- expectations and we'll of that investors First have and of We'll see. kind we update giving September. and through we'll in our initiatives shareholders an be go think longer-term all,

As then definitely demand more of earlier and long-term up as several in mentioned growth been from of factors, a volume the Pete at and acceleration mentioned forward, pool years industry then comment, perhaps think I that step activity. the the the the industries. the his look activities an installed in next pool drive we over And perspective, you Pete certainly, the in to one opportunity construction questions, there's there's some should we've about base and the seen look And aging, there. continue industry

but opportunity about us fairly some significantly, I modest not uptick there. model see our So and the will optimistic that, growth being reflect

has ridiculously little a this going a margin stepping next temporary? up time. push now stable And more you is been for level just it to on the your down, such long Or forward? Is gross bit

job question with certainly, that, in like earlier. done it's think the maintaining I But term, short Well, good We've sounds addressed over the that up. a stability. I time picked

what over what may in Some opportunity margin of see last bring But the short there's some not continue think the from we years. term, to been level the long-term. of it I has up couple

that on. certainly that focused an So be will be will effort

All right.

of outlook it inflationary continue. pretty situation confident this but industry wasn't constraints maybe. that chemical because that But a through less me. felt normalizes you the like And I'm final inflation the the expecting a one year, felt more for curious, term, normalize, me, maybe peak just question. to the some and this it call we'll So next I supply medium just of is like will a then lot of seem

about So just curious that?

be early the little leaves to manufacturers exactly I a is they're to what to because inflation it's to pass tell what the is our number Yes, trying time you when is read and of this year, next are to think as the their going along. what tea year going

out end situation probably end the third return a to the startup. year, when deconstruct fourth chemical moment until on the I normal puts it of third the you online, of don't for think back I the information think what side, because will quarter by second quarter, plan my next into quarter, chemical quarter in for said of come a our opinion

the it year. the meaningful impact later be has it by time will in So, industry, a on the

the which equipment right normal, to going So in on chemical be in perspective, it's X% much been we'll a future be to normally goes of the say from perspective, next better I year in me see area. But again, little don't comfortable that would now, range. whole From it's do, that going has early, I it's if number year. bit a calls. above I'm a we change that lot above to the that you remember read that you us, pretty but again, as an And ask call a for give it on, as for

Super. Thank guys. you

Yes.

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

Yes. Mark, Good your and great morning, congratulations on retirement. quarter.

you. Thank

just a change a customers. on some as new trying I what to a know, on look for lot don't new new forward your I now, better had Question if through in technology, consequence visibility, the construction POOLXXX I in a getting is just But to a improving I'm more is of guess of online get the changes the you're occurred? little with of forward sense question you construction your the extent visibility construction. engagement gives maybe of use that

to things. like Obviously, We have we And just a permit it's better have I a we we have. think have result had -- Yes. visibility of couple do. you access all actually data, now than ever of always

there in construction, it's pipeline inventory builders day. didn't orders So the pool plenty components put of given of in things But major in the of supply the was this this tightness in lot advance that hey, I'm one and product saying, of to of past, going a the whereas we on the tracked. need

there on are builders more they're make day sure their the accommodate going to with plaster needs set and in to these or I the that the that have have the order about in in jobs equipment information now deliver have the have sharing pipeline. we day to us are needed that that on deliver, we hey, we future they we the that So, can the

So, going need on equipment I'm they're oftentimes steel here's to that contract, us need and the need going into okay, a I'm going sell they kit job, job I saying, here, the to get date. I'm equipment, plumbing to go the kit a here kit finished this coming and and sold, the when

the the So, industry. backlog better is the what have in we're the situation in visibility of one to that we do benefits of is

to reasons of what about some factories, risk construction, you've there's and some extent pool helpful a sales pulled might of walked I new been Right. that? in kind with in that? respect has trying And home ask the would question but returned pools what you've around get is than thinking forward -- create the the little very you a the the sense new realize scenario around XXXX there through look how therefore, I just And of XXXX? maybe one always I into is guess, out XXXX? stay be to about thinking or to I'm better maybe That's downside that bit sense, it back just like. XX,XXX at risk it it. XX,XXX, And are

got mentioned. And cause I backlog mean, think like could builders market place, the significant entering to that. people in you macro market, terms as escape. from the those and valuing having to the continue. people housing to what of have we housing are consider a south, going I a value, trend, frankly, from the Millennials home, backyard work strong moving things the in

how XXX,XXX, read for I is tea but we today. anything to -- going the I well, there don't would major issue, the really say, the don't to not a near XX,XXX. drop in economic That's think leaves back down frankly, term So, there's that that

One course potential of exception is weather,

Sure.

