POOL CORP Q4 FY2024 earnings call

• Focused on providing an unmatched customer experience and driving growth in the maintenance business, including double-digit growth in private label chemical sales and development of the Pool 360 ecosystem. - New pool construction was estimated at approximately 61,000 units in 2024, a 15% decline from the prior year. - Gained market share in a tough environment due to best-in-class team, solid execution, and value proposition. - Opened 10 new sales centers and 11 Pinch A Penny stores in 2024. - Florida showed resilience with 12% growth in the fourth quarter due to hurricane-related repair; Horizon's commercial business offset residential construction softness; Europe showed sequential improvement in the 2024 swimming pool season.

For the full year 2024, Pool Corporation delivered $5.3 billion in revenue, down 4% from 2023. Gross margin was 29.7%. Operating income was $617 million with an operating margin of 11.6%. For the fourth quarter of 2024, total sales were $988 million, down 2% y-o-y. Gross margin was 29.4%, operating income was $60.7 million with an operating margin of 6.1%. By geography, Florida was flat for the full year but saw 12% growth in the fourth quarter; other year-round markets had mid-single-digit declines. Horizon had net sales down 6% for the full year and 4% for the fourth quarter. Europe saw sales decline 9% for the full year and 5% for the fourth quarter. Product categories: Chemical sales increased 2% for the full year and 8% for the fourth quarter. Building material sales declined 10% for the full year and 8% for the fourth quarter. Equipment sales were flat for the full year and up 6% for the fourth quarter.

• Total sales for 2025 expected to be flat to slightly increase, driven by maintenance-related sales growth, inflation benefits (1%-2%), and market share expansion. - New pool construction expected to be relatively flat. Renovation and remodel activities stable. - Diluted earnings per share guidance for 2025 is $11.08 to $11.58 per share including an estimated $0.08 ASU tax benefit. - Gross margin expected within the 2024 range, with long-term target of 30%. - Continue technology investments, expand sales center network, and focus on the Sunbelt for Horizon's growth.

• Macroeconomic headwinds: Consumer spending on discretionary items, especially with financing, remains a headwind; high interest rates impacting new construction and remodeling. - Weather impact: Hurricanes delayed construction and renovation activity in Florida, affecting sales. - Competition: Private equity entry and national account consolidations posing challenges to market share.

Q: Talk about Pool 360 initiatives and how they contribute to the 2025 sales outlook.

A: Pete Arvan mentions traction in Pool 360, with private label chemical sales driving maintenance business, and how the ecosystem prescribes proprietary chemicals, benefiting sales regardless of construction/remodel environment.

Q: Pinch A Penny growth and DIY shift.

A: Peter Arvan says there's not much shift to DIY, Pinch A Penny's growth is due to providing a great customer experience.

Q: Guidance on new construction and gross margin.

A: Peter Arvan states new construction is expected to be flat, with dealers' activity indicating this, and Melanie Hart discusses gross margin offsets from supply chain actions and private label expansions.