Pool (POOL) 21 Jul 222022 Q2 Earnings call transcript

Good day and welcome to the Pool Corporation’s Second Quarter 2022 Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Melanie Hart, Vice President and Chief Financial Officer. Please go ahead.

Thank you and welcome to our second quarter 2022 earnings conference call.

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

Investor comments. financial and we addition, our measures Pete? call now website in press release our is to will references and our reconciliation in financial measures to President included section. In description non-GAAP of posted turn corporate to make over Arvan. in and may I A Relations our non-GAAP our Peter CEO, the our

that you, demonstrate Thank sales last billion, year's of billion where XX% another good reported record beating on everyone quarter ever quarter challenges we industry wide quarter saw marking industry. with past and XX%. that our were is the taken results this capacity growth the quarter chain into an quarter where the came the and the increase most of first of totality, by second coming to $X $X.X call. Melanie that net given limited. plus very morning, at recognizing proudly resilience prove and that supply This the we in many is There and second These exceptional the play weather, we strength quarter in this factors sales increase strong morning company when faced the in

year. is and on pool smaller new off, time than somewhat I that backlog the First not construction surprisingly, new say for last solid would demand is pools this

construction expanding renovation of bit, of but installed work projects slowed on builders Our on they that a ever have have leads base pools. the are plenty and new reporting

the start to and weather year impacted two in following chemicals. delayed the and wetter of many packaged our experienced we second pools timing equipment very from a products many sales in seasonal cooler projects and demand that of favorable quarter, markets this of Second, years

As the the the these weather improved we in to when fulfill demand. would strong later for sales increased quarter, have expected, products

Third, several computer have like and in supply areas, many contain pumps variable that automation. persist fleet in chain chips improved constraints but products

a that lead some program the of strong pace as categories mentioned continue. and and will previous decline pumps, doubt, favorable have have inventories hypo smart the and were and fluctuating tremendously, has same for pools keep times as helped continue. a we demand pandemic, without seen Fifth, by base connected availability pools calls. tight have customizations, swimming like to very and is for on products positively new remodel, that can and expect and a of used so we of the demand robotic continuation pools sales management as shop in impact grows demand installed of which speed automation, our replacement the At as granular market dynamics the variable affecting we coronation, that product. heaters Tricor technology Our repair with the inventory such on as improved well ground supercharged above revenue construction Fourth, but cleaners time, and seen us the

represents decline Fortunately, of our a the very sales. total percentage small

by gross Lastly, driven is channel, in that industry increases construction by delays maintenance more We items mix and these and we the To is price that and positive the its current which in than price we near-term products. making volumes would of and pool the has declines profit through chain levels inflation permanent situation in nature. unit both for supply some revenue suppliers, is way our offsetting are the that structural inflation driven new constrained with passing our characterize is weather-related by that the outlook are summarize, cost worked reflected believe and into most performance. seeing

& our grow reported extremely returning we the most [XX%] our during but derive back continues mentioned, over and XX% projected, for the is to be Pool Acquisitions, which products, of that are backlog I revenue as demand where including normal maintenance to revenue Patio installed As well ensuring more base, levels, repair remain to items our remodel performing the Porpoise notably and quarter. strong. may

to from stores our value attract Pinch new new Pinch the Excluding has proven franchisees. revenue and business while unique very by individual continues acquired franchise a pinch unique proposition, the grew allows operations the in value. a very is proven quarter. operate locations, owners best-in-class XX% to which and

This the while Looking at Arizona year quarter. increased quarter. the largest growth by X% the grow saw of is in business we base in in top revenues XX%, sales last grow same that sales Texas our XX% XX%. markets, the by saw on saw California four saw

very I continues Florida grew benefit seasonal weather robust by by of market product were very Our with during business by X% in base markets XX%. a XX% the our we XXXX. grew to X% additional economy Equipment, from quarter mentioned second an second pleased saw they XXXX, business to Overall, of we and above. the that results, XX% by grew grew Continuing our and the impacted quarter. the were sales by pattern year-on as by which what in quarter

key still worth we of As in Texas the freeze is were the disruptions impact. through supply and that working mentioned, continue chain year, area, noting and to components it this last quarter, same shortages impact

Additionally, quarter but by the weather previous in two positively results year. surprisingly, pattern, volumes, year's keep with sizes weather XX% the early this in seasonal that helped, their this Chemical is the position hampered to Not and compared retail this particularly inventory markets years. in parts year were softer the favorable very by when the sales Calico year. in were weather the quarter, we impacted better than the mind in a different unfavorable trichlor last shortage on increased which in experienced

saw in on the which second of the XX%, As mentioned, quarter progressed. XXXX. as sales favorable weather of XX% turned we the is retail top growth quarter sales improved increased more that category Materials Building in the by as this

to this strong. ability is grow Our category

closer We and our pool to or are new to of and capabilities NPT them adding owners and this this owners of thousands refreshing help prospective complete America. to in customers across the millions and most product pool category product centers the bring North showcase offering

as the the are in Our line advice experience most area capabilities in and we of customer complete unmatched training best offer this products, the expert industry. and

seasonal Retail clearly the the and effects sales -- to helped Additionally, augmented grew catalog our excluding which of backyard showroom retail quarter, in our digital Pinch weather the sales, app, by A tool NPT feeling homeowners backyard the reality called the virtually. the own Penny bring markets. X% in

