Pool (POOL) 20 Apr 232023 Q1 Earnings call transcript

Good morning and welcome to the Pool Corporation First Quarter 2023 Conference Call. All participants will be in 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'd now like to turn the conference over to Melanie Hart, Vice President and Chief Financial Officer. ahead. go Please

our to XXXX conference earnings Welcome first call. everyone quarter

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

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

Peter begin the Arvan, will CEO, comments. President our call with and his

quarter Melanie, everyone and affected morning to adversely difficult and across This by on challenging you, XXXX. weather morning up of were good comparisons market, which our American results from the North patterns were call. Thank extremely first against most we the we released

year weather total Despite we and cooler both to wetter revenue of extraordinarily base for posted XXXX. and of business across when round billion, XX% revenue compared markets, $X.X down our many

especially As In a of line first in first reminder, which XX%, we in areas performed the our where of and weather some quarter-over-quarter was an tough with makes XXXX, by is sales that additional our the is expectations. but confronted business saw of of grow itself, What unprecedented quarter the grew when though our sales a in base major encouraging business markets. with normal, weather XXXX, comparison the XX%. quarter in

same in a by last and sales quarter XX%. and temperatures you California, curtailed which increase compares amounts saw year in spending, sales this specifically year historic the the markets, with X%. led cooler business quarter, XX% rain saw know, maintenance and important we where sales our market. we at construction Looking saw This very of of well as round base both decline to decline

too Arizona in we they for and XX% compared saw way normal what comparison, by In temperatures as Again, Arizona, the decline experience to saw cooler rain XXXX. above same and we as sales the a period of average patterns XX%. Texas, normal seasonal following line for increased year, which the X% X% weather last earlier. experienced year, more gain saw with pattern, saw which is sales same quarter a set last expectations in by sales

Florida, which quarter. the X% same on the XX% increase last saw that saw favorable experienced we weather in top sales of growth year in quarter, the

XXXX. in XX%, XX% Our seasonal quarter first compares with of markets, which the decrease sales include saw this we that but Canada saw the growth

external were changed quickly weather progressed industry, quarter been As in our by meaningful. sales our in the and to variable more Early the more has headwind a always biggest impactful encouraged impact quarter, as the became business conditions, the but effects true the we the single became that and is can weather. that

repair repair be some limiting the inclement mostly on usage, Maintenance made curtails allows. weather as may equipment lost the the of which pools the and weather, unused may and million. in, by All and the so have to seen weather million far living that $XX this $XX revenue believe impacted approximately which adverse in that we the spending up lower shoulders during go needs. outdoor particularly if U.S., chemical definitely postpone we season negatively historic Western the Typically pool pattern construction, delays, year, are speaking, weather spending,

headwinds. and mostly additional by number we believe the is new down. some a is XX% clearly assessing pool from decline permit so In over guides, total, some XX% economic demand ranges percent overall negative teens than data, pool worse is far. permit in After in down our markets. previous construction The initial for high approximately to This we contemplated weather the had driven

X%, first Weather, activity on which quarter XQ and construction contributed However, levels interest pool consumer comparing the lower but that end a permits rates, the level basis, permit is sequential all COVID up to up. is to of XXXX, encouraging. tailwinds see year-over-year when XXXX we quarterly of the spending encouraged we are

continue pressure as most that continue cost down higher which construction the that is which to that our share, finance lower end take are the higher typically with into pools under construction we borrowing see costs. our past consistent We pool with performance. to sales consumers our the We segment grapple XX%, estimate of and implies pool

and commitment of for to continue proposition us Our experience unmatched customer the make choice the unparalleled to supplier value industry. an

the is driven For remaining business. by Approximately context, and and business for maintenance repair by our new pool with remodel. construction approximately renovation XX% driven XX% the being of accounts of XX%

pools you can by that As already XX% driven is our exist. of business see, approximately

renovation construction As better be appears we that XX%. much anticipated to -- on renovation holding the are approximately new pool sales is had pool construction. new our than This business our up off based estimates

and of are only used renovation solid. implies activity that renovation sales are construction that X%, down construction However, key which only in is products

as later to quarter, markets. normal supply Turning tend product to normal the buying and more Base and believe less align channel the delayed to swimming shipments return start availability. stores up also reflecting to weather normalized a Commercial a business to material to to chains with season end cooler have retail a of XX%. spring supply, country were later be the across the sales are XX% off sales, We dependent, pool normalized. weather which patterns some for the most

for sell Pinch our A is revenue franchisee retail indicator through. Penny

for is where year. in we a the more of the Here, indication sales resilience typical XX% good is we believe of in of time the increase quarter, saw weather this which demand markets

see should unfavorable equipment unit lower specific XX% construction attributable no the that It were down declines in customer to to and to quarter, later which early categories. based is smaller product surprise weather, on buys. sales volume and be on Moving backlogs,

sales XX%, also Of were lower is with reflecting the saw wetter we weather favorable pricing this is and hold change Chemical in Florida, saw a and new cooler for noted, numbers. were somewhat Building all builds quarter to as throughout note, increases offset normal. in sales X%, down renovation holding weather. category previously in chemical expected XX%. expected the As no had are quarter increase down are remodel as which the by and higher material sales the quarter which