Having weather favorable

days. Buildable

in builder particularly days, more Buildable to the the a shoulder construction days, allows days. season that

Great, great.

kind from on I follow-up that And of Okay. Thanks equipment earlier just Are repair in in to regarding Texas, freezer question, able the the spending damaged that. you extent just guess, the benefit or size what that? then year. for Florida, to of replacement the quarter onetime

issue didn't affect a was the… right. Florida, Texas terms of in really it Yes, It

issue. Texas Yes,

said of that think it's due quarter. the repair a was to then And was in in going still lot the And shortages, done that first I on. there we equipment

first go going it's we what saw and at think end, I to the than between smaller much pace quarter. now a although on year in

than So I think at first quarter. saw tailwinds continued a much see level on, it's something the smaller we'll in that we albeit

Okay. Thank very you much.

Yes.

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

taking my in. for me squeezing Great. Thanks questions

inflation on follow-up to Just wanted comments. the

to Are inflation start any again is next if to on year, in you mentioned, inflation impact you going year, the But be inflationary volumes? I makes at the there higher which mean, is pool elasticity from any this from price pricing? that at all we're about to much there a impact to I You withstand demand. haven't all? even this in point seen owners I guess guess, experience environment lessons, worry going confident feel ability a modest more do about you

I impacts Yes, to the and got it where you how the it think down inflation and business. break

X% if amount. a need a pump. owner you that's a, last if typically and repair, it need pool more a maintenance for a not it need a filter, if of terms year, you filter. than need And in And you costs did So an pump, you insurmountable

order well, I'm So the to to it it's to have keep change costs I because X% the nothing pool need do going in not operating. filter, it say, more,

terms we repair, very So see of little impact. in maintenance and

again, on we of one do that that it's different, you Your renovation project, I'm the you most have question am the So whether it's a bit will relates project, and year a -- on it little is to to in is impact not impact bigger project. a on is the new project. -- me, in a when little increase, what construction total material somebody think don't Pool or inflation or on lays excuse and It the cost right? construction have, a it But going the consider above of bit of, if the have because cost is I backyard inflation think a as is material how we there -- whether a through labor, have that depending I project. is next a type the cost into things of a of construction. normal. cost terms cases given demand think can of that Most to that most deciding

might Helpful. you quickly million revenue how that's expect in affect? up? pump I to minor considering I $XX it's do now. $X million legislation start think But do revenues the you quickly base know the to relatively the question variable from million guess, showing is, follow-up my about is going that speed $XX How

way rule be there the the can't isn't anymore, case, right? lot to they can they've inventory to now pumps, says I the us, the that, only the a this left in in it switch had pipeline written, pipeline. variable the for we've So make guess, way but that of mentioned the So, sold. speed fortunately, is before, product in pumps is as

see in So full we benefits we opportunity think of next this then terms we'll benefit should that, the to what and the see the essentially is. start year year,

year, -- -- most right? to think shortages the in the for in So, XXXX, case, So the have impact the going is this it's us the given I meaningful in peak basically you're wouldn't that see, too. of on earlier it look pulls it you I in it in. a But a And so would effect to see gift that during bump also you XXXX. the consider seasonality season

best Okay. luck of Thanks And of Great again. quarter. Mark, your retirement.

Thank you, Yes. Kevin.

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

everybody. Hello,

morning. Good

Good morning, Ken.

to I'm you're going sure XX. on lot a Look us insight. give forward September guys you to New seeing York more in

stock have wasn't you I the stress However, of parts, things they which let's about July talk and supply do guys Xth channels? hot way over supply hotel How Because -- the think how now. stock a about the I how measure a to level outs? much few is tub at a in working? relative chain? How their mean, didn't measure you was disrupted do a to outs

Yes.

outs -- of actually it, season the less terms of that we emphasis than goal many we've weighting during on -- X%, put attention peak stock been do than right, been more chasing and season. on years. to a And business, be our me Our much we in is of on the at to it shoulders as the the for goal excuse that's we it

a kind weighted our in So of do we measurement. average

the On product. So, is And would overall, the it say, it by really up. some obviously, goal And by of products, X%. And is shortage location. that. is number because than come higher it has varies I the varies

suggesting But guess, backlog? meaningful, in actually of it's terms I you're something not

situations treat we really those one take it knockout so every situation. -- Meaningful, of as we -- a bad is

do But here's you they're say to that can I to And anytime -- at what hey, now we the occur and is. have know, you Because So all very something? we have hey, the no. says, tell customer meaningful. it us, system. And look

because an areas it have the the so is visibility some we challenging and the we been do that's as chemical on to arrive, can on In expectation. same what what side. scheduled we coordinate Here's on provide that with certainly side, customer don't very equipment the

it could would approaching So XX%. And above would in be products you, increase slightly but we be say X% target and can I cases, it the elevated. And tell is is crazy that the I some that large, by have some established.

Okay.