we XX% in period basis the are XX%. that same retail on sales the is It last up results year. purposes, For grew comparative noteworthy year-to-date a

period is than back that Looking Florida Commercial at no results product this is With we driven sales strong on travel this year-round the concentrated serve XX% this the and demand top we and is bouncing see the and markets posting pool are clear weather which growth category, a are that basis, in results of to of to positioned that on bifurcation pool with and Texas. trend up similar port. highly Pinch XX%, in A XXXX. the better in a with saw regional one is leisure same we Penny, encouraged

critical expansive inventory this and have of deep nature the earned expertise business. in We an time-sensitive

negative unfavorable a business a Now on the uncertainty difficult let continent tremendous me by facing very on driven add Europe because results. is European XXXX, weather After some XXXX, our color of the food was war economy quarter. surging X%. wrapping is and it saw currency On XX% a with a and in declined Ukraine constant slowing basis, sales that we energy costs, the in

XX%. For perspective, this XXXX, with compares saw sales same quarter in the where surge we

very is and the business team very seasoned managing our committed European haul. Our strategy over to and we the remain appropriately, is European long

XXX business grew including period, same compares to again, the and his with additional SetPay plan and margins. acquisitions, with very Once XXXX, to our by ability me XX% share. results. in by margin, ever this percent we show first execute off committed with to pleased POOLCORP point so by points results. to continued team. time increase overall very again, Base XX%, out Horizon, strong XX%. I'd to sales increased team's gross team sales have margin sales, income. industry We and on for commentary which pleased and marks very remain gross to exceeded Turning this the At that we once that the and This expenses we strategic basis saw like XX.X%. increased XX%. highly gross with I'm some yet the let that in juncture, grow confident our another are to very the operating total Starting add take milestone

gross margin margin customer helped chain business, basis For increased factors increase. activities, all gross Pricing many percent to and the our increase combined XX.X%, drive the in to points mix XXX management, supply our drive product percent. base

as surprise are a impacted Patio, accordingly. vendor of certain in drive Porpoise incentive Furthermore, and have our the growth lines & pace subsided. purchases. is is which some we increases programs headwinds chemical vendor integrating with faced our early tiers of the we timing and Additionally, increase. the stages the in this price helping of are rapid none Pool planned of Conversely, we Again, executed of by has vertically

see, a offset than we our face. headwinds gross can levers the multitude that, improvement is by driven margin more when As combined, you that of

Looking expenses, our drive creation activities we to continue that pleased see capacity rebuilds. very are at to operating

to These we executed sales happy making XX XX basis from and basis have the X% wages in board quarter, the base points of points, in reflecting the across the by percentage a almost up seen and we our acquisition that results. how the transportation, as increased highest while inflation expenses with and overall the are remained tremendous leases posted operating levels. very XX% Our rates of Considering increase expenses customer-driven team POOLXXX fell focused Porpoise XXX has next Wrapping grew that of at operating sales our operating of out of operating in fuel a that a business list tool. have salaries total respectively. statement, higher creating improvement income margin our generation we and operating we the which margin. of point contains $XXX of sales. result income in a of like XX.X%, XX% capacity up reflect also we in this point released believe operating and income to in basis enhancements will adoption long results I POOLXXX million, would

best. dedicated and these outdoor extremely customers, working thankful extraordinary We all made results, at the of for more our whom this help and supplier loyal is up and teamwork. the build stages possible and created the continues partners base vendor people company a POOLCORP, such of pools our POOLCORP could developed here installed together of spectacular future is enjoy by a our all modernize in more pools of released hard resilient combined to millions as work in early and industry. at and efforts living. to partners We Technology the unique the our that well-managed of by make be to be adoption tremendously not team proud are

to giving to technology The bring the and productive more and from closer than future supply valuable get back the own connected everyone time make manufacturers continues the better. more bright entire Our to is us customers ever. together, chain

approach and very have in the and changing for and is capacity always out looking have We our value create growth. balanced the second been and at to capital investments with company that are to positioning none additional allocation strategic a proposition landscape

we latest & Patio one starting now its only team. our that Our integrated in just true and have Porpoise Pool investment to is potential realize

specialty the is combination environment ability by is synergies even serve, that to made independent improve retail capabilities. growth our better accelerates the world gain a an the leverage we powerful each thousands expand the to in our continue proposition them and to share the will business This technology know industry because to giving extract business uncertain we combination. that stores the value leading of class and We footprint, very

growth have value. ability acquire accretive oriented see been businesses integrate always with to where an We organic and company we select, the

a Additionally, with more prudent POOLCORP. has record no one greenfields than is track better or

additional We locations in opened XX will year. have to and open successfully last in years X XX the an XX this

career develops retains vibrant paths our are a that performance-based attracts, talent, and employees. creating industry-leading We for company

call every vendor strong We loyal that deep have and a POOLCORP are financial with results customer have most deep with combined or we We are pool and more of demanded pool or remodeling pools grows business built one the Unlike to that supplies existence great products in of distributors, loyal and our are It professional it will year guidance whether Melanie we this required remains and commentary the now DIY as sheet one maintenance is the in of $XX.XX material half raising serviced construction service. that and products or during a forever. $XX.XX of update. when is her share. building the enjoys partnerships product maintained produced team other annuity a us, an full industry relationship to financial our turn customers. is to by -- itself essentially relationships built model the entire lifelong a of unique and durable. the advantage pool, mind is year per that behind balance I upon our With each are that and provide over maintaining for all