Europe. context now Let some me on provide

the our combined We demand remains and in continue Europe to war, of resulted in The that outlook in create sales soft. XX%. the see general economic have headwinds effects the -- weather the that decline again, to

economic the were first For context, had was more the of last as to general and the yet sales up X% the effects quarter, begin outlook stable. and war year

so XXXX stack is difficult. quarter first the increase the reference, quite year For of saw two XXX%, sales

results. business based Horizon to Turning

and Weather some sales activities the we are this most implications commercial of loss residential project being The with optimistic felt stronger X% business can up. as be in prevalent Texas. by offset made quarter this first somewhat decreased demand and projects, in declining Western Florida in are well, that states, delaying but demand some

down income let Moving me briefly the statement, cover margin. gross

we provide XX.X% prepared reflecting investments. to her area pricing We work that in pleased additional that posted remarks. we done have are related this color Melanie very the inventory the will in with mix, and

of Operating expenses at XX.X% came net sales. in

that higher than we this inflation effects years, seen we of Although, investments largely this softer two to and growth, attributable is driven is long-term towards the revenue a the our weather continue previous to make quarter. have

to to impede cost do not future demand. our have is we structural but somewhat ability our take model we discussed, want that variable, As actions would fulfill previously

to in us As quarter. first believe given invest to especially our quarter allow seasonally We, into you read premature continue best-in-class and It least continue headwinds. know, and to weather programs for and provide new suppliers. is be however, the the value our service customers the we to significant, would much unprecedented centers customer sales too that

five acquired, new locations, For added the quarter, greenfields. we seven two and

we seven. of year, the another expect the add to balance to For five

order A welcomed five activity Pinch tools, With deeper Additionally, only POOLXXX to new customer within indicating the X%, saw new penetration franchise our decreased and locations usage by respect customer Penny increased in base. quarter. online

the operating shoulders higher that season, is than of XX% constrained reflects the reported quarter weather what execution environment. than of significantly first is the the pre-pandemic the represents XX% levels. which Completing XXXX decline it $XXX posted statement, income million, in income in strong the It at we of this although noteworthy and higher we

our the face expenses. financial commentary, In the results. economy for let how and any turn with we can her costs in can behavior, and over Competitive geopolitical me guidance that our also challenges update. given of Melanie customer year and affect I address Before operating labor to impact the availability weather late call events and uncertainties and pressures

prepare Some on impact short-term results. still of and we have a we but cannot, can for while foresee these significant financial others

the on that operating each, one results a impacted year, or size, uncommon with where but frequently significant the on can vary is is not In operating it more market changes impacts that on felt seen The more prominent be results implications to with vary they short-term in tells past. by experience have impact are timing. we the of us these which weather, This conditions. new the and typical occur it in produce will in the weather nothing immediate event, based

XXXX our of significant, were the are be impacts through saw California, the two Changes business. were significant the In largest we we favorably XXXX more in are contemplated in Arizona as but our guidance. the which weather saw XXXX, generally At results in of and economic and COVID effects later and round same which time, factors effects expiration prevalent more pronounced. felt quarter impacted slowly in most can the the season expected the where year markets, tailwinds, previous across

the in markets to and when the patterns year-over-year can each year the variances large will cause change up in stack Individually, in But operating rest with basis. results very our are in markets, results meaningful it a round normal notable buying combined on of they short-term. return

migration and arrangements to profile of homeowners. resilience for and has business take is outdoor of from is it way industry, size opportunity over the existing continues, on as install stronger our work The modernize desirable. more as inflation highly our the remain stay unmatched industry and and by continue which pool valuable. is want and Pools unchanged driven and larger. install -- The upgrade of grow channel base of fundamentals long-term. remind was We The its competitive that and much making very products base that just this age, remained will the to to living southern many the Flexible to gets pools, today year. of to based in and pools larger continue and through our the every the remain ability investors share home pre-COVID, true our here made place the backyard the

of investing strategic in enable gains, our a be capabilities value would to supplier and with to remain disservice capital short-term us or to in from deviating a continue and our in to plan Taking the the investors. on reacting to proven industry. committed and issues changes offering discipline the the short-term service our structural like We and weather focused remaining view best allocation. business being will broaden that We see product execution share our while

mostly but the long-term. interest to weather related pressures and The but pass, living on will short-term, rates will in desirability pool quarter their outdoor the will stay. construction issues remain of the The economic first the new pools in results effects will affect strong

base continue grow creation size installed Capacity in continues. Our will and to value.

will of on we investment see people and the business. and day short-term and is on being employer long-term confidence and what that our issues efficient success each continued helping in be of choice bearing us grow more on our have Our customers focus is our gives the ongoing our that and we no focus the

mind, but of elected to $XX.XX challenges, to confident size have remain our of to for done estimated increase and in the guidance future. to the and proud the what XXXX With lower we recent account range the has this team for incredibly $XX.XX in our very

turn call financial now commentary. Melanie for to will over I her the

Thank morning you, and Pete, good everyone.