You've gross second Mark, think you've little we're margins moving gross into talked I margins about about half. the a talked bit. positive as

you're my to certainly carry would the But half could, we know, about related a and positive years. seems it SG&A into moving half, positive You bit is that talking that, as Well, a come it stuff. second prior product quite assumption the you a your versus of given has into see XXXX But the first if though, those as mix, you're in have down variables. mix a, here?

are you such get about when it's it me. can your tend not and we So think you to questions gross I SG&A, mean, gross getting margin. I a But your that on company concern to a

a COVID SG&A part little you to Kind that question something's to two a were set few of that be you you expand to years kind can ago that relative if So on But that is a relates it another metric that to changed EBIT. normalize? to there could in bit? of is where or would as talk

about question you're referring Well, gross little comment sales. or yes, a your percent -- SG&A a coming to SG&A obviously SG&A and bit, as your of is guess down, -- I

Right.

added higher. facilities, support before, ground last got so a I mentioned years. as you easier is part, …is I've it's of at of sales is and think our growth down vehicles point, In percent -- and leverage some growing locations, this come sales couple when people the that obviously and businesses up, know, S&GA

So great at time, And you we've easier. more a last year the bit this leverage that talked lot But obviously and SG&A know, had, we've a makes sales same about year. over that the a growth little capacity of And getting on those creation things out made initiatives, progress we the are there. operational getting big organization that investments. good And that throughout is initiatives. focus a do existing and of our to part we've

have We more come. to

and thought area. year, in the growth and And We is substantially talked seeing year, about those things incentives, gross costs paired year. also that about costs other year-over-year. costs talked areas, Pete as up like pandemic in in Insurance We the up. expenses talked leases then, we going we that some in there and this year, another be about back fact incentive be they'd last down last were during We're earlier is initially. mentioned, labor. We

should So coming a big those us. be cost year. a component and Most be down are of tailwind next likely, the structure for it'll

to at in long-term to provide of us, terms operating good to continue So a And mid-teens focus is to expect. operating leverage model, we our look about different area be a kind of plus that feel continue which opportunity that, the lot going components there, I for I of leverage. I think is that if in big

So, I both that kind if we know question, but your how parts don't that's covered of of --

gross leverage maybe lot. it off your Analyst basis more through to operating Its running, it's fell But at or is But you will your is, Because margin down -- guys XXX below. points basically your to sure, not rise this I'm your seems so. year the -- XXX a about yes, little be interesting, a right? this SG&A. I bit fact the I SG&A hold, address like plus going points, margins and come needs you're mean, Day basis if gross

-- after relates But, these there's other in time, going forward in that shift and that the you get came can doing always in that relative distribution. all topics that to before Is needing they to category anything were margins look came as demand, your price provision different which competitors be pre-buying, is given price, distributors demand manufacturers, more affected they a manufacturers the pricing, shift costs, the But in structurally realized we've had and roofing exploring to had, category, things this in input how is much all high and had swings different. given there's to and creating here perhaps in how you're XXXX demand a the how see oil there I to I'll roofing, industry you. creating you then just So high that's obviously, Pete, better. for volatility? a something little from input cost, this the structural which and given you

answer to Let me there in that, have see how a I'm we going lot --

as -- they core the supply less, very hardscape, as you have things don't business. as of like a your mean, to this the it like especially structural competitors, parts it's been just -- -- benefit has much I can't they chain It's you just good And all. seems As do.

Yes.

we I we've So the in we market in that, based have markets. three mentioned, most this as taken share, year. on think we particular of that's fact have taken And share a in points to four

multiple have locations. We

product more customers, to do markets do. we're irony So I is that mean, of it place in and from anyway. in we ourselves has most work constrained product and locations, in I they buying another, the it days but don't have that move now the another. how the that, to look working one one it only Nobody do what are need we the that nobody deliveries location, we I the to have because coordinate situation our benefit very having we're may I really where express though, specifically the separate beginning as ones are what is as we in if so that get in a our use environment. teams has teams. as hard to Because we big can't them. creating power location our at is to people to a locations and in do I mean, for multiple many to This as orders we have things, tight, lot

So and we're as that benefit to think doing the we're I the us, benefit and working hard take customers, for creating that, for customers it's it we care well. certainly, make can of sure a very

See very you guys much. you soon. Thank

Thank you.

Ken. Thanks,

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

Thank you.

service well for to the have the I contributed company like take of to Before leadership, valued Corp. to knowledge ago, Mark often Corp. CFO has Mark our into We step Since transition his trends ensure wish of dedicated to benefited at for disconnect, years. Melanie certainly Pool partner, advice. for I've we prepared passion technical success Pool his Corp. joined greatly transitions done over as and for just from moment next the experience years will His she into a He years missed his well been be here life. five seamlessly I Mark smooth and a thank as also a would has role to the has He and to he XX business Pool to phase

XX, sharing October Finally, we third on as to XXXX. look a reminder, forward of our results quarter

Thank calendars. you. mark rest please a So great day. your Have your of

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

disconnect. now may You