Pete and everyone. good morning, you, Thank

quarter expected, XXXX As with last growth a the Inflation growth around quarter is sales year-to-date. sales represents XXXX, second growth XX%. XX% increase continued in This for was quarter, a our phenomenal XX% robust pumping significant year's tremendous seasonally over accomplishment. which impact

quarter increases. due occurred having during price the the a Additional impact quarter, of current on timing partial vendor increases, equipment the the to in just the primarily area

sales was the the our our remaining lapping impact benefited that with freeze Texas in to line XXXX. expectations, X% in growth volume added acquisitions in Overall recent sales growth of growth quarter. the Our

QX sales weather evident did impact negative Upper to was rate XX% Pete quarter mentioned, growth X% negative and Canada, X% impact from the currency April However, with lowest month the the continuing year strong. of to to in in experienced X% markets the growth believe local be we as in But growth improved which from an by impact, the the throughout quarter. weather resulting currency the we during being Midwest the the rate see XXXX. macro in growth quarter in sales a local The and round growth on decline weather XXXX sales flows compared Europe quarter. the a during Northeast, activity sales

the foreign QX summary, of brought quarter, the experienced quarter that In foreign shift net currency for results. and quarter [indiscernible] approximately X% approximately would Gross a financials represented on for taken events included have the XX.X% X% XX.X% in sales a the only of also X% consolidated normally they As from X% currency sales of hit impact negative for in Europe QX, X% the 'XX, is weather, A for an negative drag impact year-to-date. place X%. estimated X% for we American down an macro and a to in weather North impact. impressive X% and margins

basis During we XXXX. point realized improvement the on increase business basis over XQ second a a consolidated base point XXX quarter, with activity XXX

result quarter the has Second as moderated we the quarter year gross year QX increase of over than QX full significant our year. accretive This benefit higher seasonality. achieved typically from in the acquisitions. prior margins increase for report in We reported same improvements as an last a from reported we faced in

This inventory from continue to such We manage dollar margin supply provides in LED mix lights, than traditional features benefit CSOs This experienced the our locations. pumps, in recent counterparts. variable also performance-based gross our in it are is nonautomated their to our items margins or vendor our made along our inventory The model XX% more capacity expenses outs and income of as in freight benefits that with of with to environment can additional a $XX margin the operating acquisitions. as significant our leverage, activity of our includes the increased the while incremental rewarded quarter also faster-moving increased products. Operating XXX to Better we improvement. flexibility coupled on seasonal million compensation operating and grow our in expenses only that replenish quarter comprised basis cost a so that levels provided a though operating shareholders experiencing is on avoid us in increase from benefit. to as certain to our an employees sales expense dollar to lost manage expense, gross of necessary increased above increased improvements operating of power enhancing incremental operating to and products locations stock gross resulted make we XX% and income rent even in sales as increases a from of ensure margin continued selling custom operating order from points program sales feed a we higher and Operating see as compensation an network increases saw our $XXX inflationary provides through shipping our volume, series on significant ability creation million. We increased historical sustain timely increased centralized product efforts tight ability costs. incentive growth portion prices ensure and automation also positions

Interest changing quarter operating in debt us provides prior quarter from to proven planning management and developed to $X.X the year a years history discipline company, second agility public due higher last to process over $X.X strategic XX times. macroeconomic respond to and the Our expense million our capabilities as year. XX-year levels increased compared and for million

a ratio to X We leverage or share capital was per compared continued remains increased investments, X.X targeted or benefit diluted conservative realized quarter the below of X X.X repurchasing even range average diluted a reported $X.X position trailing share million of times our and period debt Our we times in same and working share that times. higher overall with $X.X well $X.XX activities per acquisitions and in million XXXX. from to $X.XX

Inventories allocation. reflecting well than fluctuate to growth of turn acquisitions. additional in quarter, balance season. inventories continue fully year-to-year. discussion amounts be stocked June XXXX year-to-date from I and our this and Product sales from now As our last exercises in short X% customers the were stock restricted based are vesting tablets March related prepared option to are the to decreased tax when supply trichlor price benefit and the benefits as has transaction versus ordered in at this and had from on inventory sheet like rolling of due that for in to programs peak experienced time effect these time from realized, now as for Receivables vendor full the will allow supply computed early consistent in we sales and XX%, the in capital last higher a year, higher and the a year. at to result are to we our to of and quarter-to-quarter timing position over stock outs would the increased particular, stock

inflation, higher As $XX million approximately and from a realize for sales volume includes result, approximately products. price inventory additional cost have from million XX% approximately an The in overall we increased we selling balance acquisitions. expect realized these $XX to which

the order $XXX inventory. sales to XXXX, million business base inventory up with half In million] in year and of half with inventory approximately and review sales the Ita where we not expect pipe [ sales. year was We includes in higher turns We seen the have a on are operations second same of pleased inflation. inventory. monitor believe generated result actively resulting develop cash any down period relation as and current areas in inventory to payment and appropriate year through the of million Hurricane rebar, individual by and added quality million of $XX $XX.X from Net The that cash second managing an from hand XXXX. year-to-date, on the $XXX period of level from the levels XXXX and inventory half the demand expected deferred to margin the in do we chemicals, keep negative related We outlays $XXX.X to million levels amounts in year. at impacts in audience continue the SKU future provided are center was current cash the first inventory last by more

of seasonally expect XXXX As we down normal quarter quarter as that take early arise third we we to lead to inventory improved in times, expect order buy in opportunities would in have seen fourth to advantage XXXX. bring

are to The we generate the flows. of For beginning dividend to our significant year, quarter increase quarterly authorized a rate the Board free second expecting cash XXXX. XX% in