first billion remain base. third the our $X for last a quarter a continue the XX% in have several of realized inflation to XX% in we year exceeded row, We part years the sales as cumulative to see the in over

business line growth Our of XX% first where over realize XX% XXXX, base XX% we growth XX% XXXX. first a and increase decrease and top to still represents quarter compares quarter revenue

some At Inflation place expectations the at any beginning intact. price is are our time, for seeing in remains that by around through chemical product season. line and during quarter the overall we of trichlor not additional other the the was pricing inflation increases to increases Chemical with offset in X% with the aware pricing season took equipment this on pressures come of lines.

from Prior multiple reflects a year inflation. margin basis margin benefits margin gross the year levels than standpoint. XX.X% of Gross was of included price points XXX less prior first a and comparison strong higher historical quarter changes for from amid

of made includes related from As of year through higher lower margins, acquisition expected, year, the from continuing XX% first quarter inventory we toward base the also gross margin anticipate gross cost reflects guidance longer our sell would full and last investments accretion. our term benefited benefits the which

Operating and higher higher the fourth over our also million we would us leverage or quarters prior is sales sales quarters X% expenses of year. to expenses. increased where first typically non-variable significantly third impact $XX.X related volume second and costs as ability and see for Fixed more costs more correlations to provide

During the long-term that those projects growth specifically continue strategic around profitability, anticipate to customer drive our we experience quarter, invest in and will we offerings.

are network limiting offset we year increases. in and people ago, Therefore, related insurance, we total IT, cost marketing, expense seeing increasing from in to a on the to and year-over-year facilities, freight, the focused inflationary areas. advertising the increased overall Our increases are and these have productivity dollar

locations also generate neutral expanded added be locations which normalized market an year represent areas. gain increase overall generally earnings new operating but initial during have two on to growth, new year and will capacity These in the profitability cost ability geographic and higher earnings quarter, will share five and by We will drag to our and be four.

impacted to we still be Pinch This full the our a of longer network. not term year, franchise locations of Penny has as XX For locations by similar new as is the the to been added to plan addition view A in considerations. market part number short-term open anticipated

as XX.X%, of of benefits as an have realized of are shoulder achieved the see less XXXX a provide the a continue leverage, operating larger expect margin quarter to results XXXX step longer we and profitability. we indication for efficient. but prior to of and first The good quarter the consistent over would season scale leverage we term opportunity was the with up for quarter in for which of first first the margin five our We the the quarters more meaningful increased in years become

prior saw for the for increase quarter. million over expense our year in Interest as year to quarter X.X% prior from X.X% rates the $XX.X increased average current interest we

making have year-end, also repurchases $XX consistent our upstanding held share with in debt year-to-date. while We million market open

remain stated ratio continued adequate to to have capacity and leverage capital more We under our than target our priorities. fund

was them consistent and sheet XXXX. cash Net to flows. a continue compared balance XX.X as XX.X to utilize sales changes, customers our we support we discuss valuable Days their sales outstanding in sales credit and function days I'll activity. our our overall Next, work decrease with to days with as receivables resource to

have Inventory supply we level increases and chains from continued quarter times saw XXXX normalized. when third to lead improve

at our third in reduced XXXX. fourth XX% year-over-year growth XXXX, inventory quarter business quarter first XX% have again in to We XXXX from to X% base and quarter

provide have by is SKU, our the can of by inventory center that optimal ensures on highest focus customers. of inventory and for service Our sale and we which level levels

levels a same of time year had inventory the stock season progress normal end return safety at we levels. making target inventory are the continuing last to and through the as moving are We to on this

managing from capital million efforts of and the working Our quarter improvement in operations last flows are year. $XXX evident over first on cash

higher expecting are year the payments terms programs vendor early quarter last and offered. in not on third generally by compared second were to seasonal where We these payment

operations However, $XXX is exceed from to full million. flow year expected cash

announce and and Directors remaining time allocation review quarter have our Typically shortly the with our meeting the during repurchase any under changes program will plan of share authorization. buyback share of thereafter. of upcoming million Board capital $XX at completed We $XXX annual our million our

the updated XXXX. have We guidance for our year full EPS

including $XX.XX date. to ASU Our the benefit $X.XX tax new is realized $XX.XX, to range

and date weather Continuing mild low environment. range considers the unfavorable a the or the at from expected recessionary impacts end impact the to year could our of climate throughout remainder a Our economic outlook. results worsening

it less on buildable expecting view decline to to dates. XXXX to the now guidance. X% mid and digits new compared initial from are current We year-to-date be of could versus number available Based permits up single the XX% our trends, the to that of pool issued sales to flat construction see possible down in is down

also quarter. of the from Maintenance expected stemming revenue see is consumable unfavorable less in expected previously the from a lower than use first the X% increase weather to

Our relatively and to Horizon activity, expectations business Europe overall related renovation in our remain remodel unchanged.

