Pool Corp (POOL) Q2 2025 Earnings Call Highlights: Resilient Sales Growth Amid Economic Challenges
Gross Margin: 30%, consistent with the same period last year.
Operating Income: $273 million, compared to $271 million in the prior year.
Diluted Earnings Per Share (EPS): $5.17, up 4% from $4.99 in the second quarter of last year.
Inventory Balances: $1.3 billion, up 3% from the prior year.
Leverage Ratio: 1.47, at the lower end of the targeted range.
Share Repurchases: $104 million during the quarter, an increase of $36 million from the prior year second quarter.
Store Locations: Opened two new locations during the quarter, four year-to-date, and five new Pinch A Penny franchise stores, increasing to 302 franchised stores.
Regional Sales Performance: Florida and Arizona sales up 2%; Texas and California sales down 2% and 3%, respectively.
European Sales: Net sales increased 2% in local currency and 7% in US dollars.
Horizon Net Sales: Declined 2% in the quarter.
Commercial Sales: Increased 5% in the second quarter.
Pinch A Penny Franchise Sales: Increased 1% for the quarter.
Warning! GuruFocus has detected 3 Warning Sign with POOL.
Release Date: July 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Pool Corp (NASDAQ:POOL) reported a 1% increase in net sales for the second quarter, reaching $1.8 billion, demonstrating resilience despite economic challenges.
The company maintained a solid 30% gross margin for the quarter, consistent with the same period last year, highlighting effective cost management.
POOL360 platform transactions now represent 17% of net sales, up from 14.5% last year, indicating strong customer adoption of digital tools.
Sales in Florida and Arizona grew by 2%, driven by population growth and favorable weather, showcasing the company's strong regional performance.
Commercial sales increased by 5% in the second quarter, supported by investments in developing the commercial team and expanding project capabilities.
Negative Points
New pool construction and larger renovation projects are under pressure due to macroeconomic uncertainty and high interest rates, impacting sales growth.
Sales in Texas and California declined by 2% and 3%, respectively, reflecting macroeconomic headwinds and tempered consumer confidence.
Horizon net sales declined by 2% in the quarter, with weakness in larger development-related construction projects affecting overall performance.
The company lowered its full-year EPS guidance to a range of $10.80 to $11.30, citing the absence of interest rate cuts and external catalysts.
Chemical sales faced price deflation and weather headwinds in certain markets, impacting overall sales growth in this category.
Q & A Highlights
Q: How is Pool Corp thinking about the full year outlook given the dynamics with tariffs and pricing? A: Peter Arvan, President and CEO, explained that the maintenance and repair business remains resilient, and larger renovation projects are being phased to make them more digestible. The company is focusing on investments in NPT centers, private label chemical brands, and technology tools, which are seeing good adoption. Despite challenges, Pool Corp is strategically positioned for growth in desirable areas like Texas.
Q: What is the reason behind lowering the EPS guidance for the year? A: Peter Arvan noted that the initial expectation of interest rate cuts did not materialize, impacting new pool construction and larger renovation projects. The adjustment in guidance reflects the current economic environment and the lack of significant improvement in new pool construction.
Q: Has price competition abated as the season progressed? A: Peter Arvan mentioned that price competition is more pronounced in the first quarter due to early buy payments. Currently, competitive activity is within normal ranges, with some deflation observed in chemicals but no significant new competitive pressures.
Q: How does Pool Corp view the impact of interest rates on new pool construction? A: Peter Arvan highlighted that interest rates affect housing turnover, which in turn impacts new pool construction. A cut in rates could stimulate housing market activity, but the current high rates are a barrier to accessing home equity for pool financing.
Q: Can you provide more detail on the gross margin bridge for the back half of the year? A: Melanie Hart, CFO, stated that pricing will be more favorable, and product mix, while still negative year-over-year, is trending positively. Supply chain improvements and private label products are contributing to margin stability.
Q: What is driving the growth in private label chemical sales despite a tough market backdrop? A: Peter Arvan attributed the growth to a strong portfolio of brands, refreshed product lines, and the POOL360 WaterTest platform. The comprehensive value proposition and customer confidence in the products are key drivers.
Q: How did demand trend by month, and what are the expectations for July? A: Peter Arvan noted that April and May were strong, with a slight slowdown in early June, followed by a pickup in the latter half of June. These positive trends have continued into July, indicating a stable near-term outlook.
Q: Are there any product shortages or labor issues affecting Pool Corp? A: Peter Arvan reported no significant product shortages or labor issues. Supply chains are generally in good shape, and there is sufficient labor to meet current demand.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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