$XXX to rate. we million May, of previous our increased have Our the consecutive year. now million the rate share dividends million share increased dividend expect to authorization authorization. repurchase cash Board shareholders represents our for We from buyback per the approximately the dividend available $XXX quarterly Also XXth in to our year $XXX return under share in $X

repurchases of $XXX year-to-date that half we the of This increased full the half purchased. advantage $XXX quarter, million XXX,XXX the taken acquiring XX% period in to realized estimated or XX%. $X.XX the commitment to begin annual highest from benefit of share and of date. bringing year-to-date repurchases our increased benefit. to Inflation range ASU million. the on year were This as dollars Inflation have largely at the the expectations from tax what We shares the lapping and of shares total in moderate for ever year completed share unchanged year $XX.XX company the reflects includes in guidance tax is during the the an to the and excluding number for growth to both XX% impact Earnings in $XX.XX realized will of XX% second the a authorization to the reported XXXX. have we the increases second are invested

Our remain call. of to sales net expectations we our range on February the XX% consistent sales discussed growth for the with XX% year guidance

by Additional by consumables portion negative vendor impacted offset our to not increases slit weather previous price was second volume the guidance factored QX. as a in are in quarter, related business decreases of into in

updates factors Europe also guidance in Our currency for and impacts. foreign

contribution the X% for acquisitions unchanged. estimate from Our is

X the days will reported third in day for less also will additional day number quarter, quarter of the we and same in with have net We first selling have year. the selling we

$XX updated revised of longer-term have interest in The along half year in to with in announced quarter gross million. to our XXX XXXX expecting comparable points so of and previous we guidance. fourth line year slightly moderate third rate revised inflation increases numbers our quarter in Forecasted of QX. interest up in as to line expense realized XXX an points and our and the the We estimate may $XX resulted margin XXXX of in back million improvement the of with in profit part margin gross full from for basis more margins be debt basis average the environment, guidance the outstanding,

We expected in the expect income to the annual rate. than leverage full quarter and be our changes year to No we our year-end slightly be less are rate for rate times. expect X.X than to lower the tax third continue

of that approximately have for share repurchased estimate With XX.X to of shares. effect we updating saving the million we to are year-end the date, shares our

We to growth haven't continue completed X year-to-date now sales states. adding our in a future previously physical West a we greenfield with acquisition in. in early in an Virginia, second had presence XX and capacity state opening we have the quarter sales operating centers With this acquisition, centers

has the some from We're across expanding the lifestyle. is community cards from preventing been headlines living added XX the about store We bringing country, significant have this also year. to even. this the new a in open that Penny stores. new new around expect of year-to-date One shortage Pinch franchise to and still locations pools one enjoyment passionate franchise A during openings the area lately quarter, life We opening outdoor three franchise flowing

$X the of partnership opportunity more tubing than million have not strong donated lessons for part ongoing learn who for programs. donations YMCA's provide X,XXX will had aquatic skills. These Lifeguard with to children As locations with otherwise would to XXX our water we basic training YMCA, the recently country swimming and the throughout

session. challenges. I our operator will call growth results as begin and over see turn very to in the pleased first now the supply of chain are Q&A We to expect XXXX half began our the for industry half continued to with some second relief from our back the the

Please first [Operator comes question. from Merkel William question your Instructions] ahead with Ryan go Blair. with The

and morning Hey, good thanks everyone.

morning. Good

sales So I with wanted to unpacking little guidance a the start bit.

there It it was for Do in sounds The is a I the lower. what for like that that's have And like, Europe. drivers [indiscernible]. being growth outlook So bit your I guide. X% weather original maybe right? think volume main sounds new volumes

Yes.

guidance. X% So of were XX% XX% that look it, originally it at at kind you to in X%, included we to if

believe And weather so little as lost we've Europe. we bit QX updated we well as for to in a

for had updated first kind that we recognizing when originally in range go reiterated the on year, that would quarter, what guidance to we growth had overall we of be indicated, we year through for As we that higher the the QX. similar the

so lapping get into that is play for expectation also when look that other QX, X then we to factors And And already selling for have for day. less less to QX, year be we at were the fourth in of embedded X when those be the will because overall the prior at some the fourth we in numbers that the inflation XX% we'll quarter. costs quarter year will XX%

Got helpful. it. That's

bit color. you the the main why volumes at rank down a single then how My drivers on And get Okay. I it that the comment could on maybe based just Europe July be think you tracking. volumes the is -- would sense are there, of order guide and top list, if that organic right would could be would low digits and of I'm might be lower? but it to be helpful

Yes.