a the our to pursue to two continue impact Supply, quarter. during results. first the Horizon to with on year acquisition tuck-in & four network Irrigation We five acquisitions minimal Landscape year Pro-Water of by adding the for XXXX current completed our We purchasing locations

in followed growth growth The is quarter, first Looking in QX largest trends modest to QX first be and impact in base seen saw at the and growth the XX% expected growth last we on year-over-year and half. by business year, first in the QX. XX% quarter

one for in We compared year less quarter, XXXX. full to the and third have selling day the

margins in longer of to around for our continue forecast We the XX%. gross year full profit line with term guidance

prior Second comparison quarter difficult margins points gross will XXX increase XXXX. be from basis a year as

higher expect is we be year normal margin quarter. than the So as second XXXX quarter the for slightly the second full would projection to for

on pressures partially be cost expenses on input continued to less by are in efforts Growth creation than and offset be our capacity significantly with. the manage challenged operating we Inflationary inflationary will variable will costs. costs our ability

teams make be costs valuable in while and necessary our invest continuing manage decisions will will to growth. team programs to long-term to Our members management support that

more Reduced capacities optimization. replenishment, focus programs, will delivery projects, volumes network would significant the sliding spend. of field operational as more without such and order capital on priority express across our thin available our initiatives longer term expansion allow These ongoing for pick velocity increase

range We exceptional year. cash still we $XX to for not have $XX throughout anticipate to the year. generation, changes interest our full balances any debt flow interest decrease been There With to expect will expense million on from expectations expense million. the

the to on debt agreements position. quarter. rate from plan will second the materially end our This or impact results before to LIBOR also complete We our financial SOFR change of transition available not

rate from overall debt currently tied to to rate, fixed benefit of swap continues borrowing our agreements. interest Our rate the portion

approximately million million number March will outstanding shares applied average shares quarter weighted net This at be to XX.X Estimated the XX.X was million each year. be share XX.X income will full for that XXst. at remaining and

sharer our to any impact We future update of forecast will reflect the quarterly purchases.

has we those priorities, As expanded. key operating ESG framework to ability on our to four priorities integrate continue our focus our into

expand in creation only We expect utilize margins the as same capacity our to benefits but our to operating assist to efforts over we and the the also not governance, sustainability efforts our around long-term. practices grow

Our second issued during have will will and be accomplished. annual corporate quarter responsibility we report more the detail on provide what

as weather Our period first conditions, chain nature and focusing and challenging generating transition exit long-term only year quarter operating current while coupled time results reflects to XXXX our growth of strong business. with navigate uncharacteristic supply stable on we a disruptions of growth the macroeconomic

session. Q&A our begin now will We

We begin the will session. question-and-answer now Instructions] [Operator

question will William first Our from Blair. Merkel with come Ryan

go You may now ahead.

everyone. the morning for taking good Hey, Thanks question.

Morning.

Morning.

I'm comment back First far trends Arizona, and And California off, that's can you bouncing how in wondering all. at specifically on if so April?

April, Yeah. of the -- The different. seen much wasn't But California we month had and month we've that all Ryan, has of Arizona, weather improvement. the beginning progressed, the as

this California, construction construction still On to way, side, builders yards renovation. if think that's are can't and and simply going build forestall renovation, about soaked the the the the construction in it between

the temperature regardless long and work of a work typically renovation as rain. pool there, there's can As

improvement some in seeing area. we're that So

as component As maintenance to you know, to chemicals. Chemicals tied temperature. maintenance, is water really on spend, going it the are biggest relates maintenance, be to the

if be this the are is Arizona's up. to going So we're nineties. that out, to high week, look week the next Sun And and temperatures in mid encouraged you heating

are So, turning we trend our in and we the favor. things like think

falling down the getting the single helpful. way? change quarter bigger is what that year is second guidance expecting That's to then a can for you're confident at it. Got I'm digits. you we apart this Is in really, in weather mostly the And quarter? And mid versus the what demand be first

Yeah.

significantly I Texas, we by those the we was driven prepared also I and look if think that confident because my that good And in in in which -- much line where expectations. quarter weather, at would business the in I mentioned very with results say was had we're weather. very areas Florida, and remarks, did I pretty first well

has with So in have we've cold than Phoenix very had before I in never problem like seen rain combine that had the they've a more thing temperatures. California and XX-year that they've this. in think Arizona. we same The seen water period The market anything

confident you that So I related. would it's that tell in areas, very weather those

markets, but the the look in really you at doesn't terrible, look context I really If at weather it markets, total seasonal to the it you look the have -- quarter at when look happened. in if it in of seasonal

the which weather markets, seasonal the quarter, the delayed the wasn't end, construction weather the of pools delayed the in beginning the markets and actually deteriorated The of opening So projects. simply in bad. seasonal towards

way So that I comfortable played is major role a we're weather opening the think the season the that in up.