So wave. is a heat seen Europe we other significant than change haven't having a

what our seen as from for in little when contributor So we the we've year, a June. with standpoint. over the July business, a in promise Europe. rest guidance be Europe But we weather volume expect the overall, to updated coming do bit favorable be in we is But the activity look of a in that and much at down full line to pretty

And good the we a call and behind we're this third a that for hoping weather weather in looks rest We're the hoping being But and -- the quarter. we remain is dry, the doing unfavorable quarter. warm us. up for have that so like April lot saw of it of

Ryan. encouraging It’s

it Okay, good. Thanks. I pass on. will

question. next Our comes with Manthey David with from question ahead your Baird. Please go

said on the believe us rough year-over-year. any quarter Melanie, there I could for us Is year and fourth everyone. a with third fourth margin thanks on Thank last you provide lower gross margin. giving But point the a quarter? update both be and third Good you. update would that morning quarter finer quarter, gross full you

No. Yes.

do the comparable basis XXX still we growth, and So -- XXX looking year, that points. had so at we significant from the last

well be of those margins of we to the those certainly will so but above kind And off moderate expect XXXX levels. levels,

were Okay. some could of would remind then also given variable SG&A case sales and past in of cost down numbers reverse And could stack. us incentive sort that costs about kind XXXX, sales in you that out? automatically would us if -- in your you've comp that the flex the the with about the of percentage in you And lower the talk

Yes.

that variable the So that we at look take if at consider the And at we by and that -- when numbers of to million. about variable then decrease seen, compensation when primarily of to that as look included we $XX would at expense the And piece. growth higher XX-XX. to the kind if a the the between incentive you compensation, growth, the is about be we cost. It's normal return we we've look fixed we current breakout the component comp look a relative expect and with in

$XX in Okay. the XX%. is but million the $XX million,

Yes.

Thank very Okay. much. you

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

talk potentially is question bit may in bit. pool potentially there? about as terms some just and trend from Can the what in first of customers My projects out. construction as even on prices little housing hearing a macro demand you your underlying just a shifts thinking the about moderates you're And flatten consumer R&R any thoughts interest home how new that and in consumer of

I What pool backlogs the prepared pandemic. activity translate right hearing pull think of people right into comments, is are right need now, be given to from we're that because expected smaller, my is doesn't I understand what as don't the smaller, which in said is, sometimes backlogs being it done. on during less work are to But now Sure. now. now, the right flurry builders I

daily for obviously, basis And construction. that on there are So plenty -- on renovation project strong. to as mentioned, talk very the a busy. still the still new of out I work pool we is There's and a very remodel also builders backlog

I think and from frankly, values. the that to remodel is housing contributing one construction and of is new factors perspective, a renovation biggest

So values are housing strong.

have several the because everybody flattening equity sales a out So may appreciated. is it that the has a although rates, last values of as the purchased of today housing tremendous that amount be in home years setting on home interest rising

good. that's in addition feedback accrual and from essentially that or getting renovating of makes already likelihood whether that of the remodeling builders. we're there So pool the a that's the home, it's investing the And very

pools, has it, inside little which which So be to are home most newer of So there's looking operates. there technology your -- Most especially to of there's the similar million, base in you nothing experience know, on is of way backyard the as yet. of $X.X the very installed and right? excess a connected for homeowners

America, it that at XX look there of is -- installed Additionally, pools, look in pools across the of need be of being timing at those approximately when a will were in you of it there modernization built, when age you that and shows North the of base when a the pools need are in years update. on shows that is lot the and

busy. whether and So are we're new they pools or busy is from are guidance our builders whether they they that will and are the stay building remodeling renovating, that getting them

leads have the said that, I as mentioned, slowed. Now having

we're So -- pools. going doesn't build to but into, less hey, that translate

tell the would biggest I new is right pool limiting fact, weather. construction factor now on In you

is pool and for especially started Canada Midwest as quarter, upper that's the starts, to time prime During building in prime the well. in through the projects get second which Northeast,

those especially are conducive because constructions New early in construction, behind pool in was the not quarter. to the weather areas

number in they're but that So in they've it's most in -- that of they behind work constructed, our of the areas, not of amount units builders the behind have. those they're

as shoulders are dictate of the is done. that fourth in Now right? the completed There's function, first of will typically capacity XXXX how season, surplus quarter going pools actually you and more get season a the many of those how many really be in know, to the

get to pools, with year days going think, will now are months you how I year-end. I exist on depend of the soon only too that it's tell many and into six to buildable although built, amount between So the largely that think

of Peter, Okay. follow-up That's my you bought lot currently incredibly back question is, quarter. helpful color, stock a this

a on basis. full you I ever think year this more quarter back bought have you that than

think plan as valuations you your that the quarter. of how you about any give that down repurchase stock? inventories the the update Can on thinking programmatic through are anything or As Anything around maybe where else, approach you third cash? are you're work of sort the a to especially of us they for normalizing, uses commentary

will tremendous and we and still left, allocation that a and year authorization The which advantage by the we mentioned our have model we're say this of, taken we Board and industry we continue -- our the price, at which very price an it's really very had to we And share rest have as mean Melanie buyer. additional strong program the I use. in strong. we unchanged. because in Yes. confidence company we've We repurchase capital attractive been the and of were authorization has look granted mentioned, it's is a additional

whether been inventories there's Melanie it of any share amount market, deals always as of we're advantage then consume we and with don't new We our is bring active capital, operating be we there this will flow dividend that we have program. that very new the a whether take in that would is And disciplined expansion cash and cash. the believe in although greenfields going tremendous it's down facilities. free deploy for M&A trucks, year-end out the business, giving. that, mentioned, We're we tremendous as the our and And still increased between there's We big year. know buyback. to I that opportunities now that how And

you Okay, very great. Thank good much luck. and

with from next your with question. Stifel. Our Please comes Andrew ahead question Carter go

within I you the project do down Europe. goes Is Blue that numbers. heavy in kind just markets crusher some U.S. macro Or is very heavy. Europe of where we business? here kind to weather, terms small of too the your currency kind couldn't Where want a the in could realize is ex different the remind that unpack of just guidance? And endure of the a Thanks. decline to see you I good in X% we are versus quarter. different business, us it how year but just of those is proxy? constant portion that throughout U.S. did the the decline, if pretty

Thank you.

on So and year off year. very, down Europe, Europe quarter a they very a is very, that basis, constant and quarter, said last had comps that we strong second X%, currency of

is than about as is smaller most year. there estate and across in in But five different pools this to strong. that find smaller surrounds to mentioned, tremendous Europe. tends you what are homes had still market less I automation Having nice headwinds America. pools they said real Europe some a Europe be in features are the that, North North America. million opportunity. There's than European with be the They pools less because So They tend

that with is which Europe, or trend was this then it's in is in there but and the creates Europeans for nicely. through people's of continent, and a weather an that, started the war North is XXXX uncertainty it very to the with, lastly, And tremendous waves, you that when that to on into and America Europe, war sales war extended their encouraged would that is picked with to quarter items is we two, crazy makes hit, on immediate the the I'm enough saw not on is one. that spring number First, we when in energy in on Europe, just on and What that that kind reversal of now on uncertainty which second about with, heat people's the prices, dreadful. energy the up don't the other that's mind. if Number in Europe Europe though, And even over that contend think the sales heat have food minds inflation extends another that in frankly, basic compound inflation worse.

So we very are encouraged.

We having excited through about the market dynamics very hadn't we in prospects anticipated. some are -- that are future we work we're to Europe, but very

Europe However, our team solid. in is rock

I we about to as think we were market. do. bring operating new than Europe in are to tremendous the the before. grow optimistic knows management We to no continue They're what future and have to Our take team business the and a less mentioned, we opportunity appropriately. products share And

Thanks.

Second in inventory out the that within still that question, your that as over be you're gears do chain smaller I a the what us inventory years? a be could they and could manage question, you wanted tight, bit. deflationary to have overcorrect risk little reflected is just you you're a remind as the you risk potentially transitory eases to in in mentioned And potentially doing. that's Where and of kind know position X and I of lot the see to shift a much exposure that inflation you competitors could situation thing how supply it.

we where nature. to of there in believe price pipe, it's inventory, in we for any a we're I -- we products items actually what made our inflation, everything that, I our see said that whether our our make. is comments couple small transitory a a labor permanent a point With of level. the see rebar PVC business, into being it's have business. be the where are that cost, that manufacturers in the component don't the of with that on labor seen scenario huge From or Yes. structural. majority from in whether there to vast inflation in deflation. most suppliers translates of more And a increase commodity Having my going very a it's likely are our portion

of such some represents there driven, dollars be portion it labor the small and if material raw a less I obviously, we inventory really that that swings percentage just of really and the other, one inventory not commodity or So movement, it's happening. small inventory our portion even of see more it's anything in so could that total but where contemplate. the the way that it is pricing a don't small And in

continues time then safety stock. extending, what chain, the had ordering to having stock or your think levels you are relates last in bigger ordering more year, plus get more and your happened time the led that your of to usage lead of you and your distributors is had lead order were I stocking and supply a it function lead which times you distribution typically you're both down when because But inventory, bring chemical Well, to short oversupply that several considerably, As on times lead hang-ups product the are on to very short because is get the down have I the going are is news you it's to last on you think The that in there there in longer take were it. products mention, and is, that still inventory. out come many to us supply year, good products allowing though, side did is side. equipment supply, to that

with was trichlor year, and trichlor. last I Calico. equipment, year, flushed essentially similar I'm on flushed When comes it's with Calico short dynamic. on This to and it a So short I'm

a heaters. that's that automation issues on plenty an salt a short This year, were chip a the LED and whether we it's I still see supply have whether items year, But or them, on or chip cell last have heaters. backlog significant in it's So of -- an motor, motor whether chain inconsistency in still speed deliveries. light we variable center or it's drive embedded

I will on. pass it Thanks.

Thanks.

from Grooms Stephens. with comes question. next Our Please ahead your question go Trey with

Merkousko good This on Noah Trey. actually Hi, is for morning.

top last moderate couple from So my of We've may about line hoping was cetera. seen question, improvement you talk could et levels, longer years, first longer term. the margins the over normal to term, suppliers, more I seeing growth of sustainability EBIT significant inflation less but

of in you level how profitability? confidence get this sustaining Just do

two items. It's Okay.

that focus to creation areas we're as work that more to we we relates to we that operate continue and centers as capacity know that out initiatives our additional those we expand we roll on, effectively. to doing of all, first continue continue sales So as to in it what

can the more we volume the based sale we And on model push have place. in so that centers through growth

the to that it the where of is individually X% a at to kind X% included million of growth the component than is currently. within $XX expense be is level compensation dollars the that The about normalized line organic current other the are additional would be kind less to probably one that going in item a our long-term moved reference that significant performance-based