And right then just framework, on single is quarter, cadence year? the should digits how about or of of kind mid the we second the the think

Yeah.

of the year when talked kind just expectations from our we kind where guidance. for not original of is significantly changed gave our revenue over about So we the

obviously Although, weather impact the on didn't the quarter. of first we the have

standpoint, XX% that last for up second at comp comparison, growth, then when and quarter was a first base from business XX% only quarter. year just doing the was you're the So

So it's comparison. of when as quarter, second not for the you look a difficult at comparison

of was that the the growth first kind would So our that original move see in for a decline half modest of would the second and kind to of half. guidance larger then we year,

of so out similarly that decline because pretty weather the with half the larger quarter. first the on in to we just the And would expect that play first to

it. Thank Very Got helpful. you.

question will Goldman from Maklari Our Susan with Sachs. next come

now may You ahead. go

everyone. morning Good you. Thank

morning. Good

because also the all about are at in think or the any of new a to cancellation with that quarter. had take that that relates especially or on the ability rate consumers' banks the in during has lending as And environment, changed regional in still seeing pools? that's there? thinking quarter you the the weather, is to backlog, on it question projects bit the willingness first changes they're implications delayed My you were the Do

Very good questions.

months, certainly it that tell end would the nothing there's for So the up I to larger lower XX we're to I going for a have cash. and level lower more relates questions What of pressure common were is at always pools or around as consumer you lower the is lending end out. would that, that of What at that higher buyers Entry how with play financing, consider that's themes. the least had cash we at we much versus to much in that seeing contemplated pools as is couple with year goes last you that have projects, tell the One are the pools. rate that would that banks and of looking you versus paid said, financing financed percentage we percentage, significantly.

don't mid-level way level the much affecting the I issue end. uncertainty think pronounced out, not the entry is really upper year is in but So the at, is, pools, it's playing it and environment let's an the already with the certainly lending call exacerbating at

Okay. in And in the years, talk the part any last benefited of can then, that That's the been shift in you've that How helpful. of there change thinking of are couple maintenance business? share the seen a mix last business? that there months? the Has about the bit you couple the gains has you

question first I didn't of the I apologize, part without And on. your respond touch Yeah. to your -- second

that. about don't really because I really cancellation think delays, So we've of changed. hasn't not seen rate question weather The it's cancellations, your significant.

their season. down weather the deposit that and people they it's So still arranged put put off very were early financing, already had essentially generally in the by

you're days, it your or XX to a XX happens homeowner. later going anticipated, than was fairly I days think XX have So days happy if pool still

Your of share next that of unparalleled salespeople, our and experience the the profiles customer our of inventory carry, has the out to our with the do our with tool providing speed we're get centers, value absolutely and to with has maintenance to business, an the and which people certainly, do locations of it question that knowledge relates our able POOLXXX proposition as at gain. in to helps. Part sales we BXB

on along All to our in best-in-class be is to of service. execution us gain focus those right what we allowed share we to continue with provide believe things have that

that POOLCORP I give don't change. has don't gained We think to going that share historically that typically really that's back. share.

in normal believe here there. Certainly, we of individual that Now operations can't a or tell in market been that that forever. we part continue. gains But share may be the there has aggregate, you customer will

Okay. Thank helpful and everything. That's luck very with you good Pete. color,

Thanks.

Our next question will Baird. with come from Manthey David

now go You may ahead.

morning, Good everyone.

numbers question XXXX just believe XX%, down X%, sure those to top construction algebra. said I said new on down what you I new on And green. First down catch renovation is the you didn't line XX% you have maintenance XX%. right? I make Could

Yeah.

year. had at the beginning So for the put our Horizon make the we what didn't business, we any within of changes top to line assumptions out

of at the to green XX% stay the a business. is range decline will X% that So on

the Okay. And were right? numbers other

the our around side, to volume on expectation -- full on related only the maintenance for just remains the thing year. Well that versus was and the the still -- mention, inflation, X%

pools, that like is ASPs could revenues implying you're seems year? for the new out in XX% with X% that the or It volumes? be bottom that Okay. dropping decline actually on that higher. And end

Yeah.

think the permits to from sequentially have right? permits I year, early think quarter-over-quarter. and -- mentioned, the fourth still saw so we it's to declining we the quarter very, Because was, first call improved. as And last year actually what quarter that I industry, again, very

XX% that you would implies decline. a permit tell activity So I today,

that internal is are only have specific we is mentioned also sales what at our own looking used in are which I what new into our think that pool I by measurement, products that construction. channel,

the And market. in show you performance measure -- at XX. if And more pools affected And the end. the the end than number be the be better would -- I lower XX. data minus in be look more market -- dramatically pool the aggregate, today of it construction performance, would think number would I yes, pools, stable. if is our that higher our much I of think we the as to think so of And going number are minus new permit

So on XXXX. the for higher be to pool -- on think average the than ASP logical would an average that XXXX

seems Okay. declining in that for efforts. second budgeting dollars hope SG&A you're and capacity the to top is flat And year? efficiency to creation be on like your that then, what SG&A, you're Is saying with to investments making that say it you're a the environment, offset line you

So the will follow dollars SG&A volumes.

our where two the at activities So our negative falls. strategic some talked events related to within range. And top we plus of manage is, a could could that some line The our the compared that special we really gives look -- to POOLXXX standpoint. kind quarter as investments kind us look quarter, you to of you when been those about and to It depending to first two at upon and marketing year, be it and key that our ability on. in the we've first advertising customer things of projects some technology had focused of from last

to third from from the when to larger going a So we when second freight and overtime. see quarter, increases that's staffing, get you're

into see a more So play. lot those variable those are really of where we expenses come

year to leverage in when of growth expense for first second look that we the the and in we that significantly at quarter kind you quarters. down -- full something a less that would expense expect third going than the certainly So X% through would that see come that

sense. you. Thank Makes

from Bank. come Deutsche will with question next Ahlersmeyer Joe Our

ahead. You may now go

the Thanks guys. question, Yeah. for

And caught down from the $XX in the quarter. quarter. million XX%. base I say weather the sort I that we around of think to you -- take out you're heard singles that think incorrectly? a still business decline, the before impact if about said I I of So decline of mid million I Is the $XX or And expectation there for gap, your to the am high bridge thinking way that you in rest was to singles had