I would just curious terms it's hotel And been a for in the recent big next pools? makes percentage seeing business, sense. my demand? up, for part smaller what are right. what year. know your growth there's hotel side Right, some construction then calling overall on go commercial of into but overall you in business I'm of That of forecast the follow

see is than percentage. very we a And because opportunities have in larger we market our honestly, still It's the small of commercial that pool in the what smaller area. residential Yes. it's one would share

they're right demand amount bid the So the seen travel, areas, in there's see, news, the resorts of their aquatic with people are busy, us. money has and watching projects we're as And now. the the -- by of out for all are put everybody traveling investing is that a by the very to good bid frankly we ton boom that and encouraged in being which with very

rebound the outlook. but that on a in maintenance we've the continue the and repair, grow capitalize think we to specialists happy slowed invested construction, heavily So very inventory. and of whether the opportunity it's back or in see are a we of new We've to certainly, best with bounce to that significant after which it's business invested that considerably, part in the seen at whether area. -- positions we pandemic, us the programs, beginning We've

encouraging. will leave there. really that’s I Thanks, it

Thank you.

Our Please go with with comes your David from next question question. Research. Longbow ahead McGregor

volume you dollar what programs that How talk the unit any, for good programs, Yes, vendor morning. you evolving volumes. be thresholds, Can in with vendor just rebate and on offers certain is if about seeing, rebates changes environment? may this

comments, one turned has last year, that tailwinds year headwind upon baseline do it really what the margin right? this Yes. and mentioned the of my had to buy. a and programs with gross our and when we structure, related that I purchases a we The timing into change has to there's as don't there predicated then They're is the in all which is in growth, of

come down, going to So obviously, as less. lead I'm buy times

then the programs, contrast I'm less, if the certainly change. to buy which to vendor going that's really So of affect going doesn't

inventory a and a the to It So We us. it. do vendor off was -- attractive buy And are continue our to We calculus will opportunities that wasn't burn expect surprise year, from next some that would manage going program as we we but knew mentioned, of margins. as to what us. into normal again, early it. season the get gross winds I season that a our contemplated down in to we be and we to

Okay.

your ago? couple talked earnings question from here of ask it now We've that about different but maybe bit price way. half may and slightly Maybe, since just where days XX Second little in of second a out me. view coming for was view changed a Pete, you, on what's how different And questions, last be a cost price different cost call? your I

was me the see asked of be, I we're future I where And have buy today, call increases than at to think more say, you I I sit more said thought don't likelihood would if Yes. from going the likely on would price what early last it least not. was program. until going much inflation, I the to

is which a So thing. pricing not the bad necessarily is I think more environment stable,

I I So demand, certainly right? think change. good in thing, the is customers don't but between fall. for major and early hasn't it's demand, now stability good the programs that's buy really I be that our a would the don't predictability see much change think affected and news. It affected but the

very Thanks it. Got much.

you. Thank

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

thanks appreciate me Hi, for it. in, squeezing

it couple last what I Just of over and added the of follow-ups, you growth to could. think mix to share years? if quantify couple Is have possible a

mix, So pieces. we look at you as different we different at two in that we components, -- two at look look those really, as

see we products. that of selling So certain products can some kind on is we're of the of where the traditional more mix

than building quarter, So as gross way other growth margin we is that of quarters the call individual out, it when things. dollar you growth But the for look the at chemical in material the particular, at -- is we those types we're growth, impact. higher look

And it available, portion margin that activity and coming driving of ago. increase in -- readily certainly gross see is lighting, products. That are the and actually lot to that really fee variable pumps, significant sales a in that a We products as dollar the out the several than relates LED more the so years more were they automated automated those particular those increases. of

COVID and gained you've much of any through situation? Thanks share Okay. this how thoughts on kind

by look We that at Yes. market.

look the share. at other back number of of go market that as we've the when reference we every to continuing is part opened capture gains, greenfield there competitor greenfields and the expectation that that we when opening, share so is the we're And

And one strategic of those behind new the so opening is that purposes locations.

are been have very investments. And the share of that for kind focus to overall our new the favorable, come expansion through our -- done serving of customers -- us but the have products. increased also our looking on the we've So gains that then

relationships the with we on have, focus so forward. we are that, that that BXB options have go we some and that software, in And our sticky POOLXXX particular, making our sure of competitors those as don't the

think much growth in of how product Steve, is pretty of it's mix. terms I our balanced,

I as varies Melanie it think market. balanced. pretty And says, by it's

Fair right. and obviously, it's All for you, a quick And view Okay. risk market of the maybe is your know off here, enough. of I but a Pete. up sort not follow 'XX. taking 'XX view

playbook? what through and would of more be pass, But your your for were more I and meaning as that a you you don't managing batten how on year do have there? caveat playbook. downturn. with And that again, hatches out the I'd the Or you down a characterize think do down storm POOLCORP, there sort you view. view the if just So downturn, to must a M&A? of or wait I'm for X curious, Do How do that's put greenfields a you aggressive kind get

has appreciated as installed the mentioned, Yes. And most is downturn industry. in and And everybody that I POOLCORP has from another. unique doesn't business of mean I sure translate we not be think -- mentioned a derived as of very one which pools, as unique and I a same company maintained. the I'm base our a to is results industry very to is

move. is even our it's and pool most of $XX,XXX base, nondiscretionary. installed that is business the during business have which happen. out $XXX,XXX, XX% our but that $XXX,XXX, repair nondiscretionary the to has So impact new great tied of on construction And Recession, Over whether be turns or the didn't $XXX,XXX to to going our -- some the maintenance is business, and existing of