So you benefited as year be what last the also we buys construction had by impacted quarter base buys. also it's are is, pool X% going with starting well. well, early early then the about the the And where new side from to first

Okay.

of first point only looks you out the really light what to quarter so and about that then sort comes mid the in the a full the way Is in this right growth decline remaining teens update also And to of your year, in it incorporating quarters. the the quarter? did first three think of like update about of

So variability the there our of of within kind the expectations. is the and top bottom level our some of kind of versus top range, range level

you'll upon which way a to, model depending you So or point get of points. a couple

Okay. Great. you. Appreciate that. Thank

Carter next Andrew Stifel. with Our will come question from

not may go You ahead.

on said Yeah. number Wanted volume? kind that? equipment between What a catch you price product are gave Good didn't you that what the I Hey, and and I same quarter. seeing expectations ask, as the it, of inflation your how thank quarter Thanks. Have in there pricing, chemical does the they pricing? down you the know are to before you. for about breakout if in morning. chemical XX%

Yeah.

quarter. first for So quarter X% quarter over we the year, have inflation overall the first we're some when because just bit was higher for did the doing comparison little than you're a carryover, a expecting that

quarter. on up X% say equipment's would With actually total the Inflation inflation chemicals I to end. So for wind for around four. higher right the that, the X%

year four be negative plus at overall the four. weather. look our for it volumes expectation when you about the it's inflation and negative the for still going it's for to But to XX, XX on as inflation, So relates

offset because and product the really but So year we the offset we see bit into the the categories. from the we'll then quarter, get some catch the we at the that chemicals, on And Built excuse we'll me, fourth are on quarter, to a seeing for as other that comparison X% for standpoint. positive of pressures trichlor, little is beginning the being a moderate or X% higher on to year. that saw

year? the initiatives you Thanks. could where some product And you greater I on of Or guidance do the trichlor, know -- have that on Porpoise pressure and initial with offsetting the that, about potentially deflation online, packaging terms expect disrupting the margin is contemplate from any did case productivity the from that it. side? that still Got coming worry or in for go do chemical trichlor that,

we're the what and for we the does our facility the the with we the about -- So Suncoast or way we to Suncoast us ability open what actually package, are Porpoise are The capacity Chemical blending for entire blending does business, us, purchasing Yeah. to doesn't think business right? do that market. in have

think open than if were So better buying as in blend we I off we the everything market. are a together,

What pricing that know I back see on important as and you're a trichlor pricing through, as the demand, sells inventory offset had function of the supply the is different don't of the bleach a what balancers, going Melanie into year. lot of CalHypo is year. is we So at was what last the is that there much But trichlor on market deflation right? being and line our really half It pricing. that some And chemicals. then other the the is with would it beginning tell that all you I of part contemplated part the with to and that of in towards trichlor of said is thinking that that came

on The the industry had product more ground.

a two it is today. or quarter call than Let's more ago, there significantly

to down, the going which help pricing going coming forward. So is only stability oversupply is

Thanks. I'll pass it on.

Yeah.

next Schneeberger from Oppenheimer. come with will question Our Scott

go You ahead. may now

year. overall did your the in all at know of do Thanks very other Florida than early year. year weather. to Texas you have just takeaway? better it's well? rest if How you that in extrapolate could expected Peter, the throughout much the we that weather the morning. read much. we good on I good what and Florida on seemingly Good markets into as a Just would've comment But

Yeah.

were is the tough. line to we up than or of happy year cited quarter we the if you pools favor business, tell a today at But the it's -- thing crazy again, was I where I after continues less faced so, We're made that with and think function was that shape that Texas, Florida. also And Texas I base year. expectations. ago, almost the when last being mean, very entire they Sun good weather would out. the the Southeast in first the are with no in the in the because quarter, was look grow. in say first X% and would I good, weather I but also was X% is were conditions of a what the install very down

is the to in change ability is is particular. really market And hasn't that changed. people's the projects market, What the change necessary. what again, construction maintenance does So of amount work does on

it there's Now, part during rain of when at there temperature. is to a when more bit a significant stops, amount happens certainly rain, the But a chemical year water with frankly, the there's do that times that warm -- is required. more has because the of

the whether you in if they were chemicals. Water So for of doesn't in a rains Texas, have not, or water the it instance, ago, -- temperatures lot were require they fifties. lot temperature in high fifties a basically month a high

that growth and behaving going I think think as don't So hey, saying, be -- significant to we're we the it's are expect. into would there's we markets reading coming. it

again, And days new that pool the the it. which contemplated, renovation buildable I offset looking the maintenance in the installed business demand business and good. be the with And is to we to in construction do and by think been influenced really, at has going going of construction we line function is weather. we're to accented is saying a had that base be or

to you're discussion Melanie, you at how Great. Is exactly to just being that you ordered we it But how like? Thank like to, where you. was year you be? pace in sounds maybe where It that's on look expected? managed. could the And continue is early pace should to that be. about starting declines management, And what inventory season? the Thanks. just speak previously want there? see want What the will And you inventory it some

did be from increase size and make we very are the but is year-end, that the were first want centers that We in of typical a inventory to our with standpoint, the sales all very up right Yeah. from season. pleased seasonal ability to sure to stocked for able quarter. It

what If you less because normally of year-end was dollar historically, the from of the what amount had go do, back needed that and we quarter look we than to to at on first inventory would've significantly hand. it increase we

as and as sales center, standpoint, we from resources the well resources responsible in look we So of for have levels. inventory overall the corporate have evaluate management by that local hand the management on that are each also a that markets of what at

definitely are made. the we pleased So progress we've that with

particular and line, to versus on year When are first And at year, dollar and we is were to because this still lines. inventory we year really first those look quarter quarter it quarter, product speed we you more that's product have first in last this you we compared at the last The exactly where look year variable increase two by controls pumps. short on where want be. areas two

progress. really made we've good So

end the the we number from vendors up we days prepare when hand. forth get opportunities line and us XXXX. quarter, buy third early to the historical from on a bring expectation for a in to that inventory will quarter, kind that of fourth and us quarter that'll And As go of levels make the through evaluate with set appropriate full year-over-year that'll be in a really be and from decisions our by the would more continue second growth would down both standpoint the with we

Appreciate that color. Thanks.

Trey Our Stephens. with next Grooms from question will come

now may go You ahead.

Hey, good morning.

morning. Good

expectations. half. mentioned the in second of It's you think the growth modest in I kind

back could maybe first there maybe you guys If what little seeing around excluding are versus weather. color improve you give confidence you gives half, some some in half that a that seeing

and So in there the the pretty takes line still kind easier comps in second your half puts XQ. of tough XQ, get and but for top clearly

behind Just there. wanting to understand the your expectations driver

you're to at Yeah. is focused the Mostly it. comps when be looking it going on

little we quarter. some fourth start the Kind the So the end slow -- pool bit would the activities see on But in the a construction continue down of third to and beginning permits beginning the expect we to of new construction good sales trend on started really a daily of do the that would quarter. of at start pace.

the get So side. the will easier new certainly on there, comps construction

remodel kind did see did some the quarter of offsetting construction activity new last full of in year, the very side. that fourth strong of remain that on We

thing The that it's in weather the us going extends first and it's is how be biggest think impact a out to seasonal in able to fourth are I going be if continue weather is to our kind also work. to the and customers going quarter, So markets. season similar the to to of going comps, quarter will -- be favorable to be it's

it. Got

like your sense. That then makes given I you prior these point I gaining updated hit in believe, are as you that California. just some to share but have guide the Arizona? -- sounds don't didn't in Okay. clarity, share guide markets, And like And case are you back still And share today? the in, kind hard of harder still know other kind gains of maybe out of then, gains it hit similar guide, is a guys the pointed with of market well, baked seeing any

service. of Yeah. And people I the would talented and amount I share business mentioned a happening say that an as very really of across really that tremendous that the work our country. frankly investment is gains that's unparalleled product making provide are and

I across market we if comfortable see country, look it in ability share, really our to that very I'm can play So in. we the gain because every that at virtually it

not certainly the branch to there for on or very confident our balance there be take a but I here share. mentioned true, to may as continue ability in where be we're network, will Now, that

And singles? the gains any guide, in kind that share down of mid

as cautious weather significant quarter. we looks at second what be to Nothing this like want We point. in see the

helpful. questions. Very Okay. Thanks the taking for

Welcome.

Thank you.

from next Capital. Loop Garik question Our Shmois will with come

now ahead. go may You

on me operating quarter. Thanks Wanted for having to on. first expense first ask Hi. in the

Just increase you on inflation expense you quarter first out, of had of leverage driven weaker that hoping lower volumes? in the by the fixed facility how versus saw previously the cost much called cost could the the and the the like rent marketing you versus was some provide, things

Yeah.

increases rent we that away. saw So not going the are

locations opened -- in out new the parts. go we the rest mean, year quarter, as for increases -- most I we something is are that rent some incremental inflationary year through see continue of of from the the did the that rest the the will in So the but increases we through rent

year, throughout expectations. the but really So in we changes have renewal no account

the and there percentage -- So revenue does increase a impact from to does fourth of the first year-over-year expense significantly. more quarter

did very will some that go on see much we we away. not did that in quarter What first with did our activities So focus we customers. is

in a facing to investments be there some initiatives as we're million other of of million our in well. to projects able operating expand customer as that related activities, of well the dollars as to So some some incremental couple expenses working were couple on capacity dollars a of

it. going question just Got maintenance up the on is down Follow revenue to one. guidance flat from

it that macro change, the big maintenance, a given Just want primarily at behavior choppier confirm change but in was of not on that any to weather. you customer all? just Are seeing