rates people the last purchased so they years think, going we're amount translates interest value the a to home, if in are continue portions they perform. in even environment, part at business, that second home And populist by drop going to one lot a there is anything to I portion houses their very a Most would refinance. house given would don't of the driven of semi-discretionary. and five I house were going of from is what into net that pay because economic are business some -- stable two values, that current in continue money our the business, hands, supply so I see have housing to environment, that that invest home in that a think being expect demand people being look is the other would are of an but So the significant think would to as shortage. call we if attractive to home. I scenario the if home we much interest very change given are That of which rate really There to think the are don't much values else. sell equity we

a into lead that given of statistics any believe factors, to construction us is swing based and a could unemployment one new always economic, variety or stable. to going we capacity big new think going look construction. brought to pools we the you weather a market the going factor in industry that would on labor business, the built how is labor, that some If every way see which our I to construction the very be current get there's more other month, again new So of environment, I be pool all many renovation at that for be the bunch tell wouldn't very,

would of and So business is stable. say I that, portion the that good

to we're to that our may opportunities playbook. persist, So run continue going

more, invest We're of our to So we to maximally in in We as and need our continue capacity when we going additional out allocation creation need. the a And capacity can. possibly disciplined invest capacity we business as necessary capacity add the it. And of capacity. invest capital portions then don't we much use to have to go where need ahead we we expand very strategy.

technology, give will think improve to involved, which portion to going is everybody invest that going experience. of time we continue. our whether in back So the think it's dealers to customer business continue or to whether us. it's We'll We it's the

we buyer. strategy. very a also M&A buyer. well-capitalized strategic important are of our capital We're that's part also a From very perspective, So an an allocation

for we're the So sheet and execute strength sense. have always think out could balance be to us makes lookout that anything businesses on I to we valuable the on certainly that valuable and there see are we

value our proven see infrastructure and have of record We is track simply our that mind. others, expansive -- footprint do From opportunity. it capitalize option, something is that is We know greenfield very what a it's we simply think have the we think we if balance do that very the how business have a and on beyond makes being to being the sheet sense, that in have the of If don't to certainly valuation we the worth with requested acquisitions. perspective, is unlike buy because if a our to disciplined anything to it. attractive we the have, We certainly it. we

less experience care and taking we're we in best of customer rewarded take our so we So service makes leaning us for during economic we and continue provide the focused in pandemic, may pandemic and market been We're capacity pandemic customer. be robust the think making sure of that because into to share creation that we the environment on continue after creation are better the the mindful even that into that of business. a future, lean we've capacity a we'll before the the level to

a Are in be opportunities Absolutely. like really So Certainly. But side? them could overall position to if on change. M&A we doesn't there on jump the we them plan our

so Super. the much. all details. appreciate Thanks I

[Operator Loop Garik next question. Shmois Instructions] Please Our question Capital. go ahead with comes with your from

Hi, thanks for me in. squeezing

the comparable levels wondering to improved I throughout to wondering after degree seasonal if after market push weather the how they First April. back you more could question quarter? was progressed provide sales I'm is, the

Yes.

what here's happens. So

pool look for when to business won't So have the back business markets, at right? consumables, portion being the right, nature the the the of is the seasonal You is of you get the in that used.

be it's the why going like to markets the the year us, here's for early look what sometimes news is later then So are would beginning well, can where and are so people have little maintenance cold of when to was capacity that get up those days is those much an if capacity. it seasonal get rainy using at up fall, the in end. it gone, which gone, and good the Unless back, are end call don't products a there's the of on those very or they're the than less it the pool middle, month opens The it max growth you typically season very summer a anyway, back. almost days because say, And the you end your is depends than because they're late and extended on repair and and going less. with to you

on comes year. the of the of most our shoulders So growth

construction get the you side, On those days, back. can

if remodel and the winter, need weather some satisfy. cases, for keep good customers that then going new in early later in have the stays construction, fall, they if they are the stays to backlogs to the demand there because working certainly and in good weather our So and renovation is builders and

you is the that. just your level few above due you've the could see upcoming you question referenced upcoming appreciate but X% early X% some Or early, deflation through on Would on of year, times. see in your be bit I range? be as for thoughts it. My more normal the to it occurring? some to it of Got a would negotiations inflation but follow it's up could work into destocking normal? hoping next little the know a just you I that's of

will to knows. year. that is price think forward going clearly is I for wish is it's I year be I same going manufacturers industry today any well raw anybody I was I prices But whether paying the ever estate, going sometimes more inflation years obviously that that cheaper. would products to think their inflation real probably through think above costs inflation prices what operating the relates that an remains escalate. I'm then this meaning they Yes. mean I'm whether this next to could it's is I our that affecting people, forward unfortunately, X% cheaper of it's we us the norm. going where escalate going tell inflation whether factors side, we typically be to I to is are continue a I it's X%, than industry not on as seen. went got, material. move and think How get Remember, important The mentioned don't the pay paying you affect it to What's what I'm because much couple is what

I to I saw I'm to going to the I I year it's, very So thematically to year again, next but inflation would norm. be tell tell, guess you don't going is well. well as above that that's soon above convinced going not norm this as inflation we year think -- be next that much the think that be is as but I

that. appreciate Thanks. I Great.

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

joining Thank our October quarter we you. today. third you, We the Thank look a results great to Have for and to reporting XX. you will then. call on day, forward XXXX everyone, talk

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

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