Yeah. It really is a function of weather.

our is of non-discretionary. that As we've parts one maintenance really times said best the about industry is the many

water water and if pools it, You much cooler some to how used. move spend. is the to curtail of have and people maintenance water to the then going aren't the temperature And weather the treat that's filter, the it's Obviously, amount do using and and water. the with the are the again, raining, the of precipitation has it --

the the comfortable and that base would size the with spending weather we're that. are much a chemical really how that the pools used load the be is function implications and very the So associated the and installed of of maintenance of

again. Thanks it. Got

Thanks.

welcome. You're

Our next Steve question will come from Volkmann Jefferies. with

You ahead. go may now

I here. Great. Good morning me Thanks in Still fitting guys. morning, for guess.

you about I'm projects. are we've but me I new have of from cleanups be in I if of and calls, we couple with previous wondering sort going backlogs, that not some a Just Peter, refurbishment because is backlogs view of on to talked a where could. know scientific, this if

Yeah.

great it's a our a to deal hundred spend talking right, percent you're we customers and scientific. imagine, of not time can you As

part and part ago, your demand. builders six that of end the are So lower of tends And backlogs builder, and you to very are common. capacity depending the and year. much to you're what be months upper end to out remain right? the of type certainly was end booked there. the in a large tell country two very you comfortably build now, many through There's the were that course, projects heard more of would telling at the the more of I've I of year months on high country I in, on of the builders the they months related depending Two pools, high quality and the

out about end So season, all, to But two I number to -- much are if most you So six really you booked the high capacity. the of for wrong. you months, if you for it, haven't certainly a their wouldn't how but at right? guys, would backlogs for them changed tell be contextualize thought needed

the me to mentioned couple how And end. low of and you difference I mix up Great. Because end wanted ask teed that you've sort perfectly of think about a high should we times. between because Okay.

Yeah.

pool. pool to the them builders to what most is to and to is think challenging be, is stretch the there's to I that point seeing, financing. family we're for going where have now going The price reporting are the sell of right have higher what degree

a whether play costs lending bigger or the in that So role project is affordable not.

tell what most the to much lower So we last see mid you started to I higher really end, end pressure to and year, the would that will under the don't pools similar we demand. see be

that the safe fairly So And I the And imply was that's on think creep assumption does that we ASP likely a up I the average for the ask question, think will pool? mix that see. based fine. it

Okay.

different? the it something normally is and the about Is like think to end just low to way or Sorry. push mix And XX/XX? that, that high

lower that XX/XX. ends you It's think tell Steve. the probably would probably tell more very the I I unscientific at would that a number, probably you I lower it's end little end. than

end. XX% I to the at guess, would be the probably XX% would in I you it's tell So lower

Got it.

just understand. you I'm it. to We'll Okay. hold trying to

could. So Melanie, thank you. I And for then a if one quick

than I think gave I'm XXX, if number not the greater you cash mistaken. that flow operations from

that's I the about what before. think were talking we same as

we bit little inventory should higher that? A liquidation, net lower how bit little think is that--? income, a about So

Yeah. No, about that's I right it as on. That's think would well. the way

Thank you Okay. guys.

you. Thank

Instructions] [Operator

will question Bank Calnan of America. with from Shaun next come Our

You may now go ahead.

Hi, guys.

from question Just me. one

Is coming that year, it or into dealers the X% Do you weather a expectations related? that with what dealers? there So was on activity. early the do you any at to levels weaker anything headwind buy from drove inventory that mentioned Is feedback from slowdown? have lower the

things, of it's tell a have I all dealers essentially combination think supply to almost for I that, normal returned items. now realize the right? you would that chain

because So have to saying, year I pools when order product. they whereas being and my product, because are up, need in and my need blowing a used need the is get I ago season were to I opens have phone to

them assured I Now, have that, plenty we've -- inventory there's hey, inventory channel. in of

to okay, said, need in don't I product they've take that earlier. So

would So tell a So you, have it -- pools. a portion in opening of A they week season, dealers so related. started seasonal if the the last it is supply chain markets, if in or start essentially to you portion of later were survey to the is just right? the I

to enter put that branch of if to need have warehouse, the order in, I it can don't take or is that service and the it and So I order inventory until and shipped middle available POOLXXX have not in and I to to April know my an or on I'm going it year. directly my earlier

I think that's a it. of portion

large most last is there has of people you timing availability the do from in far they as number. The amount that maybe, I very on answer in don't of the some called knocked off when significant a aggregate, aggregate, customers and Because your but earlier. system a Might think headwind, don't shadow of if I they that inventory, depends a As starts. more in lot look product. little product. And Again, comment early more of don't have view to be think as to the the over it's season think really product have to inventory. our buy left ability a season if store that we with product it

use like more and of you I in to product inventory shadow look is whether to was markets think less or early that function tell a think the significantly if the is at that me, would illogical that those different. buys markets when I it's I product and And you available. the need it's really were Florida reason Texas, to there or

you. Okay. Thank

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

and Thank Have forward for to you discussing great you. XXXX quarter XXth. a continued our your day. look support, results Thank we Yes. on all July second

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

now disconnect. may You